Journal of Business Ethics

, Volume 123, Issue 4, pp 687–706

Strategic Leadership of Corporate Sustainability

Authors

Article

DOI: 10.1007/s10551-013-2017-3

Cite this article as:
Strand, R. J Bus Ethics (2014) 123: 687. doi:10.1007/s10551-013-2017-3

Abstract

Strategic leadership and corporate sustainability have recently come together in conspicuously explicit fashion through the emergence of top management team (TMT) positions with dedicated corporate sustainability responsibilities. These TMT positions, commonly referred to as “Chief Sustainability Officers,” have found their way into the upper echelons of many of the world’s largest corporations alongside more traditional TMT positions including the CEO and CFO. We explore this phenomenon and consider the following two questions: Why are corporate sustainability positions being installed to the TMT?What effects do corporate sustainability TMT positions have at their organizations? We consider these questions through strategic leadership and neoinstitutional theoretical frameworks. Through the latter, we also engage with Weberian considerations of bureaucracy. We find that the reasons why corporate sustainability TMT positions are installed can be in response to a crisis at the corporation for which its legitimacy is challenged. We also find the corporate sustainability TMT position can be installed proactively in an effort to realize external opportunities that may have otherwise gone unrealized without concerted attention and coordination afforded by a strategic level position. Regarding effects, we determine the position can relate to the establishment of bureaucratic structures dedicated to corporate sustainability within the corporation through which formalized processes and key performance indicators to drive corporate sustainability performances are established. In the face of our finding that many corporate sustainability TMT positions are being removed despite having only relatively recently been introduced to their respective TMTs, we find that the successful implementation of bureaucratic machinery can help considerations to sustainability extend beyond the tenure of a corporate sustainability position within the TMT.

Keywords

Chief Sustainability OfficerStrategic LeadershipCorporate sustainabilityTop management team

Introduction

The study of strategic leadership focuses on the small group of executives with overall responsibility for an organization (Finkelstein et al. 2009). Traditionally referred to as “upper echelons theory” (Hambrick and Mason 1984; Hambrick 2007), the central thesis of strategic leadership is that a small group of people who occupy the positions at the top of an organization—the top management team (TMT)—have a significant effect on organizational outcomes. As such, the TMT has long been considered a worthy unit of research analysis (e.g., Finkelstein and Hambrick 1990; Wiersema and Bantel 1992; Smith et al. 1994; Hambrick et al. 1996; Carpenter et al. 2004). TMT researchers have traditionally focused attention on the demographics of the individuals who occupy the TMT positions but, more recently, have expanded focus to consider the positions that comprise the TMT (Menz 2012; Strand 2013; Menz and Scheef forthcoming). This new field of TMT scholarship represents a response to Hambrick (2007: 337) who articulated “I have long thought that there needs to be much more attention paid to the ‘structure’ of TMTs, to complement- and improve- our understanding of TMT composition and processes.”

Corporate sustainability refers to the integration of economic, environmental, and social considerations on the part of corporations (Dyllick and Hockerts 2002; van Marrewijk 2003) and is also commonly discussed in terms of the “triple bottom line” (Elkington 1997) in a nod toward framing the associated discussions in language familiar to corporations given dominant attention in corporate vernacular to the economic “bottom line” (i.e., profits). Thus, at its foundation, the concept of corporate sustainability involves corporations’ taking into consideration their environmental and social impacts in concert with their economic objectives. Therefore, corporate sustainability is closely related to the concepts of corporate social responsibility (CSR) (Carroll 1999; Dahlsrud 2008; European Commission 2011), corporate citizenship (Matten and Crane 2005), business ethics (Beauchamp et al. 2009; Crane and Matten 2010), stakeholder engagement (Freeman 1984; Freeman et al. 2010), and stewardship (Davis et al. 1997).

More recently, strategic leadership and corporate sustainability have come together in a conspicuously explicit fashion through the emergence of corporate sustainability TMT positions—often referred to as “Chief Sustainability Officers” (Gourji 2008; Just Good Business 2008; Rigby and Tager 2008; McNulty and Davis 2010; Balch 2011; Lubin and Etsy 2010; Weinreb Group 2011). The first comprehensive formal study of the presence of corporate sustainability TMT positions is that by Strand (2013) who identifies 46 position titles from within the TMTs of large Scandinavian and US corporations in which corporate sustainability or closely related expressions including CSR are explicitly stated. The identified suite of companies includes a number of well-known multinational corporations that spans across industry sectors including Avon Products, Ford Motor, H&M, J.P. Morgan & Chase, Kellogg’s, Mattel, Monsanto, Nokia, and United Parcel Service (UPS). On average, the identified positions ranked amongst the ten highest posts at their respective corporations.  Given that each of the identified corporations employs tens of thousands of employees, these corporate sustainability positions reside within the top 0.1 % of the corporate hierarchies. In other words, corporate sustainability has explicitly achieved upper echelon status at a number of the world’s largest corporations.

In this article, we revisit the 46 TMT positions first identified in the original study by Strand (2013).  The original study was conducted in 2010 where we add data collected in 2012. This adds a longitudinal dimension to the original dataset whereby we highlight changes and offer additional insight about these relatively new TMT positions. As part of this, we conduct interviews with relevant TMT members at a subset of the identified corporations to additional information regarding the circumstances under which the positions were added to the TMT. These interviewees include individuals who occupy (or occupied) the TMT positions identified in the initial study, and a CEO who made the decisions to install the TMT position. We find that almost half of the positions identified in the original study were removed from their respective TMTs just two years later.  We also explore reasons for this. The TMT is notoriously described as a “black box” that is inherently difficult for researchers to achieve access (Pettigrew 1992, p. 164; Carpenter and Reilly 2006, p. 15; Arendt et al. 2005, p. 694; Hambrick 2007) where these offerings provide a further glimpse within this black box with respect to how TMTs engage with corporate sustainability at large corporations.

Our evidence from the TMT interviews is limited by the relatively small number of TMT respondents to whom we achieved access, and thus, we present this as an exploratory study through which we do not intend to make broad generalizations. We do, however, intend to add meaningful insights and propositions to our collective understanding of corporate sustainability engagement within the TMT and we suggest several avenues for further research. For example, whereas previous research on TMT turnover links the departure of individuals from the TMT as evidence of a downward spiral in organizational performance (Hambrick and D’Aveni 1992; Finkelstein et al. 2009, p. 234), we extend this to consider the removal TMT positions. We propose a finding that is unlike the findings from TMT studies focusing on individuals: the removal of the corporate sustainability position from the TMT does not necessarily represent failure. Rather, the removal could signal the successful embedding of corporate sustainability considerations across the organization to the point that a TMT level corporate sustainability position is no longer considered necessary. However, such assessment of failure or success cannot be made simply by a superficial exploratory study so throughout our discussion we emphasize further opportunities for more in-depth and longitudinal research to explore this.

In keeping with the exploratory nature of this study, we consider empirical evidence from a number of potentially relevant theoretical perspectives and frameworks. We draw primarily from neoinstitutional theory (DiMaggio and Powell 1983; Meyer and Rowan 1977) that includes legitimacy management (Suchman 1995). We also engage with Weberian considerations of bureaucracy (Weber 1958, 1978; Du Gay 2000). As previously emphasized, our primary focus is at all times on the TMT positions themselves—that is, the TMT “structure” (Hambrick 2007, p. 337; Menz 2012; Mintzberg 1979). This focus on positions enables us to more directly address our two research questions: Why are corporate sustainability positions being installed to the TMT?What effects do corporate sustainability TMT positions have on their organizations?

We structure the article as follows. The next section describes the methods employed to collect additional and more in-depth data on TMT positions, including a replication of the methods originally employed by Strand (2013) coupled with additional data collection from public sources in addition to interviews with a subset of relevant individuals associated with the TMT positions identified in the original study. We then discuss our findings through the various theoretical perspectives and frameworks while suggesting avenues for further research.

Methods

The methodology comprises three distinct steps that, in combination, provide the necessary data. Step A begins by replicating Strand’s (2013) original study. In Step B, we expand the dataset of TMT positions identified by collecting additional publicly available information from such sources as company web sites and press releases. Finally, in Step C, we perform a more in-depth investigation of the TMT positions and their effects by interviewing various relevant individuals, including those who occupy (or formerly occupied) the corporate sustainability TMT positions.

