ESG and Education Human Capital Management

Human Capital Management (HCM)

A growing number of employers are struggling to find talent, which leads to delays in production, longer response times, and an increased burden on current staff.

75% of companies

have reported talent shortages and difficulty hiring in 2022 — a 16-year high.

Diverse talent pipelines are critical across industries, and an educated and skilled workforce is key for a company’s growth and innovation. Developing companies’ current and future workforce is not just a social imperative, but a significant catalyst to business growth.

In addition, the U.S. Securities and Exchange Commission (SEC) has been increasing pressure on businesses to provide regular reporting on ESG strategies and programs, consistent with investor interest in assessing ESG-related risk.

In November 2020, the SEC began requiring public companies to disclose information on the number of employees and employee demographics as part of their human capital. These disclosures include metrics and objectives relating to talent acquisition, training, retention, engagement, and DEI.

The composition of skills needed for the workforce is also shifting more toward soft and technical skills. For example, a PwC survey found that 77% of CEOs struggle to find the creativity and innovation skills they need. Another survey by Manpower suggests similar skills are in demand, including reliability, self-discipline, adaptability, critical thinking, and problem-solving.

Pre-pandemic estimates suggested the global economy will have a shortage of 40 million workers with higher education and 45 million workers with secondary education, while there would be a surplus of 95 million low-skilled workers. Skilling and reskilling will be a constant issue in the future of industry and the green transition. Estimates suggest 16 million more workers will be needed to meet the increasing demand for more efficient appliances, electric and fuel cell vehicles, building retrofits, and energy-efficient construction.

Corporate investment in education and training is a fundamental tool for addressing talent development, providing the skills needed in the short and long term, and delivering on the key metrics associated with HCM. As more companies provide education and vocational training to their employees, communities, and other stakeholders, they gain a competitive advantage, advance new markets, and improve their ESG performance.

Higher education and upskilling can solve more immediate needs for talent. But addressing systemic issues, particularly regarding the high-demand soft skills that are increasing in demand, requires earlier foresight.


90% of a child's brain

developed before the age of 5

Additionally, addressing equity gaps in education at all levels promotes a more diverse and skilled talent pool from which to build workforces.

By increasing investment in education, through training programs, internships, mentorship, and financial aid for continued studies, businesses can proactively address the growing talent shortages and better position themselves to address the increased focus on education, training, and employee demographics being advanced by ESG reporting frameworks. Reskilling programs, supporting preschool initiatives in key markets, and supporting apprenticeship programs for marginalized learners are a few examples of relevant programs. Given that many of these reporting frameworks require information on scope, number of hours, and type of education and training provided to employees, investment in education is clearly critical to addressing the concerns and requirements linked to effective HCM.

Other materiality issues linked to education