Barclays and Natwest drop climate targets from executive bonuses

Banking giants Barclays and Natwest will both drop climate targets from their annual bonus schemes for senior executives.

The move reflects a wider shift underway in the corporate world, removing a formal link between climate and diversity targets and remuneration.

Both lenders will cut sustainability metrics as performance measures from annual award schemes, and instead roll climate targets into long-term share-based incentive schemes.

Barclays and Natwest have argued that this will better reflect long-term climate goals.

However, the move can be seen as part of a wider reform of pro-environmental and social measures that many companies had baked into their processes in recent years.

The reputation of the Net-Zero Banking Alliance (NZBA), convened in 2021 by the UN Environment Programme finance initiative, has been under significant pressure after six of the biggest banks in the US quit.

These included J.P. Morgan, Citigroup and Bank of America, and represented a big chunk of assets under management.

Donald Trump’s first act as the US President was to sign an executive order on 20 January to end “radical and wasteful” DEI programmes in the US.

Many companies in America have either overtly or quietly followed suit, with Deloitte “sunsetting” its diversity goals in the US and removing DEI-related content from its website.

McDonalds, Target and Walmart have undertaken similar measures in the last month.

At Barclays, climate metrics were previously included in its annual bonus scheme for senior executives, but sustainability measures will now be incorporated into its long-term incentive plan.

This will see the goals wrapped together with customer and client metrics and weighted at 25 per cent, according to its annual report.

“Progress towards these targets is expected to be volatile and non-linear and is best assessed over a multi-year period,” its report said.

“The sustainability measures are included as part of a broader, renamed category of measures… includ[ing] financing the transition, reducing our financed emissions and achieving net zero operations, as well as supporting our communities,” the bank added.

At Natwest, sustainability metrics will have a 15 per cent weighting in its chief executive’s performance share plan, rather than accounting for 10 per cent of his bonus, according to The Times.

City AM has contacted Barclays and Natwest for comment.