- 78% of major global companies now integrate sustainability metrics into board-level pay packages.
- 88% align ESG targets in pay to material sustainability topics like emissions, workforce diversity, and safety.
- 37% include ESG metrics in both short- and long-term incentives, with EU firms leading in long-term integration.
Tying executive compensation to sustainability isn’t just a governance trend—it’s a powerful lever to drive long-term value. A global review of 375 large publicly listed companies reveals that nearly 8 in 10 already incorporate ESG goals into boardroom pay.
“A company’s strategic course is set by its management, yet it is these managers who must help ensure that this course is adhered to in their daily decisions.”
By embedding ESG performance into variable pay, businesses are sharpening executive focus on climate, diversity, safety, and other material risks and opportunities that may fall outside traditional business cycles.
The data:
- 375 companies across 15 countries (including US, UK, China, and EU members) were reviewed by KPMG using 2023 public disclosures.
- 78% link executive compensation to sustainability-related targets.
- 88% of those aligning pay to ESG focus on topics core to their business.
- Climate goals often target emissions reductions, while workforce-linked goals include employee engagement, gender diversity among managers, and injury rates.
- Breakdown of ESG integration in pay:
- 37% use both short- and long-term sustainability targets
- 23% use long-term only
- 40% use short-term only
- EU companies are more likely to blend both time horizons.
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“Remuneration is one strategic pillar of a robust governance model.”
Strong alignment between pay and ESG performance can signal disciplined long-term governance. Materiality is key—companies are most effective when sustainability incentives reflect the risks and opportunities central to their business strategy.
“Linking strategic priorities to the key governance setup of a company remains an aspect of utmost importance to stakeholders, particularly investors.”
Methodology at a glance:
- Companies analyzed: 375 (25 largest by market cap in each of 15 countries).
- Sources: 2023 annual, sustainability, and compensation reports.
- Conducted: July–August 2024 by KPMG professionals.
- All findings were based on public data; no direct company submissions.
- Builds on KPMG’s earlier May 2024 report that showed similar patterns, particularly in the Netherlands.
“We hope this report can serve both as an inspiration and a contribution to debates within companies and between stakeholders.”
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