2021 – 2022 MM&K / GECN Group research – the role of ESG factors in global executive remuneration

The 2021 – 2022 MM&K / GECN Group research is focused on the role of ESG factors in global executive remuneration and is a continuation to the “2021 and Beyond: Global Executive Incentive Trends The Shift to Non-Financial Measures” Report.

The 2021 and Beyond Report identified  global trends on the inclusion of ESG factors in global executive incentive plans. This year’s research will focus on how these trends are developing.

The GECN is a group of six independent advisory firms specialising in executive compensation and corporate governance. GECN member firms have offices in Los Angeles, New York, London, Kiev, Geneva, Zurich, Johannesburg, Singapore, Melbourne, and Sidney. MM&K represents the GECN in the UK.

The 2021-2022 research will re-examine the ESG metrics adopted by companies comprising the leading global indices in connection with their executive remuneration policies:

• UK – FTSE 100
• EU – CAC 40, DAX 30 and SMI 20
• USA – S&P 100 and TSX 60
• Australia – ASX 100
• Singapore – STI 30.

In order to discern the bigger picture trends, as well as the detail, the GECN Group has developed the proprietary term, ESG Plus framework for non-financial measures. The ESG Plus framework was designed to capture all executive incentives based on non-financial measures used worldwide.

Some of the compelling reasons for companies to adopt the ESG measures into incentive plans are:

• It shows that the company is “walking the talk”
• It focuses participants on areas requiring improvement
• Investors favourably view ESG Plus metrics
• In some regulated industries (e.g. banking) some regulators may expect some connection to governance, compliance, or other measures
• ESG Plus considerations now factor-in the investment strategies of global asset owners

Our 2020 research showed that the prevalence of ESG Plus measures in incentives differs significantly by industry sector. Utilities, Financial Services, Energy, and Materials companies are the most frequent adopters of such measures, whereas Information Technology and Consumer Discretionary companies are the least frequent adopters.

Our 2021 research will be published later this year. For more information contact Margarita Skripina.

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