CEO pay should not be tied to ESG goals

THANK you for the ESG article on holding the bosses accountable for matters relating to environmental, social and corporate governance (ESG) goals (“Singapore listcos lag in climate disclosures, with ‘uneven’ quality: review”, BT, Nov 23) which noted that fewer companies are linking top executive pay to sustainability performance.

I am afraid I do not agree with the idea of attaching ESG goals to the remuneration packages of C-level executives of public-listed companies.

All C-suite executives of listed companies and owners of small and medium enterprises have the primary responsibility of driving and creating shareholder value, and that means growing the business, generating higher revenues and higher profits.

Public-listed companies have numerous board committees, including for remuneration, compliance, audit and ESG.

It should be the ESG committee that should set the company’s net-zero targets and the game plan to accomplish the goals within the planned timeline.

Let’s not forget that ESG is not a target; it’s not a result. It is a culture, a mindset, a thought process to develop policies and strategies to achieve the company’s net-zero goals.

Singapore will be imposing a carbon tax on public-listed companies beginning next year, squarely targeted at the “corporate-level” to do good. Therefore, it naturally follows that the responsibility falls on the board and the firm’s ESG committee.

The carbon tax is essentially a penalty on the company for its carbon footprint; a “stick” to get the corporate to get down to action to generate CO2 offsets and/or CO2 credits to reduce its carbon footprint.

So we really do not need to confuse the situation by trying to inappropriately attach ESG goals to the remuneration packages of C-level executives. As I said, ESG is a mindset and a thought process; not a goal.

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Singapore listcos lag in climate disclosures, with ‘uneven’ quality: review

Andrew Dekguang Jhou Chew

Executive chairman & CEO, Lignoson