Step A: Initial Study Replication

Position titles represented within the TMT “can serve as an abstract” for the issues that the corporation deems strategically and/or symbolically significant worthy of explicit attention at any given time (Strand 2013, p. 722; see also Finkelstein et al. 2009, pp. 19–20; Green 1988; Strang and Baron 1990).  Therefore, TMT position titles “provide a useful resource for researchers” (Strand 2013, p. 722).  From a methodological standpoint, there is widespread agreement to describe the TMT as a “relatively small group of executives at the strategic apex of the organization” with “overall responsibility for the entire organization” (Finkelstein et al. 2009, p. 127; Mintzberg 1979, p. 24) but there is little to no consensus amongst researchers regarding an operational definition for identifying exactly which positions are considered part of the TMT (Finkelstein et al. 2009, pp. 127–128). The methodological steps developed by Strand (2013) were designed to serve as a means through which to more consistently identify TMT members and their respective position titles.

Consistent with the initial study, we use corporate web sites as the primary TMT data source supplemented with TMT information available through Thomson Reuters. Corporate websites represent an increasingly common repository for data collection (e.g., Tiessen 2004; Bryman and Bell 2007, p. 666; Capriottia and Morenob 2007; Tagesson et al. 2009). However, some corporate websites list so many individuals as part of their TMTs that it violates the spirit of the TMT as a “relatively small group.” Others include individuals affiliated with a subsidiary company or geographic region thereby violating the criterion of “overall responsibility for the entire organization.” Hence, for greater consistency across corporations we apply the following scoping and additional selection criteria described in Strand (2013).

First, corporate websites often display photographs or some other distinguishing factor to clearly designate a subset of TMT positions as a higher rank from others individuals listed. These distinguishing factors, if offered, are used as the initial scoping criteria. Next, position titles are used from which to perform a hierarchical sort from highest to lowest ranking. The order from highest to lowest is Chief Executive Officer (CEO), Vice Chair (VC), Chief Financial Officer (CFO), and then other chiefs (like Chief Operating Officer), Officer, President, Executive Vice President (EVP), Senior Vice President (SVP), Group Vice President (GVP), Vice President (VP), Director (but not on the Board of Directors), and Manager. Vice chairs are included only when that position is part of the management team (not only the Board of Directors). Position titles indicating responsibilities for an individual business division, individual product line, subsidiary company, or geographic region are sorted below titles that indicate responsibilities spanning the entire organization.

To better ensure the consistent application of scoping across corporations and to encourage an overall mean that is reasonably close to Certo et al. (2006) suggested mean of about eight individuals, we then apply the following preferred order for TMT size used in Strand (2013): 8, 7, 9, 6, 10, 11, 12, 5, 13, 14, 15, 16, 4, 17, 18, 3, 2, 1. For example, if a corporation lists two chiefs, two EVPs, three SVPs, and six VPs on its company web site without any additional distinguishers, the resultant possible TMT size combinations are 2, 4, 7, or 13. Of these possibilities, 7 is the most preferred TMT size, so chiefs, EVPs, and SVPs are also identified as TMT members.

After using this process to identify a suite of TMT positions for each corporation, we then identify the positions associated with corporate sustainability and related concepts like CSR based on the associated keywords identified in Strand (2013). This suite of keywords is sustainability, sustainable, CSR, corporate responsibility (CR), social responsibly, citizenship, ethics, stakeholder, triple bottom line, and stewardship. In this respect, this study treats corporate sustainability as an “umbrella construct” (Hirsch and Levin 1999, p. 200; Gond and Crane 2010, p. 680).

We then compare these keywords against the suite of all identified TMT position across the 46 corporations to identify those dedicated to corporate sustainability and closely related concepts. As in the initial study, the outcome is a database populated with relevant TMT information, as well as PDF files of TMT information from company web sites and the Thomson Reuters repository (via the Financial Times web site).

Step B: Additional Data from Public Sources

We collect additional data on both the positions and the individuals who occupy (or formerly occupied) these positions drawing from annual reports, company press releases, media articles, LinkedIn profiles, and US Senate testimony. In particular, as discussed in a later section, we document changes occurring at the 46 corporations between the 2012 and 2010 iterations.

Step C: In-Depth Investigation of the TMT Corporate Sustainability Positions Identified

As previously pointed out, the TMT is notoriously difficult to access methodologically. To meet this challenge, we combine theoretical sampling (Eisenhardt and Graebner 2007) with convenience sampling (Bryman and Bell 2007, pp. 197–199) to derive a subset of the corporate sustainability TMT positions to which we already have, or could readily gain, access. We fully acknowledge that convenience sampling can never be representative of the entire population but feel its use here is justified given the exploratory nature of the study, the difficulty accessing TMTs, and our goal of shedding additional light on the TMT phenomenon while opening avenues for further research. This combined sampling resulted in a subset of three large corporations from among the 46 included in the original study: Hennes and Mauritz (H&M), Storebrand, and Svenska Cellulosa (SCA).

All interviews were carried out at the corporate locations and performed in English. At both H&M and SCA, we performed semi-structured interviews (Bryman and Bell 2007, pp. 474–496) with the individuals who currently occupy the corporate sustainability TMT position. Each interview lasted aproximately one hour. We also exchanged emails before and after the interview. At Storebrand, we performed three individual semi-structured with the CEO who elected to install and ultimately remove the TMT position, the individual who occupied the TMT position for its entire duration, and the individual who formally assumed sustainability and CSR responsibilities after the dedicated TMT position was removed. Each intereview lasted between one and two hours. We remained in contact with all intervieweess to clarify discussion points and share quotes that we intended to use in this article.

Findings

Our discussion of findings is divided based on the two types of data: (i) the publicly available information collected from Steps A and B and (ii) the interviews conducted in Step C.

Findings from Step A and B

As of 2012, only 27 TMT positions remained out of the 46 TMT positions identified in the 2010 study. These are shown in Table 1 broken out by keywords of corporate sustainability and related expressions. As a matter of convenience, CSR and corporate responsibility are included together as CSR. Given that not all keywords were found within TMT position titles just four keywords are included within this table: sustainability, CSR, ethics, and stakeholder. The two ".5" positions refer to the one position of "Corporate EVP, Corporate Social Responsibility & Sustainability" at the US-based chemicals corporation Celanese. We classify this position as half sustainability and half CSR.1
Table 1

TMT positions by keyword

Keywords

2010

2012

2012 versus 2010 (%)

Sustainability

19.5

14

72

CSR

9.5

2

21

Ethics

16

10

63

Stakeholder

1

1

100

Total

46

27

59

Table 1 shows that 41 % of the TMT positions originally identified in 2010 have been removed by 2012. Table 2 reports the same data as in Table 1 expressed as ratios to the keyword “sustainability.” The changes in ratios between years do not represent statistically significant differences given the relatively small sample sizes..
Table 2

Ratios of keywords

Keywords

2010

2012

Sustainability

1.00

1.00

CSR

0.49

0.29

Ethics

0.82

0.71

Stakeholder

0.05

0.07

For additional information on these positions and any changes between 2010 and 2012, we draw on the additional data collected in Step A and Step B.

TMT Positions with the Keyword “Sustainability”

As Table 3 shows, by 2012, only 13 position titles associated with the keyword “sustainability” remain of the 19.5 positions identified in the original study.
Table 3

Corporate sustainability TMT positions

N

Corporation

Country

Industry

2010 Position title

2012 Position title

1

Albemarle

US

Chemicals

VP & Chief Sustainability Officer

same as 2010

2

Alpha Natural Resources

US

Mining

EVP & Chief Sustainability Officer

None

3

Boliden

SE

Mining

SVP, Human Resources & Sustainability

same as 2010

4

Cliffs Natural Resources

US

Industrial Metals & Mining

EVP, Legal, Government Affairs and Sustainability

EVP, Legal, Government Affairs and Sustainability & Chief Legal Officer

5

Covanta Holding

US

Electricity

SVP & Chief Sustainability Officer

SVP & Chief Sustainability Officer

6

Dow Chemical

US

Chemicals

EVP, Business Services, Chief Sustainability Officer, Chief Information Officer

Chief Sustainability Officer, Chief Information Officer, Business Services and EVP

