Bankers’ pay is not properly linked to green performance

27 November 2025 - 09:58 h

Press Release

Directors’ bonuses can poorly represent actual performance, including on ESG criteria. The incentives to respect green commitments are simply not there. Today, a Finance Watch paper urges the European Banking Authority (EBA) to revisit guidelines on bankers’ remuneration and better link management bonuses to long-term sustainability and transition objectives.

Variable pay rules for bank senior management are not tied to transition commitments. The current rules give banks considerable discretion in how they set, weight and assess performance indicators, so sustainability metrics can remain marginal with little influence on actual pay. The EBA should reopen and revise its guidelines on sound remuneration policies to ensure banking executives are incentivised to meet sustainability targets in line with the bank’s risk appetite.

Vincent Vandeloise, Senior Research and Advocacy Officer

The Finance Watch paper calls for targeted reforms to ensure executive pay is actually linked to sustainability performance:

Integrate mandatory links between bankers’ variable pay and prudential transition plans, including long-term ESG and climate targets, to incentivise long-term decision-making.
Strengthen malus and clawback rules so that bonuses can be reduced or reclaimed if executives fail to meet ESG or transition targets, ensuring pay genuinely reflects longer-term performance.

“The current remuneration requirements remain structurally focused on the short term, ignoring climate and sustainability risks. Aligning pay with ESG performance would create the incentives to manage these risks over the horizon in which they materialise.”

Vincent Vandeloise, Senior Research and Advocacy Officer

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