Bonuses tied to green issues

2nd July 2015

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  • Business & Industry ,
  • Corporate governance ,
  • Management


James Kent

Most of the world's 500 largest companies now link executive bonuses to environmental factors, according to Newsweek's 2015 green rankings.

The magazine rated the 500 biggest publicly-traded companies according to how well they manage energy, greenhouse-gas emissions, water and waste.

It also considered the proportion of revenue that came from products and services that contribute positively to the environment.

In addition, the ranking took account of whether senior executive pay was linked to corporate environmental performance, if the mandate of board members was linked to the sustainability of the company, and if environmental metrics were audited by a third party.

This year’s rankings showed for the first time that the majority of global businesses (69%) linked at least part of their executive bonus to issues such as energy use and greenhouse-gas emissions, Newsweek said. Ten years ago, less than 10% of companies did so, it added.

All 29 UK companies in the rankings now have executive pay linked to sustainability, Newsweek found. These include Reckitt Benckiser, which came third overall, scoring particularly highly on energy (14.3% out of a possible 15%). Unilever was seventh, its waste management being the most highly ranked indicator (14.5% out of 15%), and BT came 10th, scoring 16% out of 20% for providing products that contribute to sustainability.

The rankings were created by investment business Corporate Knights Capital and ratings firm HIP Investor Research using data from Bloomberg and the CDP. Newsweek acknowledges that the research fails to take into account the context of resource use. For example, water used in a dry area may have more impact than where rainfall is high, it said.


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