How Investors Shape Corporate Waste Management: Insights from FNEGE Médias by Faten Lakhal

Institutional investors influence corporate environmental practices beyond financial performance. Their investment horizon affects how companies manage waste and engage in circular economy strategies.

Understanding how financial actors shape environmental outcomes provides a clearer view of the link between governance, regulation, and sustainable transformation.

A circular economy context shaping corporate responsibilities

Environmental sustainability has become a central concern for policymakers, companies, and investors worldwide. As economies move away from linear models based on production and disposal, the transition to a circular economy becomes increasingly important for achieving sustainable development goals.

Within this transformation, waste management emerges as a key operational and strategic issue. Companies remain the primary producers of industrial waste and face increasing regulatory and societal pressure to reduce their environmental footprint.

This shift redefines how organisations approach production, resource use, and long-term value creation.

Institutional investors as drivers of corporate behaviour

Institutional investors are often identified as influential actors in shaping corporate strategies. Previous research has established their role in financial performance and environmental practices. Their involvement extends to governance mechanisms, investment decisions, and strategic orientations.

However, their influence on corporate waste management has received limited attention. This research addresses that gap by examining whether institutional investors affect waste generation and whether this influence depends on their investment horizon.

To explore this question, the study analyses French listed companies over a ten-year period, from 2011 to 2021. It distinguishes between long-term and short-term institutional investors while integrating the regulatory context introduced by the French Energy Transition Law adopted in 2015.

Investment horizon and its impact on waste generation

The findings highlight a differentiated impact based on investor profiles.

Long-term institutional investors are associated with lower waste generation and increased recycling. Their approach aligns with strategies focused on long-term value creation, where environmental performance contributes to overall corporate sustainability.

In contrast, short-term institutional investors are linked to higher waste production. This pattern reflects investment strategies prioritising short-term financial returns, where environmental considerations may receive less attention.

These results underline the importance of investment horizons in shaping corporate environmental practices. Waste management appears not only as an operational issue but also as a reflection of broader financial and governance dynamics.

Regulation and investor pressure: a combined effect

The study also shows that the influence of long-term investors has strengthened since the implementation of the 2015 Energy Transition Law. This interaction between regulation and investor behaviour suggests a complementary dynamic.

Regulatory frameworks create constraints and incentives, while long-term investors reinforce these mechanisms through their expectations and governance influence. This combined effect contributes to more consistent integration of environmental practices within corporate strategies.

The impact is particularly visible in companies with strong environmental performance, high-quality corporate governance, and operations in environmentally sensitive industries. In these contexts, investor pressure and regulatory requirements converge, leading to more structured waste management practices.

Managerial and policy implications

From a managerial perspective, waste management can be considered as part of long-term value creation rather than a compliance requirement. The presence of long-term institutional investors supports decisions involving investments in waste reduction and circular economy practices, even when financial returns are not immediate.

From a policy perspective, encouraging long-term investment strategies may strengthen the effectiveness of environmental regulations. Aligning financial incentives with sustainability objectives can accelerate the transition toward more sustainable production models.

Research, finance, and sustainability at EMLV

This work contributes to ongoing discussions on sustainable finance and corporate governance, areas that are integrated into the Programme Grande École’s – Master in Management academic approach.

The programme combines management, technology, and societal perspectives to prepare graduates to analyse complex transformations and support organisational transitions.

Research conducted by EMLV faculty reflects these evolving challenges, linking financial decision-making with environmental and societal impact.

Learn more about EMLV’s research strategy