The news: Ralph Lauren made AI metrics a factor in determining executives’ annual compensation while removing sustainability targets, according to public disclosures reviewed by Reuters.

The move reflects companies’—and financial markets’—shifting priorities, as AI adoption takes precedence over environmental, social, and governance (ESG) initiatives.

Zoom out: Ralph Lauren is currently one of few companies to publicly link compensation to AI performance—alongside the likes of Salesforce and PepsiCo—but that is likely to change as businesses face more pressure to demonstrate returns on their AI investments. In Ralph Lauren’s case, that includes its Ask Ralph chatbot, as well as other initiatives aimed at improving visibility on LLMs and supporting creativity, productivity, and customer engagement.

For the time being, many companies are content to take a longer view of their AI spending: Just 14% of global CEOs expect returns on their AI investments within six to 12 months, compared with 19% last year, according to a KPMG survey. Seventy-one percent expect returns within one to three years, suggesting that companies expect these initiatives to take time to bear fruit.

At the same time, the share of companies seeing at least some enterprise-level financial impact from their AI investments is flat compared with last year, with just 37% attributing at least some EBIT impact to AI use, per a McKinsey report. That lack of progress could increase the pressure on executives to demonstrate measurable returns on AI spending, especially as companies contend with higher costs across their business due to the war in Iran and other macroeconomic factors.

Implications for retail: Companies are understandably keen to pour money in AI, in part because it pleases investors but also because those investments can deliver real returns in the form of time and cost savings, alongside greater speed, efficiency, and other benefits. But there is a growing concern that businesses’ investments in AI are falling short of expectations: Eighty-nine percent of CIOs and CTOs worldwide are at least somewhat concerned that global investment in AI could be growing faster than the business value it can deliver, according to an August GFT Technologies survey.

Tying executive compensation to measurable AI results therefore incentivizes companies to cut down on wasteful spending while prioritizing projects with the biggest potential.