IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/18020.html
   My bibliography  Save this paper

Do Investors Care About Biodiversity?

Author

Listed:
  • Garel, Alexandre
  • Romec, Arthur
  • Sautner, Zacharias
  • Wagner, Alexander F.

Abstract

This paper introduces a new measure of a firm's negative impact on biodiversity, the corporate biodiversity footprint, and studies whether it is priced in an international sample of stocks. On average, the corporate biodiversity footprint does not explain the cross-section of returns between 2019 and 2022. However, a biodiversity footprint premium (higher returns for firms with larger footprints) began emerging in October 2021 after the Kunming Declaration, which capped the first part of the UN Biodiversity Conference (COP15). Consistent with this finding, stocks with large footprints lost value in the days after the Kunming Declaration. The launch of the Taskforce for Nature-related Financial Disclosures (TNFD) in June 2021 had a similar effect. These results indicate that investors have started to require a risk premium upon the prospect of, and uncertainty about, future regulation or litigation to preserve biodiversity.

Suggested Citation

  • Garel, Alexandre & Romec, Arthur & Sautner, Zacharias & Wagner, Alexander F., 2023. "Do Investors Care About Biodiversity?," CEPR Discussion Papers 18020, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18020
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP18020
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Colesanti Senni, Chiara & Goel, Skand & von Jagow, Adrian, 2024. "Economic and financial consequences of water risks: The case of hydropower," Ecological Economics, Elsevier, vol. 218(C).
    2. von Zedlitz, Gerrit, 2023. "Mind the gap?! The current state of biodiversity reporting," SAFE White Paper Series 95, Leibniz Institute for Financial Research SAFE.
    3. Tobias Schimanski & Chiara Colesanti Senni & Glen Gostlow & Jingwei Ni & Tingyu Yu & Markus Leippold, 2023. "Exploring Nature: Datasets and Models for Analyzing Nature-Related Disclosures," Papers 2312.17337, arXiv.org.
    4. Hackmann, Angelina, 2024. "Bridging the biodiversity financing gap," SAFE White Paper Series 103, Leibniz Institute for Financial Research SAFE.
    5. Kalhoro, Muhammad Ramzan & Kyaw, Khine, 2024. "Manage biodiversity risk exposure?," Finance Research Letters, Elsevier, vol. 61(C).

    More about this item

    Keywords

    Biodiversity; corporate biodiversity footprint; Kunming Declaration; Natural capital; Stock returns; Taskforce for Nature-related Financial Disclosures;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:18020. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.