Managing nature’s challenges: how biodiversity concerns drive ESG performance

Purpose This study investigates whether and how management biodiversity concern (MBC) influences corporate ESG performance. Using Chinese A-share listed firms from 2010 to 2023, it examines the role of managerial cognition in translating biodiversity-related risks into sustainability outcomes. Drawing on risk governance and managerial cognition theories, the study aims to identify the internal mechanisms—particularly green governance practices—through which MBC affects ESG performance, and to assess whether external regulatory and public pressures condition this relationship. Design/methodology/approach This study employs a firm-year panel of Chinese A-share listed companies from 2010 to 2023. Management biodiversity concern (MBC) is constructed using textual analysis of MD&A disclosures based on Word2Vec and sentiment–risk lexicons. ESG performance is measured using CNRDS ESG ratings, with alternative ESG datasets for robustness. Fixed-effects panel regressions are applied, complemented by instrumental variable estimation, propensity score matching, and double machine learning to address endogeneity. Mechanism tests examine green governance channels, while heterogeneity analyses assess the moderating roles of regulatory and public pressures. Findings The results show that management biodiversity concern (MBC) has a significant and positive effect on corporate ESG performance. This relationship remains robust across alternative ESG measures, model specifications, and multiple endogeneity controls, including instrumental variables, propensity score matching, and double machine learning. Mechanism analyses indicate that MBC improves ESG performance primarily through enhanced green governance, reflected in higher green investment and stronger green supply chain management. Heterogeneity analyses reveal that the effect is stronger under greater regulatory and public pressure. Dimension-level results show the strongest impact on environmental scores, with weaker effects on social and governance dimensions. Originality/value This study contributes to the literature by shifting the focus from biodiversity outcomes and disclosure to managerial cognition, introducing management biodiversity concern as a novel firm-level construct. It provides one of the first systematic examinations of how biodiversity-related managerial perceptions translate into ESG performance through green governance mechanisms. By integrating risk governance and managerial cognition theories and employing advanced causal identification strategies, the study offers new evidence on the economic consequences of biodiversity risk. The findings enrich ESG and sustainable finance research by highlighting biodiversity as a distinct and value-relevant dimension of corporate environmental risk beyond climate change.