IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v87y2026ics1544612325022561.html

Firm-level nature dependence and carbon pollution

Author

Listed:
  • Lee, Chien-Chiang
  • Wang, Chih-Wei
  • Lin, Weizheng
  • Chan, Hsiang-Li

Abstract

This paper examines the relationship between firm-level nature dependence and carbon emissions using an international panel of listed firms from 2010 to 2022. Firms more reliant on ecosystem services exhibit significantly higher carbon emissions and intensity across Scopes 1–3. The results remain robust under placebo tests, matching methods, and alternative specifications. Further analysis identifies R&D investment as a key channel that amplifies emissions among nature-dependent firms. The positive relationship holds in both emerging and developed markets, highlighting nature dependence as an underexplored source of carbon risk in corporate environmental behavior and emphasizing the importance of integrating ecological reliance into climate-related financial disclosures.

Suggested Citation

  • Lee, Chien-Chiang & Wang, Chih-Wei & Lin, Weizheng & Chan, Hsiang-Li, 2026. "Firm-level nature dependence and carbon pollution," Finance Research Letters, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finlet:v:87:y:2026:i:c:s1544612325022561
    DOI: 10.1016/j.frl.2025.109003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325022561
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.109003?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Zacharias Sautner & Laurence Van Lent & Grigory Vilkov & Ruishen Zhang, 2023. "Firm‐Level Climate Change Exposure," Journal of Finance, American Finance Association, vol. 78(3), pages 1449-1498, June.
    2. Gao, Huasheng & Harford, Jarrad & Li, Kai, 2013. "Determinants of corporate cash policy: Insights from private firms," Journal of Financial Economics, Elsevier, vol. 109(3), pages 623-639.
    3. Alexandre Garel & Arthur Romec & Zacharias Sautner & Alexander Wagner, 2024. "Do investors care about biodiversity?," Post-Print hal-04649052, HAL.
    4. Özgür Arslan-Ayaydin & Chris Florackis & Aydin Ozkan, 2014. "Financial flexibility, corporate investment and performance: evidence from financial crises," Review of Quantitative Finance and Accounting, Springer, vol. 42(2), pages 211-250, February.
    5. Hainmueller, Jens, 2012. "Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies," Political Analysis, Cambridge University Press, vol. 20(1), pages 25-46, January.
    6. Larcker, David F. & Rusticus, Tjomme O., 2010. "On the use of instrumental variables in accounting research," Journal of Accounting and Economics, Elsevier, vol. 49(3), pages 186-205, April.
    7. Azar, José & Duro, Miguel & Kadach, Igor & Ormazabal, Gaizka, 2021. "The Big Three and corporate carbon emissions around the world," Journal of Financial Economics, Elsevier, vol. 142(2), pages 674-696.
    8. Yangyan Shi & Xiangdong Li & Yu Gong & V. G. Venkatesh & Cong Cao & Lenny Koh & Victor Shi, 2025. "Carbon trade finance: a perspective of supply chain management," International Journal of Production Research, Taylor & Francis Journals, vol. 63(22), pages 8125-8127, November.
    9. Alexandre Garel & Arthur Romec & Zacharias Sautner & Alexander F Wagner, 2024. "Do investors care about biodiversity?," Review of Finance, European Finance Association, vol. 28(4), pages 1151-1186.
    10. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    11. Wang, Keying & Wu, Meng & Sun, Yongping & Shi, Xunpeng & Sun, Ao & Zhang, Ping, 2019. "Resource abundance, industrial structure, and regional carbon emissions efficiency in China," Resources Policy, Elsevier, vol. 60(C), pages 203-214.
    12. Hainmueller, Jens & Xu, Yiqing, 2013. "ebalance: A Stata Package for Entropy Balancing," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 54(i07).
