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Do you like the idea of corporations linking executive compensation with ESG goals?

In recent years, sustainability has become a key strategic direction for companies from different sectors, driven by consumers' increasing focus on sustainability performance and corporate values. The pandemic has only accelerated the "Green Transformation" further. 

Sustainability has become such an important topic that we are seeing an increasing number of corporations linking executive pay to environmental, social, governance (ESG) metrics - which are major focus areas for investors today. It was reported recently that Goggle would tie senior executives' bonuses to their efforts in furthering its environment and diversity goals. It follows Microsoft, Intel, IBM, etc... in the move to tie executive compensation to ESG metrics. 

Some believe this is a powerful way to drive change while some think it is a sensitive instrument that should be handled with care in order to reflect the company's context and ESG priorities. It also requires a clear articulation of material ESG issues that could be understood at the board level.

What are your views? Do you like to see more companies' executive compensations being tied to their ESG performance? 

The pandemic has prompted 57% of companies to speed up efforts to reduce their impact on the climate and 62% will probably link executive pay to environmental targets this year, according to an ING survey of 450 companies across seven sectors in the U.S., Europe and Asia-Pacific.

Tags

esg, executive compensation, sustainability, esg metrics, executive pay, greener ceo, greener business, hong kong

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