The journey of ESG in managerial compensation

The paper authored by Sandro Catani entitled The ESG journey in executive compensation: trends and proposals examine the use of ESG performance metrics in executive compensation policies, a growing trend among U.S. and European publicly traded companies.

The analysis links the growth of these metrics to firm fundamentals, to the regulatory framework as well as the influence of institutional shareholders. Our findings also suggest that the adoption of some improvement in materiality of ESG metrics as well the adoption of more standard framework of measures  in managerial  scorecard could be accompanied by improvements in ESG performance and more meaningful changes in the compensation of executives. Therefore we recommend some questions to Boards and to Remuneration Committees in order to improve the link between sustainable value and ESG pay linked