The role of socially responsible investors in environmental performance. An analysis of proactive and reactive practices

Society's concern for the environment requires a response from businesses. In recent years in Europe, several policies have been institutionally promoted to encourage socially responsible investments (SRI) at the corporate level, in terms of corporate environmental performance and disclosure, and at the level of capital markets. Investors are called to consider the environmental effects of their investments and can influence the environmental practices of companies. The research proposes that the volume, stability, and value of socially responsible investors (SRIs) could be determinant in companies' adoption of environmental measures. From a sample comprising 406 observations of European companies listed on the Dow Jones Sustainability Europe Index during a period of economic stability from 2015 to 2019, the extent to which stable and significant SRI determines companies' adoption of environmental practices, both reactive-leading to reduction of the environmental footprint and effect-and proactive-tending to achieve clean energy and the recovery of the environment is studied.The results show that the value and stability of SRI positively affects companies' proactive environmental practices, while the volume of SRI is negatively related to reactive environmental practices. In addition, the volatility of SRI is positively related to reactive environmental practices.The impact of SRI on proactive and reactive environmental practices shows their decisive role in companies taking proactive measures. At a time when European companies are required to strengthen their environmental commitments, the promotion of institutional practices that stimulate the presence and stability of SRI can favour the development of proactive practices, as opposed to reactive ones that could be an indirect indicator of a company's environmental risk.