The Advisors' Blog

We’ve noted on several occasions that there’s been an uptick in the number of companies that consider progress on DEI, health & safety, emissions, or other non-financial metrics when calculating executive incentives. As companies continue to sort out whether & how to add ESG metrics to executive pay plans, one important consideration is determining who these metrics apply to. A recent Deloitte report suggests that CFOs might be slipping under the radar – despite their involvement in ESG strategies. Here are a few takeaways:

– The CFO’s role in ESG typically includes tracking & reporting progress in line with regulatory & investor expectations, demonstrating ROI of purpose, and embedding purpose in investment criteria (this 16-page report takes an even deeper dive into the CFO’s role in driving sustainability)

– While 45% of CEOs surveyed have compensation tied to “purpose-related” goals, only 6% of CFOs said the same – the lowest of any roles among the C-suite, despite reporting above-average “purpose impact” on their role

– Smaller companies (less than $1 billion annual revenue) are more likely to have purpose impact C-suite roles, but compensation is less likely to tie to purpose priorities

– Liz Dunshee