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Jus naturale : The Impact of Nature-Related Litigation on Corporate Valuation

Author

Listed:
  • Stéphane Dees
  • Eve Hanoune
  • Oriane Wegner

Abstract

This paper investigates the financial materiality of nature-related legal disputes, focusing on biodiversity loss, pollution, and ecosystem degradation. We analyze whether firms targeted by nature litigation experience statistically significant declines in market valuation using a dataset of 48 litigation (123 event dates) against 22 major companies in North America and Europe (1996–2025). Employing an event study methodology with the Fama-French three-factor model, we calculate Cumulative Abnormal Returns (CAR) over a [-5, +5] day window. Our results demonstrate that markets price in the impact of these events, leading to significant valuation declines following litigation decisions. In Europe, stock corrections occur immediately upon the filing of a complaint, suggesting a 'reputational premium' driven by investor ESG sensitivity. In North America, however, ruling/settlement dates yield larger market shocks, reflecting heavier financial penalties. Furthermore, we find evidence of sectoral spillover effects, where litigation against a single firm triggers negative contagion across the industry. The findings emphasize the necessity for financial institutions to integrate nature-related legal liabilities into their risk management frameworks.

Suggested Citation

  • Stéphane Dees & Eve Hanoune & Oriane Wegner, 2026. "Jus naturale : The Impact of Nature-Related Litigation on Corporate Valuation," Working papers 1060, Banque de France.
    • Handle: RePEc:bfr:banfra:1060
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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