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Building ESG metrics into executive remuneration

A new report delves into issues such as the subjectivity of ESG metrics, their possible abuse, and where Asean stands on such practices

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Michelle Quah

Michelle Quah

Published Mon, May 23, 2022 · 05:50 AM
    • Incorporating ESG metrics into executive remuneration is not a simple matter of merely selecting some measures and linking them to executive remuneration; ESG must be integrated into strategies, policies and practices of a company, says Prof Mak Yuen Teen, author of the report “Integrating ESG Factors Into Executive Remuneration”.
    • Incorporating ESG metrics into executive remuneration is not a simple matter of merely selecting some measures and linking them to executive remuneration; ESG must be integrated into strategies, policies and practices of a company, says Prof Mak Yuen Teen, author of the report “Integrating ESG Factors Into Executive Remuneration”. Mak Yuen Teen
    220523_MQREPORT23 - Hyrie.pdf

    THE rapidly burgeoning level of interest in environmental, social and governance (ESG) matters among companies, investors and regulators has led to increasing calls for ESG metrics to be incorporated into executive remuneration. But scepticism remains about how this should be done, even among investors who rate ESG issues highly.

    Among the concerns are the subjectivity of ESG metrics and their possible abuse. Using quantifiable ESG metrics may reduce the possibility of abuse, but may not necessarily capture the most critical ESG factors for a company.

    A report launched on Monday (May 23) — Integrating ESG Factors Into Executive Remuneration, led by corporate governance advocate Mak Yuen Teen — attempts a deep-dive into the issue and some of its concerns.

    ESGCorporate governance

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