Dive Brief:

• Securities and Exchange Commission (SEC) Chair Gary Gensler called workforce a critical asset of growing interest to investors and said he has asked agency staff to recommend disclosure mandates on specifics such as employee compensation, turnover and diversity.
• “I think that investing in a company, the human capital, the workforce is a key asset,” Gensler said Tuesday in testimony to the Senate Banking Committee. “I’ve always found that if you’re going to buy a company or sell a company — when I was doing that at Goldman Sachs — that people really wanted to have a thorough review of that workforce and its ups and downs.” 
• Gensler previously said a disclosure regime could include details on benefits, demographics, skills and development training, and health and safety. The SEC in June listed “human capital management disclosure” on a list of potential rulemaking.

Dive Insight:

The push for workforce disclosure coincides with stepped-up efforts to promote staff diversity. Nearly three out of five CFOs are planning in coming months to push diversity and inclusion (D&I) programs within their companies through such efforts as leadership mentoring programs for women and minorities, PwC said, citing a survey of financial executives.

“CFOs are putting their money where their mouth is around people, with more than half making investments in D&I training (57%),” PwC said, reporting on an August survey of 128 financial executives of Fortune 1000 and private companies.

U.S. businesses have increased support for DEI training and related programs since the murder of George Floyd while in police custody in May 2020.

In October 2020, the Business Roundtable, an organization of CEOs at many of the largest U.S. companies, pledged to regularly review pay equity and provide more information about the racial diversity of company leadership and staff.

The organization also backed corporate and government programs aimed at reducing the economic opportunity gap in communities of color. Roundtable companies generate more than $9 trillion in annual revenues and employ 20 million workers.

Gensler replied to questions on workforce disclosure from lawmakers including Sen. Mark Warner (D-Va.), who has introduced legislation that would require publicly-traded companies to provide data on compensation, investment in skill-building, worker safety, retention and other employee information.

“Every CEO says, ‘my biggest asset walks out the door each day,’ yet we don’t have virtually any reporting,” Warner told Gensler. “Investors want to know employee retention, they want to know what kind of skills and training are taking place.”

Sen. Robert Menendez (D-N.J.) voiced impatience at the pace at which prior SEC leaders have promoted workplace diversity.

“I get similar answers from every chair and the problem is we never end up with any concrete steps to creating the diversity that everyone claims that they support,” Menendez said. “I’m tired of hearing about, ‘we’re going to study it, we’re going to get more recommendations’ — I want to know what is our pathway to action.

“We’re doing more than just studying,” Gensler said. “It’s a lot to take on, to do the economic analysis, and it would be very investor focused because we have to live within the chalk lines — this is about investors and what investors make their decisions on.”