Financial markets and sustainability: how biodiversity affects investment

Biodiversity, widely recognized for its role in environmental sustainability, remains an understudied topic in the context of the stock market. Using a combination of fixed regression models and random forest techniques, the research shows that biodiversity is a significant determinant of stock returns. This finding underscores the financial importance of integrating biodiversity into corporate strategies and decisions by providing valuable insights for investors, regulators, and companies interested in aligning their financial strategies with environmental sustainability goals.