Biodiversity risk and firms’ access to trade credit

Abstract

This study examines the relationship between firm-level exposure to biodiversity risk and access to supplier financing. We find that firms’ access to trade credit decreases significantly with increased firm-level exposure to biodiversity risk. Mechanism test shows that reduced operating performance is the primary channel through which biodiversity risk affects access to trade credit. This effect is more pronounced among firms with low market power, those in industries with higher exposure to biodiversity risk, and those with weak corporate culture or low product innovation. Moreover, we find that firms highly exposed to biodiversity risk that receive less trade credit from suppliers tend to extend less trade credit to their customers. Given the growing attention to biodiversity risk, our findings offer important implications for both policymakers and corporate decision-makers seeking to understand and manage the broader financial and operating consequences of biodiversity risk.