Amid the increasing number of sustainability initiatives and their growing relevance in the financial sector, investors and policymakers are paying closer attention to how markets respond to sustainability – related frameworks. While environmental, social, and governance (ESG) factors have gained traction in financial decision-making, nature-related risks, including those linked to biodiversity loss and ecosystem degradation, are relatively unexplored yet. In this context, this study investigates the stock market reaction to firms’ announcements of their adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) framework. TNFD provides a framework that aims to help firms to assess and disclose their exposure to nature-related financial risks. Employing the Event Study methodology, this study assesses the impact of TNFD adoption announcements on the valuation of 268 firms across different jurisdictions through the assessment of their Cumulative Abnormal Returns (CARs). The findings revealed relatively muted stock market reaction, with CARs exhibiting, at most, weak negative significance. The results suggest that nature-related concerns are not integrated yet in market valuations. The results contribute to the broader debate on the significance of nature-related risks in financial markets. The obtained results show that the impact of adoption of nature-related disclosure frameworks on stock prices is still limited.
Nel contesto dell’aumento delle iniziative di sostenibilità e della loro crescente rilevanza nel settore finanziario, investitori e policymaker stanno prestando sempre maggiore attenzione alla reazione dei mercati ai framework legati alla sostenibilità. Sebbene i fattori ambientali, sociali e di governance (ESG) abbiano acquisito un ruolo centrale nei processi decisionali finanziari, i rischi legati alla natura, inclusi quelli connessi alla perdita di biodiversità e al degrado degli ecosistemi, rimangono ancora relativamente inesplorati. In questo contesto, il presente studio analizza la reazione del mercato azionario agli annunci delle imprese riguardanti l’adozione del framework della Taskforce on Nature-related Financial Disclosures (TNFD). Il TNFD fornisce un quadro di riferimento volto ad aiutare le imprese nella valutazione e nella divulgazione della loro esposizione ai rischi finanziari legati alla natura. Attraverso l’applicazione della metodologia dell’Event Study, questo studio esamina l’impatto degli annunci di adozione del TNFD sulla valutazione di 268 imprese operanti in diverse giurisdizioni, analizzando i loro Rendimenti Anomali Cumulati (CARs). I risultati evidenziano una reazione relativamente attenuata del mercato azionario, con CARs che mostrano, al massimo, una debole significatività negativa. Questi risultati suggeriscono che i rischi legati alla natura non sono ancora integrati nelle valutazioni di mercato. Il presente studio contribuisce al dibattito più ampio sull’importanza dei rischi legati alla natura nei mercati finanziari, evidenziando come l’impatto dell’adozione di framework di disclosure su tali tematiche sui prezzi azionari sia ancora limitato.
Market reaction to TNFD disclosure: an event study
MUKANOVA, AISARA
2024/2025
Abstract
Amid the increasing number of sustainability initiatives and their growing relevance in the financial sector, investors and policymakers are paying closer attention to how markets respond to sustainability – related frameworks. While environmental, social, and governance (ESG) factors have gained traction in financial decision-making, nature-related risks, including those linked to biodiversity loss and ecosystem degradation, are relatively unexplored yet. In this context, this study investigates the stock market reaction to firms’ announcements of their adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) framework. TNFD provides a framework that aims to help firms to assess and disclose their exposure to nature-related financial risks. Employing the Event Study methodology, this study assesses the impact of TNFD adoption announcements on the valuation of 268 firms across different jurisdictions through the assessment of their Cumulative Abnormal Returns (CARs). The findings revealed relatively muted stock market reaction, with CARs exhibiting, at most, weak negative significance. The results suggest that nature-related concerns are not integrated yet in market valuations. The results contribute to the broader debate on the significance of nature-related risks in financial markets. The obtained results show that the impact of adoption of nature-related disclosure frameworks on stock prices is still limited.File | Dimensione | Formato | |
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Market Reaction to TNFD disclosure- An Event Study.pdf
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https://hdl.handle.net/10589/235304