Foodservice Footprint Unknown-copy-3 CEOs not rewarded for sustainability leadership Foodservice News and Information Out of Home sector news  news-email

CEOs not rewarded for sustainability leadership

Less than one in ten UK CEOs have their pay linked to the environmental sustainability of their organisation.

Researchers found that only 6% of UK CEOs have in their bonus a KPI focusing on the environment, and less than 1% have long-term incentives focused on this area.

The study, by researchers from the Executive Remuneration Research Centre at Belgium’s Vlerick Business School, examined the pay levels, habits and incentives of CEOs and CFOs in 899 major European companies including 159 UK firms.

Data on the 159 UK companies revealed that over 90% of CEOs were given no financial incentive to focus on sustainability or environmental initiatives. This is despite a general consensus among business leaders that there is a climate crisis.

“They now understand how their practices are impacting the environment, and are actively looking to implement initiatives that focus on being more environmentally friendly. However, our research shows that for the overwhelming majority of UK firms, there is no incentive for the top CEOs to enact these environment focused initiatives and policies,” said lead researcher Professor Xavier Baeten.

Despite a clear lack of environmental KPIs, Baten said it would not be effective for governments to look to impose such KPIs on companies. “It would be much more effective and beneficial if firms think about exactly how the climate crisis will affect them and then look to first develop a sustainability strategy focusing on what are for them the most important topics of this, taking into account their business. Then, after identifying these, firms can select the relevant KPIs to include in CEOs remuneration”.