IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v104y2025ipas1057521925003898.html
   My bibliography  Save this article

Biodiversity risk or climate risk? Which factor affects corporate ESG rating divergence

Author

Listed:
  • He, Feng
  • Duan, Lin
  • Lucey, Brian
  • Hao, Jing

Abstract

This study compares the impact of firm-level climate risk and biodiversity risk on corporate environmental, social, and governance (ESG) rating divergence among Chinese listed firms. Analyzing a comprehensive dataset from 2015 to 2022, we provide novel empirical evidence that firm-level biodiversity risk exposure exerts a significant mitigating effect on corporate ESG rating divergence. In contrast, the effect of climate risk on ESG divergence does not show such statistically significant negative impact, even after considering potential lag effects. Furthermore, we show that biodiversity risk exposure reduces ESG divergence through enhancing ESG information disclosure and improving transparency. We also find the mitigating effect is more pronounced in firms with lower analyst and research reports coverage, and in firms that independently or voluntarily disclose ESG reports. These findings prove that firm-level biodiversity risk management has a significant impact on corporate sustainable performance assessment.

Suggested Citation

  • He, Feng & Duan, Lin & Lucey, Brian & Hao, Jing, 2025. "Biodiversity risk or climate risk? Which factor affects corporate ESG rating divergence," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    • Handle: RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003898
    DOI: 10.1016/j.irfa.2025.104302
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521925003898
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2025.104302?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003898. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.