ESG Viewpoint – Should ‘doing good’ pay out? Linking executive pay to ESG metrics
Insights

ESG Viewpoint – Should ‘doing good’ pay out? Linking executive pay to ESG metrics

ESG metrics in pay matter. We explain why, outline our expectations for companies in this area and detail our engagement efforts and the progress made.
Historically, executive pay has incentivised leadership to increase traditional measures of issuer performance such as revenue or operational efficiency. Now, as the world shifts its concept of corporate materiality and impact to include environmental and social matters, issuers are increasingly integrating sustainability goals alongside more traditional executive compensation key performance indicators (KPIs). These range from emissions reductions to workplace diversity targets – and, if achieved, can benefit stakeholders beyond just shareholders such as staff, society, and the environment.
In 2021, more than half of S&P 500 issuers – and nearly half of FTSE 100 issuers – included at least one ESG metric in executive incentive plans.
  • In 2021, Shell increased the weighting of its energy transition condition in the long-term incentive plan (LTIP) to 20%.
  • Since 2021, McDonald’s has factored diversity goals into executive bonuses.
  • Since 2020, Siemens has weighted 20% of stock awards for its managing board on an internal sustainability index based on three KPIs, including CO2 emissions.

Interested in learning more?

Read more about ESG metrics and executive pay, our expectations for companies and the progress we’ve been making through our engagement efforts. Download the full viewpoint to discover more.

 

30 September 2022
Andrew Droste
Andrew Droste
Vice President, Responsible Investment
Kirsty Nicholson
Kirsty Nicholson
Impact Reporting Analyst, Responsible Investment
Share article
Share on twitter
Share on linkedin
Share on email
Key topics
Related topics
Listen on Stitcher badge
Share article
Share on twitter
Share on linkedin
Share on email
Key topics
Related topics

PDF

ESG Viewpoint – Should ‘doing good’ pay out? Linking executive pay to ESG metrics

Risk Disclaimer

Views and opinions have been arrived at by Columbia Threadneedle Investments and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

 

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

 

Engagement efforts outlined in this Viewpoint reflect the assets of a group of legal entities whose parent company is Columbia Threadneedle Investments UK International Limited and that formerly traded as BMO Global Asset Management EMEA. These entities are now part of Columbia Threadneedle Investments which is the asset management business of Ameriprise Financial, Inc. Engagement and voting services are also executed on behalf of reo® clients.

Related Insights

28 November 2022

Steven Bell

Director, Multi Strategy Investments

Is the bear market in European equities over?

European shares have enjoyed a strong rally since the end of September. Steven Bell, explores the reasons behind the recovery and asks whether it will continue?
Watch time - 6 min
24 November 2022

Roman Gaiser

Head of High Yield, EMEA

High yield enters unchartered waters

Higher inflation and interest rates are unknowns for the high yield bond market, but with inflation far above US and European 2% targets central banks are having to raise rates.
Read time - 5 min
21 November 2022

Steven Bell

Director, Multi Strategy Investments

Recession Watch: Europe and USA

We’ve been talking about recession for most of this year. So what’s going on?
Watch time - 7 min

You may also like

Investment approach

Teamwork defines us and is fundamental to our investment approach, which is structured to facilitate the generation, assessment and implementation of good, strong investment ideas for our portfolios.

Funds and Prices

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Our Capabilities

We offer a broad range of actively managed investment strategies and solutions covering global, regional and domestic markets and asset classes.

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.