Workforce reporting standards
There are both mandatory (legal obligations) and voluntary standards, both national and international. These may also be called non-financial/social/human capital reporting standards.
Mandatory reporting standards
Companies need to provide an annual report externally under company law, corporate governance, financial reporting, sustainability reporting and capital market requirements. The exact requirements may vary according to the jurisdiction and the size of company.
International sustainable reporting standards
The International Accounting Standards Board (IASB) sets the financial reporting standards for around 145 jurisdictions globally, while the International Sustainability Standards Board (ISSB), a sister organisation to the IASB, will set new sustainability standards. These standards are backed by national governments, regulators, stock exchanges and auditors.
Several jurisdictions including the UK and Singapore have signed up to the ISSB standards. Since 2021, the ISSB has produced two sustainability reporting standards; a general one and one relating to climate.
The CIPD responded to the ISSB consultation on possible future standards on human capital and human rights in September 2023.
In February 2002, the CIPD, PLSA and Railpen had published a report entitled: “How do companies report on their most important asset?” analysing workforce reporting in the FTSE100 annual reports. This called for a regulatory framework for companies to:
- Report equally on workers under all contract types, rather than just direct employees, to ensure that contingent workers are included.
- Introduce ethnicity pay reporting to help tackle racial inequality and discrimination at work.
The report also called on companies to:
- Invest in information systems and provide data analytical training and development for people professionals.
- Ask HR leaders to facilitate discussions with internal and external stakeholders.
EU reporting standards
The EU published its own sustainable reporting standards in December 2023. These cover different areas of ESG reporting:
- Environmental standards on climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy.
- Social standards on own workforce, value chain, affected communities, consumers and end uses.
- Governance standard on business conduct.
There are additional reporting requirements in EU company law and corporate governance e.g. women on boards directive, pay transparency directive.
UK reporting requirements
UK company law
The Companies Act 2006 sets out various reporting obligations, including the requirement to produce an annual report and accounts. The directors should report on the key factors, with differing requirements according to the size of company.
There are also detailed reporting requirements in company law for reporting on specific elements of the workforce; for example, executive pay, the gender pay gap, and diversity and inclusion on boards. Gender pay gap reporting is mandatory for UK companies.
UK corporate governance
The Financial Reporting Council (FRC) has included guidance on workforce policies and practices in its Corporate Governance Code. Its supporting Board Effectiveness Guidance sets out guidance on relations with the workforce, covering topics including culture, behaviours and workforce pay.
UK Modern Slavery Act 2015
The Modern Slavery Act 2015 introduced a new requirement for companies (including those carrying out charitable, educational or public functions) with an annual turnover worldwide of £36 million or more, supplying goods or services in the UK (estimated to amount to 12,000 organisations), to publish a yearly statement setting out what they have done (or not done) in the previous 12 months to prevent slavery and forced labour practices in their own businesses and supply chains.
The statement, signed by a board director, must be published prominently on the company’s website as soon as possible, and no later than six months (according to Home Office guidance) after the organisation’s financial year end. The Modern Slavery Registry carries over 7,000 statements from nearly 6,000 companies made under the UK legislation. See the CIPD’s modern slavery statement.
UK requirements for quoted companies
There are additional disclosure requirements for companies quoted on the stock exchange. These are set out in the Financial Conduct Authority’s Disclosure and Transparency rules. The rules contain stipulations including the following:
Finally, there may be sectoral rules. For example, the FCA is consulting on requirements for financial services firms.
Voluntary reporting standards
There are trade standards that organisations can voluntarily follow for internal or external workforce reporting:
- BS76000 valuing people in organisations.
- ISO30414 human capital reporting.
There are also many voluntary international reporting frameworks and sustainable reporting standards including:
International:
UK:
See our guides on disability workforce reporting, ethnicity pay reporting and gender pay gap reporting for practical advice on inequality reporting.
