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ESRS 2: General Disclosures · 2026-5010-final

Disclosure Requirement GOV-3

Integration of Sustainability-Related Performance in Incentive Schemes

Practical guidance for preparing this disclosure. Use this card to identify datapoints, verify claims and organise supporting evidence. For exact requirements, always refer to the official EFRAG source.

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Reviewed by Dr Ross Kurinko · Sustainability Reporting Trainer LRA educational guidance · Not issued or endorsed by EFRAG

To prepare this disclosure

2datapoints↓ 4claims to verify↓ 5evidence areas↓ 3report examples↓

Disclosure focus

This disclosure asks an organisation to explain whether, and how, sustainability-related performance is built into pay and reward arrangements for people who influence the business. In practice, the focus is on showing the link between sustainability priorities and incentives, rather than simply saying that sustainability matters in principle. The organisation should describe the main features of the scheme in a way that makes clear what is being rewarded and who is covered.

The practical emphasis is on the real scope of the arrangement: whether it applies across the organisation or only to selected roles, business units, or senior leaders, and whether it is used consistently or only in certain parts of the business. The report should help a reader understand how far the incentive approach reaches in practice, and whether sustainability performance is embedded in everyday management or limited to a few flagship functions or sites.

This LRA educational guidance supports disclosure preparation. For the exact requirements, always refer to the official EFRAG source.

Before you start

A quick mental checklist before you prepare this disclosure — tick each as you settle it.

Have you decided which pay plans, bonus pools, or other reward arrangements are actually in scope for this write-up? Have you settled the performance basis you will use for each plan — for example, which measures, period, and cut-off point feed the figures? Can every figure or statement be traced back to a named internal source, such as payroll records, HR files, or board papers? Have you fixed the definitions you will use for the sustainability measures and any linked performance targets so the same meaning is used throughout? Have you mapped where each piece of information sits in your report, so the cross-references point to the right section or note?

Preparation

Key datapoints to prepare

Datapoint What to capture Evidence hint Owner

Due diligence actions Record the main checks, reviews and follow-up steps the organisation uses to identify, prevent, reduce and address adverse impacts linked to its activities and relationships. Due diligence policy, process maps, risk assessments, issue logs, action trackers and sign-off records. Sustainability / risk / compliance

Disclosure cross-references List where the related information appears elsewhere in the report so a reader can trace each linked topic to its full explanation. Reporting index, disclosure map, section cross-reference table and final report pagination. Reporting / finance / sustainability reporting

＋ Show GOV-3 sub-elements (LRA working checklist)

Point readers to where the related disclosures can be found elsewhere in the report. Set out the due diligence process steps you use.

How to prepare it

1Set the boundary for the due-diligence process first: decide which parts of the business, value chain, and reporting period are in scope for this disclosure, so the rest of the work is anchored to the right population.

2Agree the working definitions before you start drafting: make clear what your team will treat as a due-diligence step, what counts as relevant evidence, and which internal sources will be used to support the disclosure.

3Gather the underlying material from the people who own the process: collect policies, procedures, records, approvals, meeting papers, tracking logs, and any other support that shows how the steps were carried out.

4Turn the source material into the disclosure content: prepare the narrative of the steps taken, and where the disclosure needs figures, compile them from the same evidence base so the text and numbers match.

5Record anything left out or changed from the prior period: explain exclusions, restatements, reclassifications, or other changes in approach, and make sure the reason for each change is clear.

6Check the draft against the official source before sign-off: confirm that the final wording and any cross-references point to the right disclosure locations and that nothing material has been missed or mislabelled.

Request the data

Request the incentive-scheme evidence and disclosure cross-references

Translate the disclosure into an internal business question — then adapt it to your organisation's own language.

How are sustainability-related performance measures built into pay or bonus arrangements, and where is that shown in the reporting pack?

Use your organisation’s own names first, then map them to the reporting disclosure. For example, ask for bonus scorecards, annual incentive plans, long-term plan metrics, scorecard weightings, committee papers, and report cross-references rather than using framework labels in the request.

Weak request

Please provide the ESRS 2:GOV-3 evidence for integration of sustainability-related performance in incentive schemes, including due diligence steps and cross-references.

Why it fails: It uses framework language that many internal owners will not recognise, so the request is harder to action. It also does not say which plans, people, systems, or documents to pull, or how the evidence should be returned.

