The framework, which offers both quantitative accounting metrics and qualitative techniques, had academic support from the Saïd Business School at the University of Oxford in the U.K., which found statistical evidence that human capital return on investments is positively correlated with forward returns above benchmarks or indexes, over multiple time horizons and in most sectors.
"There are multiple paths to human capital management affecting balance sheets and profit and loss," Schroders said in a news release that also cautioned against too much emphasis on objective measures alone. With the framework's key performance indicators that help identify good human capital management practices, it can also help companies optimize human capital productivity, it said.
The framework offers investors "decision-useful investment information" that will also help inform their engagement efforts, said Marina Severinovsky, head of sustainability, North America for Schroders, in an interview.
Schroders, with $887.2 billion under management, will be testing the framework through various equities teams, she said.
"We are trying to have very sensible, accessible metrics" for assessing companies, and to encourage more disclosure from them, Ms. Severinovsky said.
The U.S. Securities and Exchange Commission and other jurisdictions are considering requiring such disclosure, she noted. "I think there's a very clear message that we want this kind of information. I think there is definitely a demand for this" as investors focus on companies' financial risk.
The framework initiative will continue working on other human capital management measurements, including materiality across industries and mapping.
