Recently, the Carbon Tracker Initiative reported that leading executives in oil and gas companies continue to be incentivized based on growth metrics such as exploitation of new reserves. Such incentive structures thwart any attempts to decrease carbon emissions from the energy sector.
In our own research, Andrew Inkpen, Kannan Ramaswamy and I find that companies from the oil and gas sector which tie executive compensation to the attainment environmental, social and governance goals are significantly more likely to invest in renewable energy (working paper, unpublished).
To stop adding fuel to the flames, incentive structures for managerial decision makers need to be changed - quickly.
