Tag: human capital disclosure

EY looks at Human Capital Disclosures

As noted in thecorporatecounsel.net, the EY Center for Board Matters has released a new study of human capital disclosures. Human capital has recently become recognized, especially by many institutional investors, as among companies’ key assets in creating long-term value. SEC Chair Jay Clayton has observed that, in the past, companies’ most valuable assets were plant, property and equipment, and human capital was primarily a cost. But now, human capital and intellectual property often represent “an essential resource and driver of performance for many companies.” According to EY, a “company’s intangible assets, which include human capital and culture, are now estimated to comprise on average 52% of a company’s market value.”  And human capital has “emerged as a critical focus area for stakeholders. There is clear and growing market appetite to understand how companies are managing and measuring human capital.” These developments have led the SEC to propose adding human capital as a topic for discussion in companies’ business narratives. (See this PubCo post.) To see how companies are voluntarily disclosing their practices regarding human capital and culture—and perhaps in anticipation of a new SEC requirement—EY undertook to review the proxy statements of 82 companies in the 2019 Fortune 100. The study may prove to be especially useful for companies trying to understand the contours of human capital disclosure, whether or not the SEC ultimately goes ahead with its proposal to require material human capital disclosures.