Which environment variable contains a list of directories that is searched for commands to execute

The PATH Environment variable

Explanation:

In computing, an environment variable refers an "object" that is dynamic and holds a value that is editable. This value is used by software programs running on the operating system to know what directories to; install files, find profiles of users, store temp files etc.

The PATH environment variable specifically handles the list of directories where executable programs can be found and it is useful as a security tool as well because every executing program or a session for a user will have its own unique PATH setting.