Biodiversity risk and the financial markets

Financial Markets, Institutions & Instruments is pleased to announce a special issue and conference on “Biodiversity risk and the financial markets”. The goal of the special issue and conference is to create a platform for cross-disciplinary researchers, practitioners, and policymakers to share insights and foster innovation in the field.

 

Guest editors:

LUCEY Brian, Trinity College, Dublin, Ireland. E-mail: BLUCEY@tcd.ie

HASAN Iftekhar, Gabelli School of Business, Fordham, NYC USA . E-mail: ihasan@fordam.edu  

QIAN Meijun, School of Public Policy & Management, Tsinghua University, China/ Research Institute, People’s Bank of China, China. E-mail: MeijunQian@gmail.com

HE Feng, Capital University of Economics and Business, China. E-mail: hf@cueb.edu.cn

 

Special issue information:

Climate change and biodiversity risk are related but distinct issues. The degradation of biodiversity and natural capital presents a profound and often underestimated threat to global financial stability, a risk comparable to or potentially exceeding that posed by climate change. This pervasive threat manifests through intricate physical and transition risks, impacting both systemic financial resilience and the stability of individual economic agents. These risks are further amplified by the deep and complex interconnections between biodiversity loss and climate change. However, a proactive engagement with and strategic investment in nature-positive solutions are not merely defensive measures; they represent substantial economic opportunities and crucial pathways to enhanced financial resilience. Financial stability is fundamentally defined as a state where the financial system—encompassing financial intermediaries, markets, and their underlying infrastructures—possesses the inherent capacity to absorb shocks and manage the unwinding of financial imbalances. This resilience is paramount, as it prevents severe disruptions in the financial intermediation process that could otherwise adversely impact real economic activity. A growing consensus among central banks and financial supervisors acknowledges that nature-related risks, particularly biodiversity loss, carry significant macroeconomic and financial stability implications. (Boldrini et al. 2023). This recognition stems from a deeper understanding that the degradation of nature has a direct impact on the broader economy and, by extension, the stability of financial systems. Risks from biodiversity loss are, similar to climate loss, both physical and transitional. Physical risks emerge from the direct disruption of essential business inputs, operational environments, or consumer demand, all stemming from biodiversity loss and ecosystem degradation Transition risks are financial losses that arise from the economic adjustments necessary to mitigate biodiversity loss and degradation  Financial institutions, including banks, asset managers, and insurers, play a pivotal role in the global economy by financing economic activities that can either sustain or alter the climate system and the biosphere. Their exposure to nature-related risks is primarily indirect, channelled through their investments, insurance policies, and loans to companies and households.

A growing body of work has begun to quantify these exposures at both a systemic and actor level. This has been enhanced by a growth in corporate level exposure metrics (See Giglio et al. 2023, He et al. 2024, Rao et al. 2024, and Wang et al. 2025) as well as efforts such as that of Iceberg Data Lab. Limited evidence on biodiversity risk and debt pricing has come from Becker et al. (2025) and Soylemezgil and Uzmanoglu (2024), and from. Hoepner et al. (2023) on CDS spreads. 

Research also has progressed at the system level. Work such as Van Toor et al. (2021) for the Netherlands, Calice et al. (2021) for Brazil, BNM (2022) for Malaysia, Freystätter et al. (2024) for Finland, Hadji-Lazaro et al. (2024) for France and Arlt et al. (2024) for the Euro-area have all demonstrated significant risks to financial systems from transition risk in particular. Kedward and Chenet (2023) provide an excellent summary of the then state of research. Giglio et al. (2023) provide survey evidence of investors concerns about imminent physical risk, while Ranger et al. (2024) note the high physical risk exposure of large UK banks. Finally, the recent report by the Network for Greening the Financial System (NGFS 2024) provides a systematic overview of the modelling complexities, emergent research and future challenges in linking biodiversity loss to financial markets.

 

This special issue, therefore calls for papers that address the broad topic of biodiversity risk and the financial system at both individual actor and systemic levels. Indicative topics include, but are not necessarily limited to

  • Mapping biodiversity risk at the financial system level
  • The role of biodiversity risk and exposure in corporate debt demand decisions
  • How, if, financial institutions and markets price corporate debt in the presence of biodiversity exposure
  • Incorporating biodiversity risk and exposure into financial instruments
  • Regulatory and voluntary measures around biodiversity risk and exposure at the corporate level and how these impact on corporate financial decision making
  • Biodiversity washing and biodiversity shifting in the presence of biodiversity-related financial instrument pricing.

Authors are encouraged to liaise with the guest editors if they are unsure of the scope of their paper.

 

Conference date: Spring 2026

Location: PBC School of Finance, Tsinghua University (TBC)

Manuscript submission to the Conference:

Papers for the special issue should first be presented at the 2026 Conference to be held in Spring 2026 in Beijing. Further details regarding the conference organization will be released in due course.