Better request

Please send the bonus plan, scorecard, or other variable pay documents for [period] that show which internal measures are used, how they affect payout, who is covered, and where this is referenced in the draft report. Include the source file, approval paper, and any changes made during the period.

Formal email template

Subject: Request for incentive-scheme evidence for [reporting period]

Dear [name/team],

We are preparing the sustainability reporting pack and need your help with the material on how non-financial performance is built into pay and bonus arrangements.

Please send the following for [reporting period] and [scope/population]:
- the current incentive plan or policy documents that show the relevant scorecards or measures;
- the metric names used internally and how they are weighted or linked to payout;
- any committee or approval papers that confirm the arrangement;
- the source file or system extract, if available;
- the draft report cross-reference or section where this will be described.

Please also confirm:
- which employee groups or roles are in scope;
- whether the arrangement changed during the period;
- the owner of the final evidence pack.

A possible LRA training template only — please adapt this to your organisation’s own terms and check the source material before sign-off.

Many thanks,
[preparer name]
[team]
[contact details]

Short Teams / Slack version

Hi [name/team] — could you share the incentive plan / bonus scorecard evidence for [period]?

We need the internal docs showing the measures used, how they link to payout, who is in scope, and any committee approval papers, plus the draft report cross-reference.

Please use your team’s own labels and send the source file or system extract if you have one. A possible LRA training template only — adapt to your organisation and check the source material before sign-off.

Thanks, [name]

Industry examples

Manufacturing

Context. A group uses a plant-level safety and emissions scorecard in annual management bonuses.

Adapted request. Please share the annual bonus scorecard and approval paper for [period] covering plant managers and operations leaders. We need the internal measure names, the weighting or payout link, the scope of sites covered, and the draft report cross-reference. A possible LRA training template only — adapt to your organisation and check the source material before sign-off.

Example response. Attached: FY2025 operations bonus scorecard; safety and emissions measures; 15% combined weighting; sites covered: 8 plants; approved by Remuneration Committee on [date]; draft report cross-reference: section [x].

Financial services

Context. A bank includes conduct, customer and climate-related measures in senior management variable pay.

Adapted request. Please send the variable pay policy, scorecard, and committee paper for [period] covering senior management. We need the internal labels for the non-financial measures, how they affect award outcomes, the population in scope, and the report section where this is described. A possible LRA training template only — adapt to your organisation and check the source material before sign-off.

Example response. Attached: FY2025 senior management variable pay pack; conduct, customer and climate measures; 20% combined weighting with a modifier; population covered: executive committee and direct reports; approved by the board remuneration committee; draft report cross-reference: note [y].

Draft your disclosure

Notes that turn data into a disclosure

LRA training templates — adapt them to your organisation, and check the official source before sign-off.

Method note

State which due-diligence steps are included, how each one has been identified, and how the related report locations have been matched to those steps.

Context note

Explain that the figures show the organisation’s due-diligence process and point readers to where each part is discussed in the report.

Fluctuation statement

If the pattern changes from one reporting period to the next, note whether that reflects a change in the process itself or simply a different way of presenting the same information.

Content index entry

GOV-3 Integration of Sustainability-Related Performance in Incentive Schemes — [location / page] / [notes]

Download Centre

Preparation tools & forms

Professional preparation tools for GOV-3 — free with an LRA Community membership. Register once (it's free) and every download unlocks, together with the Disclosure Library, templates and the LRA AI-assistant.

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01XLSPrep & Assurance workbookDatapoints, risks, evidence to check, owner and evidence pack.Get it free ↧ 02XLSData-request packRequest email, message template, response fields and sign-off structure.Get it free ↧ 03PDFLibrary CardPrintable one-page summary of this disclosure card.Get it free ↧

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Assurance readiness

For each claim, check the evidence

ClaimRiskEvidence to check

We have shown, in a table, how the due-diligence work links back to the relevant parts of the sustainability statement.An assurer may test whether the mapping is complete, whether each step is linked to the right disclosure, and whether the table is consistent with the final published statement.Draft and final cross-reference table; source mapping workbook; sign-off notes showing review of each link; version history between draft and publication.

In the statement, we point readers to where the main due-diligence activities are covered for the topic areas we report on.An assurer may probe whether the locations identified are accurate, whether any material topic area is missing, and whether the explanation matches the underlying reporting structure.Narrative sections and disclosure index; internal mapping of due-diligence stages to report sections; topic-by-topic evidence pack; review checklist confirming all relevant areas were included.

