July 19, 2022 Executive Compensation ESG & Human Capital Management Reports

2022 ESG & Incentives Reports S&P 500 Analysis

Examining the prevalence of various ESG metrics in incentives across S&P 500 companies

The adoption of ESG metrics in incentive plans has become the majority practice among S&P 500 companies, aligning with growing stakeholder interest in ESG issues.

Diversity & Inclusion continues to be the most prevalent ESG metric, while carbon footprint has shown the largest increase in prevalence year over year. Additionally, ESG metrics are predominantly included in annual incentive programs vs. long-term incentive (LTI) programs; however, ESG metrics in LTI plans are slowly gaining traction. Within incentive plans, the use of ESG metrics as part of a ‘scorecard’ continues to be the most common design approach.

Moving forward, we anticipate that ESG metrics will continue to become more prevalent among S&P 500 companies before hitting an eventual plateau.

Contributors

John Borneman

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