The role of incentives in driving real sustainability transformation in your organization

Many companies begin their sustainability journey by assigning environmental responsibility to a senior leader or committee. That’s a solid first step - but it’s just the beginning.

Here's how leading companies evolve:

1. Dedicated Leadership: A senior leader or committee is responsible for sustainability.

2. Governance Integration: The board steps in to oversee sustainability efforts.

3. Wider Engagement: Employee performance and compensation are aligned with sustainability outcomes.

4. Executive Accountability: Incentives for the C-suite are tied to measurable climate-related targets.

On point 4, which is widely seen as best practice:

A recent report by KPMG found that 78 percent of companies consider sustainability in calculating their senior executives’ pay. This is based on data from 375 publicly listed companies - the 25 largest based on market cap from 15 countries.

That’s an encouraging sign. And in my experience working with companies on their sustainability journey, this shift makes a significant difference.

To move beyond performative pledges, aligning sustainability goals with how people are rewarded at every level of the organisation (including the C-suite) is key. When incentives support climate goals, transformation follows.