The Market Effect of Acute Biodiversity Risk: the Case of Brazilian Corporate Bonds

Biodiversity is part of the Earth’s natural capital and considered the cornerstone of a well-functioning planet. The many benefits to humans provided by natural capital are often integral to the provision of clean drinking water, waste decomposition and food productivity as well as being critical for human health and mental well-being. These benefits are known as ecosystem services.

The Market Effect of Acute Biodiversity Risk- the Case of Brazilian Corporate Bonds

  • Human activities erode biodiversity but biodiversity losses also impact human activities.
  • Amundi’s event study is among the first of its kind, examining the linkages between biodiversity events and micro-level security prices (e.g., Brazilian corporate debt).
  • Using National Language Processing (NLP) and the GDELT event database, biodiversity is considered a risk that affects companies’ operations, reputations, finances and physical assets.
  • The results highlight that companies in sectors most affected by biodiversity face a widening of their corporate bond spreads following acute biodiversity events.

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