Results from the WTW 2025 ESG Incentive Metrics study
Amid political pressure and divergent stakeholder sentiments, many public companies (particularly those in the U.S.) have reframed their environmental, social and governance (ESG) strategy. After six years of analyzing ESG incentive metrics among public companies around the world, we see that organizations are now focusing on:
This shift falls in line with what we learned from the world’s leading investors earlier this year. They made clear that their focus when evaluating executive incentive design will be on a clear connection to business strategy and value creation along with robust disclosure.
In reviewing public filings this year, we found that the overall trend of executive incentive metrics in the ESG categories has remained stable compared to prior years, with a few notable observations.
Prevalence of metrics related to diversity, equity and inclusion (DEI) has dropped overall, but most considerably in the U.S. where the as the current U.S. President has issued Executive Orders concerning illegal DEI programs. However, as of disclosures filed in 2025, about one-third of S&P 500 companies continued to pay a portion of executive incentives based on these metrics.
Europe also saw a slight decline in prevalence, as the use of DEI metrics declined from 59% to 56%. Remembering that these are 2025 disclosures of 2024 practices, another 18% of European companies disclosed plans to remove 2025 DEI metrics from their executive incentive plans.
During our interviews earlier in 2025, investors indicated skepticism about the level of rigor regarding metrics in the ESG categories. Our analysis shows that their concern may be well justified.
In North America, the average payout of ESG metrics in short-term incentive (STI) plans was 128% of target (vs. 109% that of financial metrics). The payout premium is similar to what we observe for broader non-financial incentive metrics. For long-term incentive (LTI) plans, the gap is narrower but still considerable: 117% for ESG metrics vs. 105% for financial metrics.
There is not a material difference in Europe for STI plans, but the gap is notable for LTI plans: average payout for ESG metrics is 107% vs. 96% for financial metrics. In a more in-depth analysis, we found that environmental metrics (more often quantitative) tend to yield lower payout than social and governance metrics (more often qualitative).
Despite the de-emphasis of DEI, human capital remains a top business priority in the design of executive incentive plans. In North America and Europe, 71% and 81% of companies include at least one people-related metric, respectively.
Popular people metrics in executive incentive plans include:
The broad use of people metrics is consistent with our observation in the boardroom, as boards refine their role in the oversight of people risks, investments and opportunities. Boards prefer a focus on people metrics that are most material to business value creation, and they expect rigorous goal setting and disclosure to tell a compelling story to stakeholders.
While overall prevalence of ESG metrics has remained stable from 2024 to 2025, there is a notable increase in the use of ESG metrics for LTI plans in Europe. This continues a trend we’ve seen beginning this annual study. Between 2024 and 2025, the prevalence of ESG metrics in LTI plans went up from 64% to 70% in Europe. The increase is even more stark when compared to the 22% recorded in 2020.
By contrast, use of ESG metrics in North America remains uncommon. Only 10% of companies in the United States and Canada use ESG metrics in their LTI plans, according to 2025 disclosures, reflecting no change from prior years.
Download our full 2025 ESG Incentive Metrics report to access detailed information from this research.
