APAC Firms Targeting ESG Metrics in Exec Pay “Surge” – WTW

Public companies across APAC are increasingly integrating ESG metrics into their executive remuneration programmes, according to new research by investment consultancy firm WTW.

While European companies continue to lead the way, with 91% of assessed companies incorporating at least one ESG metric into their incentive plans, 63% of APAC companies are now doing the same, with 62% of them disclosing information on the ESG-related metrics they are using.

ESG metrics are more prevalent in APAC-based companies’ short-term incentive plans (50%) than their long-term incentive plans (28%), the report said, adding that 47% of metrics used are focused on social themes, with just 28% incorporating environmental measures, such as carbon emissions reductions or the responsible use of natural resources.

Australia, Japan and Singapore are market leaders in the disclosure of metrics, WTW said, with 100% of assessed Australia-based companies incorporating at least one ESG measure in their compensation plans, followed by Singapore (65%) and Japan (62%).

“The APAC region has seen an exponential surge in ESG integration and commitment in recent years, driven by tightening disclosure requirements from regulators,” said Xujing Zhu, Asia and Australasia Leader, Executive Compensation and Board Advisory at WTW.

“Pressure is clearly mounting for companies to establish an ESG agenda to remain competitive, relevant, and aligned with the priorities of their stakeholders.”

“This makes the disclosure and incorporation of ESG metrics into executive incentive plans ever more important.”

Read more articles like this on Regulation Asia’s sister publication, ESG Investor.

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