Does Institutional Ownership Structure Reduce Greenhouse Gas Emissions? An In‐Depth Study of Corporations Social Responsibility of European‐Listed Firms

ABSTRACT Motivated by the growing attention and concerns surrounding climate change and the potential role of institutional investors' ownership concentration (OC) in reducing corporations' greenhouse gas (GHG) emissions, this article explores the relationship between various forms of institutional ownership and firms' GHG emission intensity. To do so, the authors employ an extensive dataset of 628 European‐listed corporations with observations from 2015 to 2022. This manuscript method consists of linear regression models. This study's empirical results underline the positive and significant effect financial institutions, pension funds, governments, and foreign institutional investors' OC have on companies' GHG emissions. On the other hand, the regression models present empirical evidence suggesting a negative and significant effect between cross holdings OC and firms' GHG emissions. Finally, the authors identify a negative and non‐significant relationship between “other” institutional investors and organizations' GHG emissions. These findings are robust since the authors have conducted several regression analyses with different approaches and have addressed potential endogeneity bias. The present article makes significant contributions to the scholarly literature and regulatory practice underlying the active role corporate governance and institutional investors have in supporting a carbon‐neutral future.