Our table sets out, for each reported area, where the related due-diligence steps are described elsewhere in the report.An assurer may check whether the table is truly a cross-reference tool rather than a general summary, and whether the references lead to the right supporting sections.Published table; linked section references; document control log; reviewer comments confirming the references were tested against the report.

We have explained, in plain terms, where the report shows our approach to the key parts of the due-diligence process for the sustainability matters we cover.An assurer may look for gaps between the explanation and the actual report content, or for wording that overstates what is evidenced in the statement.Prepared mapping note; supporting drafts of the relevant report sections; internal consistency check between the explanation and the underlying disclosures; approval records.

Evidence pack to prepare

The governing policy or written commitment behind this disclosureA methodology / definition note setting out how the disclosure was scoped and preparedSource-system exports the figures or facts were drawn fromThe internal approval / sign-off record for the disclosure before publicationMinutes or records evidencing the relevant engagement or consultation

Common reporting gaps

The information is presented without a date or as-at point.The scope or boundary of the statement is left undefined.Key terms are used inconsistently across the report.Material changes since the previous period are not disclosed.Assertions are made without supporting detail or a source record.Boilerplate is used that does not actually answer what is asked.

Common gaps

Mistakes to avoid when collecting the data

Wrong owner

The request goes to the wrong team or person, so the data is chased from someone who does not actually hold the pay-plan or performance records.

Framework language used

The question is asked in ESRS-style wording instead of the organisation’s own terms, and the respondent cannot map it to the relevant bonus or reward process.

Scope not pinned down

No one states which pay arrangements, employee groups, or business units are in scope, so different people collect different slices of the data.

Wrong period basis

The team pulls figures from the wrong performance year or award cycle, so the numbers do not match the reporting period being prepared.

Mixed counting basis

Headcount, award counts, and value measures are blended together without a clear basis, which makes the dataset internally inconsistent.

Source labels lost

The original names from payroll, HR, or remuneration files are stripped out, so later reviewers cannot trace each figure back to its source record.

Populations merged

Different groups that should stay separate, such as executives and other staff, are combined into one file and the split cannot be rebuilt cleanly.

Evidence trail missing

The collector saves the numbers but not the supporting file names, dates, or version notes, so the audit trail is incomplete.

No sign-off record

The final dataset is circulated without a named reviewer or approval note, leaving no clear record of who checked it before use.

＋ Show 6 more− Show fewer

Where judgement is often needed

Choosing which pay plans sit in scope

Set out the organisation’s rule for which bonus, long-term award or other pay plan is treated as linked to sustainability performance, and explain any cut-off used for plans that sit close to the boundary.

Handling newly bought or sold businesses

State how you deal with awards and performance measures when a business is added or removed during the year, including whether you keep, restate or exclude those figures and why.

Different country labels for the same pay metric

If local schemes use different names or definitions for similar performance measures, explain the mapping you use so readers can see how the group view was built from local practice.

People near the inclusion threshold

Explain the rule for staff, managers or executives who are just inside or just outside the population covered by the pay scheme, including any grouping or exclusion approach used.

Picking the measurement date or period

Disclose whether you assess performance using year-end results, a full-year average, or another timing basis, and keep the chosen approach consistent or explain any change.

Using estimates where direct figures are not available

Where actual results are not yet available, say which parts are based on estimates, how those estimates were produced, and how they are distinguished from measured outcomes.

Rounding and small-number presentation

Explain the rounding rule used for pay and performance figures, and make sure the rounded figures still reconcile to the underlying totals you present.

Protecting personal data in small teams

If a pay group is so small that individual results could be identified, describe the aggregation or masking approach used so the disclosure protects privacy while still showing the substance of the scheme.

＋ Show 5 more− Show fewer

Examples

Illustrative examples

Synthetic, written by LRA — not from a company report, not text from any standard.

Illustrative (synthetic) example — Food processing

We describe the main checks we carried out to identify and manage the most significant sustainability-related issues in our operations and supply chain, and we point readers to where the fuller detail sits in our report. - Our board and committee papers summarise the review steps, the issues considered, and the actions agreed during the year. - The related narrative is set out in the governance section, the risk discussion, and the due-diligence appendix, where we also explain how the work links across those parts of the report.

