In case anyone was looking for more confirmation that corporate America is taking ESG seriously, Mastercard made an announcement last week that has CEOs and leadership teams taking notice. In a move that affirms ESG’s strategic significance, the payment technology company has formally aligned its ESG goals with pay for all employees.
Moreover, by making a public declaration of this policy, Mastercard has forced its own accountability, committing to support a culture and operations that empower all of its employees to achieve these goals.
Mastercard is not alone in taking a more aggressive approach to ESG. According to global research by Willis Towers Watson, nearly four out of five (78 percent) companies are planning to change how they use their ESG measures in executive pay plans. Last year, Apple added an executive bonus metric measuring ESG performance.
But it’s one thing to factor ESG metrics into executive bonuses, and another to tie them to the compensation of 24,000 employees worldwide, as Mastercard has done. What does Mastercard hope to achieve? In the words of CEO Michael Miebach, “We’re tying compensation to emissions, financial inclusion and the gender pay gap because we have a substantial impact in these areas and because they closely align with our vision.”
This is important. Mastercard isn’t committing itself to solving the full spectrum of environmental, social and governance challenges; it’s focusing its resources on those that make the most sense for its business. This should inspire and motivate organizations of all sizes in all industries to do the same.
We work with many organizations to help them set, measure and report on ESG goals that make sense for them. In our experience, success often comes down to a few guiding principles:
- Define your ESG goals in consideration of your business objectives and the areas where your organization can make the greatest impact.
- Hold leadership accountable for modeling the behavior that’s needed to achieve your goals – without exception.
- Recognize that for every organization, large and small, accepting and embracing ESG initiatives entails wholesale transformation of attitudes and culture – a process that requires discipline and patience. From corporate travel protocols to the questions that are asked in candidate interviews, every function in the organization must adapt.
The way Mastercard structures compensation is the ultimate demonstration of its values. For any business, the ESG discussion presents an opportunity to cultivate a give-and-take between leaders and employees that inspires engagement, yields the meaningful work sought by high-achieving employees, and underpins long-term, profitable growth.