Workforce Diversity Disclosures On the Rise

Just Capital has published its latest report on workforce diversity disclosures, noting that companies disclosing their EEO-1 report (what Just Capital refers to as the “gold standard” in diversity disclosures) more than tripled between 2021 and 2022. 34% of the Russell 1000 now discloses their EEO-1 report publicly, while 22% disclose detailed race and ethnicity data in another form and 16% disclose aggregate “people of color” data.

In a companion analysis, Just Capital looked at shareholder returns of companies disclosing EEO-1 data and found that those companies outperformed non-disclosing companies by 7.9% over the trailing one-year period ending in 2022 (see report here). Although this can hardly be called proof that more diversity disclosure leads to better business outcomes, it will form part of the business case that activist investors and other stakeholders present to companies when demanding more detailed diversity disclosure. The NYC Comptroller and Retirement Systems released a joint report at the end of last year detailing a very successful shareholder campaign to increase disclosure, resulting in over 90% of S&P 100 companies releasing their EEO-1 report.

Meanwhile, we continue to anticipate the SEC’s rulemaking on human capital disclosures, which is earmarked for April in the SEC’s latest regulatory agenda. Chair Gensler has indicated that he is seriously considering acting on the June 2022 petition of the Working Group on Human Capital Accounting Disclosure, which called for rulemaking on new human capital accounting disclosure requirements. This could mean that it will be included in any proposed HCM rules this spring.