This example shows a company explaining the practical steps it used to review and address material sustainability matters, then directing readers to the sections where those details are described elsewhere in the report.

Illustrative (synthetic) example — Renewable energy

We set out how we checked the main sustainability risks and impacts across our project pipeline, and we indicate the report sections that contain the supporting detail. - The review covered site selection, contractor oversight, and follow-up actions, with the board receiving updates on the outcomes. - Readers can find the fuller explanation in the governance narrative, the risk and controls section, and the appendix that brings the related disclosures together.

This example shows a different type of reporter describing its review process in plain language and cross-referencing the places in the report where the supporting information is located.

Company reportsReal published reports

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How companies report GOV-3 in practice

Real reports where this topic is disclosed. These are report practice, not exact disclosure templates to copy.

Sanoma Oyj

Education Services · Finland · 2025

Open report →

Sanoma Oyj’s 2025 Annual Report provides evidence that the company includes sustainability-related performance in its incentive schemes for management bodies, as noted on page 62. However, there is no found evidence regarding further details or additional aspects of these incentive schemes elsewhere in the report. The report does not provide information on other related governance disclosures under this category.

Moncler S.p.A.

Textiles, Apparel, Footwear and Luxury Goods · Italy · 2024

Open report →

Moncler S.p.A.'s 2024 Annual Report references the integration of sustainability-related performance in incentive schemes, with related context found on page 130, although it does not provide a clear or detailed disclosure of this aspect. Additional mentions on pages 105 and 130 indicate some discussion around sustainability performance and governance, but the specific details required for GOV 3.gov 3.1 are not present. Overall, the report lacks a definitive statement or comprehensive data on the integration of sustainability criteria into incentive schemes.

Pirelli & C. S.p.A.

Automobiles and Components · Italy · 2025

Open report →

Pirelli & C. S.p.A.'s 2025 Annual Report includes a reported value related to the integration of sustainability-related performance in incentive schemes, as noted on page 116. The report provides context on sustainability governance and mentions this integration, but it does not clearly disclose all specific details for the related datapoint on the same page. Therefore, while some information is covered, the completeness of the disclosure on this aspect remains unclear.

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Check your understanding

Scenarios to work through

The remuneration committee is drafting the annual bonus scorecard. It plans to include a climate metric, but the draft paper does not explain how the metric was chosen, who reviewed it, or whether any wider checks were done before it was linked to pay.

QWhat should the preparer do before the scorecard is finalised?

Reveal model answer →Hide answer ↑

The preparer should make sure the narrative explains the steps taken to assess and integrate sustainability-linked pay measures, rather than just naming the metric. That means setting out the practical review process, the people involved in the review, and how the outcome fed into the incentive design, then cross-referencing the place in the report where that information sits. If the current draft does not cover those points, it should be expanded before sign-off.

Why this matters · A reader should be able to see both the process used and where the related explanation appears elsewhere in the report.

A group company uses one short-term bonus plan for executives, while a separate long-term plan is handled by the parent board. The draft report only describes the executive plan and leaves out the parent-level arrangement because it is “group-wide”.

QHow should the preparer decide what to include?

Reveal model answer →Hide answer ↑

The preparer should not limit the disclosure to one plan if the organisation uses more than one incentive arrangement that links pay to sustainability matters. The explanation should cover the relevant schemes in scope and show where each is discussed in the report, so the reader can follow the full picture rather than only one part of it.

Why this matters · Cover every relevant incentive arrangement that is part of the organisation’s approach, not just the most visible one.

The sustainability team proposes a safety target for the annual cash bonus. Finance asks whether the report can simply state that the target exists, because the detailed design is already in the remuneration policy appendix.

QIs a brief mention enough, or does the preparer need to do more?

Reveal model answer →Hide answer ↑

A brief mention is not enough on its own. The report should explain how sustainability-linked performance is built into the incentive approach and point the reader to the location of the fuller description, so the connection between the pay design and the supporting detail is clear. If the appendix holds the detail, the main narrative still needs a clear cross-reference.

Why this matters · A short summary is acceptable only if it clearly directs the reader to the fuller explanation elsewhere.

The draft says the company “considered environmental and social matters in pay decisions”, but it does not say whether those matters were actually built into the bonus formula, used only in discretion, or reviewed as part of the design process.

QWhat judgement should the preparer make about the wording?

