The final link in the chain of improving corporate accountability for sustainability is to tie improvements to pay. In our last article, we explained that companies should use incentives to motivate executives to tap big strategic opportunities related to environmental, social, and governance (ESG) goals.
5 Steps for Tying Executive Compensation to Sustainability
Design incentives for both financial and nonfinancial goals.
July 19, 2019
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Summary.
There are many kinds of sustainability efforts that companies can pursue, but not all of them have returns that are clearly financial or that fit into traditional three-year planning cycles. To design incentives that will work for their sustainability goals, companies should follow five steps. When taken in sequence, the steps signal the company’s commitment to ESG initiatives and communicate to managers and stakeholders what the company wants to prioritize and value. The authors explain the five steps and offer examples of them in action from their experience working with companies.