Horváth Study: Executive salaries are linked to sustainability goals in only one fifth of companies

On average across all sectors, companies that have set themselves a specific carbon neutrality target are aiming for "net zero" by 2033. But thus far, sustainability targets have only been linked to executive salary components in one in five firms – however, this figure rises to almost half among large corporate groups. These are key findings of a Horváth study entitled "Spotlight on Sustainability," for which 280 top managers across all industries were asked about their current challenges and strategies.

Broken down by industry, logistics and energy companies show an above-average tendency to link sustainability goals to salary variables (47% and 43%, respectively), followed by oil and chemicals (33%). The differences are even more pronounced when viewed by company size. Among companies with annual sales of at least 10 billion euros, almost half include sustainability targets in their compensation-related target agreements (47%).

But even if the company's performance in the area of sustainability is not stipulated as a salary component, the performance of the top management will be measured in terms of sustainability goals, since in most industries these are now inextricably linked to the company's overall development," says Heiko Fink, expert and partner at Horváth. The importance that the respondents attach to the topic of sustainability has risen again since the last survey in 2021. In our current survey, 53% said that ecological and sustainable corporate management were very important, compared with 51% last year.

"Big picture" needed for sustainable corporate management

"Even more important than linking bonuses to sustainability goals is the development of a tangible sustainability steering model," says Fink. As the current study shows, only seven percent of companies have so far managed their business models holistically and consistently on the basis of concrete sustainability goals. Twenty-two percent already base their corporate decisions on at least one sustainability target. A quarter have recently adopted a similar approach, while 28% are in the process of developing one. Only 18% have not yet taken any steps to systematically align their company with regard to sustainability. "Setting concrete sustainability goals with a realistic scope helps top management to follow the right path and the overall organization to evaluate its "sustainability performance" at the management level," explains Heiko Fink.

About the study

For the Horváth study "Spotlight on Sustainability" as part the Horváth study "CxO Priorities 2022 – Managing Overlapping Crises, 280 top managers across industries were surveyed via personal interviews, of which nearly 90% were CxOs. 70% of the sample consists of companies with at least 1,000 employees. More than 90% generate annual sales of at least 100 million euros. The survey was conducted in May and June 2022.