August 27, 2020
ESG Metrics: Passing the Purity Test?
– Liz Dunshee
Although 62% of the Fortune 200 incorporates ESG metrics into incentive plans, a significant portion of those relate to shorter-term “operational” metrics, versus metrics that shareholders have deemed relevant to long-term sustainability and stakeholder objectives. That’s according to this Semler Brossy memo – which categorizes “operational” metrics to include:
– Employee Engagement/Satisfaction
– Safety
– Turnover/Retention
– Talent Development
– Customer Satisfaction/Net Promoter Score
– Product Quality
The memo notes that “customer satisfaction” is the most common ESG metric, used by about 55 companies in the Fortune 200. Although they may not be exactly what “stakeholder capitalism” proponents are looking for, the rationale for using “operational” metrics seems pretty strong – they’re easier to tie to the top or bottom line.