RT Journal Article
T1 Bridging the ESG Credibility Gap: The Role of Institutional Investors in Mitigating ESG Decoupling
A1 Cepêda, Catarina
A1 Monteiro, Albertina Paula
A1 Aibar Guzmán, Beatriz
K1 Agency theory
K1 Corporate governance
K1 ESG decoupling
K1 Institutional investors
K1 Investment horizon
K1 Sustainability disclosure
AB Because of their capacity for sustained and informed monitoring, institutional investors are uniquely positioned to enhance corporate transparency and mitigate ESG decoupling, the gap between corporate sustainability rhetoric and reality. This study examines whether and under what circumstances institutional ownership contributes to aligning ESG disclosure with actual sustainability performance. Analysing an international sample of 3465 listed companies (13,488 firm-year observations) from 2009 to 2023, we find that institutional investors play a crucial role in reducing ESG decoupling. However, this effect depends on their investment horizon: long-term institutional investors mitigate ESG decoupling, whereas short-term institutional investors exacerbate it. These findings contribute to the corporate governance and sustainability literature by showing that institutional investors are not a homogeneous group and that their monitoring effectiveness varies depending on their investment horizon. From a practical perspective, our results highlight the need for regulatory initiatives that incentivise long-term institutional engagement and more stringent ESG reporting requirements to curb opportunistic disclosure practices.
PB Wiley
SN 1099-0836
YR 2025
FD 2025
LK https://hdl.handle.net/10347/43112
UL https://hdl.handle.net/10347/43112
LA eng
NO Cepêda, C., Monteiro, A. P., & Aibar‐Guzmán, B. (2025). Bridging the ESG Credibility Gap: The Role of Institutional Investors in Mitigating ESG Decoupling. Business Strategy and the Environment. https://doi.org/10.1002/BSE.4336
NO This work is financed by Portuguese national funds through FCT—Fundação para a Ciência e a Tecnologia, under the project UIDB/05422/2020.
DS Minerva
RD 22 abr 2026