Do sustainable institutional investors contribute to firms’ environmental performance? Empirical evidence from Europe

Abstract In light of current climate change discussions, this paper analyzes the effect ownership structure on a firm’s environmental performance with subsequent focus corporate emission reduction. Based cross-national European sample consisting 7384 firm-year observations between 2008 and 2017, study explores relationship sustainable institutional investors performance. line prior research embedded in an agency theoretical framework, nature may act as stimulating driver towards green business practices. Sustainable are defined based their signatory status to UN Principles for Responsible Investment (long-term) investment horizons. The first classification stems from content-driven sustainability perspective, while second is derived temporal sustainability. results indicate that positively associated Further investigations reveal investor also firms’ willingness respond Carbon Disclosure Project. These higher carbon-risk awareness firms greater ownership. Our significantly contributes empirical offers useful practical implications. It focusses still-underdeveloped area, namely organizations relationships natural environment, including equity greener practices level.