ESG Measures Here to Stay, Farient’s Global Research Finds

November 17, 2022

For environmental, social, and governance (ESG) measures, it’s been a year of ups and downs. Pushback against ESG by anti-woke detractors has been countered around the globe by stakeholders—including investors and regulators—committed to understanding the relationship between corporate ESG initiatives and actual CEO performance. For a sixth consecutive year, Farient Advisors in conjunction with the Global Governance and Executive Compensation Group (GECN) analyzed the executive compensation practices of 500+ of the world’s largest companies. In its just-released report, 2023 Global Trends in Stakeholder Incentives: The Staying Power of ESG, Farient Advisors documents a now three-year worldwide trend for the largest corporations to incorporate stakeholder metrics into executive compensation.

Farient’s conclusion: Linking executive pay to stakeholder incentives is here to stay. For boards of companies, the research provides important insights into how corporate pay is being aligned with stakeholder metrics to better assess management performance and accountability.

Other key takeaways from this year’s research include:

  • More than three-fourths of large companies now incorporate stakeholder measures into their incentive plans
  • This prevalence is up by 5 percentage points compared to 2021 and 14 percentage points compared to 2020
  • Differences between regions are reflective of each region’s industrial base, cultural norms, and local regulations. However, all regions but Canada are moving in the same direction—up
  • Europe, the U.K., Australia, and South Africa lead the market with over 80% of large companies incorporating stakeholder measures into their incentive plans

Download the full report here.

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About Farient Advisors 

Farient Advisors provides a comprehensive array of services to boards and management including compensation program design, performance measurement, goal setting and pay for performance alignment, board of directors’ compensation, stakeholder incentives (climate, diversity, equity, and inclusion (DEI), transactions (mergers and acquisitions, spinoffs, pre-IPO/SPACs), and shareholder communications. Farient has locations in Los Angeles, New York, Louisville, and Dallas and is a founding partner of the Global Governance and Executive Compensation Group (GECN), serving clients in more than 35 countries. Farient is recognized by the Women’s Business Enterprise National Council as a certified diverse company.

 

 

 

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