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The SEC adopted its human capital disclosure rules in 2020, and this Gibson Dunn memo reviews the results of a survey of S&P 100 Form 10-K disclosures since the rules were adopted. Overall, the survey found that companies were generally tailoring the length & topics covered in their disclosures and those disclosures were becoming slightly more quantitative in some areas. Here are some of the key takeaways concerning disclosure trends during the most recent year:

– Length of disclosure. Forty-eight percent of companies increased the length of their disclosures, four percent of companies’ disclosures remained the same, and the remaining 48% of companies decreased the length of their disclosures (with the decreases generally attributable to the removal of discussion related to COVID-19).

– Number of topics covered. Twenty-two percent of companies increased the number of topics covered (with the categories seeing the most increases being diversity statistics by race/ethnicity and gender, employee mental health, monitoring culture, talent attraction and retention, and talent development), while 34% decreased the number of topics covered (the majority of which were attributable to the removal of disclosures related to COVID-19), and the remaining 46% covered the same number of topics.

– Breadth of topics covered. The prevalence of 16 topics increased, seven decreased, and four remained the same. The most significant year-over-year increases in frequency involved the following topics: quantitative diversity statistics on gender (60% to 65%), employee mental health (46% to 50%), culture initiatives (22% to 26%), efforts to monitor culture (60% to 64%), and talent attraction and retention (90% to 94%). The most significant year-over-year decrease involved COVID-19 disclosures, which declined in frequency from 69% to 34%. Other year-over-year decreases involved discussion of governance and organizational practices (56% to 51%) and diversity targets and goals (23% to 19%).

– Most common topics covered. The topics most commonly discussed this most recent year generally remained consistent with the previous two years. For example, diversity and inclusion, talent development, talent attraction and retention, and employee compensation and benefits remained four of the five most frequently discussed topics, while quantitative talent development statistics, supplier diversity, community investment, and quantitative statistics on new hire diversity remained four of the five least frequently covered topics.

The memo also addresses industry trends in human capital disclosure, the potential for new rulemaking and the IAC’s recommendations to the SEC concerning that rulemaking, Staff comments on human capital disclosure, and the implications of recent SCOTUS cases on corporate DEI programs and related disclosures.

– John Jenkins