Firm-Level Nature Dependence

We construct firm-level measures of nature dependence, capturing the extent to which a firm's business activities rely on different ecosystem services. The measures cover 26,595 listed firms from 115 countries between 2010 and 2022. Nature dependence is positively correlated with a firm's impact on biodiversity but shows little correlation with exposure to physical climate risk. Nature dependence is neither related to nature-related corporate actions disclosed in the CDP survey nor reflected in firms' corporate disclosures. Interestingly, a firm's nature dependence is positively associated with measures of downside risk. These risk effects stem from high dependences on certain ecosystem services, rather than from low or moderate dependences on a greater number of ecosystem services. Nature dependence also predicts the likelihood of being targeted by BlackRock's biodiversity engagements. Overall, investors start paying attention to nature dependence, while corporate action and disclosure remain limited.