A bird’s-eye view: firm biodiversity footprints and earnings expectations

Abstract

Using bird-watching data matched to U.S. industrial facilities, I show that firms causally reduce bird populationsand species. I use these estimates to construct a firm-level biodiversity footprint index that identifies firms withmany ecologically consequential facilities relative to their size. Sorting on the footprint generates significant abnormal returns among small- and mid-cap firms from 1988 to 2024. The return premium reflects forecast errors: investors misinterpret the higher production costs of high-footprint firms as operational decline, and their pessimism corrects when earnings are announced. Although firms’ facility locations are public, firms with larger biodiversity footprints provide less voluntary biodiversity information.

The host at the School of Economics and Business Igor Lončarski PhD.

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