Linking pay to ESG targets ‘could have unintended consequences’
Around 45% of the FTSE 100 now have ESG targets in their bonuses and LTIPs—but a new study warns there are risks involved.
Image: NPFire/Shutterstock
The inclusion of ESG targets into executive pay may be happening at high speed but it comes with a warning: it may prove "no panacea" and produce “unintended consequences”.
A new study from London Business School and PwC finds that 45% of the FTSE 100 include an ESG target in their annual bonuses or long-term incentive plans (LTIPs), or both, for executives.
The research also revealed that 37% use an ESG target in the annual bonus, with an average weighting of 15%; almost a fifth of the UK’s largest listed companies use ESG in LTIPs, with an average weighting of 16%.
“New” ESG measures are becoming more popular. Companies h
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