Bass, Berry & Sims attorney Scott Bell authored an article highlighting the latest updates in human capital disclosure requirements for public companies since the Securities Exchange Commission (SEC) imposed new requirements in late 2020.
While public companies were historically only required to disclose their gross headcount as it relates to human capital, the 2020 changes added a broader requirement that companies include in their filings a description of their human capital resources, which includes any human capital measures or objectives that the company’s management team focuses on when running the business.
However, the SEC deliberately didn’t define “human capital resources,” leaving each company to determine what is material for investors to know. “These are judgment calls, informed not only by the company’s business policies for hiring, developing, retaining and compensating employees, but also by the growing investor demand for clear understanding of how companies promote goals of diversity, equity and inclusion (DEI) among the workforce, as well as keeping up with corresponding disclosures from competitors,” Scott said.
In the two rounds of annual reports filed since these rules went into effect, virtually every company has increased its disclosure around how its policies promote DEI values in its workplace, which often includes statistical information showing the positive impact of those measures. Other themes public companies are disclosing relate to how companies develop talent, set compensation and benefits and promote employee health and safety.
The full article, “The Latest in Human Capital Disclosure Requirements for Public Companies,” was published by the Nashville Business Journal on July 8 and is available online.