Boom! There it is. Finally! Companies are starting to link the pay and bonuses of their managers and execs to climate goals like decarbonisation. And it’s not just happening in the ethical, organic, ‘right on’ companies, it’s happening amongst the big hitters of the global finance and investment industry like AXA Investment Managers.
It was big news when global asset management firm AXA Investment Managers (AXA IM) announced last week that it will begin including ESG targets in the incentive compensation packages for senior executives, including goals focused on reducing the carbon footprint of investment portfolios.
The compensation policy will apply to about 400 senior executives at the firm. It will focus primarily on portfolio decarbonization, with 75 per cent of the ESG portion of deferred compensation tied to targets to reduce carbon intensity in the corporate portfolio by 25 per cent by 2025 for AXA IM Core employees, or to have 50 per cent of the real estate portfolio to be aligned to the Carbon Risk Real Estate Monitor (CRREM) trajectories by 2025 for AXA IM Alts employees. The remaining 25 per cent of the ESG portion will be linked to AXA IM’s interim target to reduce its corporate operational CO2 footprint by 26 per cent by 2025.
Road to net-zero
This is part of AXA IM’s aim to be net zero by 2050. As well as just being delighted by the evidence of a real global shift in priorities, I am also happy to see that this falls in line with related questions in the B Corp impact assessment (BIA). B Lab have long been urging companies to link worker KPIs with social and environmental goals. It is happening. Praise be.
AXA IM’s new remuneration policy was announced alongside the launch of the its new ‘AXA IM for Progress Monitor’, a new initiative to transparently communicate AXA IM’s progress towards its goal to become a net zero as a business and investor by 2050, including publication of key metrics on its website. The chosen metrics were selected based on their material contributions to AXA IM’s goals, and include the firm’s coal exposure, carbon intensity, real estate decarbonisation, operational carbon footprint, climate-focused engagement and natural capital solutions investments.
Marco Morelli, Executive Chairman of AXA IM, said:
“As we further put sustainability at the heart of everything we do, we believe transparency and regular reporting on our progress and the challenges we may face is crucial. This is not something new at AXA IM but with the launch of the AXA IM for Progress Monitor, we are choosing to visibly position our non-financial targets alongside our financial ones and to increasingly onboard our organisation to make our employees a part of our sustainability journey. Our adjusted deferred remuneration policy which falls within this objective is key to achieve our objectives and effect change, on the road to net zero and beyond.”
There is now huge momentum building for businesses to no longer consider only the monetary gain of shareholders. I mean, look where that nonsense has got us (mass extinctions and extreme weather anyone?). The call is for all businesses to be a force for good. Working to be the best for the world, not the best in the world. Which is at the very heart of being a B Corp.
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