Skip to main content
Article

Executive Compensation Guidebook for Climate Transition

With the Climate Governance Initiative, a project in collaboration with the World Economic Forum

ESG and Sustainability|Executive Compensation|Total Rewards|Climate
Climate and Resilience Hub|Climate Risk and Resilience

By Shai Ganu , Michael Siu , Tilly Bostock , Hannah Summers , Kenneth Kuk and Jamie Teo | November 11, 2021

Willis Towers Watson, partnering with the Climate Governance Initiative, has developed a guidebook to explore how to drive the climate strategy by meaningfully embedding it within executive compensation frameworks.
Introduction to Executive Compensation Guidebook for Climate Transition

As organizations acknowledge the need to transition to a net zero business model, investors expect board members not only to drive the adoption of a credible climate transition strategy, but also to provide clear evidence that its execution has been embedded effectively across all key management processes, including enterprise risk management, strategic planning, innovation, capital investment and human capital.

One critical lever is for management to be held accountable for the delivery of the strategy and, where appropriate, the capturing of opportunities in climate transition.

Willis Towers Watson, partnering with the Climate Governance Initiative, has developed a guidebook to explore how to drive the climate strategy by meaningfully embedding it within executive compensation frameworks. Our work is informed by findings of surveys and interviews with investors and board members from organizations across the globe.

Through interviews with board members around the world, review of public disclosures from more than 800 companies and Willis Towers Watson’s expertise in executive compensation design, we document our observations on the best practices in how executive compensation can be a powerful tool in driving climate transition and climate risk mitigation.

The merits of linking executive compensation and climate objectives are well established. Emissions reduction and renewable energy adoption are increasingly prevalent metrics in executive incentive plans, especially in Europe and in high-emitting industries such as oil and gas.

There remains much for the business community to learn about the implications of a transition to net zero. Setting consistent and reliable goals and milestones will be challenging. But companies must resist the tendency toward inaction, as climate is widely considered the single-most significant risk to the planet, businesses and the stability of the global financial system.

To take advantage of the interactivity of the guidebook, please download the file and open in a PDF reader.

Click on the industry of interest below for a summary of the industry as it relates to climate change more broadly and for observations about where the industry is in terms of driving action against climate change through executive compensation.

Download industry overview
Title File Type File Size
Fast-moving consumer goods PDF .1 MB
Financial services PDF .1 MB
Oil and gas PDF .1 MB
Pharmaceuticals and life sciences PDF .1 MB
Retail PDF .1 MB
Technology PDF .1 MB
Transportation PDF .1 MB
Utilities PDF .1 MB
Authors

Managing Director and Global Leader,
Executive Compensation
Willis Towers Watson

Director, Talent and Rewards (New York)

Senior Associate, Executive Compensation

Associate Director, Executive Compensation and M&A Consulting

Senior Director, Talent and Rewards (Washington, D.C.)

Director, Talent and Rewards (New York)

Featured Content

Contact Us