The SEC is preparing a plan for companies to report more information about their employees as it eyes new environmental, social, and governance disclosures, Chairman Gary Gensler said.
Gensler didn’t give specifics about the ESG proposal in remarks he made at a financial market regulation conference Thursday. But he said earlier this year that the agency is considering what investors want in areas such as workplace diversity.
Democrats on the SEC have lamented the lack of human capital disclosure requirements for companies. Companies currently only have to report their workforce sizes and any human capital objectives or measures they concentrate on when managing their businesses.
Democratic Commissioners Allison Lee and Caroline Crenshaw have called for reporting on workforce diversity, as well as statistics about turnover and full- and part-time employees.
Gensler said Thursday he has asked agency staff for recommendations concerning new human capital disclosures, along with reporting on companies’ risks from climate change. The SEC’s work on human capital and climate reporting will be the agency’s first steps in its work to update corporate disclosure requirements, he said.
“This is one of my top priorities and will be an early focus during my tenure at the SEC,” Gensler said.
The chairman said last week he’s looking to propose ESG reporting rules after a public comment period on new disclosures ends in June. The agency should “bring some consistency and comparability” to what companies report, he said.
Companies have generally been light on metrics and have favored a more qualitative approach to workforce disclosures, said Margaret Engel, a founding partner of consulting firm Compensation Advisory Partners LLC. Most corporate disclosures on human capital rely primarily on a qualitative description of core values, programs, and practices, according to a study she authored.
Companies are hesitant to disclose statistics like workforce diversity numbers in a public filing in which they would have to attest to the accuracy of the information, Engel said.
“I think companies want to be transparent, but there is a certain amount of reluctance,” she said.