As long as this is true, no amount of cajoling, grand ambitions, or Task Forces on Climate-Related Financial Disclosures will get us to net-zero greenhouse gas emissions. We cannot ask company leadership to do one thing, while paying them to do another.<\/p>\n
The importance of linking pay to climate performance is widely appreciated. Mark Carney, the UK government\u2019s financial adviser for COP26 and the former governor of the Bank of England, has underlined the need to link bankers\u2019 bonuses to their climate impact, and this is a key pillar in the recently launched Glasgow Financial Alliance for Net Zero road map.<\/p>\n
The problem is that current efforts to address this dangerous flaw with corporate incentives risk reducing, rather than increasing, pressure for decarbonisation. This is because they tend to apply to a small fraction of the overall pay package, say 10% of the long-term incentive plan, and thus give a sense of net-zero alignment when in fact the other 90% of pay is pushing executives in the other direction.<\/p>\n
Even the 10% is often misdirected, focusing on a narrow element of net-zero alignment such as operational emissions rather than how to shift the core business activity onto a net-zero pathway.<\/p>\n
Take HSBC, which made a welcome commitment this year to align all its financing with a net-zero outcome by 2050 or sooner. As one of the largest financiers of carbon-intensive activities globally, deploying an estimated $110bn in financing to fossil fuel-related activities since the Paris Climate Agreement was signed in 2015, a meaningful move by HSBC to drive decarbonisation amongst its clients would matter.<\/p>\n","protected":false},"excerpt":{"rendered":"
The penny still has not dropped. Our current pay structures \u2013 even with tweaks for climate factors \u2013 are rewarding climate harm and this needs to stop. As long as this is true, no amount of cajoling, grand ambitions, or Task Forces on Climate-Related Financial Disclosures will get us to net-zero greenhouse gas emissions. We...<\/p>\n","protected":false},"author":30,"featured_media":12213,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"coauthors":[88],"class_list":["post-5596","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stewardship-thoughts"],"yoast_head":"\n