More Companies Link Executive Pay to Sustainability Targets
How do you get management to make progress on social, environmental and governance goals? Make their compensation depend on it.
Originally posted on Wall Street Journal
By Tatyana Shumsky
When Floris Fooij proposed a $1.7 million upgrade for the vitamin plant he oversees in New Jersey a few months ago, he did something he wouldn’t have done in the past: He mapped out for the finance team how the upgrade would affect the firm’s greenhouse-gas emissions.
His employer, the Dutch life-sciences and specialty-materials maker Koninklijke DSM NV, in recent years had tied the bonuses of operational managers such as Mr. Fooij to corporate energy-efficiency and emissions-reduction targets.
That meant that in addition to presenting the business case for the upgrade—it would pay for itself in a few years, according to Mr. Fooij—he also had to demonstrate that it wouldn’t increase the company’s emissions, or risk not getting his full bonus.
