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Laxman Pai, Opalesque Asia: An analysis shows that the vast majority (78%) of top major European companies have now adopted some measure of carbon target in executive pay, with payouts in carbon targets disclosed in 2022 averaging at 86%, and over half paying out at 100%.
The new joint study from PwC UK and the London Business School (LBS) that analyzed executive pay outcomes and links of the 50 top European blue-chip companies on the STOXX index revealed that 68% are using approved science-based targets in these payment plans.
The report also shows that the bigger carbon emitters are more likely to put carbon measures in executive pay, and are therefore more likely to score well against investor expectations.
The STOXX 50 companies are broken down into two sub-categories: the 'Climate Action 100+' ((CA100+)14 out of the 50 companies) and the 'non-Climate Action 100+' ((non-CA100+) 36 out of the 50 companies), to look at differences in approaches.
The levels of maturity in carbon reduction strategies are similar in CA100+ and non-CA100+, with 68% using SBTi-approved carbon reduction plans. The report also highlights that 80% of CA100+ companies that have an explicit carbon measure in pay have a broad statement linking this carbon measure to their long-term company plan (vs 72% of non-CA100+ companies). By contrast, only 10% of CA100+ companies provide a more comprehensive link (e.g. supported by numbers) versus 11% of non-CA100+ companies.
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