Does the Adoption of Say-on-Pay Laws Affect Firms’ ESG Performance?

Can investors successfully advocate for improved ESG outcomes at their portfolio companies? We examine whether the introduction of say-on-pay (SOP) laws provides investors with a way to increase the extent to which executive compensation is tied to ESG metrics and whether doing so, in turn, improves a firm’s ESG performance.

Surveys have found that investors value firms’ commitment to sustainability and social issues.  For example, a recent survey of 325 investors internationally by PwC found that 79 percent of investors agreed with the statement, “ESG risks are an important factor in investment decision-making” (The Economic Realities of ESG, … Read more