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.