Playing Tens: The CLO, CRO and CSO

In the sixth post of their 7-part series, John Elkington and Charmian Love look at how CLOs, CROs and CSOs are coping with the new wild cards dealt by environmental, social and governance challenges.

Beyond the 'face cards' covered in earlier blogs, the most powerful cards are the 10s. For us, the 10s of today's C-Suite are the growing array of senior people who work to maintain and build the brand and corporate reputation. They include CMOs, or Chief Marketing Officers, CLOs, or Chief Legal Officers, CROs, or Chief Responsibility Officers, and CSOs, or Chief Sustainability Officers.

That said, the proliferation of roles--which also includes a plethora of SVP and VP-level positions--isn't necessarily a good thing. Time and again, as the great societal pressures waves have crashed through our economies, we have seen new roles evolving in business to counter--and in some few cases--surf the new market forces.

Since 1994, we have tracked four great pressure waves in the capitalist world. The first peaked around Earth Day in 1970, saw a growing focus on safety, health and environmental issues, and created a raft of jobs for lawyers and OR people who tried to fight off the likes of the new Environmental Protection Agency. There were CLOs, or General Counsels, who acknowledged the legitimacy of the new agendas, but most were on the defensive, in compliance mode, at best.

During the ensuing downwave, which ran roughly from 1973 to 1987, we saw a flood tide of new regulations spreading around the world. A few companies tried to go "beyond compliance", among them 3M with its innovative 'Pollution Prevention Pays' (or 3P Program, which saved or made the company over $1 billion in the space of a couple of decades, but they remained relative rarities.

When the second great pressure wave peaked, from 1988 to 1991, the focus switched to market pressures--partly driven by issues like the Antarctic Ozone Hole, partly by a new breed of green consumers. Suddenly markets were less predictable, with major companies forced to reformulate their products as the pressure grew to get CFCs out of aerosols, chlorine out of paper, lead out of gasoline or mercury out of batteries.

The second downwave saw explosive growth in the number of voluntary market standards, some of which have already been mentioned in our discussion of the COO agenda (blog 5).

The third wave, peaking from 1999 to 2001, was massively energized by globalization--and in many ways constituted a backlash to the sort of scandals that had hit companies like Shell, Nike and Monsanto. Corporate and global governance were key concerns this time around, with the new breed of Chief Compliance Officers (CCOs) drawn into the fray to help cope with the post-Enron rules imposed by the Sarbanes-Oxley Act, and the recommendations of the U.S. Federal Sentencing Guidelines. Other C-Suite roles that have surfaced in the wake of all this include Chief Ethics Officer, Chief Communications Officer and Chief Privacy Officer.

More recently still, we have seen the emergence of the Chief Sustainability Officer (CSO). Sometimes these people take over responsibilities that previously rested--often by default--with COOs and facility managers. More typically, CSOs try hard to guide, not override other C-Suite functions. More positively, the shift of this agenda to the C-Suite often signals that a company takes these issues seriously.

As long ago as 2005, most of the 150 largest companies in the world had a sustainability officer with the rank of Vice President or higher--though our sense is that this potentially encourages an overly optimistic reading of the situation. As to their portfolios, a recent survey by Corporate Responsibility magazine listed the following tasks as typical: business ethics, communications, compliance and governance, environment, international affairs, politics and legislation, social responsibility and socially responsible investing. None of them exactly trivial tasks.

One of the earliest CSOs was Linda Fisher, at DuPont, with more recent appointments at companies like SAP, Georgia Pacific, Sun Microsystems and Flowserve. "We've certainly seen a trend," notes Andrea Moffat, the senior director of corporate programs at Ceres, an environmental advocacy group that includes investors. She was quoted in a recent New York Times Green Inc. blog to the effect that there has been a degree of title inflation, our words not hers, with companies opting for the CSO tag when previously they would have gone for Senior Vice-President of sustainability or corporate responsibility.

The most important thing, she insisted, was that the position--which generally includes responsibility for human rights and workforce diversity as well as environmental issues--reports directly to the CEO.

Whatever your views, this is a title that seems destined to proliferate as CSR and sustainability issues mainstream. As Owens Corning CSO, Frank O'Brien-Bernini, put it recently, "'CSO' is a title that senior-most CSR executives will increasingly carry. They will achieve this not by their individual might and muster, but because more of their peers at competing companies have taken on the title. Should this become industry best practice, questionnaires, surveys and shareholder resolutions will nudge the title further along."

Some CEOs will signal their commitment by embracing the CSO title themselves, as Coca-Cola CEO Muhtar Kent. As he told Forbes, long an abrasive opponent of the sustainability agenda, "In a world where populations are growing, where natural resources are stressed, where communities are forced to do more with less and where consumers' expectations are expanding, sustainability is core to our business continuity and survival."

"Coke has established some bold goals," the Forbes interview noted approvingly, "including going 'water neutral'--returning as much water to the world as it uses--reducing its absolute carbon footprint for manufacturing operations by 5% in developed countries by 2015 and eventually recovering all its packaging so it can be reused rather than sent to landfills." To meet these goals, Coke knows it must go way beyond cost-saving operational improvements to enhance its products, engage its stakeholders and suppliers and, critically, "build a culture of environmental innovation that will drive future growth."

As it becomes clearer that we are heading into an era of creative destruction in the global economy, there are two obvious questions. First, we should ask whether CLOs, CROs and even CSOs are up to the task of disrupting their companies' current mindsets and business models? While they can certainly be important catalysts, our sense is that real change will come from elsewhere, as it always does. From the edges of the system. And that's where we're headed in the final blog in this series. Second, and a question for all C-Suite aspirants, should sustainability elements be built into all top management training?

Series: John Elkington on the New C-Suite

John Elkington is co-founder and executive chairman of Volans Ventures and co-founder and director SustainAbility. His most recent book was The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World (Harvard Business School Press, 2008). Charmian Love is Chief Executive of Volans.

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  • Richard Crespin

    The Corporate Responsibility Officers Association (http://www.croassociation.org) wrestles with many of the issues raised, including questions like:
    - What's the role of a CRO?
    - What scope of responsibility should lie in his/her domain?
    - What ethics should guide the CR professional?
    - How should these functions be planned, budgeted, and structured?

    To shed some light on the issue, together with NYSE Euronext we recently completed a survey that had nearly 700 respondents from some of the world's largest companies. To see the current state of practice in the field, see the results of this Corporate Responsibility Best Practices Survey at: http://tinyurl.com/y4hnuco.

    To comment on the survey and share your thoughts, join our LinkedIn Community at: http://tinyurl.com/y2mknay.

    Richard Crespin, Executive Director, CRO Association