    13. Jiang, Feng & John, Kose & Li, C. Wei & Qian, Yiming, 2018. "Earthly Reward to the Religious: Religiosity and the Costs of Public and Private Debt," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 53(5), pages 2131-2160, October.
    14. Liu, Qing & Lu, Yi, 2015. "Firm investment and exporting: Evidence from China's value-added tax reform," Journal of International Economics, Elsevier, vol. 97(2), pages 392-403.
    15. Patrick Bolton & Marcin Kacperczyk, 2023. "Global Pricing of Carbon‐Transition Risk," Journal of Finance, American Finance Association, vol. 78(6), pages 3677-3754, December.
    16. Daniel Bradley & Incheol Kim & Xuan Tian, 2017. "Do Unions Affect Innovation?," Management Science, INFORMS, vol. 63(7), pages 2251-2271, July.
    17. Alexandre Garel & Arthur Romec & Zacharias Sautner & Alexander F. Wagner, 2025. "Firm-Level Nature Dependence," Swiss Finance Institute Research Paper Series 25-44, Swiss Finance Institute.
    18. Bolton, Patrick & Kacperczyk, Marcin, 2021. "Do investors care about carbon risk?," Journal of Financial Economics, Elsevier, vol. 142(2), pages 517-549.
    19. Timo Busch & Matthew Johnson & Thomas Pioch, 2022. "Corporate carbon performance data: Quo vadis?," Journal of Industrial Ecology, Yale University, vol. 26(1), pages 350-363, February.
    20. Ran Xu & Kenneth A. Frank & Spiro J. Maroulis & Joshua M. Rosenberg, 2019. "konfound: Command to quantify robustness of causal inferences," Stata Journal, StataCorp LLC, vol. 19(3), pages 523-550, September.
    21. Daron Acemoglu & Philippe Aghion & Leonardo Bursztyn & David Hemous, 2012. "The Environment and Directed Technical Change," American Economic Review, American Economic Association, vol. 102(1), pages 131-166, February.
    22. Ren, Xiaohang & Liao, Zihui & Tao, Miaomiao & Xiao, Ya, 2025. "Environmental regulations and corporate supply chain deviation: Evidence and financial implications for sustainable economic development," International Review of Financial Analysis, Elsevier, vol. 106(C).
    23. Liang, Tian & Zhang, Liqin & Fabuš, Michal & Zhou, Chaobo & Ailikamujiang, Aimaitijiang, 2025. "The impact of technology finance on corporate green innovation," Finance Research Letters, Elsevier, vol. 86(PC).
    24. Gjerde, Snorre & Sautner, Zacharias & Wagner, Alexander F. & Wegerich, Alexis, 2025. "Corporate Nature Risk Perceptions," CEPR Discussion Papers 20385, Centre for Economic Policy Research.
    25. Bartram, Söhnke M. & Hou, Kewei & Kim, Sehoon, 2022. "Real effects of climate policy: Financial constraints and spillovers," Journal of Financial Economics, Elsevier, vol. 143(2), pages 668-696.
    26. Ren, Xiaohang & An, Yaning & Jin, Chenglu & Yan, Cheng, 2024. "Weathering the policy storm: How climate strategy volatility shapes corporate total factor productivity," Energy Economics, Elsevier, vol. 134(C).
    27. Garel, Alexandre & Romec, Arthur & Sautner, Zacharias & Wagner, Alexander F., 2025. "Firm-Level Nature Dependence," CEPR Discussion Papers 20384, Centre for Economic Policy Research.
    28. Ren, Xiaohang & Li, Wenqi & Duan, Kun & Urquhart, Andrew, 2025. "Carbon risk and debt financing: An international perspective," Journal of International Money and Finance, Elsevier, vol. 153(C).
    29. Gan, Yufei & Song, Qingyu & Lu, Zhaoying, 2025. "Does digital transformation decrease firms’ natural dependence?," Finance Research Letters, Elsevier, vol. 86(PD).
    30. Snorre Gjerde & Zacharias Sautner & Alexander F. Wagner & Alexis Wegerich, 2025. "Corporate Nature Risk Perceptions," Swiss Finance Institute Research Paper Series 25-86, Swiss Finance Institute.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cartellier, Fanny & Tankov, Peter & Zerbib, Olivier David, 2025. "Can investors curb greenwashing?," Journal of Economic Dynamics and Control, Elsevier, vol. 180(C).
    2. Abu Amin & Ashrafee T. Hossain & Abdullah‐Al Masum, 2024. "Carbon emissions and abnormal cash holdings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(4), pages 3175-3209, December.
