A1 Journal article (refereed)
Sustainability in executive remuneration : A missing link towards more sustainable firms? (2021)

Hartikainen, H., Järvenpää, M., & Rautiainen, A. (2021). Sustainability in executive remuneration : A missing link towards more sustainable firms?. Journal of Cleaner Production, 324, Article 129224. https://doi.org/10.1016/j.jclepro.2021.129224

JYU authors or editors

Publication details

All authors or editors: Hartikainen, Heta; Järvenpää, Marko; Rautiainen, Antti

Journal or series: Journal of Cleaner Production

ISSN: 0959-6526

eISSN: 1879-1786

Publication year: 2021

Volume: 324

Article number: 129224

Publisher: Elsevier

Publication country: United Kingdom

Publication language: English

DOI: https://doi.org/10.1016/j.jclepro.2021.129224

Publication open access: Openly available

Publication channel open access: Partially open access channel

Publication is parallel published (JYX): https://jyx.jyu.fi/handle/123456789/78214


This paper contributes by showing simultaneously the interlinked challenges of sustainability-based (based on long-term economic, social and environmental targets) executive remuneration and the problems of transparency in remuneration reporting. Our empirical data, analyzed using qualitative content analysis, consists of the published remuneration statements and sustainability reports of 43 Finnish companies reporting according to the Global Reporting Initiative (GRI) framework. Our results indicate that comprehensive sustainability remuneration is still rare in Finnish large companies: long-term financial targets are implemented at most companies, but social or environmental targets were only reported by 7 companies (16%). We conclude that executive remuneration policies are still mainly concerned with financial targets and aligning the interests of executives and shareholders and ignoring other stakeholders. The dominance of the remuneration reporting by the local Finnish Corporate Governance Code (FCGC) over GRI reporting on remuneration highlights sustainability accounting as local practice and is a reason for the lack of fully transparent reporting about the criteria of sustainability remuneration. We conclude that sustainable executive remuneration and simultaneously lacking transparency of reporting on it do not support implementation of sustainability strategies in Finnish companies and may hinder the development towards genuine sustainability and shows that there is an important (missing) link between incentives and sustainability in business.

Keywords: corporate responsibility; environmental responsibility; environmental reporting; ecological sustainability; listed companies; remunerations; performance-related pay; transparency

Free keywords: sustainability; remuneration; transparency; reporting

Contributing organizations

Ministry reporting: Yes

Preliminary JUFO rating: 2

Last updated on 2021-14-10 at 10:36