ASOS ditches diversity targets for annual bonuses

ASOS is no longer requiring executives to hit diversity targets to receive their annual bonuses, switching its focus to driving profits as the e-commerce giant struggles to meet targets.

This is the latest sign of the environmental, social and governance (ESG) movement faltering. Now, executives will have to improve the online retailer’s share price and profit margins to land their annual payouts.

The move reflects an industry-wide shift away from ESG among investors, with pressure on companies to re-prioritise profits. Unilever’s new CEO Hein Schumacher, for example, has said it will no longer “force-fit” all of its brands with a “ludicrous” social purpose.

ASOS said it removed ethical targets from annual bonuses because the turnaround was “what management will be focused on delivering for the year ahead”. Instead, the company will include a diversity measure in its longer-term incentive scheme.

Prior to this, for executives to receive their bonuses, its scheme required female and ethnic minorities to be awarded leadership roles. Bosses did not receive their annual bonus last year because Asos did not hit its targets.

ASOS’s wider diversity drive aims to have 50% female and 15% ethnic minority representation at every leadership level by 2030.

This news follows Asos's attempts to stop sliding sales. Earlier this month, ASOS recorded revenues were down 11% to £3.54bn in the year to 3 September 2023 but said it had made good progress on its turnaround plan and was “readying for a return to profitable growth in FY25”.

Last month, it was revealed that ASOS was in talks to offload Topshop, which it acquired from collapsed Arcadia group back in 2021. ASOS paid a total of £265 million for the brand, plus £65 million for stock in hand and in progress. It has been reported, the company is now in talks with Authentic Brands Group, to sell the Topshop brand.