Insignia praised for tying ESG to remuneration
Insignia Financial, formerly known as IOOF, has been highlighted by KPMG as among the few Australian companies tying environmental metrics to long-term incentive plans.
The firm had a ‘building a better tomorrow’ measure under its FY22 long-term equity plan which was linked to the company becoming net zero.
KPMG said it was more common in Australia than in overseas markets for environmental metrics to be incorporated into short-term incentive plans, compared with the long-term incentive plans that accounted for a larger portion of executive remunerations.
There were “only a handful” of companies that had adopted climate-related metrics, mostly focused in the resources space such as Fortescue Metals and South32.
KPMG Australia’s Tim Nice, partner, leadership, performance & reward, and Rachel Tucker, senior manager for performance & reward, said: “ESG has climbed up the Australian corporate agenda in recent years, amidst growing stakeholder pressure and increased recognition that an effective ESG strategy is important to a generation of sustainable, long-term value for shareholders.
“The use of ‘E’ incentive measures remains relatively low in Australia by international standards, with examples outside of traditionally carbon-intensive industries far and few between.
“Given the international landscape and growing stakeholder pressure, we do expect to see more Australian companies in broader industries consider adopting environmental incentive measures where material to their long-term strategic priorities.”
A spokesperson for Insignia said: “We recognise the importance of creating a framework that measures the impact our business has on the environment and the communities in which we operate. This includes managing the risk that climate change presents to the long-term value of assets. Our approach to responsible investment and ESG issues continues to develop as regulation, climate change and community expectations evolve”.
AUTHOR
Laura Dew
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