A Framework for Tying ESG Metrics to Executive Compensation Plans

Published: June 2021

 

As the importance of ESG metrics continues to rise, what key factors should companies consider before incorporating them into their executive compensation programs? This article highlights useful steps to take to ensure your business is prepared to evolve pay design.

Investors are looking beyond traditional measures of profit and growth, utilizing environmental, social and governance (ESG) performance measures to differentiate companies as alternative investments. The list of ESG areas of focus has grown to now include sustainability, climate impact, human capital management and corporate governance. Investors expect companies to identify key ESG areas of focus, as well as disclose current statuses, goals for improvement and overall progress.

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