Reveal model answer →Hide answer ↑

The wording should be tightened so it reflects the real way sustainability performance affects incentives. If the matters were built into the formula, the narrative should say so in plain language; if they were only part of a broader review or discretion, that should also be made clear. The point is to describe the actual integration step, not leave the reader guessing.

Why this matters · Use wording that matches the real role sustainability performance plays in pay design.

Framework references

Related framework references

How this disclosure maps across the major reporting frameworks.

ESRS

GOV-3

within ESRS 2: General Disclosures

Open official source →

Primary

Related & explore

General Basis for Preparation of Sustainability Statements → Guide ✓Disclosures in Relation to Specific Circumstances → Guide ✓Actions and Resources in Relation to Material Sustainability Matters → Guide ✓Metrics in Relation to Material Sustainability Matters → Guide ✓Policies Adopted to Manage Material Sustainability Matters → Guide ✓Targets in Relation to Material Sustainability Matters → Guide ✓Show all 14 related disclosures →

More in ESRS 2 →Browse full catalogue →Disclosure Library home →Search all disclosures →

Go deeper · GOV-3

Learn to prepare this disclosure end-to-end

Available as Guided Flex, Live Cohort, 1:1 Expert Mentorship or Corporate Programme.

Explore the ESRS / CSRD course →

FAQ

Questions this page answers

How do I use the GOV-3 page to prepare an ESRS 2 General Disclosures draft from scratch?+−

Start with the plain-language explainer, then follow the step-by-step 'how to prepare' section to turn the page into a working draft. Use the draft-output section for narrative starters, visualisation ideas and a content-index line.

What data do I need to collect for GOV-3 before I start writing the disclosure?+−

The page says to prepare due diligence actions and disclosure cross-references. Collect those items first so you can build the disclosure around what the company actually did and where the supporting references sit.

How should I set the scope and methodology for GOV-3 using this page?+−

Use the step-by-step preparation guidance to decide what belongs in the disclosure, then align the scope to the due diligence actions and cross-references listed on the page. Keep the approach consistent with the evidence pack and the illustrative example structure.

Who should own the GOV-3 disclosure process in practice?+−

The page is designed for sustainability/ESG managers, HR or data owners, and assurance reviewers, so ownership should sit with the person coordinating those inputs and evidence. The workbook can help assign tasks and track what each owner needs to provide.

What should I put in the evidence pack for GOV-3 assurance readiness?+−

The page includes an evidence pack with five items, so use that as the core set of support for the disclosure. Build it around the due diligence actions, the cross-references, and the assurance claims you need to verify.

What are the four assurance claims on the GOV-3 page and how do I use them?+−

The page gives four assurance claims to verify, each with a claim, risk and evidence prompt. Use them to test whether the draft is supportable and whether the evidence pack is complete enough for review.

What are the common GOV-3 reporting mistakes I should avoid?+−

The page lists common reporting gaps and mistakes, so use that section as a pre-submission check. It is especially useful for spotting missing due diligence detail, weak cross-references, or a draft that is not backed by evidence.

How do I use the GOV-3 workbook and printable Library Card?+−

The Download Centre provides a Prep & Assurance workbook in .xlsx format and a printable Library Card in .pdf format. Use the workbook to organise preparation and assurance tasks, and the Library Card as a quick reference while drafting.

Can I use the synthetic example disclosures on GOV-3 as a template for my own draft?+−

Yes, but only as an illustrative guide. The examples are synthetic, so use them to see the style, structure and level of detail, then replace everything with your own company data and evidence.

How do I turn GOV-3 data into a draft narrative and content-index line?+−

Use the draft-output section, which includes narrative starters, visualisation ideas and a content-index line. That section is meant to help you move from collected data and evidence into a readable disclosure draft.

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	Report A	Report B	Report C
Datapoint 1	✓ p.213	unclear	✓ p.87
Datapoint 2	✓ p.214	—	✓ p.90

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Integration of Sustainability-Related Performance in Incentive Schemes

Key datapoints to prepare

How to prepare it

Request the incentive-scheme evidence and disclosure cross-references

Notes that turn data into a disclosure

Preparation tools & forms

For each claim, check the evidence

Evidence pack to prepare

Common reporting gaps

Mistakes to avoid when collecting the data

Where judgement is often needed

Illustrative examples

How companies report GOV-3 in practice

Scenarios to work through

Related framework references

Questions this page answers

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