A Sustainable Investment in Journalism

A sustainable business requires diverse revenue streams. ESG Investor now operates a subscription service as of Tuesday 14th May. To find out more please get in touch with our subscription team on subscriptions@esginvestor.net

Climate-linked Exec Pay Sends Misleading Signal – PIRC

A significant increase in the integration of climate metrics into executive pay schemes suggests a “fundamental disconnect” between performance and pay outcomes, research by the Pensions & Investment Research Consultants (PIRC) has found. Of the largest global listed companies employing climate metrics, there was an average vesting level (the proportion of a bonus paid out) of 80%, emphasising the gulf between corporate payout culture and the reality of the impacts of climate change on the environment and society, the report noted. Conor Constable, Stewardship Manager, PIRC: “We question the view that a performance metric representing a fraction of the total opportunity available to executives is a credible tool to drive more desirable climate outputs. These metrics are neither easily measurable nor sensitive to the decision making of executives. If stakeholders are serious about holding decision makers accountable on issues such as climate change, it is necessary to pivot away from highly complex and opaque compensation structures to a renewed focus on the duties of directors and their legal obligation to be responsible for the impact of a company’s operations on the community and the environment.” 

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

Copyright © 2024 ESG Investor Ltd. Company No. 12893343. ESG Investor Ltd, Fox Court, 14 Grays Inn Road, London, WC1X 8HN

To Top