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European SMEs’ Exposure to Ecosystems and Natural Hazards: A First Exploration

Author

Listed:
  • Serena Fatica

    (Joint Research Centre, European Commission, 21207 Ispra, Italy)

  • Ioanna Grammatikopoulou

    (Joint Research Centre, European Commission, 21207 Ispra, Italy)

  • Dominik Hirschbühl

    (Joint Research Centre, European Commission, 21207 Ispra, Italy)

  • Alessandra La Notte

    (Joint Research Centre, European Commission, 21207 Ispra, Italy)

  • Domenico Pisani

    (Joint Research Centre, European Commission, 21207 Ispra, Italy)

Abstract

Nature-related financial risks have emerged as critical concerns for policymakers and financial actors. Central to this issue are ecosystem services, which play an integral role in various production processes but may be interrupted due to the degradation of nature. This article delves into the vulnerability of European SMEs by combining firm-level exposures to ecosystem service dependencies with regional information on the relative abundance of ecosystem services provisioning and the risk of natural hazards. Focusing on long-term debt positions to gauge financial stability implications, the results reveal moderate nature risks for European SMEs at the current stance but also highlight a possible concentration of risks and a need to further refine the use of available indicators.

Suggested Citation

  • Serena Fatica & Ioanna Grammatikopoulou & Dominik Hirschbühl & Alessandra La Notte & Domenico Pisani, 2024. "European SMEs’ Exposure to Ecosystems and Natural Hazards: A First Exploration," Sustainability, MDPI, vol. 16(11), pages 1-21, June.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:11:p:4841-:d:1409636
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    References listed on IDEAS

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    1. FATICA Serena & OLIVIERO Tommaso & RANCAN Michela, 2022. "On the determinants of corporate default in the EU-27: Evidence from a large sample of companies," JRC Research Reports JRC131613, Joint Research Centre.
    2. Lelli, Chiara & Parisi, Laura & Heemskerk, Irene & Boldrini, Simone & Ceglar, Andrej, 2023. "Living in a world of disappearing nature: physical risk and the implications for financial stability," Occasional Paper Series 333, European Central Bank.
    3. Barbaglia, Luca & Fatica, Serena & Rho, Caterina, 2023. "Flooded credit markets: physical climate risk and small business lending," JRC Working Papers in Economics and Finance 2023-14, Joint Research Centre, European Commission.
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    Cited by:

    1. Valente Fernanda & Chen Yujia & Calabrese Raffaella & Cowling Marc & Alessi Lucia, 2026. "Nature-adjusted probability of default for European small and medium enterprises," JRC Working Papers in Economics and Finance 2026-01, Joint Research Centre, European Commission.
    2. Chen, Yujia & Ding, Zhenghong & Barbaglia, Luca & Calabrese, Raffaella & Fatica, Serena, 2026. "A climate stress testing exercise on loans to European small and medium enterprises," Energy Economics, Elsevier, vol. 155(C).

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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