The majority of FTSE100 firms do not provide data on skill investment, workforce diversity or employee wellbeing in their annual reports, the Chartered Institute of Personnel and Development has found. Jointly with the PLSA and Railpen it is now calling for a baseline framework for workforce reporting. 

 

Workforce reporting has improved in the past two years, but a new report shows that the quantity and quality of disclosures still varies greatly and remains poor in places. 

 

The report, 'How do companies report on their ‘most important asset?’, jointly published by the CIPD, the Pensions and Lifetime Savings Association and Railpen, analysed the quality of workforce disclosures in the 2021 annual reports of FTSE100 companies considering workforce cost and composition; employee relations and wellbeing; reward; voice; skills, capabilities and recruitment; and response to Covid-19. 

 

In their narrative, the majority of FTSE firms covered these themes, the authors found, but said that “the quality of reporting was generally low, and the use of data to evidence comments was ad-hoc". For example, although most firms have something to show for diversity and inclusion, just 22% reported an ethnic breakdown of their workforce, and only nine provided an ethnicity pay gap. Similarly, skills and training are almost always mentioned but only a minority shared hard figures. 

 

 

The CIPD, Railpen and PLSA are now asking employers to be more transparent on how they recruit, invest in and manage their workforce and are calling on the Financial Reporting Council, investors and representative business groups to agree a baseline framework for workforce reporting.  

 

Joe Dabrowski, deputy eirector policy at the PLSA, said: “You often hear companies say that ‘people are our greatest assets’ and yet, in many cases, the reality fails to match the well-meaning words.” 

 

He said it remains vital that investors and regulatory bodies continue to push companies to provide better transparency in these areas, which are core to how their overall approach to ESG will be judged. 

 

Caroline Escott, senior investment manager at Railpen, said Covid-19 has shone a spotlight on the importance of the workforce to sustainable corporate success.  

 

“In our engagements with companies, we have welcomed executives’ increased willingness to discuss the challenges they have faced in supporting their workers during the pandemic. Investors also have a responsibility to speak proactively and honestly to firms about material workforce issues and their expectations around decision-useful disclosures,” she said. 

 

There is already strong momentum behind reporting across environmental, social and governance, said Peter Cheese, chief executive of the CIPD, “but it’s clear more needs to be done on the ‘S’ part of ESG. Now is the time for more transparency and action, but this requires more guidance and clearer frameworks for reporting."

Cheese said the creation of an accepted baseline framework for workforce reporting "would help organisations report how they manage and invest in their people in a clear and consistent way and improve reporting practices over time. In turn, this would improve key outcomes such as staff development and retention, employee inclusion and wellbeing, and enhance organisational performance.”