Hidden Figures: The State of Human Capital Disclosures for Sustainable Jobs

Abstract

This paper addresses the increasing emphasis on sustainable business practices concerning employees. Sustainable jobs, as we refer to them, can lead to better financial performance and represent a material financial impact for most corpora-tions. Although the notion of a “good job” is widely recognized, managers and investors are hobbled by weak metrics and inadequate reporting standards. Based on our research, we take the view that human capital disclosures should focus on the set of job characteristics that enable workers to meet their needs – and we have defined a conceptual reporting framework focused on business basics, financial security, and job excellence.

Using data from six leading ESG (environmental, social, governance) rating providers, we demonstrate substantial reporting gaps. For example, we find that only 20% of social metrics are decision-useful and quantitative measures are missing for most firms (60-90% per average metric across raters). Even turnover, a financially material metric, is only available for half the firms at most and lacks detail. Two case studies, on Amazon and the quick-service restaurant industry, further illustrate the financial costs of ignoring employment quality. We also pro-vide several practical recommendations for managers and other stakeholders.

Keywords: employment quality, good jobs, ESG, sustainability, responsible business