Earth day or environmental concept

Linking Executive Compensation with ESG Goals

April 9, 2021

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Organizations linking executive compensation with ESG goals (environmental, social and governance) are gaining shareholder support for their actions. Among the companies garnering the most attention for this direction are McDonald’s, Starbucks, and Chipotle Mexican Grill.

Executives at Chipotle, for example, will see their compensation effected by their achievement of the following:

  • Environmental goals include moving up the organization’s goal to publish is Scope 3 carbon emissions from 2025 to end of year 2021. Currently Chipotle publishes its Scope 1 and Scope 2 emissions in its annual Sustainability Report and Report Update.
  • Chipotle will also strive to increase the percentage by pounds of organic, local and or regeneratively grown /raised food it uses. Last year, the company’s use of local produce was 31 million pounds while the goal for 2021 is an increase to 37 million pounds.
  • And the organization will strive to maintain both racial and gender pay equity.

According to CNBC and other sources, ten percent of Chipotle executive’s annual incentives will be tied to progress in achieving company goals.

Sources used in compiling this post include:

Chipotle will link executive compensation to environmental and diversity goals

Chipotle Links Executive Compensation to ESG Goals

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