Biodiversity impact reduction disclosure and firm performance: The role of governance quality
Keywords:
Biodiversity impact reduction, Disclosure, Firms’ financial stability, Corporate governanceAbstract
This study explores how biodiversity-related disclosures influence firms’ financial stability and examines how corporate governance moderates this relationship. Our analysis covers the period prior to the formalization of the Global Biodiversity Framework (GBF) in 2022, during which biodiversity disclosure practices were less widespread and largely voluntary. Using an international panel of companies from 87 countries over the period 2002-2021, we provide empirical evidence that transparent communication of biodiversity impacts contributes to more resilient financial performance. The findings indicate that firms that acknowledge their effects on ecosystems and incorporate biodiversity preservation into strategic and accounting decisions tend to exhibit stronger financial soundness and sustainability. Moreover, corporate governance quality significantly enhances the extent and credibility of biodiversity disclosures. As biodiversity loss becomes an urgent global risk, our research emphasizes the strategic importance of sound governance in promoting responsible environmental practices and strengthening biodiversity-related transparency.
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