Regulatory concerns of biodiversity conservation prompt creditors to markdown firms surrounded by rich wildlife species: Combining a proximity-based biological diversity endowment (BDE) measure with an exogenous shock to regulatory enforcement, we show that high-BDE firms experience a sharp rise in bond spreads and suffer with less bond (re-)issuance after the shock. Geospatial and thermal evidence indicates that high- BDE firms experience more post-event curbs on business operations. They also experience a larger deterioration in firm fundamentals, confirming the transition risk channel. Finally, high-BDE firms’ transition cost is magnified by local regulatory intensity, but is not mitigated by their prior ESG performance.