MM&K/GECN ESG Report 2024: Highlights per metric in another momentous year

March 25, 2024

MM&K (together with the GECN group) has published its 2024 report on how the world’s largest firms have used ESG (environmental, social, governance) metrics in their 2023 executive incentive plans. Download your free copy here.

For context, this article explores metrics in the broader categories like Environmental, Community, Social, etc. These categories are composed of targets, in the ‘environmental’ category, for example, linked to greenhouse gases, renewables, hazardous materials, etc.

‘Prevalence’ refers to the percentage of companies which feature a certain metric/measure at least once in their incentive plans. E.g., for executives at Lloyds Bank, 5% of their bonus will be linked to carbon emissions*. Thus Lloyds would be included in the prevalence statistics of environmental metrics and greenhouse gas measures.

Environmental metrics maintains its impressive momentum. The prevalence of environmental metrics grew by 11 percentage points (pp) across the globe to 61%. This was the fastest growth among all metrics this year and is the second fastest since this research began.

The UK remains a top-three adopter of environmental metrics at 72%. The UK’s third place is only 3% behind South Africa, though Europe still humbles the rest at 84%.

2023’s fastest environmental growth rate goes to the US at 18pp. Considering that this now places it in fourth place all the way from last in 2020 and its pre-eminence globally, this is welcome news.

Environmental metrics grew across all industries, with healthcare seeing an exceptional growth of 29pp.

Unsurprisingly, greenhouse gas emissions continue to dominate environmental metrics after a single-year 21pp rise to 83% prevalence, almost 3x higher than the next most prevalent metric, renewable energy.

Despite environment’s formidable progress, social measures retain their crown as most prevalent at 76%. This is propelled by Diversity and Inclusion which continues to be the top social measure at 65%. Though all other social measures have seen growth in 2023 after 3 years of weak or negative growth; since 2020, the incidence of employee turnover metrics has doubled and the adoption of workplace policies metrics has tripled.

Finally, we wondered last year if community measures would emerge from its status as an after-thought. It remains in last place at 20%, significantly behind the rest. Yet it is not untouched by 2023’s fortunes. The adoption of community measures is double 2020’s 10%, after its largest single-year growth of 7pp.

MM&K, together with the GECN group, publishes research annually on how ESG shapes CEO incentive pay in the world’s top companies. This is the comprehensive guide to ESG in the FTSE100, S&P100, ASX100, DAX30, CAC40, TSX60, JSE TOP40, SMI20, and STI30.

For further discussion on this article or information on MM&K’s products and services, please do not hesitate to contact James Sharp.

*Lloyds bank annual report for year ending 2023/12/31

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