Two major studies of current human capital management disclosures with almost diametrically opposed findings showcase the importance of context and data when it comes to company practice in this area. ESG ranking and activist group JUST Capital
released a study of the 100 largest employers, with rather dire findings (“below 20% for the majority of metrics”) while Meridian released a
similar study of 220 large US public companies with much higher prevalence (over 75% in major areas).
The differences lie in the methodology used in each report, as well as the purpose (some might say agenda) behind the studies. Both groups reviewed disclosures based on key themes such as workforce composition, recruitment/retention, total rewards, diversity, health and safety and training/education. However, the criteria by which companies were judged to have provided disclosure were quite different.
In the case of JUST Capital, companies were not given credit for any disclosures outside JUST’s specific list of metrics. This was particularly impactful with regard to the recruitment/retention category, where JUST reported that the median rate of disclosure was only 8% where Meridian showed 66% prevalence. Meanwhile, Meridian’s study included a much wider range of disclosure, and gave credit for any discussion of company policies and initiatives in a given area, whereas JUST Capital focused only on quantitative metrics.
The significant gaps between the two reports illustrate the difficulty in analyzing metrics which are not standardized. However, it does not necessarily follow that a mandate for all companies to disclose the same standardized human capital metrics is appropriate. That said, JUST Capital’s findings will almost certainly be used to bolster arguments in support of the SEC releasing more prescriptive HCM disclosure requirements.
