A Triangulated Governance Index Mapping Executive Compensation Structure to Long-Term Decarbonization Outcomes

• Abiodun Okunola

  Ladoke Akintola University Technology

  Author

Corporate decarbonization requires governance mechanisms that align executive incentives with long-horizon climate objectives, yet existing measurement tools cannot isolate the specific compensation components that drive actual emissions reductions versus symbolic commitments. This study develops and validates a Triangulated Governance Index (TGI) that integrates compensation structure analysis, board climate oversight depth, and verification-verified decarbonization outcomes into a composite predictive framework. Using firm-year observations from 847 publicly listed firms across 23 countries (2015–2024), the study employs a design-based research approach combining retrospective panel analysis with prospective simulation. The TGI achieves 89.4% predictive accuracy in identifying firms that will achieve absolute emissions decoupling within 36 months, significantly outperforming conventional ESG-linked pay indicators (72.1%) and standalone carbon metric variables (68.7%). Feature importance analysis reveals that emission-specific compensation weighting (β = 0.341) and verification-verified carbon target inclusion (β = 0.287) are the dominant predictors, while generic sustainability-linked pay demonstrates negligible predictive power. The framework addresses a critical measurement gap by distinguishing substantive incentive alignment from greenwashing-prone disclosure, building on validated triangulation methodologies. Practical implications include a replicable three-component index for compensation committees, with expected lead time of 18–24 months from incentive restructuring to measurable decarbonization outcomes.

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Copyright (c) 2026 Abiodun Okunola (Author)

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