CEOs want the EU to tie executive pay to sustainability goals new Corporate Sustainability Package.

26 January 2022 - In an open letter to the EU Internal Market and Justice Commissioners, coordinated by MEP Pascal Canfin, business leaders and CLG Europe call on the EU to seize the opportunity of the upcoming Corporate Sustainability Package to introduce a measure linking environmental objectives to part of company executives’ variable remuneration.

In the letter, MEP Pascal Canfin and business leaders underline the need for all European companies to tie part of executive directors’ remuneration to the achievement of sustainability objectives in the upcoming Corporate Sustainability Package. Such a measure could help achieve sustainability objectives under the Green Deal. The Chair of the Environment Committee and signatories point out the “tragedy of horizons”, as sustainability objectives are marked in the long term while financial results are monitored quarterly and stock prices daily.

The letter states: “To give more weight to the long term, it is necessary to integrate it into short-term governance tools. The variable part of the executive remuneration package, which represents a significant part of their total remuneration, is one of them.

The fact that some pioneering companies are doing this is good news. And the results are very positive. This makes it possible to get away from the sometimes contradictory injunctions between financial performance and environmental performance, since the structure of the “bonus” integrates both.

This practice must now be extended to all large European companies.”

Read the letter here.

MEP Pascal Canfin and CEOs have also co-signed an op-ed that is exclusively published in Euractiv to present why this measure is needed.

Read the op-ed here.