2022 Global Trends in ESG Incentives : Executive ESG pay not relenting

Longer-term trends are becoming evident as companies continue their environmental, social, and governance (ESG) journeys.

This year’s annual research report by Guerdon Associates’ Global Governance and Executive Compensation Group (GECN Group), is titled 2022 Global Trends in ESG Incentives: Executive ESG pay not relenting.

This year’s research picks up from last year and details the current and last two years of global and regional trends in the specific use of ESG incentives. It explores how companies around the world seek to incorporate ESG measures into their executive compensation plans. This year’s research covers leading companies in global market indices:

  • Australian ASX 100
  • Canada – TSX 60
  • France – CAC 40
  • Germany – DAX 40
  • Singapore – STI 30
  • South Africa – JSE Top 40
  • Switzerland – SMI 20
  • United Kingdom – FTSE 100
  • United States – S&P 100

Significant findings from our research include:

  • More than three-fourths of large companies now incorporate ESG measures into their incentive plans
  • Europe, the U.K., Australia, and South Africa lead the market with over 80% of large companies incorporating ESG measures into their incentive plans
  • By sector, Utilities and Materials lead the market with more than 90% of companies using ESG measures in compensation, which has not changed materially from last year
  • Social measures continue to be the most prevalent type of ESG measure used in incentives, gaining a further 5 percentage points since last year, from 67% to 72%
  • Globally, 60% of companies using social measures in incentives focus on diversity, up 15 percentage points from last year
  • Environmental measures made the most significant gains in prevalence, up by 20 percentage points in one year from 30% to 50% of companies
  • More than one-quarter (28%) of global companies with ESG measures now use those measures in their long-term incentive plans, which represents an increase of 11 percentage points from 2020

To read the full report, which describes the details of ESG measures used in executive incentives and the five actions for boards to consider and strengthen its role in the company’s ESG incentive journey, see HERE.

© Guerdon Associates 2024
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