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COMPANIES, BONUSES AND SUSTAINABILITY

Hugh Welsh believes tying bonuses to environmental goals is the right thing to do.

“I didn’t get my full stock bonus last year. It wasn’t because I didn’t meet my revenue or profit goals; I exceeded them. Instead, it was because my carbon emissions reduction efforts fell short, partly due to the integration of multiple companies DSM North America purchased in 2012”.

Although he saw his stock bonus cut last year when his firm missed its sustainability targets, he still believes tying bonuses to environmental goals is the right thing to do:

“I’m more determined than ever to meet the goal this year. By not giving me all of my deferred stock compensation, my company made it clear it means business when it comes to sustainability practices. In my opinion, this is the way it should be”.

All corporate executives are measured on their productivity and have their executive compensation tied to performance metrics that are measurable and real: you either made your numbers, or you didn’t. It should be the same for environmental targets.

If multinational corporations are sincere about sustainability, then they must link compensation for the senior executives directly to meeting goals such as cutting carbon emissions, and lowering water and energy use. Otherwise those targets will always be far down the list of executives’priorities – if even on the list.

Continuing to tie executive bonuses exclusively to short-term financial targets will continue to deliver short-term results – results that are not sustainable, and that will yield adverse long-term business consequences. Our shareholders, customers, employees and communities require –and increasingly demand –better.

Incorporating sustainability goals into the compensation structure of a company is one way the business community can assure its own stakeholders that it will continue to deliver on its promises today, and for generations to come.

 

The gLAWcal Team

POREEN project

Monday, 11 August 2014

(Source: The Guardian)