Is biodiversity risk priced?
Sustainable investment is rising across the tracked journals, and biodiversity risk has become a finance keyword. Yet few of these papers carry a keyword about returns, bonds or the cost of capital. Do markets price firms' exposure to nature loss, and has nature-related disclosure changed that?
What prompted this
"Sustainable investment" grew across all journals (19 papers in July–September 2026 against about 11 expected; see the trends page). Since October 2025, "biodiversity risk" appears on 35 papers (28 in finance journals), and 116 papers carry some biodiversity keyword (45 in economics, 44 in finance). Only 5 of the 116 also carry a keyword about stock returns, asset pricing, the cost of capital, bonds, equity or portfolios.
Questions
- Do firms more exposed to nature loss (land use, water, supply chains in sensitive areas) earn higher expected returns, or pay more for credit?
- Did investors start pricing it after the Kunming-Montreal biodiversity framework (2022) or the nature-related disclosure recommendations (TNFD, 2023)?
- Can biodiversity exposure be measured from firms' locations and supply chains rather than from what they report?
Data that could help
Facility locations of listed firms, protected-area and species-range maps, text-based exposure measures, and stock and bond returns.
Next step
Build a location-based exposure measure from facility locations and protected-area maps, and test whether it predicts returns or credit spreads.