    3. Cai, Hanyi, 2026. "The governance effects of green investors: A perspective on reducing natural dependency," Finance Research Letters, Elsevier, vol. 89(C).
    4. Tran, Thanh Tat & Hoang, Khanh & Ngo, Thanh & Nguyen, Thang Xuan & Tran, Hien Thi Thu, 2025. "How does biodiversity risk exposure affect corporate regulatory intensity?," Finance Research Letters, Elsevier, vol. 86(PB).
    5. Di Tommaso, Caterina & Foglia, Matteo & Pacelli, Vincenzo, 2025. "The impact of biodiversity score on the European firm’s performance," International Review of Financial Analysis, Elsevier, vol. 106(C).
    6. Sirin, Selahattin Murat & Yilmaz, Berna N., 2025. "Tech firms and the renewable energy sector: Exploring the moderating effects of institutional ownership on financial connectedness," Research in International Business and Finance, Elsevier, vol. 80(C).
    7. Xie, Xuejing & Gong, Yukai & Cheng, Le, 2025. "Managerial myopia and carbon emission: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 90(C).
    8. Md Lutfur Rahman & Sudipta Bose, 2025. "Firm-level Climate Vulnerability and Corporate Risk-taking: International Evidence," Working Papers DP-2024-36, Economic Research Institute for ASEAN and East Asia (ERIA).
    9. Coqueret, Guillaume & Giroux, Thomas & Zerbib, Olivier David, 2025. "The biodiversity premium," Ecological Economics, Elsevier, vol. 228(C).
    10. Ramos-Francia, Manuel & Karlström, Peter & Montañez-Enríquez, Ricardo & Ossandon Busch, Matias, 2026. "Stranded in the wastelands? Natural capital depletion and bank deposit reallocation," Journal of Banking & Finance, Elsevier, vol. 184(C).
    11. 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).
    12. Lin, Weizheng & Wang, Chih-Wei & Li, Ying-Jie & Chen, Jian-Yun, 2025. "From green to digital: Exploring the role of ecological footprints on cybersecurity risk," Energy Economics, Elsevier, vol. 146(C).
    13. Giulio Cornelli & Magdalena Erdem & Egon Zakrajsek, 2024. "CEO turnover risk and firm environmental performance," BIS Working Papers 1190, Bank for International Settlements.
    14. Amin, Abu & Hossain, Md Miran & Lee, Narae & Saadi, Samir, 2025. "Corporate political activities and firms' carbon emissions," Journal of Corporate Finance, Elsevier, vol. 95(C).
    15. Hu, Guoliu & Li, Xiaoqian & Cao, Zhangfan, 2025. "Do tax incentives make firms greener? Evidence from the accelerated depreciation policy in China," The British Accounting Review, Elsevier, vol. 57(5).
    16. Basha, Shabeen Afsar & Benkraiem, Ramzi & Ben-Nasr, Hamdi & Masum, Abdullah-Al, 2025. "Does political risk exacerbate climate risk? Firm-level evidence," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    17. Banerjee, Pradip & Bose, Sudipta & Dhole, Sandip & Truong, Cameron, 2025. "Greening up their act: Corporate carbon emissions reduction in response to political risk," Energy Economics, Elsevier, vol. 150(C).
    18. Qiuyue Zhang & Yili Lin & Yueying Wang & Yu Cao, 2025. "Band together or go it alone? Climate risk and corporate collaborative innovation," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-20, December.
    19. Provaty, Sagira Sultana & Hasan, Mostafa Monzur & Luo, Le, 2024. "Organization capital and GHG emissions," Energy Economics, Elsevier, vol. 131(C).
    20. Wei Zhang & Xinyu Li & Guanying Wang & Xiangqian Li, 2026. "Environmental pollution and IPO pricing efficiency: evidence from heavily polluting firms in China," Review of Quantitative Finance and Accounting, Springer, vol. 66(2), pages 757-798, February.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    Statistics

    Access and download statistics

    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:finlet:v:87:y:2026:i:c:s1544612325022561. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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/frl .

    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.