Mercer's ESG Incentive Plan Metrics Spot Survey report based on recent input from 85 US and 50 Canadian public, private and not-for profit/public sector companies includes some interesting and noteworthy data on the use of various types of ESG incentive plan metrics in long-term and short-term incentive plans. However, the survey results and implications should be evaluated in the context of the specific respondent demographics. Energy sector companies - which are significantly more likely to use ESG metrics (predominantly, environmental metrics) in their incentive plans, made up 20% of the total respondent group (compared to just 6% of the S&P 500), and 63% of the Energy company respondents were Canadian.
The foregoing notwithstanding, the report reveals some developing practices in this area that may inform companies' consideration of ESG metrics - particularly those companies whose industries are meaningfully represented in the survey.
See Forbes' "ESG Becoming Factor In Majority Of Incentive Pay Incentive Plans"; these prior reports: "Executive Compensation: E&S Performance Metrics," "Directors Weigh in on Pay-for-Performance," "ESG Meets Executive/Employee Compensation," "Compensation Committees & Non-Financial Metrics," and "Facebook Changes Bonus Structure to Include Social Issue Metrics"; and additional resources on our Executive/Employee Pay and ESG pages. This post first appeared in the weekly Society Alert!