For years, information about employees has often sat somewhere between the annual report, sustainability report and HR department.
Headcount might appear in one section.
Staff turnover might be discussed elsewhere.
Training statistics may be used in recruitment material.
Health and safety figures could sit in a separate sustainability disclosure.
Investors were then expected to work out whether any of it actually mattered to the future performance of the business.
That is beginning to change.
The International Sustainability Standards Board has renamed its Human Capital research project as Workforce-related Disclosures, reflecting a broader focus on the people within a company’s own workforce and workers across its value chain.
The project is still at the research stage. There is no new workforce reporting Standard to apply yet.
However, the direction is important.
Workforce information is increasingly being viewed as information that may help investors understand future cash flows, business resilience and risk.
For candidates developing their reporting judgement with an ACCA SBR tutor, that creates a useful current issue because it requires much more than listing employee statistics.
The real question is whether the workforce issue could affect the company’s prospects.
Headcount on its own tells investors very little
Imagine two companies each employ 10,000 people.
That fact does not tell an investor whether either workforce is well managed.
One company might have stable employment, scarce technical skills, strong retention and productive employees.
The other might be losing experienced staff, struggling to recruit, depending heavily on contractors and facing industrial disruption.
The headline number is identical.
The economic position is not.
This explains why workforce reporting cannot simply become another table containing more numbers.
Investors need information that helps them understand how people affect the company’s ability to operate and generate returns.
That may involve workforce composition, skills, turnover, compensation, training, working conditions or safety.
The useful information depends on the business.
Turnover can become a financial issue very quickly
Employee turnover is a good example.
A turnover rate may initially look like an HR measure.
Its financial consequences can be significant.
Replacing employees costs money.
Recruitment agencies may need to be paid. New staff require training. Existing employees may spend time helping replacements rather than completing their normal work.
Productivity may fall while positions remain vacant.
Customer relationships can weaken when experienced people leave.
Projects can be delayed.
In specialist industries, replacement may not even be straightforward because the required skills are scarce.
A rising turnover rate can therefore affect operating costs, revenue, project delivery and future growth.
That is the investor connection.
The reporting question is not simply:
“How many employees left?”
It is:
“What does the level of turnover tell investors about the company’s future prospects?”
Not all turnover means the same thing
Even apparently comparable workforce measures can hide important differences.
A retailer may naturally experience higher staff turnover than an engineering consultancy.
Seasonal businesses may use temporary workers.
A technology company may depend heavily on a small group of highly specialised developers.
A professional services business may expect junior employees to progress through the organisation and eventually leave.
This means investors need context.
A single group-wide turnover percentage may actually obscure the important information.
Suppose overall turnover remains at 12 per cent.
That may appear stable.
But if turnover among software engineers has increased from 8 per cent to 30 per cent while turnover among other employees has fallen, the risk profile may have changed significantly.
The company could be losing precisely the employees it needs to deliver its strategy.
Good reporting should help investors understand that distinction.
Skills can be an asset without becoming an accounting asset
Modern businesses often say that their people are their greatest asset.
Accounting standards do not generally allow companies to recognise employees as assets on the statement of financial position.
That does not make workforce capability irrelevant.
A company may depend heavily on technical knowledge, specialist qualifications or experience.
Those capabilities can support future revenue even though they do not meet the recognition criteria for an accounting asset.
This creates an interesting reporting gap.
A factory and its machinery appear on the balance sheet.
The skilled employees needed to operate the equipment generally do not.
For some businesses, the workforce may be more difficult to replace than the machinery.
Workforce-related disclosure can therefore provide investors with information that the financial statements alone cannot communicate.
That does not mean assigning a speculative financial value to employees.
It means explaining material workforce dependencies and risks.
Training tells a better story when it connects to strategy
Companies frequently report the number of training hours provided to employees.
The figure may be impressive.
It may also be meaningless.
Twenty thousand hours of training tells investors very little unless they understand why the training was needed and what it supports.
Suppose a manufacturer is automating significant parts of its production process.
Training employees in digital systems may be critical to making that investment successful.
If the company cannot develop the required skills internally, it may need to recruit expensive specialists or delay implementation.
The useful disclosure therefore connects training with strategy.
Why is the company investing in particular skills?
Where are capability gaps?
How difficult are those skills to obtain?
How does management know whether training is working?
These questions turn an HR statistic into information about execution risk.
Workforce composition can reveal hidden dependencies
Businesses rarely rely only on permanent employees.
They may use contractors, agency staff, franchise workers, outsourced service providers and workers employed by suppliers.
That broader workforce can be essential to the company’s operations.
This is one reason the ISSB project is not limited to direct employees.
Its current scope includes workers in the value chain.
That matters because a company may outsource an activity without outsourcing the economic risk associated with it.
