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UK pensions industry body NAPF highlights corporate workforce issues for investors

A new paper will eventually feed into NAPF voting guidelines

The UK’s National Association of Pension Funds (NAPF), which represents pension funds managing more than £900bn (€1.2trn) of assets, has said its members have raised concerns about a lack of clear and consistent corporate reporting around workforce issues and that it will develop a series of events to address the topic over the coming months.

It is one of the first times that the industry body has focused so explicitly on an ESG issue. To kick-start its work, the NAPF has launched a paper ‘Where is the workforce in corporate reporting’, highlighting the lack of reporting by companies on how they manage their workforces.

The paper says better reporting around human capital will be good for long-term investors, companies and the wider UK economy.

Launching the paper at an event in London, Joanne Segars, chief executive of the NAPF, said a company’s workforce was an essential asset, but often missing from corporate reporting. “The E and G are well reported on, like climate change and executive and governance. But the social is often forgotten.“It was not high pay which caused the financial crash, but a damaging culture – a factor that is not captured in corporate reporting.”

She continued: “Companies often tell us they would report on this [human capital] if investors asked them to – and too few investors make that request. But on the other hand, investors say they would place greater emphasis on this issue if more meaningful information were available.”

The NAPF paper suggests four areas for the development in corporate reporting in this area: workforce composition (for example diversity of ages and gender, proportion of contingent and permanent labour); the stability of the workforce (including turnover, employee benefits and remuneration policies); the skills and capability of the workforce; and the motivation and engagement of the workforce (absentee rates, number of accidents and work-related fatalities).

To accompany the paper, it will hold a series of roundtables later in the year to bring together investors, analysts, companies and policy makers. The discussions will be fed into the NAPF’s Corporate Governance Policy & Voting Guidelines.

The paper is supported by the International Integrated Reporting Council and audit giant PWC.