Several labor organizations, trade groups and the Illinois treasurer have banded together to ask that the SEC propose a rule mandating that public companies disclose human capital management metrics.
"Investors are in desperate need of consistent, comparable, and decision-useful workforce information," 17 signatories wrote in a Feb. 22 letter to SEC Chair Gary Gensler.
The signatories — which include Americans for Financial Reform Education Fund, AFL-CIO, Better Markets, Illinois Treasurer Michael W. Frerichs, Interfaith Center on Corporate Responsibility, and Public Citizen — said the agency's existing framework on human capital disclosure, adopted in 2020, "is woefully inadequate and does not meet the needs of investors," echoing concerns from the SEC's Investor Advisory Committee.
In September, the IAC recommended that the SEC promulgate rules on human capital management disclosure, which the agency said it planned to do in its fall 2023 regulatory agenda.
However, no such rule has been proposed. According to the letter, institutional investors first filed a rule-making petition on the issue in 2017, and the SEC first included a rule on human capital management disclosure in its spring 2021 agenda.
"The continuing opacity of public companies' human capital management practices puts investors — including workers saving for retirement — at risk," the signatories wrote. "Effective human capital management is essential to long-term value creation and therefore material to evaluating a company's prospects."
In December, Sen. Sherrod Brown, D-Ohio, chair of the Senate Banking Committee, and Sen. Mark Warner, D-Va., also wrote a letter to Gensler urging him to issue new rules on human capital management disclosure.
The senators previously introduced legislation in September, known as the Workforce Investment Disclosure Act, that would require public companies to disclose workforce demographic information, turnover rates and training data, among other information. The legislation has yet to move in the Senate.
