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Can biodiversity risk improve firm ESG performance? Empirical evidence from China

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  • Pi, Tianlei
  • Jiao, Linke
  • Zhou, Yuhan
  • Shi, Jin

Abstract

We examine the relationship between biodiversity risk and firm ESG performance in Chinese A-share listed companies from 2013 to 2023. We find a significantly positive relationship between biodiversity risk and firm ESG performance, and this conclusion still holds after robustness and endogeneity tests. The mechanism analysis shows that green innovation and external regulation are the main channels through which biodiversity risk promotes firm ESG performance. In addition, the effect of biodiversity risk on ESG performance is also significantly heterogeneous due to the ownership structure, the different level of industrial pollution.

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  • Pi, Tianlei & Jiao, Linke & Zhou, Yuhan & Shi, Jin, 2025. "Can biodiversity risk improve firm ESG performance? Empirical evidence from China," Finance Research Letters, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:finlet:v:76:y:2025:i:c:s1544612325001953
    DOI: 10.1016/j.frl.2025.106931
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    Cited by:

    1. Gan, Yufei, 2025. "When green claims turn brown: The Impact of corporate greenwashing on biodiversity risk in China," The Quarterly Review of Economics and Finance, Elsevier, vol. 104(C).
    2. Efstathios Magerakis & Ahsan Habib, 2026. "Biodiversity Risk and Working Capital Management," Business Strategy and the Environment, Wiley Blackwell, vol. 35(3), pages 3445-3467, March.
    3. Zhang, Min & Chen, Guorong & Deng, Jing, 2025. "Does biodiversity attention affect risk spillover in the AFHF sectors?—Evidence from Chinese stock markets," Finance Research Letters, Elsevier, vol. 82(C).
    4. Wang, Anchao & Saqib, Abdul & Chen, Xiuxiu & Zhao, Xiaoqing, 2026. "How biodiversity disclosure enhances ESG performance: The role of entrepreneurship and physical climate risk," Finance Research Letters, Elsevier, vol. 89(C).
    5. Wang, Gang, 2025. "How does biodiversity risk affect digital transformation? Evidence from China’s manufacturing enterprises," Finance Research Letters, Elsevier, vol. 85(PD).
    6. Chen, Guorong & Xing, Xiaoyun & Deng, Jing, 2025. "Climate–biodiversity–finance nexus: Comparative evidence from the U.S. and China," Finance Research Letters, Elsevier, vol. 86(PA).
    7. Ma, Chaoqun & Gao, Lu & Jiang, Yong & Ren, Yi-Shuai, 2025. "How biodiversity information disclosures spill the beans on firm value?," Finance Research Letters, Elsevier, vol. 85(PD).
    8. Li, Jun & Jin, Yihang & Zhou, Peng, 2025. "Do banks price firms' biodiversity risk? Evidence from the Kunming declaration," International Review of Financial Analysis, Elsevier, vol. 106(C).
    9. Khan, Nasir & Lucey, Brian, 2026. "Biodiversity risk, corporate governance, and firm performance: empirical evidence from China," Finance Research Letters, Elsevier, vol. 87(C).
    10. Zhang‐Hangjian Chen, 2026. "Biodiversity Risk and the Cost of Equity Capital: Implications for Sustainable Development," Sustainable Development, John Wiley & Sons, Ltd., vol. 34(2), pages 2184-2206, April.
    11. Pi, Tianlei & Jiao, Linke & Zhou, Yuhan & Shi, Jin, 2026. "Biodiversity risk and corporate greenwashing: Evidence from China," Research in International Business and Finance, Elsevier, vol. 83(C).
    12. Nader Naifar & Mohammed Alhashim, 2025. "Systemic Tail Dependence Between Biodiversity, Clean Energy, and Financial Transition Assets: A Partial Correlation-Based Network Approach," Sustainability, MDPI, vol. 17(14), pages 1-18, July.

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