Employers plan to tie executive pay to D&I, climate initiatives, survey shows

Dive Brief:

Employers are accelerating their environmental, social and governance (ESG) priorities and that includes aligning executive incentive plans with ESG goals, according to the Dec. 9 results of a Willis Towers Watson survey. Seventy-eight percent of respondents said they are planning to make this change over the next three years.
Employers named target setting (52%), performance measure identification (48%) and performance measure definition (47%) the greatest challenges in applying ESG goals to executive incentive plans.
In the interest of improving equity, 73% of employers have implemented at least one diversity and inclusion initiative while 43% have completed a pay equity analysis and 46% are engaging employees through "listening strategies." The report also said 3 in 10 respondents created a new executive role focused on ESG strategy. "We know from our research and consulting that companies’ focus is on a stronger alignment of executive compensation plans and ESG priorities, particularly with climate change and environmental measures, inclusion and diversity matters, and overall human capital governance," Shai Ganu, global head, executive compensation, at Willis Towers Watson said in a statement.

Dive Insight:

The Willis Towers Watson report cited the coronavirus pandemic, this summer’s protests against structural racism and increased interest from institutional investors as the trends driving the shift to greater accountability for executives around ESG goals and measures.

ESG covers a wide range of potential initiatives and incentives, but the changes made by organizational leaders during the past nine months appear to line up with the Willis Towers Watson findings.

LinkedIn reported that job postings for roles in diversity doubled, and LinkedIn was also one of a number of learning providers to share with HR Dive that investment in D&I training increased significantly. Many companies, such as Best Buy, have pledged significant amounts of money to combat equity problems related to their industry or region.