Business slow on tying ESG performance to remuneration

While environmental, social and governance (ESG) matters are being taken more seriously by Irish business leaders, companies are still hesitant about tying ESG metrics to remuneration.

A survey by the the Institute of Directors (IoD) in Ireland and the Diligent Institute reveals a significant increase in the discussion of ESG matters within Irish boardrooms since the pandemic.

Eight out of 10 respondents said ESG matters are discussed at board level at least once a year, whereas just over half (52 per cent) said their board discussed the issue before March 2020.

The survey also reveals a hesitancy towards tying metrics to directors’ remuneration, with just 17 per cent of respondents saying they already do so. However, this figure is expected to more than double to 37 per cent in 2021.

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Key role

IoD in Ireland chief executive Maura Quinn said:"From a national and global perspective, there is a greater sense of urgency regarding environmental and sustainability issues.

“Companies have a key role to play in society and in influencing the changes needed for the world to attain the goals set out by global leaders at events like last week’s Cop26.

“Business leaders can lead from the front by incorporating ESG matters as a priority at the executive and board level and embedding them in corporate activity,” she said, noting the onset of the Covid-19 pandemic has marked a turning point for ESG in Irish boardrooms.

Executive director of the Diligent Institute Dottie Schindlingersaid: “Irish boardrooms are mirroring global trends with an increasing focus on ESG. Companies are under sustained pressure to take action on ESG matters, such as climate action and social justice issues – and this pressure only increased during the pandemic.”