2021 MM&K / GECN Group research highlights trends in the use of ESG metrics in global executive incentive remuneration.
November 4, 2021
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 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 is the GECN member firm in the UK.
The 2020 research highlighted the use of ESG metrics in incentive plans, instead of an exclusive focus on financial achievement, and how this path may be a better way towards value creation and sustainability. The 2021 research focuses on investigating trends in the use by companies of ESG metrics in their incentive plans and changes made in response to the COVID-19 pandemic. This year’s scope of research includes the following:
- UK – FTSE 100
- EU – CAC 40, DAX 30 and SMI 20
- USA – S&P 100 and TSX 60
- Australia – ASX 100
- Singapore – STI 30
- South Africa – JSE Top 40
The preliminary findings show an overall increase in the usage of ESG metrics in incentive remuneration plans globally, with as many as 84% in Australia, and as little as 57% in Singapore, which remains unchanged from 2020 (see Chart 1, below, for more details).
The next graph (Chart 2) shows preliminary findings for the global sample by sector, with Materials and Financials leading in terms of implemented ESG metrics. Since 2020, most sectors have reported an increase in the use of ESG metrics, with Utilities reporting a 1% decrease.
Whilst typically, short-term plans have tended to include qualitative measures, and long-term plans have incorporated quantitative measures, 2021 has recorded an overall increase in the use of ESG measures for long-term plans. The most significant increase has been in the introduction of environmental measures in long-term plans.
The full report, to be published later this year, will present a detailed analysis of the data and dive into more details of the trends associated with ESG and executive incentive remuneration.
For more information, please contact George Edwards.