European and US companies have been diverging on the inclusion of diversity, equity and inclusion (DEI) outcomes in executive pay, but there are signs of a re-think among European companies, too, according to a WTW study on ESG incentive metrics.
DEI metrics have fluctuated in North America since 2021, dropping notably from 2024 to last year. Europe saw a modest decline, with the prevalence of DEI-related metrics has dropped three percentage points, with 56% of companies continuing to use at least one DEI metric in their executive incentive plans.
However, WTW flagged that forward-looking reports indicate that 9% of companies that used a DEI metric in the 2024–2025 fiscal year plan to remove it, potentially substituting it with a different metric, often another one in the “people and HR” category.
The consultancy said this trend was likely understated because most companies do not disclose forward-looking changes to their incentive programmes.
ESG stability
The study analysed 1,070 public company disclosures across 18 markets, covering fiscal years ending between May 2024 and May 2025. This includes the top 300 companies in major indices across Europe, North America, Asia and Australia.
Across the top 300 companies in major European indices, 94% still use at least one ESG metric, with ESG measures appearing in 86% of short-term and 70% of long-term incentive plans.
Carbon emissions reduction metrics are by far the most prevalent ESG metric, reported in 70% of plans in Europe.
Human capital metrics are also common across incentive plans, reported in 81% of plans in Europe, with metrics linked to DEI within management accounting for 44% and others linked to employee engagement accounting for 31%.
“The broad use of people metrics is consistent with the focus of boards as they continue to prioritise their role in the oversight and governance of human capital risks, investments and opportunities,” said Hannah Summers, a director in WTW’s executive compensation and board advisory practice.
“They are concentrating on developments in labour markets, skill shortages, employee retention, and labour costs, all of which they view as critical to company strategy and competitive advantage amid geopolitical shifts and technology-driven business transformation.”
