The Handbook of Board Governance, 3rd Edition

40Winter Is Closer: The Approaching ESG and Human Capital Management Reporting Storm

Solange Charas, BA, MBA, PhD

Board director, senior-level human capital executive, founder of HC Moneyball, and adjunct professor

William L. Prickett, BA, JD

Chair of Seyfarth’s Securities and Fiduciary Duty Litigation Practice Group and member of the Firm’s ESG team

Introduction

The prior edition of this chapter was titled: “Winter is coming,” a phrase originating in the popular series Game of Thrones and a watchword for constant vigilance. We said that for boards of directors, winter may be coming—on the topic of human capital management and disclosure. Back in 2019 at the original writing of this chapter, before COVID-19, BLM, and an enhanced ESG movement, we believed that human capital transparency was called for by governance monitoring agencies as the sole “voice” in the demand for human capital performance information. We anticipated that stakeholders of all kinds would rely on this information to better understand the overall sustainability of the organization as well as the “health” of the human capital practices and outcomes. When you consider that, according to the World Bank, 80 percent of the U.S. GDP is generated by services, and that 90 percent of the market value of the S&P 500 companies is attributed to intangible assets, based on the research from OceanTomo, and according to the SEC, the workforce is considered an intangible asset, you can see how this topic has come to ...