Key Points
Some 54% of S&P 500 companies incorporated climate-related metrics into their executives compensation plans in 2023more than double the figure from two years earlier, according to a January report from the Conference Board and ESGauge, a data analytics firm..
Butexperts say how a company ties pay to climate is crucial, with some methods more effective than others..
Companies that are serious about rewarding for climate goals should also break down their long-term targets into smaller, clearly achievable and measurable goals, says Larcker, who is also a distinguished visiting fellow at the Hoover Institution, a public-policy think tank..
The company moved up from a D-minus in 2022 by replacing an unmeasurable climate-related metric" with a quantitative emissions-reduction metric in its CEOs long-term compensation package, according to the foundation..
Even companies that are moving toward their climate targets can have setbacks due to reasons beyond their control, so there needs to be some flexibility built into compensation plans, saysPaul Washington, executive director of the Conference Board ESG Center..
