The research, led in partnership between the University of Edinburgh Business School and the School of Geography and the Environment at Oxford University, has set out to understand the extent to which listed companies worldwide are exposed to biodiversity risks, either through the fact that they are impacting biodiversity or through the fact that companies are dependent on biodiversity.
"We show that companies have started responding strategically to biodiversity risk", said Theodor Cojoianu. "In 2018, 29% of companies had adopted a biodiversity policy. However, around $7.2 trillion of total enterprise value remains exposed to unmanaged biodiversity risk, in particular driven by the dependency that sectors have on biodiversity."
The paper implements a new way for investors to understand their biodiversity risks, and a natural-capital-based view (NCBV) of firms is currently being explored by asset managers worldwide to help theorise how corporations are constrained by both their impacts and dependencies on natural capital. The research team will build on this research to understand how biodiversity risks and impacts translate into financial market outcomes.
Read the full paper, published in Business Strategy and the Environment:
Dr Theodor Cojoianu is Senior Lecturer in Sustainable Finance