Quantifying firm-level risks from nature deterioration

Ricardo Crisóstomo

CNMV Working Papers from CNMV- Spanish Securities Markets Commission - Research and Statistics Department

Abstract: We estimate the loss of value that companies might suffer from nature overexplotation. We find that global equities shed 26.8% in a scenario of unabated nature decline, while the worst-performing firms lose 75% of their value. Our risk framework considers five environmental hazards: biodiversity loss, land degradation, climate change, human population and nature capital. We also introduce two metrics to assess nature-related risks: a Country Degradation Index that tracks the damage caused by environmental hazards in specific territories, including nonlinear dynamics and tipping points, and a Nature Risks Scores that summarises the risk that companies face due to the decline of nature and its services.

Keywords: Environmental degradation; nature-related financial risks; climate change; ecosystem services; tipping points (search for similar items in EconPapers)
JEL-codes: G01 G17 G28 I30 Q51 (search for similar items in EconPapers)
Date: 2025
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