<p>Despite extensive literature on the diffusion of positive practices through director interlocks, research on inhibitory learning in the context of environmental issues remains limited. To address this gap, we examine how focal firms respond to environmental penalties imposed on their interlocking firms by integrating cost-benefit assessment and salience theory. Using data of director interlocks and environmental penalties from Chinese listed firms, we find that such penalties significantly reduce environmental misconduct in focal firms, with stronger effects when directors possess information advantages or environmental working experiences. Specifically, firms enhance environmental protection measures and corporate governance after receiving penalty-related information, as reflected in increased environmental investments, more attention to environmental issues, improved environmental management practices, reduced pollution emissions and the heightened diligence of directors. Our study highlights the inhibitory effect of environmental penalty information transmitted through director interlocks, emphasizing the critical role of directors in strengthening corporate environmental governance.</p>