Sustainability Targets in Executive Remuneration Contracts and Corporate Sustainability Performance in the United Kingdom and European Union

Hien Thi Thuc Nguyen (), Subhan Ullah (), Hanh Thi My Le () and Affan Hameed ()
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Hien Thi Thuc Nguyen: PHENIKAA University
Subhan Ullah: University of Nottingham
Hanh Thi My Le: Ton Duc Thang University (TDTU)
Affan Hameed: University of the Arts

Environment Systems and Decisions, 2023, vol. 43, issue 3, 393-415

Abstract: Abstract This study investigates the impact of the integration of sustainability criteria in executive remuneration on corporate sustainability performance (CSP). The paper tests the pooled OLS models on a cross-country sample comprising 279 firms from 19 European Union countries and the United Kingdom under the period from 2014 to 2018. The results suggest that there is a significant positive impact of sustainability-related executive remuneration on CSP. Furthermore, there is no significant statistical evidence for the moderating impact of the sustainability committee on the relationship between sustainability-related contracting and CSP. Moreover, the results reveal that the moderating effects of official CSR disclosure and external assurance for sustainability reports are significantly negative. We suggest that regulators and practitioners promote the integration of sustainability targets in executive remuneration to improve CSP and review the quality of sustainability reporting systems.

Keywords: Sustainability-related executive remuneration; Sustainability committee; Sustainability report; External assurance; Corporate sustainability performance (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10669-023-09901-6

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