It’s Time For An SEC Human Capital Disclosure Requirement Rule Reset | Center for American Progress

This in-depth article (estimated 30 min read) summarizes how the SEC’s Human Capital Disclosure Requirement Rule’s lack of standardization often leaves stakeholders (e.g., investors) with information that is not detailed, reliable, consistent, or comparable enough to use to make informed decisions. For example, in a previous post, I noted that an analysis by Harvard Law of the first fifty 10-Ks filed after November 8 varied dramatically. Another study published by Stanford University reported that 57 percent of the 10-K filings it surveyed contained no quantitative metrics. This article recommends the SEC should require corporations to disclose quantitative workforce metrics in at least four categories: 1) Demographics (e.g., number of full-time employees, disaggregated by race, ethnicity, and gender), 2) Job quality (e.g., minimum wages for workers, by job duties or another classification). 3) Worker voice (e.g., description of outstanding National Labor Relations Board complaints and related legal costs, and 4) Human capital development (e.g., whether the company has a business plan for workforce retention and redeployment of workers whose jobs are eliminated.) Across these four areas, the article offers 25 metrics for firms to consider. It would be useful at some point for firms to report the impact of their human capital on specific business outcomes. For a range of articles I have covered on the SEC disclosure requirements, please check here.