Analysis of CSR practices in the CAC 40

byGiulia/08/04/2024 17:30

The Observatoire de la RSE (Orse), PwC France and Maghreb, in collaboration with theUN Global Compact – France Network, have jointly unveiled the results of their 3rd study on the integration of CSR (Corporate Social Responsibility) criteria into the remuneration policies of CAC 40 companies. This analysis, based on Universal Registration Documents (UDRs) as at June 30, 2023, provides an in-depth view of how practices are evolving in the French corporate landscape.

Contextualization of the study

The study is based on a rigorous methodology, incorporating testimonials from over 15 companies and the positions of Orse’s managing trade unions (CFDT, CFE-CGC and CGT), as well as Medef. These elements provide a solid basis for analyzing trends and changes in the way companies integrate CSR criteria into their compensation policies.

The state of play: An undeniable evolution

This new edition reveals significant advances in the integration of CSR criteria within major CAC 40 companies.

Widespread integration into the CAC 40

The study reveals that 100% of CAC 40 companies include CSR criteria in the short-term variable compensation of their executive directors. A significant advance since 2017, indicating a growing appropriation of this practice. This underlines the growing awareness of societal and environmental issues in companies’ strategic decisions.

Expansion of CSR measures and priorities

The integration of CSR criteria is evolving in response to societal challenges. Companies are now opting for more varied schemes, focusing on environmental and social issues such as CO2 emissions and diversity. The proportion of short-term executive compensation devoted to these criteria is on the rise, ranging from 10% to 30%. This trend suggests a shift in CSR priorities, with growing recognition of the importance of both the environment and social responsibility.

Communication: A step towards transparency

CAC 40 companies are communicating more on the integration of CSR criteria, demonstrating their growing maturity. However, there are still nuances, which can sometimes make understanding complex. Certain aspects, such as the indicators chosen or the achievement of objectives, vary in terms of transparency. Communication remains a challenge, with 65% of CAC 40 companies disclosing neither the indicators nor the CSR objectives incorporated into the remuneration of other populations.

Expanded perspectives: SMEs, private equity and new themes

The study also delves into previously unexplored areas, offering enriching perspectives.

SMEs: the challenge ahead

SMEs still seem to be shy about incorporating CSR criteria into their compensation schemes. According to the annual barometer of the UN Global Compact – Réseau France and PwC France et Maghreb, only 9% of SMEs with 10 to 250 employees include criteria linked to the Sustainable Development Goals (SDGs) in their managers’ variable remuneration. This finding highlights the need to raise awareness among SMEs of the benefits of integrating CSR criteria into their compensation policies.

Private equity: moving towards ESG

A trend is emerging within private equity, with 37% of respondents believing that their fund incorporates Environmental, Social and Governance (ESG) considerations into executive remuneration. Some private equity companies even apply up to 50% CSR criteria in the carried interest mechanism. This suggests a growing awareness of the importance of ESG in investment and compensation decisions.

New themes: Transparency of the equity ratio

The study highlights disparities in the methodology used to calculate the equity ratio of CAC 40 companies. Although 87.5% have published a complete methodology, only 38% combine a comprehensive methodology in terms of scope and methodology applied. This underlines the need for greater consistency and transparency in calculating the equity ratio, enhancing comparability between companies.

A strategic shift confirmed

Sylvain Lambert, Partner in charge of sustainable development at PwC France and Maghreb, and Vice-Chairman of Orse, underlines the importance of this edition, confirming the strategic shift of companies towards more widespread sustainable development practices. In addition to the widespread adoption of CSR criteria in executive remuneration, the study reveals an extension of the systems, increased relevance of the criteria and growing importance of these criteria in remuneration. This underscores the ongoing need for innovation and adaptation to meet emerging CSR challenges.

A dynamic CSR future

This joint study provides a comprehensive overview of CSR practices in compensation policies, outlining a future where social responsibility is at the heart of companies. The trend observed in the CAC 40 extends beyond this, affecting SMEs and private equity, reinforcing the idea of a global movement towards responsible compensation. Disparities remain, but the trend towards transparency and the ongoing integration of CSR criteria marks a major turning point in the way companies design and implement their compensation policies. The road to responsible compensation seems clear, but it will require ongoing commitment and collaboration between companies, stakeholders and regulators to ensure effective and ethical implementation of CSR practices.

Analysis of CSR practices in the CAC 40

Contextualization of the study

The state of play: An undeniable evolution

Widespread integration into the CAC 40

Expansion of CSR measures and priorities

Communication: A step towards transparency

Expanded perspectives: SMEs, private equity and new themes

SMEs: the challenge ahead

Private equity: moving towards ESG

New themes: Transparency of the equity ratio

A strategic shift confirmed

A dynamic CSR future

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Analysis of CSR practices in the CAC 40

Contextualization of the study

The state of play: An undeniable evolution

Widespread integration into the CAC 40

Expansion of CSR measures and priorities

Communication: A step towards transparency

Expanded perspectives: SMEs, private equity and new themes

SMEs: the challenge ahead

Private equity: moving towards ESG

New themes: Transparency of the equity ratio

A strategic shift confirmed

A dynamic CSR future

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