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PreprintCited by 29Sustainable Finance and Green BondsCorporate Social Responsibility ReportingFinancial Markets and Investment Strategies

The DOI matches its Crossref record, with a small difference in title or year; 1 of the 1 references it cites were found in a registry or an index.

Do Investors Care About Biodiversity?

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Garel, Alexandre, Romec, Arthur, Sautner, Zacharias, Wagner, Alexander F.·2023·SSRN Electronic Journal
DOI 10.2139/ssrn.4398110
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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.

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  • Investing in non-ESG firms introduces additional risks such as carbon emission risk, environmental regulation risk, biodiversity risk, physical risk, transition risk or litigation risk heightened by social norms.

    “On the one hand, investing in non-ESG firms introduces additional risk such as carbon emission risk, environmental regulation risk, biodiversity risk, physical risk, transition risk or litigation risk heightened by social norms”

    From A review on ESG investing: Investors' expectations, beliefs and perceptions (2024) · cites this paper as Garel et al. (2023)

  • Green firms generate lower returns relative to brown firms.

    “At the firm level, M.Baker et al. (2022), Bolton and Kacperczyk (2021), Garel et al. (2023) and Hsu et al. (2023), Hong and Kacperczyk (2009), Zerbib (2019) show that green firms generate lower returns relative to brown firms.”

    From A review on ESG investing: Investors' expectations, beliefs and perceptions (2024) · cites this paper as Garel et al. (2023)

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  78. Bd. Du Pont d'Arve, 42

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Metadata

Authors
Garel, A., Romec, A., Sautner, Z., & Wagner, A. F.
Affiliations
  • Audencia Business School (FR)
  • TBS Education (FR)
  • University of Zurich (CH)
Corresponding author
Wagner, Alexander F.
ORCID
Venue
SSRN Electronic Journal
Publisher
Elsevier BV
Published
2023
ISSN
1556-5068 (ISSN-L)
DOI
10.2139/ssrn.4398110
OpenAlex
W4360762233
Cited by
29
References
0
Citations by year
2025: 14 · 2024: 11 · 2023: 4
Type
posted content
Language
en
Open access
Locations
  • SSRN Electronic Journal (acceptedVersion)
  • Zurich Open Repository and Archive (University of Zurich) (acceptedVersion, cc-by-nc-nd)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Zurich Open Repository and Archive (University of Zurich) (submittedVersion, other-oa)
  • Zurich Open Repository and Archive (University of Zurich)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Sustainable Finance and Green Bonds
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
Keywords
biodiversity, stock returns, COP15, nature-related financial disclosure, environmental regulation, litigation risk, risk premium, investor behavior, ESG investing

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