KPMG Study: Over 40% of Global Giants Integrate ESG into Executive Pay

A new KPMG study highlights a growing trend among the world’s largest companies to link executive compensation to environmental, social, and governance (ESG) performance. The report, KPMG Survey of Sustainability Reporting 2024, analyzed 5,800 companies across 58 countries, revealing significant strides in sustainability reporting, leadership, and target setting as firms prepare for mandatory regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD).

According to the study, 41% of the largest companies globally, known as the “G250,” have integrated ESG considerations into executive pay, up from 40% in 2022. “An increasing number of today’s investors are now taking non-financial data just as seriously as financial data,” said John McCalla-Leacy, Head of Global ESG at KPMG International.

Mandatory sustainability reporting requirements, such as the CSRD, are driving much of this change. These rules require companies to report on environmental and social impacts and obtain independent assurance for sustainability disclosures. Despite these upcoming requirements, many companies are adopting measures in advance. Jan-Hendrik Gnändiger, Global ESG Reporting Lead at KPMG International, noted, “Mandatory sustainability reporting is nearly upon us... but many companies are adopting its measures before they are required to do so.”

The study revealed that 69% of G250 companies and 54% of smaller firms, categorized as “N100,” published sustainability assurance reports in 2024, up from 63% and 47% in 2022. Additionally, 50% of G250 companies and 45% of European firms have conducted double materiality assessments, a key CSRD requirement.

The focus on climate goals is also evident. The report found that 95% of G250 companies have published carbon reduction targets, up from 80% in 2022, with 60% aligning these targets with the Paris Agreement. Biodiversity reporting has doubled since 2020, with 56% of G250 companies and 49% of N100 companies now including it in their disclosures.

Sustainability leadership is another area of growth. The report states that 56% of G250 companies have a board member or executive dedicated to sustainability, compared to 45% in 2022. Similarly, N100 companies with sustainability-focused leaders have risen to 46% from 34%.

“The fact that there are more sustainability leaders within executive teams at the boardroom than ever before is clear evidence that we’re making solid progress,” added McCalla-Leacy.

Voluntary reporting frameworks like the Global Reporting Initiative (GRI) and Task Force on Climate-related Financial Disclosures (TCFD) remain dominant, with 77% and 72% of G250 companies using these, respectively.