Multi-Supervisory Board member Jolande Sap is optimistic about the transition to sustainability in business. 'Many forces are now moving in the right direction.' It would go much faster, however, if leaders were driven less by money and more by intrinsic motivation. 'Many executives and Supervisory Board members feel that things have to change, but are unwilling or afraid to act on it professionally. That never ceases to amaze me.'

Too few companies are transparent about their sustainability targets and how they factor sustainable performance into executive pay, observes multi-Supervisory Board member Gisella van Vollenhoven. Measurable KPI’s and bonuses can help. “Progress and assessment interviews are about achieving financial and non-financial targets, but the outcomes have no impact on salary. This can be a missed opportunity.”

Amy Wilson is the lead of the European engagement team at EOS, a stewardship service provider that is part of the investment manager Federated Hermes, aimed at more sustainable results for both society and environment. A critical view on executive pay is part of that. Wilson sees that there is support amongst directors for simpler pay schemes, more focus on the long term, more fixed salary and higher shareholdings. ‘But we find that in practice, it is difficult.’  

The current system for directors’ remuneration is outdated and inhibits the sustainability of business. That is the opinion of Frederic Barge, founder of Reward Value, Management Scope’s new expert partner. The development of a new model for responsible remuneration can act as a catalyst for social change. ‘We want to make an impact.’

To make the transition from short-term profits to sustainable long-term results, the executive compensation system must be overhauled, argues Frederic Barge of nonprofit research firm Reward Value. The current tool has become blunt. To achieve an appropriate remuneration policy, it is essential that shareholders, Supervisory Board members and executives have a better and more frequent dialogue.

Sooner or later, linking remuneration to sustainability goals will be mandatory. Frederic Barge, Founder of non-profit research firm Reward Value, therefore argues in favor of a new remuneration model. Barge recently exchanged thoughts and ideas with Supervisory Board members about the options. Companies do not need to jump in at the deep end straight away: ‘Draw up a separate policy alongside the existing remuneration policy.’