Brave New World: Creating Long-Term Value through Human Capital Management and Disclosure

Human Capital Management as an Emerging Critical Governance Area. Report of the Working Group Examining the Board’s Role in Human Capital Management and Disclosure. 

The SEC is now requiring that US public companies disclose information about human capital management “to the extent such disclosures would be material to an understanding of the registrant’s business”—such disclosure is no longer voluntary. Boards will need to determine whether human capital is material, what they need to disclose, how to contextualize human capital performance, and how they should communicate this to the investor community.

This report addresses the key topics the Working Group considered, including: establishing the link between human capital performance and corporate financial performance; quantifying human capital performance; the board’s role in overseeing human capital governance; and risk mitigation. The report provides guidance on strategic considerations as well as tactics to achieve high levels of governance quality related to human capital, a key aspect of ESG. The report also provides a view of what other governance agencies, beyond the SEC, are requiring/recommending related to qualitative or quantitative disclosures.

Examples of what other public companies have done in the past are included in the tool kit of resources.