A focus on ESG — environmental, social, and governance principles — will continue to expand in 2023 and beyond, according to Seyfarth’s Human Capital Disclosure Report released Feb. 21.
During the past year, the number of disclosures with references to board-level oversight of human capital issues increased across all industries, with an average of 35% reporting board oversight in 2021 and an average of 42% reporting it in 2022.
“ESG is safely part of the business lexicon and continues its march from a ‘nice to have’ to a way of doing business,” the report authors said in a statement.
Companies appear to be carefully assessing and calibrating their ESG statements, strategies and actions as they look ahead at looming political concerns, SEC enforcement actions, heightened investor and consumer scrutiny, and a growing number of ESG-related shareholder proposals, the report authors noted.
“All of this is set against the backdrop of anxieties regarding U.S. and global economic conditions and recessionary concerns,” they said. “One thing is certain, however, throughout it all: ESG will continue to evolve, and is not going away.”
After an inaugural report last year, Seyfarth doubled its second annual review, analyzing the 2022 human capital management disclosures for 200 publicly traded companies across 10 industries.
Overall, the 2022 disclosures showed a wide range in the information included. At the same time, several trends became apparent. For instance, the number of references to the COVID-19 pandemic decreased, and the number of references to board-level oversight of human capital issues increased.
In addition, nearly all of the disclosures expressed a commitment to diversity, equity and inclusion principles, although the level of detail varied. In general, more companies provided more detailed statistics related to diversity and year-over-year comparisons, marking an increase in the number of companies that included demographics reporting from 44% in 2021 to 59% in 2022.
Companies also reported greater efforts to address the “great resignation” and “quiet quitting” through numerous approaches focused on keeping a diverse workforce engaged, as well as developing talent within the organization. These measures included engagement surveys, career development and internal mobility initiatives, flexible hours and work-from-home programs, and wellness programs that included lifestyle coaches, well-being speakers and ergonomic programs.
In terms of benefits, more companies reported offerings beyond the typical retirement and medical packages. Some noted new or unique options, such as on-site health clinics, telemedicine, caregiver leave, mental health and mindfulness programs, virtual courses, and financial and digital literacy training.
“Increasingly, it seems that every element of a business has an ESG touchpoint. This is arguably true given that the ESG umbrella of topics is vast,” the report authors wrote. “Climate and the environment remain central to the discussion. As an equally dynamic and crucial touchpoint, the business community has focused on human capital management — how must businesses attract, manage, engage, and retain the talented workforces that comprise what is among their most important and valuable intangible assets.”