FRC calls for improved workforce reporting

Reporting on workforce-related issues “needs to improve” to meet investor needs and reflect modern-day workforces, according to a new report from the Financial Reporting Council’s (FRC) Financial Reporting Lab.

It claims workforce-related matters such as working conditions, changing contractual arrangements and automation have all become areas of “increasing investor focus” in recent years, and the Lab’s report reveals investors overwhelming support for “clearer company disclosures”.

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The Lab’s report provides “practical” guidance and examples on how companies can provide improved information to investors.

It also encourages companies to think of the workforce as a “strategic asset” and explain how it is invested in, underpinned by data on the composition, engagement, retention and diversity of the workforce.

It comes after the FRC released its annual review of the UK Corporate Governance Code which considered reporting by early adopters. The report also encouraged further improvement of company reporting in relation to their consideration of culture and employee engagement.

Phil Fitz-Gerald, director of the Financial Reporting Lab, said: “As the nature of the workforce has evolved, so too have the opportunities and risks for investors who are rightly demanding improved reporting on workforce matters, such as what the workforce is, retention and turnover, and workforce engagement.

“Reporting on culture should be informative and provide investors with a clearer insight into risks, setting out how the workforce contributes to value and how that value is maintained.

He added: “Given the competition for talent, investors are also interested in how companies intend to support the development of their workforces in a sustainable, long-term fashion.”

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