Cevian Capital AB, an activist investor with sizable stakes in some of Europe’s biggest companies, will start using its clout to make sure executive pay levels are pegged to sustainability targets.
The new campaign is intended to address growing concerns that too many firms are touting environmental, social and governance goals without always living up to their promises.
“Several of our companies are not currently where they need to be, including larger ones such as ABB, CRH and Ericsson,” Cevian Managing Partner Christer Gardell told Bloomberg.
“Only a tiny share of companies meaningfully incorporate ESG targets into their incentive plans. That makes no sense,” Gardell said in a separate statement.
Cevian wants the matter to be put to a shareholder vote in its portfolio companies at annual general meetings next year. Those companies that have yet to take ESG seriously need to “start,” while the rest need to “accelerate” strategies already in place, according to the statement.
The strategy is a response to the “box checking” that many companies have been using “to give the perception of progress when real advances are not being made,” Cevian said.
The investor plans to “hold companies and their directors to account” through a combination of voting on director elections and compensation plans. Cevian is also ready to put forward shareholder motions if needed.
This article was provided by Bloomberg News.