Why More Companies Are Linking CEO Pay To ESG

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As companies increasingly consider tying parts of executive compensation to ESG measures, they signal a broader corporate embrace of social responsibility principles. But the actual practice of incorporating those measures within a compensation program is easier said than done.

. According to the Survey, a primary motivating factor for incorporating ESG measures into executive compensation, is to both emphasize to investors the priority a company attributes to its ESG initiatives, and to support the satisfaction of company ESG commitments.. The Survey is not, however, “pollyannish” with respect to the practice of tying compensation to ESG measures, and identifies a number of concerns which are worthy of board attention.

-Third is the need for companies to tailor the ESG incentive model to their own necessities, as opposed to “simply following the trend,” as the Survey warns against. -Sixth is the internal organizational awareness of the difficulties that can be encountered in measuring how ESG performance goals can impact compensation.The Survey results notwithstanding, there are several other factors that should be taken into consideration when evaluating the advantages and disadvantages of tying some portion of executive compensation to ESG principles.

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Esg is a scam.

For the last two decades I have had the same performance metrics at an executive level under the term CSR (corporate social responsibility). If any board takes a long enough view these metrics are usually both fiscally sound and for retaining best talent.

The problem is, who decides what is appropriate when it comes to ESG? Hitting a moving target is very difficult.

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