Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Fortune
Fortune
Alan Murray, Nicholas Gordon

CEOs need to pay attention to climate metrics—or risk getting a smaller paycheck

(Credit: Getty Images)

Good morning.

If you want to know how serious companies are about climate, take a look at their executive pay practices. A new report from the Conference Board, out today, says 54% of S&P 500 companies now have climate metrics in their CEO pay plans. That’s up from just 25% in 2021.

Interestingly, the practice was most common with energy companies. The share of Russell 2000 energy companies using climate metrics in CEO pay calculations was 68%, up from 37% in 2021.

Diversity and inclusion metrics have also jumped. They were found in the pay plans of 75% of S&P 500 in 2023, up from 52% in 2021.

The study also found that incorporating ESG metrics into pay packages is much more common among big companies than small ones. In the Russell 3000, only 24% of companies with revenues under $100 million reported using ESG performance metrics, while the share rose to 83% for companies with revenues of $50 billion or more.

The report’s conclusion: The “ESG backlash, which has been mounting since early 2022, has not dissuaded companies from continuing to integrate ESG-related performance metrics into the incentive plans for their CEOs and senior executives.” Indeed, a full 76% of S&P 500 companies now include some measure of ESG performance in their compensation design (up from 66% in 2021.)

The Conference Board produced the study with FW Cook and ESGAUGE, and gave CEO Daily an early look. You can find the full report this morning here. And catch our year-end wrap-up on the Leadership Next podcast here. (In it, I disclose my favorite CEO interview of the year—apologies to all the others!)

More news below.


Alan Murray
@alansmurray

alan.murray@fortune.com

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.