Nearly three quarters of S&P 500 companies included at least one environmental, social or governance metric in short-term or long-term plans in 2023, up slightly from the previous year.
Meridian Compensation Partners said in a report that 73% of S&P 500 companies included at least one ESG metric in incentive plans in 2023, compared to 68% in 2022. Use increased in all ESG categories, with environmental increasing the most. Diversity and inclusion, carbon footprint, emission reduction and employee engagement each grew 5% year-over-year.
However, the stated or implied weighting of ESG metrics was low at only between 5% and 15% of short-term incentive opportunity. The analysis was based on data provided by ESG data analytics firm ESGAUGE from proxy statements filed between 16 April 2022, and 15 April 2023.
Social metrics were the most common metric, used by 66% of the sample, more than double either of the other two categories. Environmental metrics were used by one third (32%), and 22% had governance metrics. Nearly one quarter (24%) of the sample had metrics that reflect general ESG measurement according to the report.
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