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Governance

Investor coalition calls for SEC to require human capital management disclosures

A coalition of 25 institutional investors representing more than $2.8 trillion in assets has submitted a rule-making petition to the U.S. Securities and Exchange Commission that calls for listed companies to be required to disclose information on human capital management, practices and performance.

"Investors believe the current SEC reporting system presents a critical information gap," said a Monday news release from the Human Capital Management Coalition, which is led by the $56.4 billion UAW Retiree Medical Benefits Trust, Ann Arbor, Mich. "Information that could help investors evaluate how well a company manages its workforce generally is not required in the U.S. markets and therefore can be hard to come by. Workforce-related disclosures mandated by the SEC are limited to employee headcount, preventing investors from gathering even basic information such as the amount of money a company spends on its workforce per year."

The petition does not contain specific reporting metrics, but outlines nine categories coalition members deemed "fundamental to human capital analysis" — workforce demographics; stability; composition; skills and capabilities; culture and empowerment; health and safety; productivity; human rights; and compensation and incentives.

The coalition expects specific data points to be developed in the rule-making process.

"As institutional investors and asset managers, members of the HCM Coalition have a vested interest in ensuring that the companies in which we invest are positioned for sustainability and growth over the long term," said Meredith Miller, chief corporate governance officer for the UAW Retiree Medical Benefits Trust, in the release. "The ability to effectively harness and apply the collective knowledge, skills and experiences possessed by each individual in the workforce is essential to long-term value creation and is therefore material to investors evaluating a company's future performance. Current disclosures leave investors with an incomplete picture of how well companies are seizing opportunities and managing risks."

Added Scott M. Stringer, New York City comptroller and fiduciary for the five pension funds within the $170.6 billion New York City Retirement Systems: "Workers are the bedrock of every successful company and the lifeblood of our economy. Talent is everything, and investors need to know how companies are managing their employees and whether they're quality, hospitable and safe places to work."

Along with Mr. Stringer's office and the UAW Retiree Medical Benefits Trust, coalition members include the $323.6 billion California Public Employees' Retirement System, Sacramento; $208.7 billion California State Teachers' Retirement System, West Sacramento; $31.5 billion Connecticut Retirement Plans & Trust Funds, Hartford; New York state Comptroller Thomas P. DiNapoli, sole trustee of the $192 billion New York State Common Retirement Fund, Albany; $87.3 billion Ohio Public Employees Retirement System, Columbus; CtW Investment Group; Hermes Investment Management; and Legal and General Investment Management.

An SEC spokesman declined to comment.​