Merging Paths: Sustainability and Executive Compensation
By Michael Schweibinz
Executive compensation and sustainability were two popular themes in the media in 2013. Conversations about these two important topics have spread from offices to social media sites, and finally, to courtrooms.
We have witnessed much improvement by companies regarding sustainability, yet little movement by boards to more closely align executive pay with average employee compensation. According to a study by the Economic Policy Institute, the huge gap that exists between the top wage earners and the middle is the result of a boom in executive compensation, which rose 876% between 1978 and 2011.
Today, many executives are receiving bonuses for cutting emissions, improving efficiency, and achieving clean technology goals. While these new incentive programs won’t solve the problem of sky-high executive compensation, they may begin to improve sustainability on a global scale.
For this report, Glass Lewis reviewed the constituents of indices in 11 global markets and found that “42% of these companies provide a link between executive pay and sustainability, a considerable increase from two years ago, when only 29% of companies provided such a link.”
As executives guide firms down greener roads, companies gain financial, reputational, and cultural benefits. This is why sustainably oriented companies tend to be better positioned over the long-term; and also why business owners, investors, and pension funds are all gaining competitive advantages by integrating sustainability into operations.
First Affirmative understands that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?
Posted: January 22, 2014