May 19 2020
WASHINGTON - U.S. Sen. Mark R. Warner (D-VA) and U.S. Rep. Cindy Axne (D-IA) urged the U.S. Securities and Exchange Commission (SEC) to require that human capital management information is made publicly available in a timely and accurate manner to help determine whether a company will be successfully able to weather risks following the COVID-19 crisis – a critical issue for investors and the overall economy.
In their letter to the SEC, the members of Congress stressed the importance of standardizing the human capital management policies that companies disclose to the public, particularly policies regarding employee engagement and sick leave, investment in training, and administrative controls like cleaning practices, varying work schedules, and protective equipment for workers.
“During these deeply uncertain times, companies and workers face a rapidly evolving set of economic, health, and workforce challenges unimaginable only a few months ago. Now, more than ever, investors and the public should have access to comprehensive, timely, and comparable information related to companies’ human capital management practices,” wrote the lawmakers. “Over the past several months, companies across the country have taken extreme actions to adapt and respond to the evolving workforce challenges presented by COVID-19. Facing extraordinary operational and financial challenges, different industries and businesses are attempting to weather the crisis in unique ways.”
“Through different responses to their workforce, from layoffs to workplace safety to paid leave, COVID-19 is exposing the myriad ways that company human capital management practices pose operational and reputational risks for short and long-term performance.” they continued. “To standardize what companies disclose to the public, we urge you to provide the guidance necessary to ensure timely and accurate delivery of critical human capital management information to investors.”
In their letter, the lawmakers requested that the SEC finalize and implement proposed modernizations to Regulation S-K and its updates to human capital management reporting requirements, urging that these requirements include quantitative disclosure items with a high value across industries, like total number employees, total wages, turnover rates, spending on employee training opportunities, and whether workers have full-time or contractor status.
Sen. Warner and Rep. Axne have previously called for better disclosure practices of human capital management information.
Earlier this year, they introduced bicameral legislation to require public companies to disclose basic human capital metrics, including workforce turnover rates, skills and development training, workforce health and safety, and compensation statistics.
The full text of the letter is available here.