A New Yardstick for Pay: Environmental & Social Factors

A New Yardstick for Pay: Environmental & Social Factors

NOVEMBER 12, 2021

KEY TAKEAWAYS

  • The uptick in the use of E&S performance metrics in compensation observed over the last two years appears to be driven by societal developments like climate change awareness, #MeToo, BLM, and COVID-19
  • Social metrics like worker safety dominate but the growth rate of environmental metrics is higher, signifying increased importance
  • Safety metrics remain most common, although climate change and diversity-related metrics experienced the biggest upswings
  • Diversity, CSR, and staff-relations metrics were used across all sectors in 2020
  • The utility sector has the highest prevalence of E&S metrics, although the real estate sector and consumer staples experienced the biggest jumps of late
  • E&S metrics are included in STIPs more often than LTIPs, with large cap companies leading the way
  • Companies that include E&S metrics in executive compensation plans often choose to include more than one such metric

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