Integrating ESG into executive pay to be a PRI priority engagement in 2013

Focus will also be on human rights in the extractive sector

The United Nations-backed Principles for Responsible Investment (PRI) is to make the integration of environmental, social and governance (ESG) issues into executive pay one of its priorities for collaborative engagements this year.

The project begins in mid-2013 under Athanasia Karananou, the PRI’s Manager of Investor Engagements, Corporate Governance.

It has grown out of guidance developed by a group of PRI investors to support dialogue between shareholders and companies in June last year.

The guidance provided recommendations on how to identify appropriate ESG metrics, link them meaningfully to executive pay and provide sufficient disclosure to investors, the PRI says.

“The group has now embarked on the second phase of the project, engaging with companies in two sectors within four different markets to develop sector-specific supplements to the guidance,” the PRI says.The PRI secretariat will also launch a collaborative engagement with the extractive industry focused on the implementation of Professor Ruggie’s Principles on Business and Human Rights and the UN Guiding Principles on Business and Human Rights starting in mid-year.

The engagement will look to identify priority business relationships to consider for good human rights practices (e.g., joint ventures). The project will be headed up by Erin Court, the PRI’s Manager of Investor Engagements, Social Issues who joined the initiative in May 2012.

The PRI’s existing priority collaborative engagements cover the environment (water, fracking, emissions reductions targets, sustainable palm oil), social (labour standards in agriculture, human capital management), and governance (director nominations, anti-corruption).

The PRI is also planning a series of ESG Investor Briefings from mid-2013, where companies present a one-hour webinar on ESG issues. Link