The new U.S. Securities and Exchange Commission (SEC) regulation mandates human capital disclosure by all companies selling securities in the U.S. The rule was effective Nov. 9, 2020, with no grace period, so going forward, publicly traded companies must disclose material human capital information.
The new human capital disclosure rule is likely to provide investors with increased transparency into a company’s workforce and allow investors to better understand the value of a company’s human resources. I anticipate that companies will use this disclosure requirement as an opportunity to highlight to investors the ways in which they prioritize their human capital and culture.
The rules require disclosure of human capital objectives or measures used to manage the business if they are material to an understanding of the business. Companies need to consider whether to include a qualitative objective and/or a quantitative measure in each area of human capital.
Interestingly, the SEC rule does not specify what these measures should be, so each organization can decide what they want to include. I expect companies to expand their human capital disclosures to include information such as employee retention, employee incentive rewards, health and safety policies, wellness programs, training and development procedures, and diversity and inclusion efforts, among others.
However, an organization will need to pull metrics to discuss and support these items. And SAP SuccessFactors software has the content and report templates to help you do that.
With a longstanding history of working with publicly traded companies, SAP SuccessFactors has developed a template to furnish needed data for the SEC reports. The human capital disclosure reporting template will take much of the burden from a company as it includes the vast majority of human resources (HR) categories and metrics that investors will be seeking as they study an organization. It will not surprise anyone if other non-public companies follow suit in the future and this becomes the standard template publicly traded companies use under the new SEC regulation.
Register now for the webinar, Using the SEC Human Capital Disclosure Requirement to Increase the Value of Human Resources, being held Wednesday, May 19, 2021, from 12:00–1:00 p.m. ET. A panel will discuss the implementation and impact of this new regulation, as well as how these data requirements can be used to increase the strategic role of HR in your business.
Learn more about the reporting and analytics offerings at sap.com/hcm.
Barbara Ocain is a global executive advisor with SAP SuccessFactors.