PwC and the London Business School have published a report into the linking of executive pay to ESG goals revealing that half (45 per cent) of FTSE 100 companies now have some form of ESG link.

Breaking this figure down shows that 45 per cent of FTSE 100 companies have an ESG target in the annual bonus, the long-term incentive plan (LTIP), or both. 37 per cent use ESG in annual bonus with an average weighting of 15 per cent and 19 per cent of the FTSE 100 use ESG in LTIP with an average weighting of 16 per cent.

The most common category of measure in the bonus is social, including measures focusing on diversity, employee engagement, and health and so on, whilst the most common category of measure in the LTIP is environmental, typically measures focusing on decarbonisation and the energy transition.

The report differentiates between ‘old’ ESG measures such as health and safety rising new ESG measures around climate change, sustainability and diversity.

The report analyses the current market practice, the reason behind the concept and how a system can be created and implemented.

Full report here</b>.