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Corporate responsibility officers are supposed to ensure companies are on their best behavior. But do C.R.O.’s really have a seat at the table, or are they little more than politically correct window dressing?
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Not so long ago, protesters made Gap Inc. a symbol of labor exploitation in developing countries, and a generation of anti-sweatshop student activists came of age rallying against the San Francisco-based apparel giant.

Today, the company is teaming with Bono, funding H.I.V. and AIDS education programs in countries it was once accused of exploiting, and even garnering cautious praise from some of the activists who once attacked it.

Dan Henkle gets credit for at least part of that. He oversees a wide range of initiatives at the firm, from factory labor standards to greenhouse gas emissions. Henkle is what’s known as a corporate responsibility officer, or C.R.O., the latest acronym to get a corner office in corporate America. And in this post-Enron, Sarbanes-Oxley, Al Gore Oscar-winning era, everybody suddenly wants one. “Companies are starting to integrate this into their existing business model,” says Henkle, whose official title is senior vice president for social responsibility. “It’s good business.”

Positions such as Henkle’s have been evolving at a small number of companies since at least the 1990s. But some say the phenomenon has now reached the tipping point. As many as 55 of the Fortune 1000 now have a formal C.R.O., up from just 12 in August 2006, says Jay Whitehead, publisher of CRO, a new magazine, and head of a related membership organization, which held its first conference in November. Members include Starbucks, Avon, Intel, the Gap, I.B.M., State Street, Mattel, and Chiquita Brands.

That number is likely to grow. “We get asked a couple times a week, or even a day, by corporate boards what the job title and job function are,” says Whitehead, a Harvard Business School grad who has started other niche publications. His answer is complicated and full of corporate jargon like “stakeholders” and “silos.” But in plain English, a C.R.O. is in charge of monitoring and promoting good corporate behavior. Avon’s C.R.O. might push for programs to phase out cardboard packaging or move to a paperless ordering system, while the Gap’s officer creates a system for monitoring overseas factories.

Lobbying for such changes is also part of the job. And the ability of a C.R.O. to influence company power brokers is often what determines whether the post is merely politically correct window dressing or a truly influential position.

The pay range for C.R.O.’s is comparable to that of corporate legal officers of similar rank, according to Whitehead, and at a Fortune 1000 company, it might run from $150,000 to $250,000. Some C.R.O.’s arrive at companies after working at foundations; others rise up from human resources, legal compliance, or public relations positions.

Not surprisingly, the new title has generated skepticism. In some cases, the position appears to be mostly cosmetic. Avon’s director of corporate responsibility, Susan Arnot Heaney, for instance, reports to the vice president for communications, who’s in charge of burnishing the company’s image. But Heaney insists her function is about more than that. “The role I have is really to be the coach,” says Heaney, who, after spending a good deal of her career in public relations, came to the newly created position in February 2006. “I make sure various standards are at the forefront of decision making and communicate with activists and political and investment groups.” She acknowledges, though, that since her position is so new, she often encounters confusion within the firm about what her job entails.
 
At other companies, however, the job has been evolving and gaining importance, and many corporate chieftains are finding that having a responsibility czar, and listening to that executive, is good business. The Gap’s Henkle has been in his job for six years, longer than his counterparts at most other firms. He manages a team of some 90 people in about 22 countries and reports to the chief legal and administrative officer.

“My job has changed a lot in the past six years,” he says. “The comparison I would make is that human resources used to be called personnel, and it evolved from ‘it would be nice to have one’ into an essential component.”

Henkle’s largest responsibility is making sure that the Gap’s 2,000 factories around the world comply with its health and safety, environmental, and wage standards. He has also worked to reduce the environmental footprint of Gap businesses in the U.S. and helped implement guidelines to deal with the wastewater coming from prewashing jeans. Henkle has helped his company set up an H.I.V. and AIDS prevention and treatment program in the tiny African country of Lesotho, where the Gap has a factory. The company is donating half of the profits from its Product Red line of apparel to Bono’s programs in Africa. All this has helped quiet the company’s critics, improved the Gap’s corporate image, and won allies in the socially responsible investment community.
 
This is the kind of brand burnishing that Richard Pearl wants to replicate at Boston-based State Street Corp. Pearl started running the bank’s corporate citizenship programs in early 2006 and has spent much of his time recruiting allies to push for change within the company. He’s been emphasizing the advantages to the bank’s reputation and the clout of socially responsible investors. “Cutting a check and sending people to rake leaves wasn’t enough to shore up our reputation,” he says. “We’re a global company, and we needed to benchmark against the world, not just the U.S. To compete for business around the world, we need credentials.”

Those credentials start with reducing State Street’s environmental impact and touting its recycling efforts. The company also plans to launch a working group in May, including about 30 vice presidents from different divisions, such as investment services and asset management. Once they come up with an initial policy, they will meet once a month, Pearl says.

David Stangis, head of corporate responsibility for Intel, used to be the one sent to brief hippie investors on its recycling policies. Now, he spends much of his time dealing with the company’s board of directors and leading a 10-member committee of vice presidents from various divisions. Together, they consider a wide range of issues including human rights, corporate transparency, and greenhouse gas emissions, and discuss how Intel’s business strategy might address those matters.

Stangis keeps his allies ready for battle by scanning scores of publications and putting out an internal one-page report focusing on emerging issues. “There are hundreds of things we monitor,” he says. “Government affairs, community relations, environmental issues. We look at press outlets all over the world. We make sure we’re watching issues other companies are getting called out on.”


 



 

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