Does adopting voluntary ESG practices affect executive compensation?

Menachem Meni Abudy, Ilanit Gavious, Efrat Shust

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


The Equator Principles (EP) is a voluntary framework of environmental guidelines for financial institutions in project financing. This paper examines the impact of an EP adoption on executive compensation. Compared to a matched sample of non-adopting banks, we find that total compensation significantly increased in banks that adopted the EP. The increase was driven by larger grants of equity-based compensation. This effect of EP adoption on executive pay does not depend on the risk management framework of the bank or on the timing of the adoption. Lastly, we do not find evidence of a change in the adopting banks’ performance.

Original languageEnglish
Article number101718
JournalJournal of International Financial Markets, Institutions and Money
StatePublished - 1 Mar 2023


  • Banks
  • ESG
  • Equator principles
  • Executive compensation
  • Financial institutions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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