Investors call for improved workforce reporting

News types: Corporate Reports, Policies and Responsibilities, Publications, Statements

Published: 20 January 2020

Reporting on workforce-related issues needs to improve to meet investor needs and reflect modern-day workforces according to a new report from the Financial Reporting Council’s (FRC) Financial Reporting Lab (the Lab).

Workforce-related matters such as working conditions, changing contractual arrangements and automation have all become areas of increasing investor focus in recent years and the Lab’s report reveals investors overwhelming support for clearer company disclosures.

The Lab’s report provides practical guidance and examples on how companies can provide improved information to investors. It encourages companies to think of the workforce as a strategic asset and explain how it is invested in, underpinned by data on the composition, engagement, retention and diversity of the workforce.

Alongside the report, the Lab also published a summary of the report covering questions companies should ask themselves about their reporting on workforce matters.

Last week, the FRC released its annual review of the UK Corporate Governance Code which considered reporting by early adopters.  That report also encourages further improvement of company reporting in relation to their consideration of culture and employee engagement.

Phil Fitz-Gerald, Director of the Lab, said:

“As the nature of the workforce has evolved, so too have the opportunities and risks for investors who are rightly demanding improved reporting on workforce matters, such as what the workforce is, retention and turnover, and workforce engagement.

“Reporting on culture should be informative and provide investors with a clearer insight into risks, setting out how the workforce contributes to value and how that value is maintained.

“Given the competition for talent, investors are also interested in how companies intend to support the development of their workforces in a sustainable, long-term fashion.”

Notes to editors:

*There are new reporting requirements on how directors have fulfilled their responsibilities on section 172 of the Companies Act, CEO pay ratio requirements and the revised UK Corporate Governance Code (the Code), which requires increased reporting on workforce engagement, remuneration matters and corporate culture.