Do Chief Sustainability Officers Make Companies Greener? The Moderating Role of Regulatory Pressures

Abstract

We draw from upper echelons theory to investigate whether the presence of a chief sustainability officer (CSO) is associated with better corporate environmental performance in highly polluting industries. Such firms are under strong pressure to remediate environmental damage, to comply with regulations, and to even exceed environmental standards. CSOs in these firms are likely to be hired as legitimate agents to lead and successfully implement environmental strategy aimed at reducing pollution levels. Interestingly and contrary to our expectations, we found that the presence of a CSO is associated with higher levels of pollution emissions. Nonetheless, we found that the CSO has a positive influence on a firm’s environmental performance if faced with strict environmental regulations. We argue that the enforcement of environmental regulations enhances monitoring and accountability of pollution emissions. The sample for this study comprised all the S&P 500 firms required by the Environmental Protection Agency to annually report their toxic emissions to the Toxic Release Inventory. Data were collected for a 6-year period from 2006 to 2011. We used a panel data regression and employed propensity score matching to correct for potential endogeneity problems.

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Notes

  1. 1.

    ISS was previously known as IRRC or Riskmetrics.

  2. 2.

    File available at http://www.epa.gov/oppt/rsei/pubs/index.html (last accessed: December 30, 2015).

  3. 3.

    As previously mentioned, the dependent variable environmental performance is the reverse of toxic emissions, calculated by multiplying this measure by −1.

  4. 4.

    We also verified the robustness of findings using toxic emissions change as alternative dependent variable for all our regression models. These alternative models (not shown) provide similar findings. We thank one of the anonymous reviewers for suggesting this additional robustness test.

  5. 5.

    We thank one of the anonymous reviewers for pointing out this important limitation.

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Acknowledgements

We would like to acknowledge the helpful comments from Peter Tashman, Judith Walls, Jorge Walter and the two anonymous reviewers.

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Correspondence to Patricia Kanashiro.

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Kanashiro, P., Rivera, J. Do Chief Sustainability Officers Make Companies Greener? The Moderating Role of Regulatory Pressures. J Bus Ethics 155, 687–701 (2019). https://doi.org/10.1007/s10551-017-3461-2

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Keywords

  • Chief Sustainability Officer (CSO)
  • Environmental performance
  • Corporate governance
  • Institutional theory
  • Upper echelons theory
  • Sustainability