Bringing ESG into Executive Pay

Climate change, plastic pollution, water shortages, Black Lives Matter and societal wealth inequality. These are just some of the global issues that define our times. These social and environmental issues are now also becoming business critical issues for UK companies - not only for reputational reasons, but because the future strength and viability of a company will often depend on the adaptations they make. As a result, companies are increasingly considering the use of Environmental, Social and Governance (ESG) goals within executive pay, linking incentive outcomes with the delivery of meaningful change in these areas.

We’ve examined current market practice in this area and set out our thoughts and ideas on incorporating ESG into executive pay.

Our five key principles include:

1. Keep it strategic
2. Think input or output
3. Measurement and reassurance
4. Start with simple KPIs
5. Communicate and connect with the wider workforce