Cole Darrow
Human Capital Management
Reports & Downloads
Volume 1 |
Published October 10, 2024
2024 ESG + Incentives Reports S&P 500 Analysis
Volume 1 |
Published October 10, 2024
Examining the prevalence of ESG metrics in incentives across S&P 500 companies
The inclusion of Environmental, Social, and Governance (ESG) metrics in incentive plans has reached a more stable phase after several years of growth, with prevalence changing from 72% in FY2022 to 74% in FY2023. Companies continue to shift their focus from adoption to refinement of existing ESG metrics and structures (e.g., adjust existing plans away from discretionary incentives and towards weighted metrics).
Human Capital Management’s (HCM) metrics continue to be the most prevalent category of ESG metrics (71% of S&P 500 companies), driven by stakeholder focus on retention issues, talent competition, and relative ease of measurement compared to other ESG metrics. While Diversity & Inclusion remains the most prominent HCM metric at 54% of S&P 500 companies, other Human Capital Management (HCM) metrics, particularly those focused on talent and retention, have grown more rapidly as companies adopt a more holistic approach to HCM. At the same time, Environmental metrics maintain a notable year-over-year shift of +7%, likely driven by stakeholder pressure and the increased focus on the SEC climate disclosure rules, which have yet to be formally approved.
The data presented reflects decisions made in early 2023 (i.e., before the Supreme Court ruling on affirmative action and finalization of the SEC environmental rules) and, therefore, may not reflect the more critical responses to ESG metrics and sociopolitical backlash. We anticipate there to be heightened movements within ESG metrics in 2025 proxies.
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