Staff at the International Sustainability Standards Board (ISSB) have presented additional research showing evidence that investors have a significant and growing interest in improved disclosures on human capital issues.
The update, presented to the board’s February meeting round, builds on earlier staff findings aired in December 2024.
“Investors of all types operating in all jurisdictions have a strong interest in information on human capital-related risks and opportunities, primarily driven by a desire to manage investment risk and enhance returns,” said ISSB staff member Charlotte Lush.
She added that client demand and regulatory requirements also serve as additional factors.
Complex rule-making landscape
The research has also identified complexities and nuances around geography, value-chain considerations, and the strategic context in which these issues affect companies’ financial prospects.
The board added the human capital project to its workplan as a research effort following the conclusion of its recent workplan consultation.
The project, which mirrors a parallel project on biodiversity and ecosystem services, is in its initial research phase.
Wide-ranging research
Between June 2024 and January 2025, the staff engaged with over 300 individuals from 158 investor organisations and other stakeholders in the investment value chain using bilateral discussions and roundtables.
ISSB member Jeff Hales said it was important to understand why investors need information about human capital issues.
He said: [I]t really is important to understand why because we know that there are various types of investors and they’re interested in many different sources of information for many different reasons.”
The staff noted at paragraph 17 of Agenda Paper 4A that while much of the available literature focused “more heavily on the investor relevance of human capital information […] rather than considering what investors’ information needs are.”
Downstream value chains
It also emerged during the meeting that issues such as downstream value chains and regional variations might require deeper analysis to ensure comprehensive and globally applicable standards.
ISSB member Verity Chegar noted that at paragraph 40 of the staff meeting paper, the research team had noted that “no investor mentioned downstream value chain as a risk opportunity”.
Her board colleague Ndidi Nnoli-Edozien singled out this finding as one warranting closer examination.
The downstream value chain typically includes distribution channels, customer-facing roles, and sales agents. The upstream value chain generally refers to suppliers, sourcing, and procurement activities – a company’s supply-side relationships and workforce.
Workplace dynamics, other issues
The ISSB’s ongoing research has also revealed increased investor concern around workforce dynamics such as technological disruption and demographic shifts, which could significantly reshape future disclosures.
Board member Elizabeth Seegar’s remarks also served to highlight the sheer complexity of the task ahead of the board in setting standards in the human capital space.
She said: “Investors have a different perspective on what to call this space and different subtopics as well. It’ll be really important for us to navigate that carefully.”
Alongside terminology challenges, she also identified materiality gaps, and the dynamic nature of human capital issues as areas to consider. She then went on to consider the importance of location, the balance between qualitative and quantitative data, and the need to explore regulatory and business model considerations in future research.
Staff said they will now “synthesise findings, integrating investor feedback from today’s discussion to evaluate the necessity and feasibility of potential standard-setting”.
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