The Advisors' Blog

ESG has been a hot topic all year for executive compensation – it’s been talked about so much that it feels like everyone is doing it, but it’s still quite uncommon in most industries. Here’s a breakdown from ISS on where the E&S metric usage stands now:

– The uptick in the use of E&S performance metrics in compensation observed over the last two years appears to be driven by societal developments like climate change awareness, #MeToo, BLM, and COVID-19

– Social metrics like worker safety dominate but the growth rate of environmental metrics is higher, signifying increased importance

– Safety metrics remain most common, although climate change and diversity-related metrics experienced the biggest upswings

– Diversity, CSR, and staff-relations metrics were used across all sectors in 2020

– The utility sector has the highest prevalence of E&S metrics, although the real estate sector and consumer staples experienced the biggest jumps of late

– E&S metrics are included in STIPs more often than LTIPs, with large cap companies leading the way

– Companies that include E&S metrics in executive compensation plans often choose to include more than one such metric

If you’re ready to take the leap, we previously covered the do’s and don’ts of tying ESG to executive pay during our Executive Compensation Conference. Contact info@ccrcorp.com now to register and gain access to these talking points if you missed the Conference – here’s an agenda of all the sessions you can learn from.

– Emily Sacks-Wilner