NAPF publishes discussion paper on workforce reporting

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26 Jun, 2015

The National Association of Pension Funds (NAPF) has published a discussion paper highlighting its view that there is limited reporting by companies on their approach to managing the workforce even though the workforce is considered core to the financial performance of a company and in many ways are “a firm’s most valuable asset”.

The discussion paper indicates that companies report on how they make use of financial and natural capital but “in contrast, the use of human capital is minimally reported on and can only be partially found in financial statements”.

The aim of the discussion paper is to “initiate a discussion on how companies can better articulate how their human assets drive their strategy, contribute to growth and are aligned with the creation of long-term shareholder value”.

Although there are various ways that a company can report workforce matters, such as through narrative reporting, Integrated Reporting and as a result of the EU Directive on non-financial reporting, the discussion paper indicates that companies should be disclosing more with regards to human capital matters and the link to the long-term strategy of the company.

The discussion paper suggests that disclosures could be improved in four areas:

  • The composition of the workforce - who constitutes the workforce? How is it composed? Is the employment model sustainable?
  • The stability of the workforce - what are the turnover figures? Is talent being undesirably lost?
  • The skills and capabilities of the workforce - what investment is made in training and development? Are the talents of the workforce being maximised and productivity gains being achieved?
  • Employee motivation - is there a positive culture? Is the workforce motivated? Are the employees’ advocates for the business?

The NAPF invite responses from companies and investors as well as from other interested parties including policy makers and standard setters.  It intends to host a series of roundtable events later in the year and will incorporate specific principles into the latest set of its Corporate Governance Policy and Voting Guidelines.

The press release and discussion paper are available on the NAPF website.

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