Sustainability Bonuses in the EU Are Potentially Problematic

Encouraging sustainable behaviors, including creative ways of incentivizing sustainability among workers, is being weighed all throughout the EU. A German soccer team recently included the option for a sustainability bonus in their contracts, which considers the impact of certain behaviors and rewards employees who make sustainable choices.

“The soccer team incentivized what employees actually eat,” said Alexander Schlicht, vice president of legal at Osborne Clarke in New York City. “This is highly controversial.”

What Are Sustainability Bonuses?

These clauses are not yet widespread, and the logistics and feasibility of them are still in question. With a sustainability clause, companies set up a metric system that measures certain employee behaviors—even travel.

“Broadly speaking, it’s incentivizing everything [that] is sustainable,” Schlicht said. “In this case the employer introduced a point system to determine the bonus calculations; depending on how many points the employees actually earned the bonus is paid out.”

Companies can work to provide more sustainable options that employees can take advantage of, like offering electric bicycles for commuting to work, as a prerequisite to make sustainability bonuses feasible. It’s also a feature that employees can opt into or opt out of.

"In European countries, there are good employment protections,” Schlicht said. “When you say you don’t want to have such a clause included in your contract, you don’t have to expect retaliation or being laid off.”

Potential Problems

But as a mostly untested form of compensation, there are potential problems with sustainability bonuses.

Hanna Tabea Saupe, the head of HR at a digital marketing company in Berlin, is skeptical of sustainability bonuses. “Generally, I think it’s a good thing to focus more on sustainability, and I also think it’s a good thing if there are more political regulations around it. But I don’t think it’s the right approach,” she explained, noting that it makes more sense to focus on large companies that pollute rather than individual employees.

Certain aspects of the sustainability clause, such as those practiced by the German soccer team, might not be upheld going forward, including the team’s attempts to include what employees eat in the metric of their sustainability bonus. 

“Personally, I would say broad and far-reaching clauses are not enforceable,” Schlicht said. “Regulating what employees eat would be looked at very critically in front of labor courts in Germany and many other European countries. I think there will be a good chance that an employee could sue the company and demand the full payment of a bonus, even if the sustainable targets have not been met. Also, employers should be very careful that such a metric system is not breaching European privacy laws.”

Saupe points out that where the metric begins and ends is unclear, and that regulating an employee’s personal life can be problematic. “What do you look at? Do you look at how much the person flies? Do you look at it only from a work perspective? Or do you look at it in their personal life as well, which then I would find pretty challenging to track,” she said. “I think some people might be concerned with sharing this kind of information.”

“I am a big fan of innovation and sustainability, but I definitely don’t think employers should move in the direction of patronizing their employees and getting too involved in the very personal space of their employees,” Schlicht said.

“Generally, bonuses need to be linked to measure achievable targets,” Saupe noted, “either on a company level or individual performance level.”

Katie Nadworny is a freelance writer in Istanbul.