Biodiversity and animal testing in listed companies. Empirical evidence from European listed large-sized companies

In the last decade, accounting for biodiversity has been variously defined by some scholars and it is largely explored in different topics (Gray, 1992; Jones, 1996; 2010; Jones and Matthews, 2000; Jones and Solomon, 2013; Atkins et al., 2014; Bebbington et al., 2019). Its evolution in accounting for extinction species is becoming a relevant field for preserving biodiversity and species (Atkins and Atkins, 2016; Atkins and Maroun, 2018; Maroun and Atkins, 2018; Atkins et al., 2018). Conceptual and empirical papers about biodiversity and accounting extinction species have been carried out by some scholars (Adler et al., 2018; Husin et al., 2018; Adler et al., 2017; Olivier, 2016; Rimmel and Jonall, 2013; van Liempd and Busch, 2013) but there is a need to explore in-depth this topic in a large geographical context through quantitative analysis (Hassan et al., 2019). Some interesting studies focused on specific species and their influence on business activities (Atkins and Atkins, 2016) and on extinction risks in several countries (Atkins and Atkins, 2018) by highlighting an increasing interest and an urgent demand to recognize and measure disclosures and policies carried out by large companies (Hassen et al., 2019). Although the strong pressure exerted by Agenda 2030 and the 17 SDGs in all countries in the world, the European Union is revealing a huge interest in nonfinancial reporting and ESG disclosure by issuing the first mandatory disclosure on these topics for large companies through the implementation of the European Directive 95/2014 (Doni et al., 2019). Moreover, recently a Technical Expert Group (TEG) on Sustainable Finance is working to facilitate sustainable investment by publishing (June 2019) a technical report on EU Taxonomy to evaluate substantial contribution to climate change and environmental issues by companies (https://ec.europa.eu/info/publications/sustainable-finance-teg-taxonomy_en). Given the lack of empirical studies on this topic in the European context, we intend to probe whether and to what extent biodiversity is a relevant topic for a sample of European listed companies. In other words, our research question aims to investigate how biodiversity and extinction accounting might affect financial performance of large-sized companies. In particular, we opted for the large-sized capitalisation companies included in STOXX® Europe Large 200. Such index covers the following countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. We collected just secondary data mined from ASSET4, with respect to ESG information, and Factset, for accounting-based information. Our analysis covers a period from 2010 to 2016. The key independent variables are the disclosure and the processes put in place for biodiversity impact reduction, the reporting of initiatives brought forward for restoring or protecting native ecosystems, the direct or indirect firm’s involvement in animal testing, the taking up of animal testing guidelines, and the promotion of programs to reduce, phase out or substitute for animal testing.