March 8, 2022
New analysis of FTSE 100 annual reports finds that while workforce reporting has improved in the past two years, the quantity and quality of disclosures still varies significantly and remains very poor in places. The new report, How do companies report on their ‘most important asset?, from the CIPD, the PLSA and Railpen, analysed the quality of workforce disclosures in the 2021 annual reports of FTSE 100 companies against seven key themes: Workforce cost and composition; employee relations and wellbeing; reward; voice; skills, capabilities and recruitment; and response to COVID-19.
It found that most of the FTSE 100 covered these seven key themes in their narrative to some extent, but the quality of reporting was generally low, and the use of data to evidence comments was ad-hoc.
In response to the findings, the three organisations are urging employers to provide greater transparency over how they recruit, invest in and manage their workforce. They are also calling on key parties – such as the Financial Reporting Council, investors and representative business groups – to come together to agree a baseline framework for workforce reporting. This would help improve the consistency and quality of company disclosures on key people issues that are central to efforts to create more inclusive and productive organisational cultures and working practices.
This type of framework could also inform the workforce element of the new reporting standard being created by the International Sustainability Standards Board, which the UK Government supports as part of the push to achieve a net-zero economy.
Key findings from the analysis include:
- Inclusion/make-up of the workforce: While 93 percent of companies provide evidence of investment in inclusion and diversity, only one in five (22 percent) FTSE 100 employers reported the ethnic breakdown of their workforce, up from just 10 percent in 2019. Nine companies disclosed their ethnicity pay gap, up from three in 2019. Just 6 percent of firms provide information on the cost of their contingent, non-permanent workforce.
- Skills and training: Almost all companies (97 percent) mention investment in skills or training, but only a few provided concrete evidence of this. Only 37 percent reported their number of apprenticeships and internships, 35 percent disclosed hours of training, and 16 percent disclosed the cost of training. Only 11 percent provided data on their internal hire rates, an important indicator of how well companies train and develop staff.
- Reward: Overall, there is a lack of reporting on pay and reward beyond gender and ethnicity pay gap reporting. Only 15 percent of employers discussed their pension policy in the people section of their annual report, despite pensions being a key part of the employment offering.
- Wellbeing: Only 13 percent of annual reports discussed mental wellbeing in relation to health and safety or risk assessments. This suggests that mental health and wellbeing is still not treated as seriously as physical wellbeing, and its link to stress, absenteeism, productivity, as well as the importance of supportive workplace cultures, is not widely understood.