Attracting attention in advancing human capital management is "human capital disclosure." This refers to companies disclosing information about their talent — talent strategies, diversity and capability development status of employees, engagement levels, and more — externally to stakeholders. This column explains the significance of human capital disclosure and its impact on each stakeholder.
Why Was Human Capital Disclosure Made Mandatory?
The acceleration of human capital disclosure stems from three factors: the trend of investors prioritizing ESG, establishment of legal frameworks, and strengthening of corporate competitiveness.
Establishment of Legal Frameworks
Key movements in Japan are as follows:
- 2021: Corporate Governance Code revision explicitly stated "strategic securing and development of human capital and diversity"
- 2022: Ministry of Economy, Trade and Industry published "Human Capital Visualization Guidelines"
- March 2023 fiscal year: Human capital information disclosure effectively made mandatory for approximately 4,000 listed companies
In Europe and the United States, disclosure of employee-related indicators is already mandatory, and the U.S. SEC has also established rules for human capital information disclosure.
Why Disclosure Is Important
No matter how much management focuses on human capital, if not communicated externally, it won't be evaluated by investors or job seekers. One aim of promoting human capital disclosure is to encourage each company to further refine their talent strategies.
How Does Human Capital Disclosure Impact Each Stakeholder?
Impact on Investors
With disclosure of talent strategies and the status of talent, investors can more easily evaluate a company's long-term growth potential. Human capital information is important decision-making material in ESG investing, and rich disclosure improves the company's ESG "S" evaluation.
Impact on Employees and Job Seekers
Human capital disclosure is an expression of the company's sincere stance of valuing employees and genuinely engaging with their growth.
- Disclosing average annual training hours and engagement survey scores improves employee pride and motivation
- Becomes an important indicator for job seekers when choosing a company
- Effect of strengthening recruitment power as a "great place to work"
Impact on Customers and Business Partners
Information about training investment and environment development where diverse talent can thrive serves as proof that the company is conducting sound management suited to the times. For business partners, it leads to a sense of reassurance that "the organizational foundation is solid and trustworthy."
Three Key Points for Effective Human Capital Disclosure
1. Disclosure with a Story
Rather than just listing numbers, explain the connection to business strategy. Show the background in a form like "our company focuses on developing X skills to support our XX strategy, and as part of that we make X million yen in annual training investment."
2. Presenting Year-on-Year Changes and Target Values
Showing transitions and targets like "turnover rate was X% 3 years ago, improved to X% through HR system reform, aiming for X% or below in the future" conveys the company's commitment.
3. Balance of Quantitative and Qualitative Information
In addition to quantitative data like engagement scores and paid leave utilization rates, introducing employee voices and specific episodes conveys the company's atmosphere and culture.
What Are the Risks to Be Aware of in Human Capital Disclosure?
The most important risk to watch is not falling into "disclosure just for show." Including only convenient numbers or stringing together flowery words, stakeholders will sensitively see through it. What's important is sincerity and consistency.
Frequently Asked Questions (FAQ)
Q. Is human capital disclosure also necessary for non-listed companies?
The legal obligation targets listed companies, but for non-listed companies, voluntary disclosure is also effective for strengthening recruitment power and building trust with stakeholders.
Q. What specific indicators should be disclosed?
Talent development policy, training investment amount, engagement scores, diversity indicators (female manager ratio, etc.), turnover rate, paid leave utilization rate, etc. are the main recommended items.