7

Duke Energy

US

Gas, Water & Multiutilities

SVP & Chief Sustainability Officer

VP Sustainability & Chief Sustainability Officer

8

Ford Motor

US

Automobiles & Parts

Group VP, Sustainability, Environment & Safety Engineering

VP, Sustainability, Environment & Safety Engineering

9

Fortum

FI

Electricity

EVP, Corporate Relations & Sustainability

None

10

Kellogg’s

US

Food Producers

SVP, Global Nutrition, Corporate Affairs & Chief Sustainability Officer

None

11

Monsanto

US

Food Producers

EVP, Sustainability & Corporate Affairs

same as 2010

12

Neste Oil

FI

Oil & Gas Producers

SVP, Sustainability & HSSE

same as 2010

13

Newmont Mining

US

Mining

VP & Chief Sustainability Officer

EVP, Sustainability and External Affairs

14

PG&E

US

Electricity

VP, Corporate Environmental & Federal Affairs & Chief Sustainability Officer

None

15

ProLogis

US

Real Estate Investment Trusts

Chief Sustainability Officer

None

16

SKF

SE

Industrial Engineering

SVP, Human Resources & Sustainability

General Counsel and SVP, Group Legal & Sustainability

17

Smithfield Foods

US

Food Producers

SVP, Corporate Affairs & Chief Sustainability Officer

EVP, Chief Sustainability Officer

18

Svenska Cellulosa (SCA)

SE

Personal Goods

SVP, Corporate Sustainability

SVP, Corporate Sustainability; acting SVP, Corporate Communications

19

United Parcel Service (UPS)

US

Industrial Transportation

SVP, Supply Chain, Strategy, Engineering, & Sustainability

None

19½

Celanese

US

Chemicals

Corporate EVP, Corporate Social Responsibility & Sustainability

None

At both Alpha Resources and Fortum, the individuals who held corporate sustainability TMT positions in 2010 remained in their respective TMTs, but by 2012, neither their titles nor any other TMT position titles referred explicitly to corporate sustainability. Rather, the individual at Alpha Resources, Michael R. Peelish, held the TMT position of “EVP & Chief Sustainability Officer” in 2010 but by 2012 had become the “EVP, Chief Administrative Officer.” Similarly, at Fortum, Anne Brunila was “EVP, Corporate Relations & Sustainability” in 2010 and but “EVP, Corporate Relations and Strategy” by 2012. Nevertheless, a company press release in late 2012 indicates that despite the title change, she had maintained responsibilities for corporate sustainability, which were then expanded to include corporate strategic responsibilities:

Anne Brunila, who joined Fortum Corporation as Executive Vice President and member of the Management Team in September 2009, will leave her position on her own request. Her responsibility area has covered Corporate Communications, Corporate Relations and Sustainability and since 2012 also Corporate Strategy.

This press release also affords a glimpse into the future of TMT structures of corporate sustainability at Fortum as clarified by its CEO Tapio Kuula:

These changes give us the possibility to rethink our current organization structure and slightly reorganize the Management Team’s responsibility areas as follows. Corporate Strategy will be combined with Mergers and Acquisitions reporting to CFO Markus Rauramo, who will also take over the responsibility for the Sustainability function. Public Affairs and Corporate Relations will report to the President and CEO.

At Celanese, when Sandra Beach Lin, the “Corporate EVP, Corporate Social Responsibility & Sustainability,” departed the company to assume the role of CEO at the solar energy company Calisolar (Forbes 2012a), Celanese elected not to backfill the corporate sustainability TMT position.

Likewise, at UPS, when Bob Stoffel retired from his position as “SVP, Supply Chain, Strategy, Engineering, & Sustainability” effective January 2011 after 35 years of service with the company, his responsibilities for corporate sustainability were formally transferred to UPS’s COO, leaving no TMT position title that explicitly refers to corporate sustainability. UPS (2010) explained the reassignment of responsibilities in the following press release:

A member of UPS’s Management Committee since 2004, Stoffel currently serves as the senior vice president for supply chain, strategy, engineering and sustainability. His retirement takes effect on January 1, 2011. Stoffel’s responsibilities for supply chain, engineering and sustainability will be assumed by Chief Operating Officer David Abney. His responsibilities in the strategy arena have been assigned to Alan Gershenhorn, the senior vice president for worldwide sales and marketing.

“Bob Stoffel has served this company with distinction for his entire working career and we will miss his counsel and interaction in the day-to-day management of UPS,” said Chairman and CEO Scott Davis. “Bob has been a key leader in this company’s strategy development and transformation from a domestic package delivery company to a global logistics leader.” “He also has championed efforts to lessen UPS’s environmental impact and to create a more sustainable future for the company, its customers and the communities that we serve,” Davis continued. “UPS’s future is bright because of Bob Stoffel’s contributions”.

Unlike those at Celanese and UPS, however, the corporate sustainability TMT position at Duke Energy, Ford Motor, Newmont Mining, and SKF survived the transition between individuals. At Duke Energy, in 2010 Roberta B. Bowman held the position of “SVP & Chief Sustainability Officer,” which by 2012 had become the “VP & Chief Sustainability Officer” position held by Shawn D. Heath. Although Bowman left the company, she maintains an advisory role as Senior Advisor to the Chairman, Duke Energy on Xylem’s (2013) Water Advisory Board, where her bio reads as follows:

Ms. Bowman has more than 30 years of experience in the energy industry. She served as Senior Vice President and Chief Sustainability Officer for Duke Energy, creating the company’s first integrated sustainability plan to drive efficiency and competitive advantage by balancing environmental, economic and social issues.

At Ford Motor, in 2010, Susan M. Cischke was “Group VP, Sustainability, Environment & Safety Engineering,” but after retiring effective February 2012 after 35 years in the automotive industry, her corporate sustainability responsibilities were transferred to Robert Brown, who assumed the title “VP, Sustainability, Environment & Safety Engineering” reporting directly to Ford Motor’s CEO. The accompanying press release (Ford 2012) made the following comments on the transition:

“Sue is the very best example of someone who is committed to being part of the solution,” said Alan Mulally, Ford president and CEO. “Sue knows how to bring people together, find common ground and make progress on the world’s big issues, especially environmental sustainability, energy independence and economic development.”

Cischke was appointed to her current role in 2008 and she has served as the company’s top environment and safety officer since 2001. In this role, she has been responsible for establishing Ford’s long-range sustainability strategy and environmental policy and assuring that Ford meets or exceeds all safety and environmental regulations worldwide. She also has been responsible for establishing Ford’s long-term safety strategy, promoting aggressive standardization of product technology that delivers real world safety benefits. Cischke led the company’s participation in the effort to develop one national standard for fuel economy, resulting in industry-wide commitments to nearly double fuel efficiency by 2025. “Sue’s contributions to continuous improvement in the areas of environment and safety will pay off for years to come,” Mulally said. “Our company, our customers and our communities will benefit from her commitment to contribute to a better world.”

… In his new role, Brown, 56, will assume direct responsibility for the company’s environment and safety strategy, policy and performance. He will report to Alan Mulally. “Robert has the right combination of skills and experience to lead Ford forward in this very important area for our company and our stakeholders,” Mulally said. “Robert’s appointment ensures we will be positioned to continue our leadership in the areas of sustainability and safety, and demonstrates our continued strong commitment to working together with all our stakeholders to develop holistic solutions that contribute to a better world.”

At Newmont Mining, after former “VP & Chief Sustainability Officer” David A. Baker retired, Brian Hill became “EVP, Sustainability and External Affairs” as reported in the following press release from Newmont Mining (2011):

Brian Hill, Newmont’s Executive Vice President for Operations since 2008, will assume responsibility for environmental leadership and sustainability, social responsibility and community and government relations.

“Given the challenges and complexities facing our industry in jurisdictions around the globe, we need Brian’s proven leadership capability and deep operating and business experience to create competitive advantage for Newmont through our industry leading sustainability efforts,” said Mr. O’Brien. “Brian has been instrumental in driving high performance and consistent execution in our operations, as well as building an exceptional operations team.”

Baker now serves on the board of directors of Resolve (2013), where his bio refers to his role and responsibilities at Newmont Mining:

Mr. Baker served as Newmont’s first Chief Sustainability Officer where he had broad responsibility for developing and implementing Newmont’s global strategy for sustainability during an era of increasing stakeholder focus and expectations on corporate transparency, substantive community engagement and the broader issues around sustainability, value creation and shared value.

At SKF, in 2010, Eva Hansdotter held the position “SVP, Human Resources & Sustainability” but by 2012 had transitioned to the TMT position “SVP, Group People & Business Excellence.” The position of “General Counsel and SVP, Group Legal and Sustainability” was then filled by Carina Bergfelt, who in 2010 was already a TMT member with the position of General Counsel.

TMT Positions with the Keyword “CSR”

As of 2012, only 2 of the original 9.5 TMT positions associated with the related CSR concept remained (Table 4). As previously mentioned, Helena Helmersson’s position title at H&M had changed from CSR Manager to Sustainability Officer. At Storebrand, the individual in the “EVP, Corporate Responsibility” position, Elin Myrmel-Johansen, assumed the position of Director, Strategy Implementation, and her sustainability and CSR responsibilities were formally transferred to VP of Strategy Pål Petersen. Therefore, Storebrand no longer has a dedicated position related to corporate sustainability in its TMT. These transitions are explored in more depth in the discussion of the Step C interview data.
Table 4

Corporate social responsibility TMT positions

N

Corporation

Country

Industry

2010 Position title

2012 Position title

1

Avon Products Inc.

