Steve W. Klemash is Americas Leader at the EY Center for Board Matters; Bridget Neill is Americas Vice Chair, Public Policy at EY; and Jamie C. Smith is Associate Director at the EY Center for Board Matters. This post is based on their EY memorandum.
The talent paradigm is shifting. 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. [1] At the same time, the nature of work is rapidly evolving, new generations are reshaping the workforce and businesses are redefining long-term value and corporate purpose through a stakeholder lens.
In this era of disruption, talent and culture have leapt to the forefront of thinking around enabling strategy and innovation and creating long-term value. Accordingly, human capital has rapidly 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, demonstrated by:
- Comments received by the U.S. Securities and Exchange Commission (SEC) on human capital matters, as articulated in the August 2019 proposed rule amendments to revise current business disclosure requirements
- Influential investors like BlackRock and State Street Global Advisors making human capital and company culture engagement priorities
- Market-driven frameworks such as the Global Reporting Initiative, the Embankment Project for Inclusive Capital and the Sustainability Accounting Standards Board (SASB) identifying human capital as a key value driver
Advancing disclosures to keep pace with this transformational view of human capital will be a journey. To better understand where companies are on this journey, we reviewed the proxy statements of Fortune 100 companies to see how leading companies are disclosing their governance and management of human capital.
