New SEC Rule Requires First-Time Disclosure of U.S. Companies’ Human Capital Management

Published: September 2020


The new rules are principles-based, but the SEC did give examples of what could be considered material and worth including. Companies will be well-served to start preparing for disclosure now.

On August 26, 2020, the Securities and Exchange Commission (SEC) adopted rule amendments that require all U.S. public companies to disclose a description of their human capital resources, including any human capital measures or objectives a company uses to manage its own operations.
Until now, the SEC’s only enumerated human capital disclosure requirement was for companies to provide their number of employees.

The new disclosure requirement is “principles-based” and rooted in materiality, which means the SEC deliberately did not define “human capital resources” or even provide a specific list of topics that must be covered (other than the number of employees, which remains a required disclosure). As a result, the human capital disclosure is required only to the extent it is material to an understanding of a company’s business.

The SEC explained that it “did not include more prescriptive requirements because… the exact measures and objectives included in human capital management disclosure may evolve over time and may depend, and vary significantly.” The agency says factors like industry, location, business strategy, macroeconomic conditions and national and global health matters can all have a varying impact on businesses.

“Human capital accounts for and drives long-term business value in many companies much more so than it did 30 years ago,” SEC Chair Jay Clayton said in a statement. He said he expects to see meaningful qualitative and quantitative disclosure, and that metrics remain constant from period to period with changes disclosed prominently.

The SEC identified examples of potential subjects that could be material, including measures or objectives that address the attraction, development and retention of personnel. But the SEC emphasized that even these examples are not mandated. Ultimately, each company will need to tailor its human capital disclosure to its own workforce and current practices.
Based on items mentioned by the SEC during the rulemaking process, here are some of the topics that companies could address in their human capital management disclosure:

  • Number and type of employees, including full-time, part-time, seasonal and temporary
  • Internal rates of hiring and promotions
  • Voluntary and involuntary turnover rates
  • Data on the amount of employee training
  • Measures related to employee productivity
  • Programs the company has implemented to address employee education
  • Succession planning for the leadership team
  • Workforce health and safety data
  • Progress a company has made on its human capital objectives

The new disclosure requirement will be effective 30 days after publication in the Federal Register, which could make it apply as early as October 2020. Companies with fiscal years ending at the end of calendar Q2 or Q3 should determine whether they need to do anything in their upcoming filings, and calendar year companies will also need to incorporate relevant disclosure in their 10-K or other filings.

If you have questions about this topic or other corporate-governance-related matters, please contact one of the authors or write to

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