Newsletter: New Global Research Shows Different Paths to Stakeholder Value

New Global Research Shows Different Paths to Stakeholder Value

Dear Friend,

Investors around the globe are pressuring boards and management for greater accountability. Meanwhile, other stakeholders, including employees and the communities in which businesses operate, are demanding that corporations provide greater transparency and clearly defined commitments to ESG goals. Stakeholder stewardship is seen as vital to value and profitability.

The 2022 and Beyond: Global Trends in Stakeholder Incentives research is based on findings from publicly disclosed information representing more than 500 global companies to discern patterns in corporate governance across multiple industries and countries. This annual report, our fifth, is published by Farient Advisors in partnership with the Global Governance and Executive Compensation (GECN) Group, where Farient is a founding partner. This year’s research provides insights into “stakeholder incentives,” and identifies the measures that compensation committees are including in their executive pay programs to align pay and performance with pledges for carbon neutrality and greater diversity, equity, and inclusion (DE&I).

One of the report’s key findings is that companies are accelerating their ESG journeys as the value of corporations is redefined by governments, employees, investors, and society at large.

Findings from this year’s report suggest several major implications for boards and management, including:

• Companies are still early in their long journey toward developing stakeholder strategies, measures, and incentives
• Use of stakeholder incentives continues to increase
• The most meaningful gain in the use of stakeholder-incentive measures is in the environmental realm
• While many firms have started incorporating stakeholder interests into their pay plans in a qualitative way, the trend is toward greater quantification
• The speed of change is faster than we think

In a year certain to be marked by increased investor and regulatory activism around environmental, social, and governance (ESG) issues, it’s paramount boards think about concrete ways to link incentives to stakeholder metrics that are clear, quantifiable, and attainable; “talking the talk” is no longer enough.

Throughout the year, Farient will publish more detailed analyses of the research findings, geared toward helping directors and executives understand where your industry and company are on the stakeholder journey; what you need to do now; and how to best communicate these processes and goals to often skeptical investor audiences.

View the Newsletter via the link below:

New Global Research Shows Different Paths to Stakeholder Value