U.S. Rep. Maxine Waters (D-CA) and U.S. Sen. Sherrod Brown (D-OH) have forwarded correspondence to Securities and Exchange Commission (SEC) Chairman Gary Gensler, advocating for the disclosure of standardized data.
The action would aid investors and other stakeholders via the inclusion of race, ethnicity, gender, sexual orientation, and disability status in future rulemaking.
“As the SEC continues to update its disclosure rules to ensure today’s investors have reliable data to make informed investment decisions, such data should be included in all future rulemaking related to human capital management and diversity,” wrote Waters, chairwoman of the House Financial Services Committee, and Brown, chairman of the Senate Banking, Housing and Urban Affairs Committee.
The legislators said shareholder proposals increase demand for additional data concerning human capital and diversity, equity, and inclusion (DEI).
“To be effective, disclosures should include corporate board, executive leadership, and workforce diversity data,” the legislators said. “The SEC recently approved a comply or explain rule regarding corporate board diversity for those listed on the NASDAQ. Research confirms that diverse boards lead to improved financial results, indeed, companies with the highest percentages of women board directors outperformed those with the least by 53 percent when it comes to return on equity. You cannot fix what you cannot or do not measure.”
The lawmakers indicated sharing such data is essential to closing decades-old employment gaps among men, women, and people of color.
“Required disclosures on actual spend and hiring is essential to ensuring firms are accountable and transparent to their current shareholders and potential investors,” the legislators concluded. “Providing guidance on human capital reporting is a priority for Congress and shareholders. It is the time now for the SEC to respond to the call for greater data disclosure and clarity.”