The ESG Review: Mastercard ties staff bonuses to its ESG performance

Mastercard’s announcement this week that it would tie all future staff bonuses to performance against set ESG goals was an eyebrow-raiser.

While more and more companies are pegging executives’ bonuses and even their pay levels in this way, applying it to the entire workforce’s bonus pool is a bold move. It will be interesting to see whether others follow suit, but also what approach the company takes to demonstrating how the actions of its people are moving the needle on those goals, given Mastercard has recently brought forward its carbon net zero target from 2050 to 2040.

“While our global efforts go much broader and deeper, we’re tying compensation to emissions, financial inclusion and the gender pay gap because we have a substantial impact in these areas and because they closely align with our vision. Making personal, financial and environmental success attainable for everyone – that’s how we power economies and empower people,” said its CEO Michael Miebach in a statement.

It ended with the point that tying rewards to performance in this way would ensure the “full force” of the business was behind its ESG achievements. Of course, business leaders need to ensure their employees operate in an environment that allows their efforts to create the desired impact, but there’s surely no better way of ensuring people are committed to their company’s goals than making it count in their pockets. And the counter-argument is pretty obvious: without that full force behind the initiatives, they’ll always be much harder to achieve, and employees can feel detached from them.

There’s an interesting question in this for communicators though - how do you publicly demonstrate the strength and the success of that internal commitment externally, in meaningful and impactful ways that enhance reputation? While numbers at reporting time will always help, and ‘shining’ a light’ on innovative examples and collaborations can make good examples of them, what’s the best way to make that count as part of a communications strategy?

The likelihood is that to make it stick, employees will need to be able to advocate for the success the business is having by sharing their own accounts of how they’re playing a part. And while orchestrated campaigns and announcements may be impactful, people will also need a free reign to find and retain their own voice, authentically and at scale.

That said, as such a dramatic change of bonus policy may help to recruit people who want to help a business to improve its stakeholder value and achieve ESG goals, they may not need much encouragement.

It’s interesting that the announcement has been widely welcomed across social media, with questions raised about what precedents it may set, and whether other large businesses may find it more difficult to demonstrate the full force of their employee base being committed to such change if they don’t do something similar.

Mastercard may have played this particular card very well.

The ESG News Review is written by Steve Earl, a Partner at BOLDT

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