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Seven ways to get sustainability incentives right

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Boston Consulting Group or enjoy below:

🗞️ Driving the news: A recent BCG study details the struggles and potential solutions in implementing effective sustainability incentives in corporate governance
• Despite a significant push towards integrating environmental, social, and governance (ESG) goals into executive compensation, many existing frameworks fail to yield significant progress due to poor design and implementation

🔭 The context: Current corporate sustainability incentives often feature generic, qualitative, or poorly aligned metrics with strategic objectives, and usually cover too few individuals within the organization
• This has resulted in minimal behavioral change and a lack of deep integration of sustainability goals across company operations.

🌍 Why it matters for the planet: Effective sustainability incentives are crucial as they can lead to substantial improvements in corporate environmental impact
• With only a limited portion of companies employing impactful ESG incentives, widespread enhancement in corporate sustainability practices remains stunted

⏭️ What's next: The report suggests that for incentives to be more effective, they need to be material, measurable, and aligned with long-term company strategy. Broadening the scope of who receives these incentives and increasing their financial significance could also enhance their effectiveness

💬 One quote: "Many environmental, social, and governance (ESG) schemes are not designed in a way that yields meaningful progress," said Alice Bolton and Ron Soonieus, BCG Researchers

📈 One stat: "47% of corporate directors advocate for full integration of sustainability in executive performance metrics"

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