The corporate biodiversity exposure effects on ESG performance

The sharp plummet in global wildlife populations has provoked the concerning of ecological health for sustaining business activities. Against this backdrop, this paper examines the effects of Corporate Biodiversity Exposure (CBE) on corporate Environmental, Social, and Governance (ESG) performance. Based on the data from Chinese listed companies and employing the methodological approach of He et al. (2024), we utilize a high-dimensional fixed effects (HDFE) model to examine the CBE effect on ESG for three different dimensions. The empirical results demonstrate that heightened biodiversity exposure exhibits a significant positive impact on a firm's ESG performance aggregately. Our dimensional analysis further reveals that this positive association is strongly evident in the environmental and social aspects. However, the governance dimension has not been firmly associated with CBE from our Chinese sample. Our study provides salient research implications on corporate governance and sustainable business development against the anxiety of ecological system erosion during business operations.