Executive compensation at 73% of S&P 500 companies is now tied to ESG performance, survey finds

The vast majority of S&P 500 companies are now tying executive compensation to some form of ESG performance, according to an analysis out this morning from The Conference Board, Semler Brossy and ESGAUGE. Seventy-three percent of companies made the link last year, compared to 66% the year before.

The most significant increase came from companies using diversity, equity and inclusion goals in their executive compensation plans. Those included 51% of companies in 2021, up from 35% the previous year. Carbon and other emissions goals tied to compensation increased sharply as well, but still only exist at 19% of S&P 500 companies—up from 10% in 2020.

The report makes clear that, despite widespread adoption, methodologies for linking pay to ESG performance remain disparate and vague, and the metrics far from precise. Moreover, the links between ESG and company performance are, in most cases, yet to be proven. The main reason boards adopt such goals, according to the study’s survey, is to “signal that ESG is a priority.” You can read the full report here.

We’ll be exploring rising ESG commitments at this week’s annual meeting of the Fortune CEO Initiative, a community of purpose-driven corporate leaders. I’ll be talking with Bank of America CEO Brian Moynihan about how he’s dealing with the political pushback against ESG, asking former Treasury Secretary Larry Summers about how much pain the economy has to endure to defeat inflation, and speaking with Sen. Joe Manchin (D–W.Va.) about what to expect from a post-election Congress. You can follow the full proceedings on fortune.com, and I’ll be reporting back here.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Lula’s back

Luiz Inácio Lula da Silva will once again become Brazil’s president, after narrowly beating far-right incumbent Jair Bolsonaro in a second-round poll yesterday. The veteran leftist has pledged to protect the Amazon rainforest, which is good news for the climate and may clear the way for a major trade agreement between the European Union and South America’s Mercosur trading bloc. Trump-backed Bolsonaro had not conceded at the time of writing. New York Times

Eurozone inflation

The Eurozone’s consumer price inflation rate his 10.7% this month, crossing into double digits and overtaking the U.S., where inflation is still officially a shade over 8%. The disparity partly reflects a worse energy crisis in Europe. Wall Street Journal

Musk’s Twitter

Just a few days after Elon Musk took over at Twitter, there are issues. The first is a surge in hate speech, seemingly designed to gauge Musk’s approach to content moderation. As a result, many high-profile users are speaking out or just bailing on the platform, and advertisers are understandably nervous. Then there was a now-deleted tweet from the man himself, spreading a baseless conspiracy theory about the assault on Paul Pelosi. And then, reports that Twitter will charge $20 per month for the privilege of having a blue tick—which raises the possibility of those who refuse to pay becoming more vulnerable to impersonation. Fortune

AROUND THE WATERCOOLER

Coinbase CEO Brian Armstrong is obsessed with self-improvement. Can he improve fast enough to turn his company around?, by Anne Sraders

Poland building its first nuclear power plant is ‘A clear message to Russia: We will not let them weaponize energy any longer’, by Associated Press

‘I’m an additional paid family member’: The life of a 27-year-old house manager who makes $45K a year, by Trey Williams

The next Powerball jackpot is for $1 billion after months of nobody winning, by Associated Press

‘Black Adam’ rules the box office again with few new challengers taking on the first Dwayne Johnson superhero movie, by Associated Press

This edition of CEO Daily was edited by David Meyer.