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The majority (80 per cent) of Canadian public companies are using at least one environmental, social and governance factor in their executive compensation plans, with social factors (78 per cent) the most prevalent measure, according to a new report by WTW.

The report, which analyzed disclosures from 900 public companies across the globe, found two-fifths (40 per cent) of Canadian companies used environmental and governance factors to determine executive compensation.

A quarter (25 per cent) of Canadian companies reported plans to introduce an ESG measure or expand or modify their use of ESG measures in executive compensation plans.

Read: Report finds more U.S. companies linking executive pay to ESG performance

Two-thirds (67 per cent) of all public companies tied their short-term compensation plans to at least one ESG measure, up from 59 per cent in 2021, while eight per cent reported using at least one ESG measure in their long-term plans, up from five per cent last year.

More than two-thirds (69 per cent) of S&P 500 companies reported using at least one ESG metric in their executive incentive plans, up from 60 per cent in 2021.

“The link between executive compensation plans and ESG priorities is no doubt growing stronger, particularly relating to climate, diversity, equity and inclusion and other human capital matters,” said Kenneth Kuk, senior director of executive compensation and board advisory at WTW, in a press release. “We expect further development in the measurement, reporting and governance of ESG metrics in the next few years.”

Read: Nike releases new DEI goals, ties executive pay to broader ESG efforts