Manuscript Submission to the Journal: Selected papers presented at the conference will be invited to be submitted to the “Financial Markets, Institutions & Instruments” (FMII) at https://submission.wiley.com/submission/dashboard?siteName=FMII

Instructions for Manuscript Submission to the Journal

All submissions deemed suitable to be sent for peer review will be reviewed by at least two independent reviewers.

Once your manuscript is accepted, it will go into production and will be simultaneously published in the current regular issue and pulled into the online virtual Special Issue. Articles from this Special Issue may therefore appear in different regular issues of the journal, though they will be clearly marked and branded as Special Issue articles.

Please ensure you read the Guide for Authors before writing your manuscript.

https://onlinelibrary.wiley.com/page/journal/14680416/homepage/forauthors.html

The link to submit your manuscript is available on the Journal’s homepage at: https://onlinelibrary.wiley.com/journal/14680416

 

Keywords:

Biodiversity risk, financial market, corporate debt, financial instruments

 

Reference:

[1]    Arlt, Sophia and Berg, Tobias and Hut, Xander and Streitz, Daniel, A Biodiversity Stress Test of the Financial System (November 29, 2024). Available at SSRN: https://ssrn.com/abstract=5038769 or http://dx.doi.org/10.2139/ssrn.5038769

[2]    Becker, Annette, Francesca Erica Di Girolamo, and Caterina Rho (2025).  “Loan pricing and biodiversity exposure: Nature-related spillovers to the financial sector”. In: Research in International Business and Finance 75, p. 102724.

[3]    BNM, Bank Negara Malaysia. "An Exploration of Nature-Related Financial Risks in Malaysia." (2022).

[4]    Boldrini, S., Ceglar, A., Lelli, C., Parisi, L., & Heemskerk, I. (2023). Living in a world of disappearing nature: physical risk and the implications for financial stability (No. 333). ECB Occasional Paper.

[5]    Calice, P., Kalan, F. D., & Miguel, F. (2021). Nature-related financial risks in Brazil. Policy Research Working Papers.

[6]    Freystätter, H., Kauko, K., Kärkkäinen, S., & Määttä, I. (2024). Climate change and biodiversity loss as systemic threats to financial stability in Finland. Bank of Finland bulletin  2024 https://publications.bof.fi/handle/10024/53891

[7]    Giglio, S., Kuchler, T., Stroebel, J., & Zeng, X. (2023). Biodiversity risk (No. w31137). National bureau of economic research.

[8]    Hadji-Lazaro, Paul, Mathilde Salin, Romain Svartzman, Etienne Espagne, Julien Gauthey, Joshua Berger, Julien Calas, Antoine Godin, and Antoine Vallier. "Biodiversity loss and financial stability as a new frontier for central banks: An exploration for France." Ecological Economics 223 (2024): 108246.

[9]    He, Feng; Chen, Longxuan; Lucey, Brian M; 2024   Chinese corporate biodiversity exposure Finance Research Letters, 70, 106275

[10] Hoepner, Andreas G. F. and Klausmann, Johannes and Leippold, Markus and Rillaerts, Jordy, Beyond Climate: The Impact of Biodiversity, Water, and Pollution on the CDS Term Structure (February 8, 2023). Available at SSRN: https://ssrn.com/abstract=4351633 or http://dx.doi.org/10.2139/ssrn.4351633

[11] Kedward, K., Ryan-Collins, J., & Chenet, H. (2023). Biodiversity loss and climate change interactions: financial stability implications for central banks and financial supervisors. Climate Policy, 23(6), 763-781.

[12] NGFS 2024 Central banking and supervision in the biosphere: An agenda for action on biodiversity loss, financial risk and system stability  https://www.ngfs.net/en/publications-and-statistics/publications/central-banking-and-supervision-biosphere-agenda-action-biodiversity-loss-financial-risk-and-system

[13] Ranger, Nicola, Tom Oliver, Jimena Alvarez, Stefano Battiston, Sebastian Bekker, Helen Killick, Ian Hurst et al. "Assessing the materiality of nature-related financial risks for the UK." (2024). https://nora.nerc.ac.uk/id/eprint/537627/

[14] Rao, Amar; Lucey, Brian M; Kumar, Satish;  2024 Corporate Biodiversity Risk and Concern: Evidence from Indian Firms and Industry-Level Insights    Available at SSRN 4986392             

[15] Soylemezgil, Sevgi and Cihan Uzmanoglu (2024). “Biodiversity risk in the corporate bond market”. In: Available at SSRN 4721219  

[16] Van Toor, J., Piljic, D., & Schellekens, G. (2020). Indebted to nature exploring biodiversity risks for the Dutch financial sector [online]. DeNederlandsche Bank. https://www.dnb.nl/media/4c3fqawd/indebted-to-nature.pdf

[17] Wang, Yueyang; Lei, Lanxin; Xing, Zixiao; Lucey, Brian M; Wang, Yizhi;  2025 Biodiversity at Risk: How Managerial Myopia and Incentives Shape UK Corporate Environmental Strategies        Available at SSRN 5151470