A retailer could depend on warehouse workers employed by a logistics provider.
A manufacturer may rely on workers throughout an international supplier network.
A technology company may use contractors for critical development projects.
If those workers face poor conditions, skills shortages or disruption, the reporting company may still experience financial consequences.
Supply may be interrupted.
Costs may rise.
Contracts may be lost.
Regulators may intervene.
Customers may react.
The legal employer is only part of the story.
Health and safety can affect more than reputation
Health and safety information is sometimes treated as corporate responsibility reporting.
For many businesses, it is a direct financial risk.
Serious workplace incidents can halt production.
They can create legal claims, regulatory penalties and higher insurance costs.
Experienced employees may be lost.
A poor safety record can make recruitment harder.
Customers may also require suppliers to meet particular safety standards.
In sectors such as construction, manufacturing, energy and transport, safety performance can therefore affect operational continuity and future cash flows.
The same applies to worker wellbeing where the effect is economically significant.
High absence rates or widespread burnout in a professional workforce may affect capacity and customer service.
The reporting should focus on material consequences rather than attempting to turn every employee issue into investor information.
Compensation can reveal both risk and strategy
Pay information can also become financially relevant.
A company may struggle to recruit because its remuneration is below the market.
Another might face rapidly increasing labour costs because specialist employees are scarce.
A business could depend on aggressive bonus structures that encourage undesirable behaviour.
The key issue is not whether employees are paid too much or too little in some abstract sense.
Investors need to understand whether the company’s compensation approach supports its ability to attract and retain the workforce required to deliver its strategy.
That becomes especially important where labour is a major cost.
If wages rise faster than the company can increase prices or improve productivity, margins may fall.
A workforce disclosure therefore becomes connected directly to forecasts and financial performance.
Engagement scores need interpretation
Employee engagement is another popular metric.
A company may proudly disclose that 82 per cent of employees are engaged.
The obvious question is what that actually means.
How was the measure calculated?
How many employees responded?
Has the methodology changed?
Is the result consistent across important parts of the organisation?
More importantly, does the measure tell investors anything about the company’s prospects?
An engagement measure may be useful if falling engagement has historically been associated with higher turnover or operational problems.
A standalone percentage without context can become corporate decoration.
Good reporting needs to explain why the measure matters.
Investors need trends rather than isolated numbers
Workforce reporting becomes more useful when investors can see change.
A single turnover percentage is less informative than several years of consistent data.
A training figure becomes more useful when users can see whether investment has increased alongside a major transformation programme.
Safety statistics matter more when trends are visible.
Consistency therefore becomes important.
Companies should avoid changing definitions simply because the new method produces a more flattering result.
Where methodology changes, that change should be explained.
Comparability may also require disaggregation.
The relevant workforce trend may differ substantially between countries, business units or employee groups.
One group-wide average can hide the problem.
Workforce information needs controls
There is another challenge.
Much workforce data does not come from the financial ledger.
It may come from HR systems, payroll systems, supplier information, surveys or operational databases.
Those sources may not have been designed for external reporting.
Definitions can vary.
One division may define voluntary turnover differently from another.
Contractor information may be incomplete.
Supplier workforce data may depend on estimates.
Employee survey results may change because the questions changed rather than because workforce sentiment improved.
If the information becomes material to investors, the controls around it also become more important.
The reporting team needs to understand where the data originated, who owns it and how it was checked.
This is similar to the challenge companies already face with other sustainability information.
A polished workforce disclosure is not useful if the underlying data cannot be trusted.
The board needs to understand what drives the number
A board should not simply approve a workforce KPI because it appeared in the previous annual report.
Directors should understand why the metric is being disclosed.
A useful review might consider:
- whether the measure relates to a material workforce risk or opportunity
- how the metric has been defined and calculated
- whether the underlying data is sufficiently reliable
- whether different workforce groups should be shown separately
- whether the measure is consistent with information used internally
- whether the narrative explains the financial consequences
- whether negative trends are being given the same prominence as positive ones
That final point matters.
Workforce reporting should not become another opportunity to publish only good news.
Investors need information about material risks as well as achievements.
The annual report needs to tell one story
Workforce information should also connect with the rest of the company’s reporting.
Suppose the annual report says employee retention is excellent.
Elsewhere, management explains that major projects have been delayed because of skills shortages.
Those statements need reconciliation.
Or imagine the strategic report says the company is investing heavily in employee development while financial forecasts assume substantial cost reductions through workforce restructuring.
Both may be true.
Investors need enough information to understand how they fit together.
This concept of connectivity is becoming increasingly important across corporate reporting.
Workforce disclosures should not sit in isolation from strategy, risks and financial information.
The project is still research, not a new reporting Standard
Candidates need to be precise about the current position.
