Corporate America’s top emitters are failing to effectively link greenhouse gas reduction targets to CEO pay, a report by a shareholder advocacy group found.
As You Sow analyzed the 2021 chief executive officer compensation packages of 47 US companies included in the Climate Action 100+ initiative, an investor-led program to ensure the world’s largest corporate greenhouse gas emitters curb their footprints. It found that many firms didn’t tie CEO pay to climate metrics, and when they did, it’s wasn’t to a level that would prompt bosses to meaningfully reduce emissions.
As You Sow assessed the companies on whether they included a climate metric in the CEO’s 2021 compensation package, giving higher marks for incentives in line with the Paris Agreement’s goal of limiting warming to 1.5°C. It also looked at whether the climate metric was quantitative and the amount of pay tied to it could be measured.
A spokesperson for Marathon Petroleum Corp., which got a C-, noted it was the first independent US downstream energy company to establish Scope 1 and 2 emissions intensity reduction targets linked to executive and employee compensation. “We continue to challenge ourselves to lead in sustainable energy by deepening environmental, social and governance commitments to drive long-term benefits for our business and stakeholders,” the spokesperson said.
Multiple companies outlined a goal to “reduce emissions” without specifying the target required to receive a payout, according to the report. Others used vague terms such as “demonstrate leadership” in curbing greenhouse gases, a statement that can’t be quantified, while others touted milestones without having initially set measurable goals. That doesn’t cut it for investors.
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