US

Personal Goods

SVP, Human Resources & Corporate Responsibility

None

2

Hennes & Mauritz AB

SE

General Retailers

CSR Manager

Sustainability Officer

3

ITT Corp

US

General Industrials

VP, Corporate Responsibility

None

4

J.P. Morgan Chase & Co

US

Banks

Head, Corporate Responsibility

None

5

Lundin Petroleum AB

SE

Oil & Gas Producers

VP, Corporate Responsibility

same as 2010

6

Mattel

US

Leisure Goods

SVP, Corporate Responsibility

None

7

Nokia Corp.

FI

Tech Hardware & Equipment

EVP, Corporate Relations & Responsibility

None

8

Sprint Nextel Corp.

US

Mobile Telecom

SVP, Corporate Communications & Corporate Social Responsibility

same as 2010

9

Storebrand ASA

NO

Life Insurance

EVP, Corporate Responsibility

None

Celanese

USS

Chemicals

Corporate EVP, Corporate Social Responsibility & Sustainability

None

At Avon Products, after “SVP, Human Resources & Corporate Responsibility” Lucien Alziari left the company to become “Head of Group Human Resources” at the Danish shipping giant Maersk (2012), his TMT position was not backfilled. Likewise, when ITT Corp separated into three independent publicly traded corporations in 2011, Ann D. Davidson, formerly “VP, Corporate Responsibility,” assumed the role of “Senior Vice President, Chief Legal Officer & Corporate Secretary” with ITT Exelis, and her original position was not backfilled at any of the three newly formed corporations.

At the US toy company Mattel, as of 2010, Geoff Massingberd held the position of “SVP, Corporate Responsibility” but in February 2011 transitioned into “Executive Vice President, International” leaving the TMT position dedicated to CSR at Mattel vacant. Instead, the responsibilities associated with his former position were formally transferred to a newly created TMT position, “Chief Operating Officer,” filled by Bryan Stockton. Mattel’s CEO Robert Eckert describes this transition during Mattel’s (2011) fourth quarter 2010 earnings call:

To set the stage for 2011, last month we announced the appointment of Bryan Stockton, Mattel’s former President of International, to the newly created position of Chief Operating Officer, which further aligns Mattel’s senior leadership team with the company’s global strategic priorities. Bryan now oversees the design, development, manufacturing, marketing and sales of all Mattel toys globally, such as Barbie, Hot Wheels, American Girl and Fisher-Price, as well as licensed entertainment properties, and the Mattel Digital Network. He is also responsible for the Operations and Corporate Responsibility functions.

The “SVP, Corporate Responsibility” position identified in 2010 had actually been created three years earlier in September 2007 in response to Mattel’s highly publicized product recalls of over 20 million toys because of safety concerns and associated child deaths (Garrahan 2007). As a result of these grave issues, Mattel’s CEO Robert Eckert was called to testify before a US Senate Committee on Appropriations (2007), at which time he announced the creation of a corporate responsibility organization headed by Massingberd and reporting directly to Eckert. His testimony at the hearings included the following statement:

Like many of you, I am a parent. I, like you, care deeply about the safety of children. And I, like you, am deeply disturbed and disappointed by recent events. As to lead paint on our products, our systems were circumvented, and our standards were violated. We were let down, and so we let you down. On behalf of MatteI and its nearly 30,000 employees, I apologize sincerely. I can’t change the past, but I can change the way we do things. And I already have. We are doing everything we can to prevent this from happening again….

… As I said at the outset of my testimony, these recent recalls have been a personal disappointment to me and, I am sure, to all of the thousands of men, women and parents who have always taken great pride in working at Mattel. As an industry leader, with some of the world’s best known and most trusted brands, we frequently help set new standards for the industry. We are by no means perfect. But we have tackled difficult issues before and demonstrated an ability to make change for the better, not only within our own company but for the broader industry. In this regard, we’ve created a new Corporate Responsibility organization reporting directly to me. The new organization adds an even greater level of accountability for adherence to the company’s safety and compliance protocols.

At Nokia (2008), the “EVP, Corporate Relations and Responsibility” position identified in 2010, which was assumed by former Finnish Prime Minister Esko Aho when he first joined Nokia in November 2008, is no longer part of the TMT. After holding the position for 3 years, Aho departed Nokia in May 2012 to assume a Senior Fellowship at the Mossavar-Rahmani Center for Business and Government at Harvard’s Kennedy School (Nokia 2012). As of 2012, no TMT position title exists at Nokia that includes any of the keywords in this study.

At J.P. Morgan Chase & Company, in January 2011, when William Daley left his 3-year post as “Head, Corporate Responsibility” to serve as Chief of Staff to US President Barack Obama in January 2011 (New York Times 2011), the company awarded the position to Peter L. Scher, one of 50 individuals listed on the company web site as Executive Committee members. Unlike Daley, however, Scher was not distinguished on the site as one of its select group of 14 highest ranked executives, which includes CEO James Dimon. As already explained in the methodology for Step A, a number as large as 50 violates the concept of TMT as a relatively small group, the rationale for applying a scoping method based on distinguishers from the company web sites. This J.P. Morgan example, therefore, represents the one instance in the replicated study in which a position title was present on the corporate website but excluded from identification in this study for methodological reasons of scoping.

TMT Positions with the Keyword “Ethics”

Of the 16 positions identified in 2010 as associated with the keyword “ethics,” only ten remained by 2012 (Table 5). One special case is that of FTI Consulting, where the position of "EVP, General Counsel, and Chief Ethics Officer" held in 2010 by Eric Miller had by 2012 been renamed to EVP, General Counsel, and Chief Risk Officer. As this includes no keywords relevant to the research, Miller’s post, although part of the TMT, was excluded from this follow-up study.
Table 5

Ethics TMT positions

N

Corporation

Country

Industry

2010 Position title

2012 Position title

1

AGL Resources

US

Gas, Water & Multiutilities

EVP, General Counsel & Chief Ethics & Compliance Officer

same as 2010

2

Allergan

US

Pharma & Biotech

EVP, Chief Administrative Officer, Secretary & Chief Ethics Officer

None

3

AOL

US

Software & Computer Services

SVP, Chief Ethics & Compliance Officer

None

4

Edison International

US

Electricity

VP & Chief Ethics & Compliance Officer

VP, Risk Management, Chief Ethics and Compliance Officer, and General Auditor

5

Eli Lilly

US

Pharma & Biotech

Chief Ethics & Compliance Officer & SVP, Enterprise Risk Management

same as 2010

6

FTI Consulting

US

Support Services

EVP, General Counsel, and Chief Ethics Officer

None

7

Halliburton

US

Oil Equip, Services & Distn

SVP, Chief Ethics & Compliance Officer

same as 2010

8

Lubrizol

US

Chemicals

Corporate VP, Global Risk Management & Chief Ethics Officer

Corporate VP & General Counsel, Chief Ethics Officer

9

Medtronic

US

Health Care Equipment & Services

VP, Global Chief Ethics & Compliance Officer

None

10

Navistar International

US

Industrial Engineering

SVP, General Counsel & Chief Ethics Officer

same as 2010

11

News Corporation

US

Media

SVP, Deputy General Counsel, Chief Compliance & Ethics Officer

None

12

On Semiconductor

US

Tech Hardware & Equipment

SVP, General Counsel, Chief Compliance & Ethics Officer & Secretary

same as 2010

13

Qwest Communications (now CenturyLink)

US

Fixed Line Telecom

Chief Ethics & Compliance Officer & SVP

None

14

Scotts Miracle-Gro

US

Household Goods & Home Construction

EVP & General Counsel, Chief Ethics Officer

EVP & General Counsel, Corporate Secretary and Chief Ethics & Compliance Officer

15

Teco Energy

US

Electricity

VP, Business Strategy & Compliance, & Chief Ethics & Compliance Officer

same as 2010

16

Teradata

US

Software & Computer Services

Deputy General Counsel & Chief Ethics & Compliance Officer

same as 2010

TMT Position with the Keyword “Stakeholder”

Finally, as shown in Table 6 the only TMT position identified in 2010 with the keyword “stakeholder” remained intact, the “EVP and Chief of Staffs of Stakeholder Relations” at Novozymes held by Thomas Nagy.
Table 6

Stakeholder TMT positions

N

Corporation

Country

Industry

2010 Position title

2012 Position title

1

Novozymes

DK

Pharma & Biotech

EVP, Stakeholder Relations

EVP, Chief of Staffs of Stakeholder Relations

Findings from Step C

We asked Storebrand CEO Idar Kreutzer, who was at the helm of Storebrand during the installation of the position “EVP, Corporate Responsibility” in 2008, his rationale for installing this position to the TMT. He stated:

We have worked intensively with the socially responsibility investment (SRI) part of corporate social responsibility since 1995. We are one of the larger SRI investors in Europe. All our assets and the management are managed according to very strict criteria. In addition, I have been a member of the World Business Council for Sustainability, a council member since 2000. I have engaged in several of their processes, and I have been fortunate to lead some of them. And that has given me the necessary understanding to put our SRI activities in context. And my reading of all the situation is that the global challenges we are facing—population, energy, climate, resource, depletion, biodiversity, water—the global challenges we are facing will fundamentally change the framework for doing business and represent huge risks, but also significant opportunities for business.

