Nordea Ties Incentive Compensation for Top Execs to ESG Goals
Northern Europe-based financial services company Nordea announced that it will introduce ESG targets as part of its Long Term Incentive Plan (LTIP) for senior executives this year, with performance based on hitting a series of sustainable finance, climate and diversity goals.
The company said that it decided in 2021 to include ESG targets in executive remuneration programmes, and that this is the first time the targets are included in the LTIP programme.
Nordea’s 2023-2025 LTIP covers senior executives and key employees “whose efforts have a direct impact on Nordea’s results, profitability, customer vision and long-term growth,” including the CEO, nine members of the Group Leadership Team, and approximately 50 senior leaders. According to the company, the plan has been designed “so that the maximum outcome will require achieving exceptional financial and sustainability performance.”
In addition to total shareholder return and cumulated adjusted earnings per share (aEPS), performance criteria for the incentive plan will utilize and ESG scorecard examining progress on areas including sustainable financing, net-zero committed assets under management, gender balance and credit profile.
While the company did not disclose details of the ESG scorecard, it said that it was built around Nordea’s 2025 sustainability targets. Nordea’s 2025 goals include facilitating more than €200 billion in sustainable financing, ensuring that 90% of the company’s exposure to large corporate customers in climate-vulnerable sectors are covered by transition plans, doubling the share of net-zero-committed AuM, and reaching at least 40% representation by each gender at the top three leadership levels.