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SEC's New Human Capital Disclosure Requirements: What You Need to Know and Do Now

Updated: Oct 26, 2020

On August 26th 2020 the U.S. Securities and Exchange Commission (SEC) announced that it adopted new Human Capital Disclosure Requirements for public companies reporting / listing on the U.S. exchanges, opening a new era of human capital reporting and disclosure.

Here is a quick FAQ to help companies like yours better understand what it means for them.

Human Capital Reporting & Disclosure

Q1 - What does this mean for my company now?

Less than a month from now, public companies will be required to describe in more detail how human capital impacts their business results, including human capital risk factors that have or in the future could be expected to have a negative impact on the company. Prior to this adoption, the SEC only required companies to disclose the number of its employees.

With the SEC ruling companies now will need to determine:

  • Which metrics to disclose to accurately reflect the business impact of their human capital investments and management practices,

  • How to pull together data from myriad systems to calculate those metrics, and

  • How Investor Relations communicates the link between the metrics results and business strategy.

Keep in mind that the rules become effective 30 days after publication in the Federal Register, currently anticipated to be published in September 2020.

Q2 – How can we comply with the new disclosures?

The SEC did not specify an exact set of measurements or objectives. Instead it let companies decide what is best for them based on the nature of their business. This creates both confusion and opportunities.