My intention for appointing a senior executive and placing that position on the Executive Committee was to lift the agenda from being a part of what we are doing to bring it into the strategic complex of our core business activities. That was the reason. So we have gradually developed an understanding for the strategic impact of what you’re talking about. Therefore, instead of having this as something we did on the investment side that did not affect the strategy of the business, we wanted to lift it up to be a part of the, part of the, so to say, the DNA of the strategic thinking of the company. So that was the purpose. And Elin Myrmel-Johansen held that position for three years and did a fantastic job in both lifting the internal awareness, bringing the global challenges and the CSR agenda to a strategic level in the company, and also engaging with our line managers to make them internally operational. That was the purpose.

According to Storebrand CEO Kreutzer, he modeled the TMT level position after Norwegian municipalities of the 1970s and 1980s that put in place a separate Office for Environmental Affairs to drive environmental initiatives during this period. This also led Kreutzer to discuss his rationale for later removing the position in 2011:

As a consequence of the discussion about environmentally friendly municipalities, in the 1970’s and 1980’s all of the Norwegian municipalities put in place an office for Environmental Affairs. So they had a separate office and this office took care of the environment. And now today we know that environmental affairs have to do with transportation and building policies—the core activities of municipalities.

So that was the picture I had in my head. We need to have this for a limited timeframe, to lift the awareness and then lift it into the core of the strategy. But I did not know that it took 3 years. It could have been five or two or seven.

We asked Kreutzer, who was also at the helm of Storebrand during the removal of the TMT position, to expand upon whether at the initial time of installation in 2008 whether he had then already planned to remove the position by 2011. He offered:

My idea was to use [the installation of this TMT position] as a stepping stone to getting [sustainability and CSR] on to the strategic level. But I did not know enough to really have an idea of how long that would take us. But after three years, Elin and myself, we agreed that we had reached a point where we were prepared to take the next step. But that could vary from business to business. And if we did not have the history we had with SRIs 10, 15 years or so, focusing on SRI investments and the gradual process we have been through, we would probably have needed more than three years of this position—perhaps five, perhaps, seven years.

Along this vein, we asked SCA’s Kersti Strandqvist, whose corporate sustainability role remains part of the TMT, to predict whether SCA will always have such a dedicated TMT position. Her reply echoed that of Storebrand’s CEO:

In a way, I would almost hope that this position would be redundant in five to seven years or something like that because then it would be really part of the whole company’s the way of working in such a way that, for example, when we have quarterly reviews and speak about our company with the analysts and so on, that we would naturally report on our [key performance indicators], also for sustainability. Then I’d say my position is redundant because then it’s happening anyway… But I think we’ve got a ways to go.

Strandqvist also stated that in her opinion, the reason that a corporate sustainability TMT position remains necessary as work remains to articulate the relationship between corporate sustainability and economic value:

I’d say the main difficulty for us wouldn’t be internal. It would be external because the world around us is not really there yet. Some big customers are. Some analysts and investors are, but not everybody. We still require a lot of translation work. I was meeting up with some [Wall Street] analysts the other week, and it’s really interesting because they said, “This [sustainability work SCA does] is great stuff. I do see that it should probably contribute to the value of the company and should impact the share price long term but you need to help me put that into my Excel sheets and my models.” That’s why I say it’s going to take some time before this [removal of the corporate sustainability TMT position] happens.

We also asked H&M’s Helena Helmersson to predict whether H&M and others across the industry are likely to have TMT positions dedicated to corporate sustainability and CSR in the future. Helmersson also expressed a desire to embed attention to CSR and corporate sustainability within the business in such a way as to make the position unnecessary. She emphasized “the responsibility never ends” where part of her role is to continually find new areas in which H&M is expected by its stakeholders to assume responsibility in areas that they previously did not. She offered:

I think that more companies will install a position just under the CEO [dedicated to CSR and sustainability]. However, the trend is really to incorporate CSR into the business. We will always have some projects that the CSR organization will have to drive- like the Better Cotton Initiative because it’s huge. We want to change how all of the cotton is produced in the world. So there are specific projects that our team will drive.

But ideally, the CSR and sustainability responsibilities could be embedded within the functional areas… However, here I’m not sure [if this is possible] because I also see sustainability becoming more and more complex. It’s like the responsibility never ends.

So I would see that [a dedicated position] will be needed just because there’s always certain steps to take before a specific functional area can drive it. It’s good that it goes through a CSR department who knows the trends, who knows what’s coming, and who knows which new things to jump on and to continue with.

Relatedly, when we asked SCA’s Strandqvist what advice she would offer to another company considering the installation of a TMT position dedicated to corporate sustainability, she gave the following reply:

I think they really need to be serious about what they want to do. If it’s just to be able to communicate sustainability and talk about the stuff that is happening in the organization, I think it might be a better place within the communications team, which I believe is quite common and has been quite common so far. If they really want to [make] a change—change the strategy into something that is really building on sustainability rather than just adding that touch—then I think that would help give them the focus.

What I do, for example, in our executive team is I put it on the agenda. Just by my being there having the discussions, my asking the questions, and my [putting] the sustainability issues, strategies, and targets on the executive committee agenda just chang[es] the mindset of the whole company. It changes the focus.

We then asked SCA’s Strandqvist whether she would advise a company that had never worked with sustainability to install a dedicated position as part of its TMT:

That’s a very difficult question because I think that would depend on the commitment from the CEO and the top management team because it could work. If you have a CEO who is really deeply determined that “Yes, we will make a change.” Just putting somebody in the top management team would help trigger that because then you could have people working on the issues throughout the organization.

If the CEO is not committed, I think it’s going to be an extremely difficult position. It could work from zero but it’s easier, I think, if it’s really embedded in the organization, because then you have the champions all over the company who could help you drive it. If you set a target to reduce your environmental impact, whether that’s water or carbon dioxide or something like that, it’s not done within the staff function in a headquarters.

It is actually done with the action plans happening in the mills, in the factories. We set the targets. We follow up on the key performance indicators (KPIs). We make sure it happens and create the big picture for the company.

H&M’s Helmersson also described the benefits of increasingly embedding attention to CSR and sustainability across the organization:

Since 2008, we have been in the process of incorporating our sustainability strategy in all functions, which means that I am actually driving a support department to support all the other functions.  And this sounds lovely, and it is... So the ownership is there, and they have their goals.  And they are driving this, I would say, very much by themselves.

And then we have other functions which are not as mature when it comes to sustainability where we have to be clearer about what areas they can contribute to.  The interest is there but we need to make sure that they know what to do and that they are measured because that’s really a way to get clear goals and to get the follow-up that we need and to get people running.  And so I would say that is extremely different for different functions; how far they have come and how much we need to support.  And I would guess that even though production and the supply chain is more mature, this is still where we put a lot of time—it’s a huge part since we are in very challenging countries when it comes to human rights and also the environmental issues. So we are still providing very active support when it comes to supply chains—but also more and more in other functions like marketing, design, interior and construction.  Logistics is one example of a department that has been working with sustainability for a very long time.

We also need to support our buying and design department with improving their purchasing practices. For example, late product decisions might lead to production peaks in our suppliers' factories with overtime as a consequence. Improving such a complex issue is a journey because buyers are used to being measured on how their collections are selling without considering consequences for their purchasing practices.  That is what they are followed up on every week... So it’s definitely there for all the functions but it’s very different how much support we need to give.

