Climate targets, executive compensation, and corporate strategy
View / Open Files
Authors
Ritz, R.
Publication Date
2020-10-29Series
Cambridge Working Papers in Economics
Publisher
Faculty of Economics, University of Cambridge
Type
Working Paper
Metadata
Show full item recordCitation
Ritz, R. (2020). Climate targets, executive compensation, and corporate strategy. https://doi.org/10.17863/CAM.62311
Abstract
Since the 2015 Paris Agreement, climate change – and wider environmental, social and governance (ESG) issues – have risen to board-level on the corporate agenda. Under increasing pressure from institutional investors, companies are reformulating their strategies for a climate-constrained world. A novel aspect of the emerging corporate response is that executive compensation is being linked to climate targets. At the world’s largest energy companies, climate metrics now make up 8% of CEO’s short-term incentive plans. This paper explains the case for corporate climate action, summarizes the use to date of climate-linked management incentives, and presents a framework for understanding their benefits and design challenges.
Keywords
Balanced scorecard, corporate climate action, corporate strategy, ESG, executive compensation, management incentives
Identifiers
CWPE2098
This record's DOI: https://doi.org/10.17863/CAM.62311
This record's URL: https://www.repository.cam.ac.uk/handle/1810/315202
Statistics
Total file downloads (since January 2020). For more information on metrics see the
IRUS guide.