This thesis aims to study how firms’ environmental strategies are shaped with a focus on board directors. For this study, I compile the Database on Director Network, Toxic Releases and Political Activities and use toxic releases from the US Environmental Protection Agency (EPA)’s Toxics Release Inventory (TRI) Program as the key environmental performance indicator. By using the database compiled, I first study how director networks are formed. My findings show that firms are likely to appoint influential directors with good environmental performances. Further, directors with environmental characteristics
similar to the other board members or their firm are more likely to be chosen as board members. I also show that boards of directors with good environmental performances or in which directors have diverse environmental performance backgrounds will improve firms’ environmental quality.

Then I examine the effect of political ideology in shaping firms’ environmental strategies. My results show that although political ideology is less significant in determining a firm’s environmental strategy than board directors’ previous environmental performance records, Republican-leaning firms have poorer environmental performances. To address the endogenous concerns, I also follow a similar approach to study network formation with the inclusion of politics-related measures and find firms also tend to appoint directors who
share similar political ideologies. These findings help to explain the political polarization in the private sector from a network formation aspect and provide further evidence of the role of political ideology in shaping environmental strategies.