Noting the variety of position titles used by the companies in our sample, we also asked questions about the choice of titles for the position. According to Storebrand CEO Kreutzer, he chose the title “EVP, Corporate Responsibility” for internal communication but if he was installing the position today he would elect to use a different title:

It had to communicate internally. In Norwegian, we have something called samfunnsansvar, which is best translated as ‘corporate responsibility’. So it communicated well internally. It also communicated well externally, and I guess that it was very much where we were in the development. But in the general public today, I would not call it corporate responsibility.

I do not like the expression corporate responsibility very much because in my opinion it sends the signal of ‘do gooders’. By that I mean it under-communicates the opportunity part of it, the strategic part of it, the fundamental importance this has to the business. So to me, corporate responsibility now limits the perspective too much compared to what I’d like to communicate … something significantly broader than only corporate responsibility.

When we followed up with Kreutzer to ask what he would title the position were he to launch it today, he replied “I don’t know. I haven’t found a good name.” There are indicators, however, that Storebrand (2012) is in fact shifting toward the language of sustainability, evidenced by a section of its 2011 annual report being conspicuously titled “From CSR to sustainability”:

For 15 years, Storebrand has used CSR as a concept for the work being carried out within the environment, social issues and social commitment. To ensure long-term development as a company calls for more than just assuming responsibility. It calls for a sustainable strategy. The concept of sustainability defines the core of long-term success: “sustainable development should maintain this generation’s needs without compromising the ability of future generations to meet their own needs”. This is a guiding star for the Group’s strategic planning and daily operations, and is followed up, among other things, by asset management’s analysis of enterprises in the investment process. Sustainability is also one of the Group’s new promises to its customers.

A shift from CSR toward sustainability language is also observed H&M, where Helmersson’s former title of CSR Manager from 2010 has been amended to Sustainability Officer as of 2012. We conducted our interview with her in 2011 before this change had been made, and at that time, we asked Helmersson whether CSR was the most appropriate expression within her position title. She replied:

No. This has just been on the agenda in a team meeting.. Corporate social responsibility talks more about social, not environmental. So, I think that my position title will be changed.

We then asked her whether the company was considering any potential alternatives to the CSR expression:

It’s more sustainability in that sense.  Many companies have changed that already.  And sustainability is much broader and it goes in line with us working hard with integrating environmental and social responsibility in the business. We are convinced that social and environmental responsibility will lead to long term profits.  So I would say sustainability.

Discussion

We structure this section around our two major research questions: Why are corporate sustainability positions being installed in TMTs?What effects do corporate sustainability TMT positions have on their organizations? Before engaging directly with these questions it is relevant to first note that based upon the evidence presented within this article, the Chief Sustainability Officer position does not appear to be on its way to becoming a permanent fixture within the TMTs at all large corporations. Of the 46 TMT positions identified in 2010 as being associated with corporate sustainability, only 27 remain as of 2012. This is a removal of 41 % in just two years. Thus, the path of the Chief Sustainability Officer appears to be unlike that of the CFO position, for example, which was first introduced into TMTs in the early 1960s and has since become a permanent fixture within the TMTs of virtually all large corporations (Zorn 2004). We will revisit this as we consider our research questions.

Why are Corporate Sustainability Positions Being Installed in TMTs?

Based on the evidence presented, we can identify a number of co-mingled reasons that serve as contributing factors for the installation of TMT corporate sustainability positions. Context is important where we consider whether the corporate sustainability positions were installed reactively to the TMT (in response to a crisis, for example) or proactively (Suchman 1995). Consideration regarding reactive or proactive installation of the TMT position also relates to the concept of managerial discretion—that is to say the leeway or latitude of action available to TMT members that comprise a particular context (Hambrick and Finkelstein 1987; Haleblian and Finikelstein 1993; Finkelstein et al. 2009, pp. 26–37). Given the CEO is the individual ultimately responsible for deciding whether or not to add a position to the TMT, we focus attention on managerial discretion of the CEO here.

We consider reactive or proactive installations by drawing from Suchman’s (1995) landmark contribution Managing Legitimacy: Strategic and Institutional Approaches. In it, Suchman (1995, p. 597) states that “legitimacy repair generally represents a reactive response to an unforeseen crisis of meaning.” Mattel’s response serves as a clear example of efforts to re-legitimize itself in the aftermath of a crisis. Given that children and the concept of safe play are central to the identity of Mattel as a toy company, the tragedies of 2007 in which children died as result of playing with Mattel’s toys presented a crisis of meaning at Mattel. The testimony by Mattel’s CEO to the US Senate Committee on Appropriations in which the CEO emphasizes a restructured TMT and organization is evidence of an attempt at legitimacy repair. In Suchman’s words (1995, pp. 598–599):

[B]eyond offering denials, excuses, justifications, and explanations, organizations also may facilitate re-legitimation through strategic restructuring (Pfeffer 1981).

Mattel’s strategic restructuring involved the installation of a new member of the TMT by the title “SVP, Corporate Responsibility” that was charged with responsibilities for heading up a corporate responsibility organization. Mattel’s CEO emphasized the direct reporting of this position to the CEO as demonstration of the significance of the restructuring as impacting the highest level of the organization.

With consideration to the concept of managerial discretion, Mattel’s CEO had limited managerial discretion in making this decision given the presence of strong environmental factors in the form of powerful external forces (e.g., US Senate, parents as consumers) demanding explicit and significant action by Mattel to address the crisis. Thus, Mattel’s CEO was to a large degree “forced” by these powerful external forces into conspicuously demonstrating that significant action had been taken. Although Mattel’s CEO was necessarily required to install a TMT position per se, given the severity of the crisis and the need for re-legitimization of the organization, the managerial discretion was limited that made a restructure of this significant nature that involved the TMT much more likely.

Storebrand, on the other hand, exemplifies a proactive case of installing a TMT position. In this proactive case, one can surmise that the internal organizational factors and the CEO’s managerial characteristics play the most significant role regarding why the TMT position is installed given powerful external forces are not a pressing factor (Hambrick and Finkelstein 1987). Thus, task for Storebrand’s CEO to install a new TMT position involved convincing of relevant stakeholders, like the Board of Directors (West and Schwenk 1996), which such a TMT position was needed. To do this, Storebrand’s CEO pointed to the internal organizational factor that Storebrand had recently undergone a major acquisition where the TMT level CSR position could serve to help bind the organizations together. Storebrand’s CEO also emphasized the opportunities for creating the TMT position to recognize opportunities as result of having such an externally focused position as part of the TMT. Here the CEO’s managerial characteristics are demonstrated. Drawing from Pless et al.’s (2012) typography of individuals in top-level leadership positions, one could surmise that a CEO who demonstrates attention toward a broader constituent group of stakeholders may be more likely to install a TMT position dedicated to corporate sustainability or CSR as these concepts are inherently concerned with a more expansive suite of stakeholders.

Additionally, and related to the second question regarding the effects of this TMT position, there appears to be an associated installation of bureaucratic machinery within the corporations to support the corporate sustainability and CSR efforts. Bureaucracy involves the establishment of formalized organizational structures with defined hierarchy, processes, and quantified elements like KPIs intended to efficiently drive performances about a stated objective (Meyer and Rowan 1977; Watson 2006, 2010; Weber 1978). Mattel’s CEO described the organizational structure that accompanied the TMT position, Storebrand’s CEO referred to governmental bureaucracy with the Office for Environmental Affairs as inspiration for installation of the position and associated structures, and the individuals associated with the TMT positions at H&M and SCA both stressed the processes and KPIs put in place across their respective corporations to drive efforts. Furthermore, the degree to which the implementation of this bureaucratic machinery in the corporation is successful, effects lasting beyond the tenure of a position in the TMT can be expected. This is relevant to consider given the finding that many of these positions have since been removed from the TMTs with transfer of responsibilities to other members of the TMT—but where presumably the underlying bureaucratic structure remains in place at the time of transfer. This raises relevant questions for further research regarding the effects of a transfer in responsibilities where corporate sustainability no longer has an explicit “seat at the table” of the TMT. Such considerations regarding the effects of the corporate sustainability TMT position and the associated bureaucracies lead to our second question.

What Effects do Corporate Sustainability TMT Positions have on the Organization?

The original study by Strand (2013) adds fuel to this question with its finding that corporations with a TMT position dedicated to corporate sustainability are three times more likely to be selected for the Dow Jones Sustainability Index (DJSI) than corporations no such TMT position. While Strand (2013) emphasizes that the relation is correlational (not causational) and that sustainability performance measurements like the DJSI are not without their critics (e.g., Chatterji et al. 2009), these findings draw further attention this question regarding the potential effects of corporate sustainability TMT positions at their organizations. We consider this question from a number of perspectives here.

