Essays on the Determinants and Consequences of Corporate Biodiversity Disclosure

Corporate biodiversity disclosure (BD) is an increasingly important aspect of sustainability reporting, reflecting the growing recognition of biodiversity loss as a material global risk. Yet, BD remains under-researched compared to other environmental disclosures, such as carbon emissions, and lacks standardisation in reporting practices. This thesis addresses these gaps through three interconnected papers examining the extent and quality of BD in UK-listed firms, the influence of corporate governance on BD, and the economic consequences of biodiversity transparency on firm market performance (FMP).

The first paper develops a Biodiversity Disclosure Index (BDI) measuring both the quantity (BDQT) and quality (BDQL) of BD across FTSE All-Share companies. Aligned with frameworks such as the Global Reporting Initiative (GRI) and the Sustainable Development Goals (SDGs), the BDI offers a structured tool for evaluating biodiversity performance. Results reveal that BDQT is more prevalent, while BDQL remains limited, especially in sectors with lower biodiversity exposure, highlighting the need for more consistent and robust frameworks encouraging both breadth and depth in reporting.

Building on this, the second paper examines how board diversity (DOB), both demographic (BDD) and structural (BSD), shapes BD in UK firms. While governance is a known driver of sustainability, the specific role of board diversity in BD remains underexplored. Adopting a multidimensional approach, this study finds BDD significantly enhances BDQL in biodiversity-intensive sectors, supporting Resource Dependence Theory (RDT) and Upper Echelons Theory (UET). BSD, framed through Stakeholder-Agency Theory, has a more complex effect: although it enhances oversight, it may also introduce rigidity that limits deeper engagement. These findings underscore the need to balance governance control with cognitive and experiential diversity at board level.

The third paper explores the economic consequences of BD using Buy-and-Hold Abnormal Returns (BHAR) to assess its impact on FMP. While environmental reporting has well documented financial links, biodiversity-related impacts are less understood. This study finds that BDQT improves short-term FMP by reinforcing legitimacy and stakeholder trust—aligning with the legitimacy dimension of Stakeholder-Agency Theory. However, this effect fades over time unless supported by substantive content. BDQL, though costly in the short term, yields long-term gains through risk mitigation and operational resilience. These dynamics reflect the strategic trade-off between symbolic compliance and meaningful biodiversity engagement.

This thesis offers critical implications for stakeholders. Policymakers are encouraged to move beyond voluntary frameworks and adopt enforceable standards enhancing both quantity and quality of BD. Corporate managers are advised to leverage demographic diversity and disclose comprehensively to build trust and resilience. For investors, especially those focused on sustainability, assessing both the depth and scope of BD is essential, as high-quality disclosures, despite their cost, signal long-term strategic orientation and stronger risk management. Future research could expand these findings through cross-sectoral and crosscountry analyses to better understand institutional and cultural drivers of biodiversity transparency.