Pension funds request more transparency from companies' workforce disclosures

A coalition that includes some of the largest U.S. pension funds want federal regulators to force big banks and other public companies to disclose details on how they manage, compensate and incentivize their employees.

In a rulemaking petition seen by Reuters, a coalition of 25 institutional investors including the California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS) has called on the U.S. Securities and Exchange Commission to craft regulations requiring public companies to provide details they see as material to investors.

These would include details about worker demographics, skillsets, safety, productivity, human rights, compensation and incentives, the petition shows. Under current rules, companies are only required to provide investors with an employee headcount.

"The way you structure and pay a sales force ... can definitely affect the business performance," said Meredith Miller, the chief corporate governance officer with UAW Retiree Medical Benefits Trust, a leading coalition member.

"Effective management of human capital can really boost the bottom line for a company, and at the same time, poor management of workforce issues like training and development, or health and safety or diversity, can create liability."

The 29-page petition, seen by Reuters, lays out an argument for why so-called human capital management disclosures would be material to investors, though it does not prescribe how those disclosures should be presented and defers that decision to the SEC.

The demand for additional information on how companies treat their workers comes less than a year after Wells Fargo & Co was fined by U.S. regulators who found that its compensation structure and unrealistic sales goals led employees to open some two million unauthorized accounts.

The petition cites a series of studies about how workforce issues can impact companies' bottom lines as evidence for why new disclosure rules are needed.

For instance, one study cited in the petition found that cutting work hours - a common practice among retailers - was found to harm a company's profitability.

The SEC typically receives a handful or more of public rulemaking petitions each year from interested stakeholders such as trade groups and good governance non-profits.

But the SEC is not required to take up the proposals.

A 2011 petition calling for companies to disclose their political spending, for instance, was never formally proposed by the agency despite receiving a record number of comments and signatures.