Key Takeaways from ISS-Corporate’s London Roundtable

Corporate governance and sustainability leaders gathered in London for an interactive discussion on the changing expectations facing boards and management teams. The session brought together ISS-Corporate specialists, investors, governance and sustainability practitioners, and market participants to explore developments across governance, executive compensation, sustainability reporting, and climate transition planning.

While regulation remains an important driver, a recurring theme throughout the discussion was that investor expectations continue to evolve beyond simple compliance, requiring companies to demonstrate clear governance, accountability, and business relevance.

Executive Compensation: Balancing Competitiveness and Restraint

The discussion opened with a review of executive compensation trends in the FTSE 100, where companies continue to grapple with attracting and retaining senior talent while maintaining shareholder support.

Participants noted a growing number of companies revisiting remuneration policies outside the standard three-year cycle. Much of this activity has been driven by concerns about international competitiveness, particularly against U.S. markets, as well as the need to recruit and retain executive talent in highly competitive sectors.

Recent years have seen a notable increase in CEO pay levels, with much of the growth concentrated in long-term incentive plans rather than fixed salary increases. Pharmaceutical, life sciences, and banking sectors were highlighted as areas where compensation growth has been particularly pronounced.

Investors stressed that while they remain open to higher pay opportunities, support ultimately depends on strong alignment between reward and performance. Long-term, performance-based incentives continue to receive the strongest support where companies clearly demonstrate how executive outcomes are linked to value creation.

Governance and Board Effectiveness

Board composition, succession planning, and director tenure remained important topics.

Investor participants emphasized that while governance frameworks provide useful guardrails, they increasingly prefer thoughtful explanations over rigid compliance. Director tenure was cited as an example, with participants noting that a board member serving beyond a traditional nine-year threshold may still be considered independent where a company provides a compelling rationale.

The discussion also explored how governance structures can support long-term growth and risk-taking. Rather than focusing solely on compliance measures, investors are increasingly interested in whether boards have the right mix of skills, expertise, and perspectives to navigate future challenges.

ESG Metrics in Executive Pay Continue to Mature

The inclusion of environmental, social, and governance (ESG) metrics in executive remuneration remains an established practice, but participants noted a significant evolution in how these measures are evaluated.

Investors are no longer focused simply on whether ESG metrics exist. Instead, attention has shifted toward materiality, strategic relevance, and rigor.

Several attendees observed that climate-related metrics, which dominated discussions several years ago, are now being supplemented by broader social and workforce-related measures. However, investors cautioned against using ESG measures as an easy “add-on” to compensation structures. Successful approaches are those that directly support business strategy and include meaningful, measurable targets.

Sustainability Reporting: Expectations Continue to Rise

The FCA’s decision to introduce UK Sustainability Reporting Standards (UK SRS) on a comply-or-explain basis is not expected to materially change reporting expectations for large-cap and larger mid-cap companies. The expectation that companies provide relevant sustainability disclosures for investors remains.

Some companies are voluntarily moving ahead with reporting, including early adoption of UK SRS, to test both reporting and assurance readiness as part of a longer-term roadmap that may include future ESRS reporting and other applicable requirements.

One of the strongest messages of the session was that sustainability reporting is moving beyond a compliance exercise. Investors increasingly want to understand how sustainability-related risks and opportunities are integrated into governance, strategy, capital allocation, and day-to-day decision-making.

Reporting expectations are also becoming more nuanced. Investors are looking beyond whether a company has a policy, commitment, or target and are instead examining the credibility of implementation, governance structures, and evidence of progress.

Nature and Biodiversity Move Up the Agenda

Nature-related risks emerged as an increasingly important topic.

Speakers noted growing investor interest in understanding how companies depend on natural systems and how environmental degradation may affect business performance. While climate continues to dominate sustainability discussions, biodiversity, water availability, and ecosystem resilience are becoming more prominent considerations in risk assessments and investor engagement.

The consensus was that nature-related issues are likely to become a much larger focus area over the coming years, particularly for organizations with significant supply chain or natural resource exposure.

From Disclosure to Business Decision-Making

A recurring theme throughout the sustainability discussion was the importance of translating reporting requirements into business action.

Several participants shared experiences of using double materiality assessments, climate risk reviews, and sustainability reporting programs to engage broader internal stakeholders, including finance, procurement, legal, risk, and operations functions.

This is also one of the greatest challenges: moving from cross-functional engagement to an aligned strategy, securing sufficient management buy-in, and executing the necessary follow-up actions. The discussion highlighted a link between senior management involvement in materiality assessments and subsequent engagement with the results. Greater involvement in the assessment process was seen as supporting stronger ownership and integration of the findings into the business.

The discussion drew on real-world examples of climate-related disruptions affecting operations, supply chains, and workforce productivity. These illustrated how sustainability assessments can help organisations frame emerging challenges as business risks rather than purely reporting obligations.

Transition Plans Need More Than Targets

Climate transition plans were another major discussion point.

Participants highlighted a growing expectation that transition plans demonstrate not only ambition but also credibility. Investors increasingly want to understand how targets will be achieved, who is accountable for delivery, and how plans are incorporated into operational and financial decision-making.

The discussion suggested that companies are moving from broad commitments toward more detailed implementation plans that address governance, resourcing, capital allocation, and execution pathways.

While regulatory momentum on transition plans has become less certain in some markets, iremains focused on whether Capital expenditure was also noted as a particularly important element when assessing transition plans, including the expected cost to the business of achieving its decarbonisation objectives.

The discussion also considered the EU’s Empowering Consumers for the Green Transition Directive, which is becoming increasingly relevant for companies selling to consumers in the EU. Companies will need supportable, evidence-based information to substantiate environmental claims.

Looking Ahead

The roundtable concluded with a shared recognition that governance and sustainability are becoming increasingly interconnected.

Whether discussing executive remuneration, board oversight, climate risk, or sustainability disclosures, the common thread was the growing expectation that companies move beyond reporting and demonstrate how governance structures are driving meaningful business decisions.

As regulatory frameworks continue to evolve, participants agreed that the companies best positioned for success will be those that treat governance and sustainability not as standalone compliance exercises, but as integral components of long-term business strategy and value creation.

How is your organization responding to evolving stakeholder expectations?

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