This is why it is exciting that — despite the recent pushback and rhetoric from some corners — the SEC appears to be moving forward with S-related rule making specifically around human capital disclosures. They recognize that the workforce demands it, customers expect it, society depends on it, and many executives now have their compensation tied to it. Therefore, there is every reason to apply the same standards of disclosure rules and assurance requirements around the data related to human capital as we do to data related to physical capital.

The SEC, which could (and should) forge ahead with formal rulemaking related to human capital disclosures, is expected to announce Climate Related Human Capital Disclosure requirements in October. And while we don't know exactly what it will say, it is expected to cover: governance of human capital related risks and opportunities, DEI metrics and policies, labor practices, recruitment and retention, and rewards and benefits. Knowing that these categories are most likely to be included, below are some recommendations for what companies can do to prepare:

• Start now: While there will likely be a glide path for implementing new rules, we expect that public companies will need to publish historical comparison data when the requirements kick in, which suggests companies need to prepare well ahead of time to meet any compliance deadline.
•  Poll your employees: The most important thing companies should be doing to begin is self-identification campaigns among their employees while simultaneously ensuring they have the infrastructure for responsible data collection that maintains privacy. The more specificity companies ask for, the greater the participation in the employee survey.
• Be prepared to over report: SEC-mandated data disclosures may not enable companies to tell their whole story. Due to that, organizations should be prepared to publish a supplemental human capital transparency report that provides context behind their numbers.
• Invest in technology and process: It cannot be overstated the degree to which the data quality is essential, and processes to collect all of it – from policies to people data – need to be reliable, repeatable and transparent. It is expected that whatever information is disclosed will have to have assurance (i.e., an audit like for financial data) so it's time to move away from manual analysis and ad hoc spreadsheets.

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ESG reporting is not just a matter of checking boxes; it's about acknowledging what the critical levers are that drive long-term business performance and making them visible. Years ago, getting the depreciation schedule nailed down for that new factory equipment was essential to give investors a fair representation of the businesses' future prospects.

In today's service and tech-dominated economy, if we don't disclose similar levels of detail about the health and value of our company's human capital we are withholding critical, material information from shareholders. And when we report on the health of our human capital, we will reveal the levers at our disposal to make those workforces more vibrant, diverse, engaged and resilient. Solutions like caregiving benefits, advanced people analytics tools, and paid leave insurance for starters. When we invest in and report on the health of our human capital it benefits all of us – shareholders and workers alike.

Courtney Leimkuhler is co-founder and general partner at Springbank.