Corporate Role in Pakistan's Natural Capital: Drivers, Barriers, and Models for Private Sector Investment in Biodiversity through Hierarchical Regression.

https://doi.org/10.5281/zenodo.19338162

Abstract

The paper examines the drivers of investment in biodiversity protection by corporations in a country like Pakistan, whose economy is severely reliant on its rapidly deteriorating natural capital. Based on the integration of natural capital, stakeholder, and institutional theories, this paper modeled a modified mediated effect with external drivers like institutional drivers, market drivers, and physical risk drivers affecting investment, wherein the mediational effect is absorptive capacity, and this model is modified by its interplay with perceived policy quality. Based on primary data collected through surveys on 300 enterprises and other secondary data, this paper used hierarchical regression and path analysis. The paper finds institutional drivers, market drivers, and physical risk drivers to be strong predictors, but absorptive capacity acts as the strongest direct driver. Most importantly, absorptive capacity strongly mediates every external driver and further enhances the role of pressures from institutions. Moreover, perceived policy quality further weakens the pressure of markets for better investment accruals. The model accounts for 63% of the variation in biodiversity investment made by businesses. Results show that non-performance in external pressure but in internal capacity to absorb it in an unpredictable policy environment is the major challenge. The conclusion implies that private finance mobilization for nature-positive investment in the transitional period of climate change calls for a two-fold approach of stronger in-house ESG structuring in businesses and an incentivized policy system lining up proper returns for businesses to stem private finance for environmental conservation in Pakistan.