Biodiversity risk

Stefano Giglio, Theresa Kuchler, Johannes Stroebe and Xuran Zeng

Review of Finance, 2026, vol. 30, issue 1, 131-161

Abstract: We explore the effects of physical and regulatory risks related to biodiversity loss on asset values. We first develop a news-based measure of aggregate biodiversity risk and analyze how it varies over time. We also construct and publicly release several firm- and industry-level measures of exposure to biodiversity risk, based on (1) textual analyses of firms’ 10-K statements, (2) the holdings of biodiversity-related funds, (3) firms’ responses to a questionnaire fielded by the Carbon Disclosure Project, and (4) a large survey of finance professionals, regulators, and academics. Exposures to biodiversity risk vary substantially across industries in a way that is economically sensible and distinct from exposures to climate risk. We find evidence that biodiversity risks already affect equity prices: returns of portfolios that are sorted on our measures of biodiversity risk exposure covary with innovations in the aggregate biodiversity risk index. However, our survey indicates that market participants do not perceive the current pricing of biodiversity risks in equity markets to be adequate.

Keywords: Biodiversity Loss; Investment Decisions; Asset Pricing; Environmental Economics (search for similar items in EconPapers)
JEL-codes: G10 G11 G12 Q5 Q53 Q57 (search for similar items in EconPapers)
Date: 2026
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