Why are public companies facing shareholder proposals on topics related to human capital management?
Because human capital management is material to all companies. If you have employees, you need to consider how they are treated, and whether current policies, practices, and culture are conducive to a workplace that attracts, retains, and incentivizes top talent.
Investors are beginning to realize the importance of this issue. Through its annual investor outreach program, the EY Center for Board Matters found that over one-third of investors identified human capital management and corporate culture as top priorities. It is already on the agenda for some of the world’s largest money managers; BlackRock began including the topic as an engagement priority in 2018, and, in 2019, State Street Global Advisors announced a focus on corporate culture as a value driver for companies.
Further illustrating the topic’s salience, in August 2019, the Business Roundtable (BRT) updated its statement on the purpose of a corporation, shifting from a shareholder focus to a commitment to all stakeholders. The statement addresses human capital management through its commitment to investing in employees through fair compensation and benefits, training and education, diversity and inclusion, dignity, and respect.
Last year more than twenty companies faced proposals on issues related to this topic, and six proposals received majority support. This proxy season, boards and management will once again be asked to to address human capital management as it relates to diversity, employment practices, culture, health and safety, and pay equity, amongst other issues. Investors will be asked to vote — and will need to understand the issues involved.
Glass Lewis’ new Human Capital Management report provides crucial context, from background on how boards approach providing oversight, to developing trends in corporate reporting, to a review of regulatory responses. The report is part of Glass Lewis’ “In-Depth” series, a growing library of ESG-focused literature that illuminates the topics at the top of the agenda for investors and public companies.
In-Depth: Human Capital Management is available now. Glass Lewis customers can access the report on Viewpoint via the Help & Resources menu, or Governance Hub, or contact their Glass Lewis Representative for more information.
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