Jus naturale: The Impact of Nature-Related Litigation on Corporate Valuation

Stéphane Dees, Eve Hanoune, Oriane Wegner

Working papers from Banque de France

Abstract: This paper investigates the financial materiality of nature-related legal disputes, focusing on biodiversity loss, pollution, and ecosystem degradation. We analyze whether firms targeted by nature litigation experience statistically significant declines in market valuation using a dataset of 48 litigation (123 event dates) against 22 major companies in North America and Europe (1996–2025). Employing an event study methodology with the Fama-French three-factor model, we calculate Cumulative Abnormal Returns (CAR) over a [-5, +5] day window. Our results demonstrate that markets price in the impact of these events, leading to significant valuation declines following litigation decisions. In Europe, stock corrections occur immediately upon the filing of a complaint, suggesting a 'reputational premium' driven by investor ESG sensitivity. In North America, however, ruling/settlement dates yield larger market shocks, reflecting heavier financial penalties. Furthermore, we find evidence of sectoral spillover effects, where litigation against a single firm triggers negative contagion across the industry. The findings emphasize the necessity for financial institutions to integrate nature-related legal liabilities into their risk management frameworks.

Keywords: Nature-Related Risks; Litigation Risks; Corporate Valuation; Environmental Complaints (search for similar items in EconPapers)
JEL-codes: G12 K32 K41 Q54 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2026
New Economics Papers: this item is included in nep-eur and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:1060

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