The Influence of Corporate Sustainability Officers on Performance

56 Pages Posted: 22 Feb 2018

See all articles by Gary F. Peters

Gary F. Peters

University of Arkansas at Fayetteville

Andrea Romi

Texas Tech University - Area of Accounting

Juan Manuel Sanchez

University of Texas at San Antonio

Date Written: February 11, 2018

Abstract

The creation of a specialized executive position that oversees sustainability activities represents a distinct shift in the structure of top management teams and their approach for addressing sustainability concerns. However, little is known about these management team members, namely the corporate sustainability officers or CSOs. We examine CSO appointments and their association with subsequent sustainability performance. Our results indicate that the creation of a CSO position may represent more of a symbolic versus substantive governance mechanism. Further tests suggest that CSO expertise and the firm’s existing sustainability performance affect the association between the CSO and post-appointment sustainability performance. We find no association between CSO appointments and subsequent sustainability performance for firms that were already poor performers, while firms possessing relatively higher levels of prior sustainability performance appointing a CSO begin to experience significant improvements to performance after three years. We further find that CSOs with prior sustainability expertise are associated with increases in sustainability performance in firms that were already strong performers, but not in firms with poor sustainability performance. Non-expert CSOs on the other hand, are associated with initial decreases in performance for poor performing firms, whereas better performing firms hiring non-expert CSOs are able to rely on other sustainability attributes of the firm and benefit from improvements in performance in the long-term. We discuss the potential importance of these positions as it relates to symbolic vs. substantive governance mechanisms through the lens of top management team literature streams.

Keywords: Chief Sustainability Officer; CSO; sustainability performance; CSO expertise

Suggested Citation

Peters, Gary F. and Romi, Andrea and Sanchez, Juan Manuel, The Influence of Corporate Sustainability Officers on Performance (February 11, 2018). Journal of Business Ethics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3122114

Gary F. Peters

University of Arkansas at Fayetteville ( email )

Sam M. Walton College of Business
Department of Accounting
Fayetteville, AR 72701

Andrea Romi (Contact Author)

Texas Tech University - Area of Accounting ( email )

P.O. Box 42101
Lubbock, TX 79409
United States

Juan Manuel Sanchez

University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

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