The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Sat, 19 Sep 2020 11:43:30 +0000 en-US hourly 1 https://wordpress.org/?v=5.4.2 ESG Issues in the Forefront https://corpgov.law.harvard.edu/2020/04/15/esg-issues-in-the-forefront/ https://corpgov.law.harvard.edu/2020/04/15/esg-issues-in-the-forefront/#respond Wed, 15 Apr 2020 13:00:58 +0000 https://corpgov.law.harvard.edu/?p=128385?d=20200415090058EDT Posted by Robert Newbury, Don Delves, and Ryan Resch, Willis Towers Watson, on Wednesday, April 15, 2020
Editor's Note: Robert Newbury is Director, and Don Delves and Ryan Resch are managing directors at Willis Towers Watson. This post is based on their Willis Towers Watson memorandum. Related research from the Program on Corporate Governance includes Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here); and The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here).

The ongoing coronavirus pandemic has brought the issues of employee safety and engagement, community support, compliance and stakeholder communications to the forefront of most companies’ responses. S&P 500 companies are well on their way to integrating ESG in their compensation and human capital governance programs, but there is still work to do to meet the increasing demands of stakeholders.

A slim majority of S&P 500 companies use environmental, social and governance (ESG) metrics as part of their compensation evaluations, Willis Towers Watson research finds. This comes at a time when public statements of support from major business leaders and investors suggest that these metrics are poised for even greater adoption.

Just over half (51%) of S&P 500 companies use ESG metrics in their incentive plans, with 50% including it in annual incentive programs (AIPs), just released research by Willis Towers Watson’s Global Executive Compensation Analysis team (GECAT) confirmed. However, only 4% use ESG metrics for long-term incentive programs (LTIP).

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