Two of Britain’s biggest banks, Barclays and NatWest, are removing sustainability metrics from their short-term executive bonus plans, instead shifting climate goals into multi-year incentive schemes.
The move aligns with a broader trend in the corporate world to scale back—or entirely drop—environmental or diversity measures linked to pay packages.
Under Barclays’ overhaul, climate targets will no longer feature in annual bonus calculations for its chief executive, CS Venkatakrishnan (“Venkat”), or other senior managers, and will instead be “fully” integrated into a new long-term incentive plan (LTIP). The bank believes assessing climate objectives over several years provides a clearer view of progress, which it says may be “volatile and non-linear.” Venkat’s LTIP is worth up to 550 per cent of his £1.6 million salary, while his maximum annual bonus is 250 per cent.
NatWest is making similar changes, removing climate metrics from annual awards and relocating them to a revised share-based plan. Chief executive Paul Thwaite, who earns a base salary of nearly £1.2 million, could receive up to £3.5 million through this new structure, almost triple his base pay. Although NatWest previously weighted climate performance at 10 per cent in annual bonuses, it will now form part of a 15 per cent sustainability segment within its longer-term scheme.
These decisions follow the UK’s decision to remove a banker bonus cap inherited from the European Union. They also mirror wider upheavals beyond British finance: Six major American banks, including JPMorgan Chase and Morgan Stanley, have pulled out of a global net-zero alliance amid political backlash at home. Meanwhile, global corporations such as Meta (owner of Facebook) and retail giant Walmart have revoked or cut back on their diversity, equity and inclusion policies following the return of President Trump, who has rescinded various related measures.
BT Group, the former state telecoms provider, also confirmed this month that it would scrap the diversity component from its bonus plan for thousands of middle managers—highlighting a growing shift away from using social and environmental goals in annual remuneration.
NatWest said it remains committed to embedding sustainability within executive pay, while Barclays reiterated in its annual report that the long-term view is most appropriate for assessing climate performance. Rivals HSBC and Lloyds continue to reflect environmental progress in their executive compensation, though future updates may also face scrutiny amid evolving regulatory and shareholder pressures.
