KPMGInternationalkpmg.com/esgLinkingsustainabilitymetricstoboardmembers’payIncentivizinglong-termvaluecreationContentsForeword03Introduction04Keyfindings06Methodology08Adoptionofsustainabilityinboardroompay1013Topicsusedforsustainabilitytargets17Short-termandlong-termsustainabilitytargets20Recommendations22HowKPMGcanhelpBackground2325Appendix©2025CopyrightownedbyoneormoreoftheKPMGInternationalentities.KPMGInternationalentitiesprovidenoservicestoclients.Allrightsreserved.2|Incentivizinglong-termvaluecreation:Linkingsustainabilitymetricstoboardmembers’payForewordCompanieshavemadesignificantprogressinrecentyearsinidentifyingtherisksandopportunitiesrelatedtohowsustainabilityisconsideredinacompany’sstrategy.However,inmanyinstances,therealizationoftheseopportunitiesorrisksfallsoutsidethenormalbusinessplanningcycle.Therefore,incentivizingsustainability-mindedbehaviorisakeyelementofanoverallgovernancemodelthatsupportsday-to-daydecision-making.Acompany’sstrategiccourseissetbyitsmanagement,yetitisthesemanagerswhomusthelpensurethatthiscourseisadheredtointheirdailydecisions.Aneffectivewayofprovidingthemwithfurtherincentivestostayoncourseistoanchorthecompany’ssustainabilitytargetsintheirremuneration,inthesamewayasotherstrategicaims.Consequently,linkingstrategicprioritiestothekeygovernancesetupofacompanyremainsanaspectofutmostimportancetostakeholders,particularlyinvestors.Remunerationisonestrategicpillarofarobustgovernancemodel.Forthisreason,themanagementboardpaysystemisakeyaspectofcorporategovernanceforacompany’sshareholders.Withthisoverviewof375companiesfrom15countries,wetakestockoftheintegrationofsustainabilitycriteriaintoboardmembers’pay,findingthatanimpressive78percentofthesecompaniesalreadydoso.Wehopethisreportcanservebothasaninspirationandacontributiontodebateswithincompaniesandbetweenstakeholders.Nadine-LanHönighausGlobalESGGovernanceLead,KPMGInternationalandPartner,KPMGinGermanyIntroductionKeyfindingsMethodologyAdoptionofsustainabilityinboardroompayTopicsusedforsustainabilitytargetsShort-termandlong-termsustainabilitytargetsRecommendationsBackgroundAppendixHowKPMGcanhelpForeword©2025CopyrightownedbyoneormoreoftheKPMGInternationalentities.KPMGInternationalentitiesprovidenoservicestoclients.Allrightsreserved.3|Incentivizinglong-termvaluecreation:Linkingsustainabilitymetricstoboardmembers’payIntroductionForewordIntroductionKeyfindingsMethodologyAdoptionofsustainabilityinboardroompayTopicsusedforsustainabilitytargetsShort-termandlong-termsustainabilitytargetsRecommendationsBackgroundAppendixHowKPMGcanhelpIntroduction©2025CopyrightownedbyoneormoreoftheKPMGInternationalentities.KPMGInternationalentitiesprovidenoservicestoclients.Allrightsreserved.4|Incentivizinglong-termvaluecreation:Linkingsustainabilitymetricstoboardmembers’payExecutivepayisacriticaltopicforseveralreasons.Itaimstoensurethatthecompensationofboardmembersisalignedwiththecompany’slong-termgoalsandperformance,motivatingexecutivestoworktowardsthesustainablesuccessoftheorganization.Awell-structuredremunerationsystempromotestransparencyandaccountability,whichareessentialforgoodcorporategovernance.Italsomaintainsfairnessbyensuringthatthecompensationisappropriateandreflectiveoftheexecutive’scontributionstothecompany.Additionally,executiveremunerationplaysasignificantroleinattractingandretainingthebestpeople...
