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NextGen Magazine

 
 

Seeking to Put Money Where Mouth Is, Some Companies Linking Exec Pay to Sustainability Goals

By:
Chris Gaetano
Published Date:
Jun 24, 2019
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A small but growing group of companies is providing a blunt incentive for top executives to angle toward corporate sustainability by linking portions of their bonuses to meeting environmental, social and governance-oriented (ESG) goals, according to the Wall Street Journal. This means that CEOs at these companies not only have to make a business case for their actions but also explain how these actions align with the company's goals toward being a responsible corporate actor. The idea is that, by linking pay with ESG goals, leadership will have the incentive to bring sustainability thinking into their everyday decisions, which will hopefully filter down to the lower levels of the organization due to setting the proper tone at the top. 

However, the Journal noted that linking pay to sustainability goals may scare off certain candidates, adding that few companies seem to be doing well at achieving them. A survey from Bain Capital last year found that only 4 percent of companies with sustainability goals had either met or exceeded them, versus 47 percent that expressed having difficulty with meeting even half of their goals.