Companies often provide employee training and education opportunities that benefit both the company and its employees. Time spent on training and employee development programs is tracked and often included in a company’s ESG report. This article will discuss the current recommended disclosures for employee training and education.
Most topics considered to be employee training and education related are straightforward, but it is important to understand what initiatives are eligible for reporting. Acceptable reporting categories for training and education include:
- Internal programs and training meant to improve employee skills
- External training and education opportunities endorsed by the company
- Transition assistance programs
These topics cover everything from training on specific industry topics to sabbatical periods with guaranteed return to employment. While there are a variety of topics included in this reporting standard, on-site coaching by supervisors should be excluded. An example of this would be a supervisor explaining a common company practice, such as formatting used for deliverables. Consequently, the exclusion of this activity provides a more accurate comparison of companies who have elected to report their training and education efforts using one or more reporting frameworks.
Current Applicable Standards
Overall, five sets of proposed standards and frameworks currently include disclosures for reporting on employee training and education: the Global Reporting Initiative (GRI) framework, the Workforce Disclosure Initiative (WDI) framework, the World Economic Forum (WEF) standards, Sustainable Development Goals (SDGs), and the Sustainability Accounting Standards Board (SASB) standards.
Global Reporting Initiative
The GRI standard that applies to education and training is GRI 404. This standard has three topic disclosures:
- GRI 404-1 Average hours of training per year per employee
- GRI 404-2 Programs for upgrading employee skills and transition assistance programs
- GRI 404-3 Percentage of employees receiving regular performance and career development reviews
The first disclosure presents the total training hours completed during the year, along with average training hours per employee. Companies report the second and third disclosures less frequently than the first. If the second disclosure is included, the primary training and education program used by the company is usually described with the most important effects that the program has had on its participants. If reported at all, the third disclosure appears as a simple percentage. A brief description of the first disclosure follows below, and all three disclosures are available at the GRI website.
Workforce Disclosure Initiative
The Workforce Disclosure Initiative provides seven disclosures that companies can use while detailing their training and education efforts. These disclosures are located in the WDI Survey that companies can voluntarily fill out and are as follows:
- Describe the company’s strategy for developing the skills and capabilities of employees. State the KPIs as applicable.
- How does the company identify and address skills gaps and training need on an ongoing basis? Provide details on how consulting with workers and/or worker representative bodies informs the process, as applicable.
- Provide the number of hours of training provided to employees (on an [full time equivalent] basis) by gender (female and male only).
- Describe two example trainings provided to employees to develop or upgrade their skills in line with their existing or a new role.
- Provide the average number of hours of training provided to employees (on an [full time equivalent] basis) by contract type (if no employees on any one of the contract types, state “n/a”).
- Describe any differences in access to training and development opportunities between the company’s indefinite/permanent employees and its fixed-term/temporary employees, contractors and other direct operations workers.
- How does the company measure the impact of its training programmes on business productivity and worker satisfaction?
As shown above, the WDI framework primarily consists of qualitative disclosures describing a company's current efforts to train and educate its employees, along with two quantitative disclosures detailing number of training hours provided to types of employees, stratified by gender. These disclosures can offer stakeholders a clearer understanding of a company's training and education status, but no requirements mandate their use.
World Economic Forum Pillar 3 - People
Additionally, the World Economic Forum provides recommended disclosures on training and education. Under the theme of “Skills for the Future,” there are two disclosures to communicate training and education. The first disclosure is similar to GRI 404-1 and can be compared numerically since the criteria matches. The second disclosure additionally deals with cost and is the “average training and development expenditure per full time employee.” Aside from this disclosure, none of the other generally used frameworks have a major disclosure for costs associated with training and education efforts.
Sustainable Development Goals
Another framework that discusses training and education topics is the Sustainable Development Goals (SDGs). Presently, there are three goals that align with training and education topics, those being SDG 4 (Quality Education), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduce Inequalities). While SDGs are meant for adoption by countries, companies that also report these SDGs can demonstrate what they are doing to help the countries they operate in.
Sustainability Accounting Standards Board
Finally, the Sustainability Accounting Standards Board (SASB) provides an additional framework, which divides its training and education reporting by industry. Presently, the SASB has a research project regarding Human Capital Management. The research at the present time aims to “assess the scope and prevalence of various human capital management (HCM) themes broadly across SASB’s 77 industry standards,” which may result in a general standard for a topic like training and education across industries.
Comparison of 10-Ks and ESG Reports
For companies publishing ESG reports, the topic of training and education is disclosed similarly for both ESG reports and 10-Ks. An ESG report and 10-K will generally disclose the same information about the company's training hours and programs. If this topic were to eventually become required for SEC filings, it would be a useful subject to compare within a Human Capital section to better understand what a company prioritizes for its employees.
As shown above, companies seeking to disclose their training and education efforts have a variety of different standards to choose from. Since there are no current requirements for reporting on training, companies can select the standard that best represents their efforts. The topic of training and education shows up consistently in ESG reports created by companies, but there is a lot of variation in how those efforts show up in public filings such as Form 10-Ks.
https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/ (Link to GRI Standard 404: Training and Education 2016)
https://www3.weforum.org/docs/WEF_IBC_Measuring_Stakeholder_Capitalism_Report_2020.pdf (WEF Link see page 68 for the main disclosure and page 72 for less commonly reported disclosures)
https://sdgs.un.org/goals (Links to the SDGs page for SDGs 4, 8, and 10)
https://www.sasb.org/wp-content/uploads/2020/12/Human-Capital_Preliminary-Framework_2020-December_FINAL.pdf (SASB Preliminary Framework on Human Capital and the SASB Standards see pages 56-63 for training and education)