SEC Chairman Gary Gensler
made waves Thursday when he announced in a private speech to agency and academic researchers that the SEC would shortly be proposing new rules on the disclosure of human capital metrics. Stating that investors “increasingly want to understand” workforce and human capital practices for their portfolio companies, Mr. Gensler said the staff would propose a new rule on disclosing HCM soon, noting it is “one of my top priorities and will be an early focus during my tenure at the SEC.”
Mr. Gensler has a reputation for efficiently moving through the rule making process, and the SEC may submit a request for information (as they are doing with climate risk disclosures) prior to writing the proposed HCM rule or simply publish a rule and then seek public comment.
The Center supported the SEC’s 2020 principles-based guidance on HCM and warned against prescriptive “laundry lists” of required or suggested metrics. Supporters of a more prescriptive approach at the time called for diversity metrics, voluntary vs. involuntary turnover, L&D spend, and part-time vs full-time employees, among other measures. Given increased scrutiny of diversity and pay equity initiatives in the current environment, it is likely that any proposed SEC rule will not fail to include a strong suggestion (if not a mandate) regarding company disclosure of those items. The Center will engage closely with the SEC and members on this issue and will report back once more details are known.