The ISSB has not issued a Workforce-related Disclosures Standard.
In September 2026, it renamed the research project from Human Capital to Workforce-related Disclosures to better reflect its scope.
The Board is continuing its research and will decide the future direction of the project.
That could eventually lead to standard-setting on some workforce topics.
It may also lead to a more targeted solution.
The outcome has not yet been decided.
This distinction matters in an SBR current issues answer.
Do not write as though every possible workforce metric will soon become mandatory.
Explain the current project, the investor information problem it is investigating and why more consistent disclosure could be useful.
That is a much stronger answer.
IFRS S1 already creates a wider reporting context
The absence of a dedicated workforce Standard does not mean companies can ignore material workforce-related sustainability risks.
IFRS S1 is built around disclosure of material sustainability-related risks and opportunities that could reasonably be expected to affect a company’s prospects.
Workforce issues can fall within that wider concept.
The current research project is exploring whether investors need more specific and comparable information in this area.
That distinction is useful.
IFRS S1 provides the broader framework.
A future workforce project could potentially provide more focused guidance or requirements.
Candidates should therefore avoid presenting workforce reporting as something completely disconnected from the existing sustainability reporting framework.
How this could appear in an SBR scenario
Imagine a technology business is growing rapidly.
Revenue has increased by 25 per cent.
Management expects similar growth over the next three years.
However, the scenario also reveals that turnover among senior engineers has doubled, vacant technical positions are taking longer to fill and spending on contractors has increased sharply.
The company’s annual report describes its workforce as highly engaged but provides only a group-wide engagement score.
A weak answer might recommend disclosing more employee information.
A stronger answer would connect the workforce issue to the financial outlook.
The loss of experienced engineers could constrain the company’s ability to deliver its growth strategy.
Recruitment difficulties may increase salary and contractor costs.
Project delays could affect future revenue.
Management should therefore assess whether the workforce risk is material to investors and provide information that explains the affected employee groups, trends and financial consequences.
The candidate could also question whether a group-wide engagement score provides meaningful information when the main risk sits within a specialist part of the workforce.
That is reporting judgement.
Do not turn workforce reporting into an HR essay
This is probably the biggest exam risk with the topic.
A candidate sees workforce information and begins discussing employee satisfaction, diversity or training in general terms.
That is too broad.
SBR requires a reporting perspective.
Ask how the issue affects the company’s prospects.
Could costs rise?
Could revenue fall?
Could operations be disrupted?
Could strategy fail?
Could regulatory or legal exposure increase?
Could important skills disappear?
Could a workforce weakness undermine assumptions used elsewhere in the annual report?
Those questions keep the discussion connected to investors.
Financial statements may also be affected
Some workforce issues can connect directly to traditional accounting.
Restructuring plans may create questions around provisions.
Employee remuneration may involve share-based payments.
Pension arrangements create liabilities and significant estimates.
Staff shortages may affect impairment forecasts if they limit production or project delivery.
Workforce disputes can create provisions, contingent liabilities or going concern concerns.
The sustainability disclosure and the financial statements should therefore not tell contradictory stories.
If management identifies a serious workforce risk but assumes uninterrupted growth in its impairment models, someone should challenge the inconsistency.
This is exactly the kind of connectivity that produces a strong SBR answer.
What candidates should remember
You do not need to memorise a long list of workforce measures.
Remember the investor question.
Why might this workforce issue affect the company’s prospects?
Then identify the information needed to understand that effect.
Turnover may matter because skills are difficult to replace.
Training may matter because the company’s strategy depends on new capabilities.
Working conditions may matter because disruption could affect supply.
Compensation may matter because labour costs affect margins.
Health and safety may matter because incidents affect operations, costs and reputation.
The metric is only useful when you understand the economic link.
Candidates using a structured ACCA SBR course should practise building those links rather than preparing a generic paragraph that could be inserted into every sustainability question.
Workforce reporting is moving closer to the money
Calling the project Workforce-related Disclosures rather than Human Capital may sound like a small naming change.
It actually helps explain the direction.
The focus is broader than treating employees as a corporate resource.
It includes the workforce across the company’s operations and value chain and asks what information investors need about related risks and opportunities.
That brings workforce reporting closer to mainstream financial analysis.
Employee turnover can influence costs.
Skills shortages can constrain revenue.
Training can determine whether investment succeeds.
Safety can interrupt operations.
Compensation can influence margins and retention.
Value-chain working conditions can disrupt supply and create regulatory exposure.
None of those issues belongs solely to HR when the financial consequences become material.
The challenge for companies is not to disclose every workforce statistic they can collect.
It is to identify which workforce issues could genuinely change the company’s prospects and explain them clearly.
That is what investors need.
And for SBR candidates, that is the difference between writing about people and writing about reporting.
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