Bonuses can be a good thing - if they're linked to carbon emissions

Now days the remuneration in some companies is not only depending on the earnings per share but it also depends from sustainability indicators.

Like in the American utility supplier company Xcel Energy the bonus is depending from how low is the carbon emission. Xcel has chosen for this regulation because: "Xcel believes strongly in providing long-term incentive opportunities that deliver awards on the achievement of specific performance goals linked to the success of the company and its long-term strategy in the core utility business. These include financial and environmental goals."  (Xcel spokeswoman Patti Nystuen). A quarter of the remuneration is based on metrics related to carbon dioxide emissions, and safety. The other 75 % is based on the financial result.

This sort of regulations is the result of shareholders advocacy. Because of the fact that shareholders can put pressure on the board they can choose for sustainability. They can make shareholders resolutions where they set objectives for the environmental and social care.

But it is a pity that just a little group of companies has a policy like that. Only a third of the European companies succeed in committing remuneration to environmental, social, and governance (ESG) performance. Now it is the challenge to bring in this sort of resolutions in other companies.

Laurens Traens