From Words to Impact: Building the Biodiversity Concern Index with Semantic Brand Score

Abstract

This study investigates how corporate narratives on biodiversity influence firm valuation using the Semantic Brand Score (SBS) framework. To address the rising importance of biodiversity in sustainability, the research introduces the SBS-BioConcern Index, a multidimensional metric assessing the prevalence, diversity, and connectivity of biodiversity-related terms in corporate disclosures. Analyzing annual reports from 500 Indian companies (2015-2024), the SBS-BioConcern Index outperforms traditional keyword-based metrics by capturing both breadth and contextual relevance of biodiversity communication.Findings reveal an upward trend in SBS-BioConcern scores since 2020, driven by global sustainability goals and regulatory pressures. Sectors like Energy, Technology, and Mining exhibit high biodiversity emphasis, while Media and Healthcare lag. Econometric analysis shows a significant positive relationship between the SBS-BioConcern Index and key valuation metrics-enterprise value and net profit margin-indicating financial gains from biodiversity integration. This study provides a robust framework for assessing biodiversity communication, emphasizing its dual role in advancing ecological preservation and enhancing profitability. Policymakers, investors, and corporate leaders can use the SBS-BioConcern Index to position biodiversity as a strategic priority. Future research could expand this approach to other regions, enriching the understanding of biodiversity's influence on corporate strategies and market outcomes.

Keywords: Biodiversity, Bio-concern, Biodiversity Risk, Firm Valuation, Semantic Brand Score JEL Codes: Q57, G32