Podcasts - 27.06.2023 - 09:00
Innovations in Sustainable Finance #6 with Tom Gosling | ESG Incentives and the Zone of Discretion
Most large European corporations compensate executives for reaching ESG targets. Is that a good thing, and how should this be done? Julian Kölbel discusses these questions with Tom Gosling, perhaps the world's most experienced expert regarding ESG compensation.
Source: HSG Newsroom
Some insights you learn in this episode:
- Even if ESG targets contribute to long-term shareholder value, it can make sense to incentivize middle managers on ESG because they are usually incentivized on annual targets.
- ESG incentives can work when they are aligned with overall strategy, focus on one central ESG issue, and are monitored by a knowledgeable anchor investor.
- There is no way to fix the economic incentives given by the market and regulation with managerial incentives.