VoxEU, the research-based policy analysis and commentary from leading economists, powered by the Centre for Economic Policy Research (CEPR) in London has published a column written by Stefan Reichelstein and Shira Cohen, Igor Kadach and Gaizka Ormazabal. It is about “ESG Pay” and examines the use of ESG performance metrics in executive compensation contracts. It links the reliance on these metrics to firm fundamentals, the geographic location of firms as well as the influence of institutional shareholders. Their findings also suggest that the adoption of ESG variables in managerial performance measures is accompanied by improvements in ESG performance and meaningful changes in the compensation of executives.
Get an overview of all VoxEU columns here.