The Impact of Chief Sustainability Officers on Environmental Performance of Korean Listed Companies: The Mediating Role of Corporate Sustainability Practices

Abstract

Chief sustainability officers and sustainability consultants have become increasingly common today as many organizations have become more aware of their impact on the environment and society at large. With the growing importance of integrating sustainability into business, many firms are appointing chief sustainability officers to manage and oversee the sustainability affairs of their firms at various levels. However, very little is known about the chief sustainability officer and the sustainability management team. This study investigates the potential importance of the chief sustainability officer (CSO) and the sustainability management team toward the firm’s environmental performance. Using a sample of Korean-listed companies for the year 2017–2020, this study aims to investigate the relationship between appointment of the chief sustainability officer and a firm’s environmental performance. It also explores the possible mediating role of corporate sustainability practices (CSP) in this relationship, utilizing Baron and Kenny’s method to analyze the mediating role. First, the regression analysis was conducted to assess the impact of the presence and role of CSO on the firm’s environmental performance. Subsequently, the firm’s CSP was then introduced into the regression analysis as a mediator, to evaluate its influence on the relationship between the chief sustainability officer and the firm’s environmental performance. We found that CSP completely mediated the relationship between CSO and environmental performance. This study contributes empirically to the growing literature on the relevance of sustainability management officials and their impacts on the firm’s environmental performance.

The Importance of a Chief Sustainability Officer (CSO) in Multinational and State-Owned Enterprises

“…Building good relationships with local people may take more work for MNEs and SOEs, which could result in disputes and disturbances. Missed Business prospects: The company may lose out on possible development and income streams if a CSO cannot find and seize sustainability-related business prospects, such as green technologies, renewable energy projects, or sustainable product lines [36].…”

“…MNEs and SOEs may be exposed to various sustainability-related risks without a CSO, such as regulatory non-compliance, reputational harm, difficulties gaining access to markets, and financial underperformance. To reduce these risks and take advantage of sustainability opportunities, many multinational businesses abroad designate a CSO or create specialized sustainability teams and efforts [36].…”