Bonuses Padded by Cryptic ESG Claims Draw Activist Scrutiny
- Investors want clearer disclosures for executive compensation
- Roughly 33% of largest companies now tie part of pay to ESG
The Novo Nordisk A/S headquarters in the Bagsvaerd suburb of Copenhagen, Denmark.
Photographer: Carsten Snejbjerg/BloombergThis article is for subscribers only.
As companies increasingly tie executive pay to ESG, there’s evidence to suggest the add-on is being used to enable bigger remuneration packages without leading to any meaningful environmental, social or governance improvement.
In response, activist shareholder groups are demanding more disclosures around ESG-linked pay to force companies to produce transparent metrics. Currently, many of these bonuses are shrouded in vague language, according to US-based nonprofit As You Sow, which focuses on investor issues ranging from climate change to gender inequalities.