Companies reduce climate goals in executive pay structures

Many large companies are changing how they link executive pay to climate goals. This shift comes as resistance against environmental, social, and governance (ESG) initiatives grows in the U.S. Companies like UBS, HSBC, BP, and Starbucks are leading this trend. In recent reports, UBS omitted commitments to reduce emissions in key areas like real estate and cement from their executives' compensation plans. Similarly, Standard Chartered adjusted its bonus plans by removing targets related to financed emissions. HSBC reduced the focus on environmental goals in its pay plans, which drew feedback from shareholders. While these companies have not completely removed climate metrics from pay structures, there is a noticeable shift. Some organizations still maintain sustainability targets, but overall, the number of U.S. companies linking executive pay to these goals has stalled, according to the Conference Board. Andrew Page from PwC noted that there is a divide in interests regarding these targets between U.S. and European investors. Companies that had previously tied pay to sustainability goals are now reassessing their approach. BP and Starbucks have also announced changes, removing specific climate-related targets from pay plans. Experts warn that, while linking pay to climate goals can prioritize environmental issues, easily attainable targets might not lead to real progress. Instead of punishing companies for failing to meet these goals, pay structures often provide rewards for achieving them, leading to concerns that they do not incentivize significant change. Overall, as companies adjust their incentive plans, there is uncertainty about the effectiveness of these measures in promoting genuine sustainability efforts.