Maximizing the Benefits of ESG Performance Metrics in Executive Incentive Plans
Our Privacy Policy has been updated! The Conference Board uses cookies to improve our website, enhance your experience, and deliver relevant messages and offers about our products. Detailed information on the use of cookies on this site is provided in our cookie policy. For more information on how The Conference Board collects and uses personal data, please visit our privacy policy. By continuing to use this Site or by clicking "ACCEPT", you acknowledge our privacy policy and consent to the use of cookies. 

CEO & Executive Compensation

A TCB Benchmarking Release

Maximizing the Benefits of ESG Performance Metrics in Executive Incentive Plans

/ Article

In partnership with:

Companies have crossed the Rubicon in integrating environmental, social & governance (ESG) performance into their executive incentive plans. With three-quarters of S&P 500 index companies embedding some type of ESG metric into their leadership compensation policies, the practice is now deeply ingrained. But there is an opportunity to move beyond generic goals and tailor ESG performance measures in a way that contributes to competitive advantage and long-term growth.

Companies have crossed the Rubicon in integrating environmental, social & governance (ESG) performance into their executive incentive plans. With three-quarters of S&P 500 index companies embedding some type of ESG metric into their leadership compensation policies, the practice is now deeply ingrained. But there is an opportunity to move beyond generic goals and tailor ESG performance measures in a way that contributes to competitive advantage and long-term growth.

Trusted Insights for What’s Ahead®™

  • Expect companies to continue to link executive compensation to ESG performance, even in the face of growing ESG backlash. According to 2023 disclosures, 75.8% of S&P 500 companies incorporate ESG performance in compensation design, compared to 66.5% in 2021. As part of their general response to ESG backlash, companies should take a fresh look at how they include ESG objectives in executive compensation. Choosing these metrics carefully is crucial to ensure an executive compensation plan that drives sustainable value creation.
  • Compensation committees should identify and prioritize ESG factors tied to their company’s long-term business strategy. Currently, ESG performance metrics tend to relate to the company’s industry: for example, only 24% of information technology companies integrate environmental performance metr

Author

Matteo Tonello

Matteo Tonello Matteo Tonello

Head of TCB Benchmarking and Analytics
The Conference Board

Read Bio

This publication is only available to Members. Please sign in to your myTCB® account to access it. To learn more about becoming a Member, click here. To check if your company is a Member, click here

Sign In

Forgot your password

Create An Account

 

Keep my computer signed in

Forgot your password

Create An Account

myTCB® Members get exclusive access to webcasts, publications, data and analysis, plus discounts to events.

Knowledge Partners

Other Related Resources