An illustration with a laptop and mobile phone shows the website of online fashion retailer ASOS on August 12, 2021. (Photo by JUSTIN TALLIS / AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
ONLINE fashion retailer Asos has announced a change in the criteria for its annual executive bonus scheme, no longer requiring leaders to meet diversity targets to qualify for incentives, reported The Telegraph.
The move is seen as a sign of shifting from the environmental, social, and governance (ESG) movement, which is witnessing a decreased emphasis on diversity and increased focus on profitability.
Under the revamped bonus scheme, executives will now primarily be evaluated based on the company’s profits, with additional considerations given to improvements in Asos’s share price and profit margins.
This marks a departure from the previous bonus structure, where executives were required to meet diversity targets, including increasing female and ethnic minority representation in leadership roles, the report added.
The latest move is seen as a strategy to prioritise the company’s return to profitability.
Chief executive José Antonio Ramos Calamonte has recently emphasised that the upcoming year will focus on taking essential measures to revive Asos’s growth.
The decision aligns with a broader trend among firms, as evidenced by other notable companies, including Unilever, Shell, and BP, refocusing on profits and recalibrating their ESG strategies in response to investor pressure.
Unilever, known for its ethical stance, abandoned its efforts to imbue all brands with a social purpose, while oil majors Shell and BP renewed their emphasis on traditional energy sources over renewables.
Asos justified its decision by emphasising the need for a turnaround in profits, stating that the management’s focus for the upcoming year will be on delivering profitability.
The company’s commitment to diversity, however, remains intact, as it plans to incorporate a diversity measure in its longer-term incentive scheme.
Under the plan, executives may see fewer shares vesting if insufficient progress is made on diversity over the next three years.
The move comes at a critical juncture for Asos, which is grappling with financial challenges, including a substantial loss of nearly £300 million in the last fiscal year and a 10 per cent decline in sales.
The company has been exploring strategies to enhance its financial position, including the potential sale of Topshop, a brand it acquired in 2021, to US retailer Authentic Brands.
Meanwhile, Asos said that it plans to achieve 50 per cent female and 15 per cent ethnic minority representation at every leadership level by 2030.