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SEC Panel of Investors Calls for More HCM Disclosure

The SEC’s Investor Advisory Committee met with a panel consisting largely of pro-HCM disclosure groups that have significant influence at the SEC regarding human capital metrics, including the anticipated new rule on HCM disclosure.

The panel said the existing 2020 HCM rules “fell short and allowed management to exercise too much latitude” and encouraged the SEC to pursue more standardized reporting requirements for companies, since current reporting is “poor and inconsistent.” 

Chair Gensler provided remarks noting that “the Commission adopted rules in 2020 regarding human capital, and we would benefit from the Committee’s insight on the current requirements and opportunities for further enhancements.”  

Kavya Vaghul, Senior Director of Research at JUST Capital, provided an overview of the findings from her organization’s report, The Current State of Human Capital Disclosure in Corporate America: Assessing What Data Large U.S. Employers Share, where she concluded “corporate disclosure on human capital metrics is exceptionally poor.” Vaghul supports the requirement of disclosure on employment and labor type, job stability, compensation and benefits, workforce DEI, occupational health and safety, and training and education. Of note, these themes are consistent with what the Center has been hearing from the Commission on its plans to propose a rule this fall on human capital management. In addition, Vaghul noted that disclosure is low across the board and most human capital metrics are currently disclosed in CSR or Sustainability Reports, which do not require auditing or standardization. 

Ethan Rouen, Assistant Professor of Business Administration, Harvard Business School, encouraged the Commission to collect more labor data and possibly disaggregate “cheap labor, like we do in R&D” and further noted that “turnover is a great predictor of future returns.” Rouen said the 2020 rules had a significant impact resulting in more firms disclosing DEI information in their 10K, as well as turnover, recruitment, and retention. 

Christine Shaw, Principal Investment Officer, Corporate Governance & Sustainable Investment, Connecticut State Treasurer (FASB) said the “absence of uniform measurement of ESG is one that needs to be tackled.” Shaw noted that disclosure standards will be very helpful to asset owners like her company to engage in evaluation of external managers. 

Tye Graham, EVP and CHRO, Amalgamated Bank noted HCM data currently being reported by the bank includes key DEI metrics, total number of employees (including noting that 25% of employees are unionized under a collective bargaining agreement), percentages of employees who are internally promoted, and information around competitive pay. Graham said he is closely reviewing voluntary turnover within the organization to understand the rationale of those who are choosing to leave vs. those who leave through a reduction in force.


Chatrane Birbal

Vice President, Government Relations, HR Policy Association

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