sustainability<\/a> targets in boardroom pay align them to topics that are material to their business.<\/p>\nThe most widely adopted sustainability targets relate to climate change and a company’s own workforce, often aligning with ESG topics material to their businesses. While more companies link sustainability to short-term targets, investors generally expect to see a balance between both short-term and long-term targets.<\/p>\n
The analysis also highlights a significant regional difference in the adoption of sustainability-linked pay. Companies in the EU are more likely to use such measures than those outside the EU, even though the UK and Australia, two non-EU countries, are ranked second and third in the top 25 companies. This shows that even beyond the EU’s regulatory reporting requirements, companies are taking an ambitious approach to firmly anchoring sustainability in their organization and the actions of their managers.<\/p>\n
Despite strong adoption of full alignment to material sustainability topics by both Japan and the UK, on average countries outside the EU are less aligned than those within it. An average of 7.5 companies in non-EU countries fully align material sustainability topics and boardroom pay measures, compared with 8.7 companies in EU member states.<\/p>\n
Nadine-Lan H\u00f6nighaus, Global ESG Governance Lead at KPMG International, said \u201cDespite ongoing economic and geopolitical uncertainty, the findings make clear that linking executive compensation to sustainability performance is becoming increasingly widespread within the world\u2019s largest companies. While there are some notable regional differences, there is a consistent global trend, that reflects the crucial role senior executives play in steering a company towards long-term value creation.\u201d<\/p>\n
\u201cFor business leaders, transparency in linking sustainability performance to executive pay is key and for those companies at the start of the journey, now is the time to start thinking about incorporating sustainability targets into executive remuneration with a focus on relevant targets that are linked to material sustainability topics. The starting point should be a small number of performance indicators that are measurable, meaningful, and decisive in steering and improving a company’s sustainability performance.\u201d<\/p>\n
\n","protected":false},"excerpt":{"rendered":"
A new report from KPMG International revealed 78 percent of 375 businesses across 15 countries analyzed link executive compensation to sustainability performance. The report, \u2018Incentivizing long-term value creation: Linking sustainability metrics to board members\u2019 pay\u2019, examined \u00a0the adoption of sustainability in boardroom pay. Meanwhile, 88 percent of companies that specify sustainability targets in boardroom pay […]<\/p>\n","protected":false},"author":410,"featured_media":110608,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[984,6030],"tags":[6766,6336,15532],"yoast_head":"\n
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