SEC to Hear Panel of Investors on Need for Mandated HCM Disclosure – Rule Forthcoming?

The SEC announced the agenda for its next Investor Advisory Committee meeting on Wednesday, September 21, at 10:00 a.m. Eastern – and the very first panel will focus on “Human Capital Management and Labor Valuation and Performance.” Notably, the panel is largely pulled from the Human Capital Management Coalition, with moderator Cambria Allen-Ratzlaff of JUST Capital and panelists Tye Graham (CHRO of Amalgamated Bank), Christine Shaw (Connecticut Retirement Plans) and Tamara Sells (CalPERS) all participating in that Coalition. They will be joined by Harvard Business School’s Ethan Rouen, who is part of the separate Working Group on Human Capital Accounting Disclosure (confused yet?) which recently asked the SEC to propose new rules on accounting for HCM in financials.

The makeup of the panelists is important because it indicates the groups that are influencing the SEC regarding human capital metrics, including the anticipated new rule on HCM disclosure. The agenda for the meeting notes that “many investors” feel its 2020 principles-based rules fell short in providing high-quality data and allowed companies to “exercise too much latitude” in what they disclosed. Therefore, the agenda states, this session will consider investors’ views on what HCM data should be disclosed and how and why investors would use it. Given the makeup of the panel, the result of the discussion is easily surmised. However, it may also provide a clue as to the status of the much-awaited rule. It is possible that if the SEC is bothering to hold a panel on what investors would find useful, the rule is not as “baked” as one might suppose from its October 2022 expected date. On the other hand, the panel may simply reiterate what has already been drafted in the rule. Either way, it’s worth a listen – the public may view the meeting on www.sec.gov via webcast. The Center team will also attend and report the highlights of the meeting in our update.