First-of-a-kind Report Analyzes how TSX 60 Companies (Do or don’t) Compensate Executives for Sustainability Performance
April 3, 2013 /3BL Media/ - Coro Strandberg, CBSR Associate and sustainability thought-leader has released a ground-breaking report, Sustainable Pay: how TSX 60 companies compensate executives for sustainability performance. According to the report, 57 per cent of the TSX 60 companies consider sustainability in their annual incentive plans while 35 per cent do not and eight per cent do not disclose this information. None pay bonuses to executives for long-term sustainability performance.
The report provides unique analysis and recommendations for the emerging area of incenting executives for sustainability performance.
Timed to coincide with the spring release of corporate management reports, this report is a must-read for investment analysts, boards, compensation/human resources advisers and executives. It provides 2011 results for comparison with the newly reported 2012 compensation practices. This information will equip compensation committees to design enhanced incentive packages for 2014.
“Mounting evidence shows firms that invest in improved sustainability practices outperform their competitors.” says Strandberg, who also advises boards and executives on sustainable pay incentives. “In order to improve corporate sustainability performance, executives need proper incentives. But there are no universal standards that link sustainability performance to executive pay. This research will help to close that gap. With increasing disclosure, analysis and demonstrated results we will see progress in this emerging compensation field.”
Top findings of the Sustainable Pay report suggest:
- Eight companies set explicit sustainability performance targets.
- Safety (reduced injuries) and environment (reduced spills and leaks) are the top priorities for sustainable pay, showing a heavy reliance on compliance-oriented sustainability goals.
- A focus on protecting corporate value and mitigating risk. Few metrics focus on creating value and enabling new opportunities for a company’s growth.
- A lack of metric consistency across sectors to enable comparison.
- Canadian practices in sustainable executive pay are similar to global practices in this area with the exception of a greater global focus on incentives for growing green product portfolios and reducing energy use and greenhouse gas emissions, which contribute to climate change.
“I welcome Coro Strandberg’s first-of-its-kind systematic study into the sustainable pay practices of TSX 60 companies,” says Toby Heaps, co-founder and chief executive officer of Corporate Knights. “Her finding that 57 per cent of companies already consider sustainability factors in the annual incentive plan shows that the Rubicon has been crossed. While sustainable pay is still a wild west, this report contains many sensible recommendations for harnessing its power to build better companies and a better world.”
About Coro Strandberg
Coro Strandberg is a Canadian leader in sustainability and corporate social responsibility. She advises companies that seek to improve their social and environmental performance and impact. Coro specializes in sustainability and the role of the board, executive compensation, human resource and risk management and business integration. She also advises industry associations on how to enhance sector-wide sustainability performance. For 12 years Coro was a director of Vancity Credit Union, including three years as board chair, where she was involved in executive compensation programs. She recently released with Canadian Business for Social Responsibility the Transformational Company Qualities, a roadmap tool to help companies accelerate their sustainability innovation and performance.
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