CAPABILITY 2
Human Capital & corporations

Human capital analysis is of great value to corporates as they comply with recent financial services legislation and as they seek to communicate more effectively with the financial markets.

Controversy over the lack of perceived transparency between corporations and the financial markets, for example, OneTel, HIH, Enron, Amcor and WorldCom, is driving regulatory change.

Reforms introduced by the Financial Services Reform Act include a requirement for investment products to disclose in their Product Disclosure Statements, the extent to which they take into
account labour standards; environmental; social; and ethical considerations. In listed companies, Boards are required to show evidence of human capital issues such as succession planning and remuneration strategies.

The reforms also give the Australian Securities and Investment Commission (ASIC) the power to
make guidelines about disclosure in these areas.

In presenting their paper 'The Case for Human Capital Analysis in the Financial Markets' to an
ASIC Forum, Dr Carol Royal and Loretta O'Donnell make the case for a deeper level of disclosure
of human capital issues.

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