SEC weighs adding ‘human capital component’ to disclosure requirement

Securities and Exchange Commission Chair Gary Gensler affirmed last week that he is asking SEC staff members to propose recommendations for a mandatory “human capital” disclosure requirement for public companies.

“Investors want to better understand one of the most critical assets of a company: its people. I’ve asked staff to propose recommendations for the Commission’s consideration on human capital disclosure,” Gensler tweeted last week. 

Human capital disclosures, he said, could include metrics such as workforce turnover, skills and development training, and workforce demographics, among others. 

Larger U.S. companies already have begun voluntarily to include human capital data in their disclosure statements, the Wall Street Journal reported in March. Many are including race and gender demographics for the first time. In a survey of more than 160 annual reports filed by S&P 500 companies for 2020, approximately a third included some sort of diversity disclosure.

“Some institutional investors are pressing for better information on workforce diversity. Many are starting to incorporate details into rankings or investment decisions,” the Wall Street Journal reported.

In other business, last week the SEC announced open data enhancements designed to provide public access to financial statements and other disclosures made by publicly traded companies on its Electronic Data Gathering, Analysis and Retrieval system, also known as EDGAR.

In addition, the commission is releasing for the first time application programming interfaces, or APIs, that aggregate financial statement data, making corporate disclosures quicker and easier for developers and third-party services to use.
“These new APIs make important information about public companies more accessible and usable than ever before,” Jed Hickman, director of the EDGAR Business Office, said in a press release. “This marks another important milestone in the SEC’s continuing efforts to facilitate innovation and make financial disclosure data accessible to all market participants.”