Expanding horizons, shrinking habitats: Firm scope and biodiversity risk

Biodiversity risk represents a pressing global challenge with far-reaching consequences for ecosystems, economic stability, and corporate sustainability. This study explores the link between firm scope—the breadth of related product markets a firm engages in—and biodiversity risk, leveraging a comprehensive dataset of U.S. publicly listed firms. Our findings reveal a significant positive relationship between firm scope and biodiversity risk, indicating that firms operating across broader product markets face greater ecological vulnerabilities. However, this relationship weakens in firms with strong corporate culture and high operational efficiency, while it intensifies in environmentally sensitive industries and those with greater analyst coverage. These findings enrich the literature by highlighting how corporate diversification strategies can exacerbate ecological risks. The study provides practical implications for managers and policymakers, underscoring the urgency of embedding environmental considerations into strategic planning to mitigate biodiversity risks.