‘Unfathomable’: Why US investors, regulators are rethinking human capital management disclosures

Wall Street’s top regulator, the U.S. Securities and Exchange Commission, is in the early stages of creating a number of new ESG-related disclosure rules, including on the issue of human capital management.  

Human capital management refers to the way that companies manage their workforce. It includes things like a company’s approach to hiring, recruitment, pay and benefits, and the working conditions a company provides. Right now, public corporate disclosures on these topics are voluntary in the U.S. But many investors say that leads to insufficient and inconsistent data. 

“I think it’s unfathomable that, in this day and age, the only metric that companies are currently required to disclose is the number of people that they employ — especially when we talk to every company and they tell us that their human capital is their most important asset,” says Aeisha Mastagni, a portfolio manager in the sustainable investment and strategies group at the California State Teachers' Retirement System, one of the largest public pension funds in the U.S. “And yet we as investors have no way to measure that, benchmark that, compare it to other companies in our portfolio.” 

In this episode, we explore the changing state of human capital data disclosure in the U.S., why some investors want disclosures to become mandatory, and what to expect from the SEC.  

We also talk to securities and governance lawyers at the Philadelphia-based law firm Dechert and with Bryan McGannon, director of policy and programs at US SIF: the forum for responsible and sustainable investment.