Glass Lewis’s new report: “In-Depth: Linking Compensation to Sustainability” addresses potential upsides, downsides, challenges, and opportunities associated with linking compensation to sustainability metrics. Generally, although the demand from investors for sustainability-linked pay is on the rise and companies are increasingly responding accordingly, the report shows that the evidence is quite mixed as to whether, to what extent, and under what circumstances sustainability-linked pay achieves its intended objectives consistent with optimal value creation. As with many trending practices, the devil is in the details, which vary by company.
See “Some CEOs Are Hearing A New Message: Act On Climate, Or We'll Cut Your Pay” (NPR), “Move to link exec pay to ESG integration growing” (Pensions & Investments), and additional resources and “how to” considerations on our Executive Pay page »Non-Financial Metrics (Sustainability, DE&I, etc.).
This post first appeared in the weekly Society Alert!