Sustainability remains at the top of the corporate governance agenda with regulators and investors tasking companies with deepening their Environmental Social Governance (ESG) commitments and setting measurable and actionable goals. That’s the main finding of the eighth edition of Russell Reynolds Associates’ Global Corporate Governance Trends report. According to the research, investors are especially keen to link executive pay with progress against corporate ESG targets.

The qualitative analysis is based on interviews with experts in the areas of law and governance, as well as market executives, investors, board members and shareholders from more than ten countries, including the United States, United Kingdom, Germany and Brazil.

The report predicts increased pressure on boards to tie compensation to ESG goals, and in some cases, investors may vote against boards who do not provide transparent, measurable metrics to deliver net zero: “There is an emerging call from investors for companies to provide distinct actions that correspond to the pillars of E, S and G in order to unbundle Sustainability into more impactful strategies.”

“Climate and social obligations are the seminal corporate governance issue of 2023. We expect the whole ESG agenda to dominate boardrooms across the UK as businesses grapple with increased regulatory burdens and a recognition from investors and other stakeholders that sustainability is the heart of a business’s license to operate.”, Managing Director at Russell Reynolds Associates, Caroline Raggett, said.

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Source: Russell Reynolds Associates