Quantitative Sustainable Economics and Finance 
Time: 10.30 am
Date: 03th of October  2024
Room 2028

Maria-Eugenia Sanin (Paris Saclay University) “Biodiversity Risk, Firm Performance, and Market Mispricing”

Abstract : Combining new data on biodiversity-capacity and biodiversity-footprint with firm fundamentals, we conduct a causal analysis of the impact of biodiversity physical risk on firms’ profitability and stock returns. With this purpose, we build a biodiversity index for 35 countries and use a time series model to capture its variation over time. We show that such time trend estimation can be aggregated as risk exposure and can significantly forecast establishment-level profitability. We then show that the market underprices biodiversity physical risk, which is due to the insufficient analysis of related information and its impact on the firm-level future cash flow. We also document disparities of risk exposure across firms and sectors, and our results are consistent with previous findings in terms of climate physical risk.

Organizers:

Patricia Crifo, Emmanuel Gobet, Peter Tankov, Gauthier Vermandel, and Olivier David Zerbib.

Sponsors:
CREST