Traditional TMT studies have focused on the effects of the demographics of individuals who comprise the TMT and their effects on organizational performances, with a particular focus on the effects of heterogeneity of demographics among members (Wiersema and Bantel 1992; Hambrick et al. 1996; Carpenter 2002). Future studies of this traditional TMT scholarship nature may consider the demographics of the individuals in the corporate sustainability TMT positions and the effects their introduction to the TMT. For example, Strand (2013, p. 728n.4) notes that “a conspicuously high proportion of females” holds the CSR and corporate sustainability positions in the TMT in comparison to the relatively low proportion of females holding TMT positions in general. Past studies have linked the concepts of CSR and sustainability to so-called “feminine” qualities (e.g. Park et al. 2007; Casimir and Dutilh 2003; Strand 2011, p. 92), and studies have also linked heterogeneity introduced by having women in the traditionally male-dominated TMTs as impacting firm-level performances (Krishnan and Park 2005; Smith et al. 2006). With this in consideration, future studies may consider the effects of women in the TMT on the sustainability performances of corporations. In addition to gender, future studies may consider the apparent demographic heterogeneity of backgrounds introduced to the TMT with this position given that a wide assortment of non-traditional backgrounds including environmental sciences (e.g., UPS and Ford Motor Company) and politics (e.g., Nokia and J.P. Morgan & Chase) represented by the individuals occupying this position.

But beyond this more traditional TMT scholarship focusing on demographic heterogeneity of individuals, this may be re-applied in a shift toward considering “TMT structure” by the heterogeneity of the positions represented within it. The corporate sustainability position is a nontraditional role within the TMT that introduces a degree of heterogeneity of positions. Through this, the sustainability agenda is introduced to the TMT alongside of the agenda represented by more traditional TMT positions, such as the CFO. Carpenter (2002) points to distinct information, more skills, and potentially productive conflict in TMT decision-making processes as benefits of TMT heterogeneity. Likewise, SCA’s corporate sustainability TMT officer Kersti Strandquist stated her belief that simply asking questions that otherwise would not have been asked by the traditional members of the TMT and having a different perspective representing the sustainability agenda participating in the strategy-setting process as part of her TMT position has placed corporate sustainability on the SCA agenda which in turn can help to drive sustainability performances. Further scholarship may fruitfully move beyond a traditional focus on the demographics of individuals within the TMT to explore what happens when the heterogeneous mix of strategic priorities includes the sustainability agenda.

Many scholars point to the heightened degree of symbolism that TMT members represent simply for “being at the top of the organizational hierarchy” and the effect this can have on organizational performances. At the TMT level, “all executives actions carry added meaning… conveying surplus messages to observers … [who are] trying to detect the executive’s intentions, values, predispositions, and where he or she is headed” (Finkelstein et al. 2009, p. 19; see also, Pfeffer 1981; Green 1988). As a result, installing a corporate sustainability position in the TMT is likely to send a strong signal to the company that sustainability is of importance to the organization that can, in turn, lead to organizational effects as individuals across the organization perceive that corporate sustainability is a priority and preference their actions accordingly, and sustainability performances follow.

Such symbolism is relevant when considering the inherently cross-functional nature of sustainability and the need to draw upon individuals and resources from across the organization that do not likely report to the individual in the corporate sustainability position. Thus, having a corporate sustainability position at the level of the TMT may make it more likely people will engage and prioritize their activities with respect to the priorities expressed by the individual in the corporate sustainability TMT position—and more likely for the eventual adoption and prioritization of the sustainability agenda within the agenda of their functional units through ongoing engagement and encouragement of the individual in the corporate sustainability TMT position. H&M serves as example of this where Helmersson describes that since 2008, the company has been on a path to incorporate the sustainability strategy within functions firm wide where managers across H&M are increasingly taking ownership of the corporate sustainability agenda, establishing their own goals, and are driving the sustainability agenda “very much by themselves.”

H&M’s Helmersson also describes the formal structures that have arisen under her TMT position including the establishment of bureaucratizing elements (Meyer and Rowan 1977; Weber 1978) such as formalized structures and processes, quantifiable goals, and KPIs to drive performance. Such bureaucratization is echoed by Storebrand CEO Kruetzer’s using the Norwegian governmental Office for Environmental Affairs as inspiration for establishing a TMT position specifically for sustainability and CSR. According to Adler and Borys (1996), both the formalization and specialization of workflow, together with a hierarchy in which a chief officer heads a corporate sustainability bureaucracy within an organizational bureaucracy are core features of bureaucracy overall.

Although the term “bureaucracy” itself is too often seen as inherently negative, here we consider both the concept and its process in a value-neutral manner consistent with Weber’s analytical application (du Gay 2000). In this sense, the establishment of a corporate sustainability bureaucracy within the larger corporate bureaucracy is a means through which to establish processes and KPIs that can outlast the tenure of any individual or position. Thus, to the degree that processes and KPIs were established at H&M and Storebrand during the tenures of associated TMT positions at the top of the corporate sustainability bureaucratic hierarchy, corporate sustainability performance will likely continue to be driven. This durability is particularly relevant given that in the two years since the original study, many of the TMT positions have been removed. Therefore, to the extent that the individuals occupying the TMT positions during this time are successful in establishing the bureaucratic machinery of processes and KPIs linked to organizational sustainability-related objectives, longer term sustainability performance may be anticipated. As such, the removal of the corporate sustainability TMT position is not necessarily a sign of a discontinuation of sustainability activities at the corporation.

In his original study, Strand (2013) points to Novo Nordisk as an example of this where raising corporate sustainability to the TMT level was used as a means to heighten organizational interest and build supporting organizational bureaucratic structures whereby the head corporate sustainability position can then be later moved to a lower level in the organization. In the early 2000s Lise Kingo ascended to the TMT at Novo Nordisk in a position charged with formal corporate sustainability tasks; by 2012, however, as reflected by her broadened and all-inclusive title of "EVP, Chief of Staffs", she had also absorbed a number of other organizational responsibilities. Today, explicit attention to corporate sustainability resides at a level one step lower than the TMT with Susanne Stormer’s position of "VP, Corporate Sustainability" who is charged with coordinating Novo Nordisk’s sustainability efforts. The merits of this approach are suggested by Forbes’ (2012b) citing Novo Nordisk as “the most sustainable company on the planet” given its top position in the Global 100 sustainability performance rating.

We deem Novo Nordisk as a success story but this claim can be made only after further investigation that goes beyond an exploration of whether or not a dedicated TMT position exists.  When formal responsibility for corporate sustainability has been transferred from a dedicated TMT position to more general positions like COO and CFO, or to a lower level in the organization, assessing the outcomes of such a transfer requires more in-depth and longitudinal investigation on a company by company basis (see also Gephart 1978).  In the case of Mattel, for example, we might ask what effects Mattel’s dedicated TMT position has had on the company now that the formal responsibility for CSR has transitioned to the COO? Without further exploration into whether organizational processes and KPIs that remain in place at Mattel, it is difficult to judge.

These questions re-invite consideration of why the position was installed in the first place. This can be fruitfully addressed by considering Weaver et al.’s (1999) initial drivers of corporate ethics program establishment. Drawing from neoinstitutional theory, Weaver et al. explore these corporations’ expectations for socially responsible processes and outcomes and determine whether their responses are “organizationally integrated” or “decoupled.” Focusing on the establishment of formal corporate ethics programs, they find to support for the theoretical position that external pressures for social performance are likely to encourage easily decoupled processes, whereas commitment (or lack thereof) by corporate TMTs tends to encourage decoupled responses or integrated processes.

It is apparent that in some cases the Chief Sustainability Officer position was installed temporarily with the specific intent of raising sustainability considerations and related issues on the corporation’s strategic agenda, meaning that the removal of the TMT position may well be an indicator of its success. In the case of the Norwegian life insurance corporation Storebrand, for instance, the TMT position of EVP, Corporate Responsibility, held for the 3 years of its existence by Elin Myrmel-Johansen, was put into place in January 2008 and removed in February 2011. Upon removal of the position, the formal CSR and corporate sustainability responsibilities at Storebrand officially transferred to Pål Petersen, the VP of Strategy (a position not included in the TMT on Storebrand’s corporate web site), while Myrmel-Johansen assumed the position of Director, Strategy Implementation (also not listed among Storebrand’s TMT). Yet previous research on TMT turnover has consistently interpreted individual departures as evidence of a downward spiral in the overall organization (Hambrick and D’Aveni 1992; Finkelstein et al. 2009, p. 234). Our findings, in contrast, suggest that the removal of a TMT position is not necessarily evidence of organizational failure.

