Performance on sustainability targets shapes top execs' pay
performance-based pay of their chief executives and senior management, to factor in the company's sustainability goal outcomes in appraisal KPIs amid their increasing influence on investor and consumer sentiments.
Companies including ITC, Hindustan Unilever (HUL), Mahindra & Mahindra, Lupin, Cipla and Emaar have started to link their performance in areas like water and carbon positivity, plastic neutrality, climate-resilience, and diversity and inclusion in hiring to the remuneration of their senior management. This comes at a time when ESG (environment, social and governance practices) is becoming a buzz word in business deals, investment decisions and even consumer response to products, industry experts and executives said.
ESG goals are becoming more common in annual KPIs (key performance indicators) for executive leaders, said Anandorup Ghose, partner at Deloitte India. While the weightage to these goals varies by industry, approximately around 10-15% weightage is assigned to ESG-linked metrics, he said.
«These goals are not cascaded very deep into the organisation — some functional areas would have a greater coverage than others — but these definitely exist in some way or form in CXO goals,» Ghose said.
Until recently, performance-oriented pay was linked with a company's performance in areas like Ebitda, net profit, revenue, market share, share price movement, cost reductions and so on.
That is changing as the boards of large companies are becoming more aware of the rising significance of and emphasis on
