By: Bobbie Burton and Marcelle Clavette
Recently published research suggests that transparency in information disclosures from organizations influence efficiency, effectiveness, and trust.¹ Given this knowledge, the increasing trend of public human capital disclosures has garnered growing interest. In recent years, this interest has been followed by developing rule-making pressures and societal expectations for employers in reporting this data.
For instance, the Securities and Exchange Commission (SEC) has requested that organizations disclose any workforce measures, objectives, or efforts essential to their day-to-day business operations. Such information includes employee headcounts, demographics, turnover rates, training metrics, compensation, and benefits. Importantly, these information disclosures link human capital to organizational performance and promote transparency in human capital management.
Environmental, social, and governance (ESG) reporting also informs standards for annual disclosures. ESG, specifically, concerns what organizations are expected to report on in regard to their environmental and social responsibility, as well as their leadership accountability. Human capital disclosures fall within the social pillar of ESG, which focuses on standards for organizational behaviors and expectations pertaining to employees, suppliers, and community. Limited guidance from the SEC has left organizations with complete discretion over how these human capital disclosures are presented in their annual reports.
Organizations are increasingly leveraging ESG reports to promote transparency around their programmatic efforts, commitments, and progress in diversity, equity, inclusion, and accessibility (DEIA). However, currently there is not a standardized approach to this reporting.² As interest grows for more awareness of workforce diversity and nuanced differences in DEIA practices, DCI consultants have developed the DCI ESG Tracker, a tool for tracking and trending human capital disclosure practices from organizations across multiple industries (i.e., North American Industry Classification System; NAICS).
Thus far, DCI has collected a combined sample of human capital disclosures from 20 of the Fortune 100 and 500 companies’ public facing ESG reports. Here are our initial findings on three major categories commonly addressed in ESG reports: representation, diversity goals, and pay.
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Most Companies Report On |
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Representation |
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Diversity Goals |
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Pay |
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As DCI continues this ESG trending effort, we would appreciate hearing about human capital insights that are important to you and your organization so we can continue to provide helpful resources for future human capital disclosures and ESG reporting and determine the best way to make this information available.
Please take approximately 5 minutes to voluntarily complete this anonymous survey, before May 31, 2023: Human Capital Disclosure Trends Survey
References
1 Albu, O. B., & Flyverbom, M. (2019). Organizational transparency: Conceptualizations, conditions, and consequences. Business & Society, 58(2), 268-297.
2 At the time of this blog release, DCI noted various public resources with recommendations regarding ESG reporting human capital standards. DCI continues to monitor rulemaking to ensure that universal application of ESG required disclosures is achieved, and that these disclosures feature standardized content. This ongoing monitoring is essential to ensure the integrity and accuracy of ESG reports