Long‐Term‐Oriented Institutional Directors and Corporate Environmental Engagement

ABSTRACT We investigate whether and how the representation of institutional investors on boards influences environmental practices. The findings reveal a positive correlation between the presence of institutional directors and renewable energy use. Further analysis reveals that institutional directors committed to long‐term goals primarily drive this relationship, rather than those focused on short‐term results. The study also examines how internal and external organizational factors influence the effectiveness of monitoring by long‐term‐oriented directors. The results suggest that directors monitor more effectively in settings where local communities and corporate governance prioritize long‐term strategies. Moreover, our analysis indicates that long‐term institutional directors contribute to environmental initiatives in ways that align with their influence on corporate environmental reporting. These findings support social movement theory by showing that social initiatives can motivate firms to adopt more responsible practices and foster an environment that values long‐term information.