Human Capital Management Coalition Statement Re: SEC’s Regulation S-K Final Rulemaking

Urges SEC to Go Further, Seek Company Reporting on Four Metrics

Detroit, Michigan, Aug. 27, 2020 (GLOBE NEWSWIRE) -- STATEMENT

The U.S. Securities and Exchange Commission issued a final rule on August 26 amending Regulation S-K, the financial reporting rule that included changes to the way workforce information is reported by public companies. The Human Capital Management Coalition which is advocating for greater disclosure on human capital stated today that under the new rules shareholders would still face difficulty in obtaining information that is clear, consistent, and comparable in order to make optimal investment and voting decisions.  While the rule-making represents important progress in acknowledging the importance of the workforce, the new rules give public companies too much latitude to determine the content and specificity of the human capital-related information they report.

In 2017, the $5.9 trillion Human Capital Management Coalition filed a landmark rulemaking petition to the U.S. Securities and Exchange Commission that clearly laid out the investor case for the disclosure of reliable, consistent, and timely information about human capital management by public companies. We contended that human capital – defined as the collective knowledge, motivation, skills and experiences of the workforce – is the engine that drives our economy and allows companies to compete in an environment where ingenuity and the ability to adapt to novel technologies are the keys to lasting success. Investors must have the tools to understand how well a company manages its human capital in order to make optimal decisions about where we direct our financial capital. We also held that the SEC, with its mandate of investor protection, market fairness, efficiency, and capital formation, was the venue best suited to begin a market-wide dialogue to modernize financial reporting to reflect how companies create value today and in the future.

In issuing amendments to Regulation S-K, the SEC acted on our 2017 rulemaking petition with an important first step in acknowledging the incredible value of the workforce. The final rule is not perfect – it permits an overreliance of management discretion in what is reported and does not require a uniform set of baseline information which is consistent, comparable, and concise to allow investors to gain a clear and effective understanding of a company’s skill in managing its workforce.

The Coalition urges the Commission to adopt a balanced approach that would require all companies to report on four quantitative yet modest disclosures to anchor the principles-based, industry- and company-specific reporting framework relied upon in today’s amendments. These four fundamental metrics are: (1) the number of employees, including full time, part-time and contingent labor; (2) total cost of the workforce; (3) turnover; and (4) employee diversity and inclusion. We also strongly encourage the SEC to instruct its staff to issue interpretive guidance to give firms explicit direction that will ensure human capital management disclosures are consistently robust, meaningful and comparable.

Current events, including COVID-19 and the recent outpouring of corporate support for racial justice, only underscore the need for this basic information on workforce assets. This information would allow investors to put corporate disclosures and the impact of these events on performance in context. The Coalition has always viewed the development of human capital reporting metrics as a marathon, not a sprint. Today’s actions by the SEC represents the first leg of the journey.   

We look forward to working with the SEC to assist in developing a balanced approach to human capital-related reporting.

The Human Capital Management Coalition is co-chaired by the UAW Retiree Medical Benefits Trust and California State Teachers’ Retirement System and includes 30 institutional investors representing over $5.9 trillion in assets.



 Source: Human Capital Management Coalition,


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