It may be argued by some that the installation of a TMT position for legitimacy purposes is akin to “window dressing." That said, its establishment may also serve as an entry point for dialog and discussions, one that encourages reflection about the corporation’s impacts on and role in society. Thus a little window dressing is not necessarily a bad thing as it can lead to the change it purports to represent (Lunheim 2005; Christensen et al. 2013). Hence, in his now classic text, On Bullshit, Frankfurt (2005) emphasizes that provided a complete decoupling of rhetoric from considerations to reality does not occur, action can follow. From this perspective, the installation of a corporate sustainability TMT position may be a signal of organizational aspirations that may subsequently lead to more sustainable practices.

All of this said, contextual factors clearly matter regarding the effects of the removal of a corporate sustainability TMT position can be removed. H&M serves as example where removing the corporate sustainability TMT position would, arguably, lead to a potential deterioration of corporate sustainability performances given the ever-expanding expectations for responsibilities that H&M experiences that demand trend-spotters and coordination across that large corporation. This expansion of responsibilities and dynamism of issues faced by H&M is arguably different than with Storebrand, for example. Hence while the corporate sustainability TMT position is being removed from TMTs, one may anticipate that for a selection of corporations facing expanding expectations of responsibilities, like H&M, the position is more likely to stay at the level of the TMT.

Additional Considerations

While not the focus of this study, the apparent shift in the language of these TMT positions from CSR toward sustainability is noteworthy and represents the potential realm of promising future studies in its own right. We find that among TMT positions, the ratio of titles that explicitly include the phrases “CSR” or “corporate responsibility” to those explicitly including the word “sustainability” dropped from 0.49 in 2010 to 0.29 in 2012 (see Table 2). In other words, in 2010, for every one TMT position explicitly referencing “CSR,” there were about two positions explicitly referencing “sustainability.” By 2012, for every one TMT position explicitly referencing “CSR,” there were about three positions explicitly referencing “sustainability.” The sample that generated these statistics is quite small (N = 46 in 2010; N = 29 in 2012) where this shift illustrated in Table 2 does not by itself represent a statistically significant difference. Nevertheless, the evidence of a language shift from “CSR” toward “sustainability,” expressed in Strand’s (2013, p. 728) conclusion that “there is some suggestion that the ratio of ‘sustainability language’ to ‘CSR language’ is increasing,” is supported in this follow-up study by data from the interviews with H&M and Storebrand officers.

This language shift may be fruitfully interpreted through a management fashion lens (Abrahamson 1996; Abrahamson and Fairchild 1999). The theory of management fashion proposes that managers face continued pressures to move from normative toward rational language. Storebrand’s Kreutzer, for instance, pointed to the limitations of the corporate responsibility and CSR language and its associations with “doing good,” possibly indicating that focusing on a company’s ethical imperative to assume responsibility overshadows its business opportunities. Throughout the interview, Kreutzer seemed to endorse the notion of what has been termed “strategic ethics” (Goodpaster 1991:2 Quinn and Jones 1995) whereby ethical considerations for such elements as responsibilities and duties can be effecient means through which to further company interests. This may serve as indicator of a desire to move from normative toward rational language.

Relatedly, this language shift from CSR toward sustainability may be considered through the Weberian concepts of substantive and formal rationality (Weber 1958, 1978; Brubaker 1991).  Substantive rationality has to do with beliefs and values whereas formal rationality has to do with efficiency.  As Strand (2013) notes, the language associated with the CSR keyword tends to appeal to substantive rationality whereas the language associated with sustainability tends to appeal to formal rationality. “With respect to CSR, an area for further exploration to consider [are the] potential tensions that may arise as formally rational tools are increasingly adopted by corporations intended to more efficiently drive CSR efforts but may also unintentionally raise the potential for charges of substantive irrationality” (Strand 2013, p. 728; see also Guthey 2012; Guthey & Morsing 2013).

This consideration of language may point to a limitation of this study given that in our analysis, we focus on the keywords “sustainability” and “CSR,” at times lumping together and at times treating as distinct. Both these terms, as well as their associated expressions, have been contested on the grounds that they hold different meanings for different people (Moon et al. 2005; Gond and Crane 2010). Hence, by focusing solely on keywords represented within position titles, we are in effect treating these expressions superficially. These terms are contestable, suggesting that future research might benefit from more in-depth exploration of what they mean to those who hear and use them. The ambiguity associated with these expressions may also be utilized in a strategic manner (Eisenberg 1984; Guthey and Morsing 2013).  This may be particularly the case with the expression sustainability given that, for example, this expression may be well-received by a CFO who may consider sustainability in terms of economic sustainability.  Hence a Chief Sustainability Officer may choose to strategically use the expression sustainability rather than expressions associated with CSR when engaging with more traditional members of the TMT, like the CFO.

A further limitation of this study is that given we have followed the methodology presented by Strand (2013) to identify TMTs, we do not identify whether the 46 TMT positions are direct-reporting to CEOs. Such reporting structures are not available upon the cursory review afforded by this methodology. Identifying reporting structures requires more in-depth analysis. (In the subset of companies explored, all of these positions are direct reports to the CEO.) Future research may consider the effects of driving sustainability initiatives at various levels of the corporation—from direct reporting to the CEO down to levels below the CEO in the corporate hierarchy.

Conclusions

In this article, we focused our attention on the strategic leadership of corporate sustainability by exploring the recent introduction by several of the world’s largest corporations of dedicated corporate sustainability positions into their top management teams (TMTs)—often referred to as “Chief Sustainability Officers.” We present evidence of these positions having been installed both reactively (in response to a crisis, for example) and proactively and where these positions appear to be in a very dynamic state as a number of these TMT positions have recently been installed but even more recently removed.

Traditional TMT scholarship has linked the departure of individuals from the TMT as serving as evidence of a downward spiral in the overall organization. However, we find that the removal of the corporate sustainability focused TMT position may not necessarily be a signal of failure. Rather, this may serve as the successful incorporation of attention to sustainability in the form of a bureaucratic structure including processes and KPIs to drive the sustainability agenda. Thus, removal can have multiple meanings where an in-depth analysis is needed on a case by case basis to make such judgments.

This represents both the greatest limitation and arguably the most significant finding of this study. Regarding limitations, despite presenting evidence that many corporate sustainability TMT positions are now being removed despite only recently having been introduced to their respective TMTs, we cannot offer generalizations regarding whether or not this is indication of success or failure and the overall effects on sustainability performances of these companies. However, this serves as an important finding as one may otherwise inappropriately assume that just because a TMT position dedicated to corporate sustainability is removed from the TMT, the installation of the position was a failure and the organization is no longer concerned with the sustainability agenda. We contend that such judgment cannot be made through a cursory review of positions represented within the TMT but rather requires attention on a case by case basis.

Hence, while we generally agree that TMT position titles are useful indicators of the issues that the corporation deems strategically and/or symbolically significant as proposed within Strand (2013), we find that it is equally important to bear in mind that the removal of the corporate sustainability position from the TMT does not, in and of itself, indicate that sustainability is any less important at an organization. This presents an opportunity for further research to consider how the elevating of a TMT position dedicated to corporate sustainability for a specified duration may be utilized as a means through which to establish bureaucratic structures with formalized processes and KPIs to drive sustainability performances. This may also entail exploration regarding what kinds of corporate sustainability bureaucratic structures are most effective. For example, Novo Nordisk is highlighted within this article as presenting the potential for a best-practice case study. So how exactly does Novo Nordisk structure its corporate sustainability efforts and what effects can be observed at Novo Nordisk as result? Additionally, the longer term effects of having once installed a corporate sustainability position to the TMT and then having removed it may be considered. For example, even if the TMT position is deemed a success upon its removal, might attention to sustainability erode over time? If so, could this merit a periodic re-establishment of the TMT position to reinvigorate company-wide sustainability efforts? These longer term considerations regarding the effects of having installed a TMT position with dedicated responsibilities for a specified period of time present an area of opportunity for further research and can help to illuminate our understanding of the effects of TMT structures on organizational performances.

Footnotes
1

As Table 4 shows, the TMT position title CSR Manager identified in 2010 at the Swedish retailer H&M underwent a name change in 2012 when the new incumbent, Helena Helmersson, assumed the title “Sustainability Officer.” Accordingly, one of the 9.5 TMT positions associated with the keyword “CSR” in 2010 became a TMT position associated with the keyword “sustainability” in 2012, thereby reducing the number of CSR-related TMT positions by one and increasing the number of sustainability-related TMT positions by one for 2012.

 
2

Goodpaster (1991) employs the expression “strategic ethics” but does not endorse it.

 

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© Springer Science+Business Media Dordrecht 2014