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Human Capital and the Future of Work: Implications for Investors and ESG Integration

Author

Listed:
  • Kotsantonis, Sakis

    (KKS Advisors)

  • Serafeim, George

    (Harvard Business School)

Abstract

Human capital development (HCD) is a key consideration for most companies, but only recently have investors focused on understanding the risks and opportunities related to human capital with the emergence of environmental, social, and governance (ESG) investment frameworks and impact investing. We argue that the importance of human capital is likely to be magnified in an environment of rapid technological change, where the future of work is uncertain and that existing frameworks for measuring and evaluating HCD might not be fit for purpose. Against this backdrop, we derive an HCD metric that focuses on outcomes rather than inputs; demonstrate that even in the current disclosure landscape one could measure with reasonable accuracy this metric for thousands of companies; and provide exploratory evidence on its relationship with employee productivity. Moreover, we develop an estimate of probability of automation of job tasks for each sub-industry and show the relationship between this probability to elements of our HCD metric and other human capital characteristics. Finally, we outline an investor engagement framework to improve the disclosure landscape related to HCD and to empower effective investment stewardship.

Suggested Citation

  • Kotsantonis, Sakis & Serafeim, George, 2020. "Human Capital and the Future of Work: Implications for Investors and ESG Integration," Journal of Financial Transformation, Capco Institute, vol. 51, pages 115-130.
    • Handle: RePEc:ris:jofitr:1639
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    Citations

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    Cited by:

    1. Lovlyn Ekeowa Kelvin-Iloafu & Francis Ezieshi Monyei & Wilfred Isioma Ukpere & Happiness Ozioma Obi-Anike & Phina Njideka Onyekwelu, 2023. "The Impact of Human Capital Development on the Sustainability and Innovativeness of Deposit Money Banks’ Workforces," Sustainability, MDPI, vol. 15(14), pages 1-15, July.
    2. Song, Jiayi, 2024. "Corporate ESG performance and human capital investment efficiency," Finance Research Letters, Elsevier, vol. 62(PB).
    3. Celestine Chijioke Onah & Aduma Aloysius & Benjamin Amujiri, 2023. "Marshall Plan and International Development Strategy: Perspectives from African Underdevelopment," Insight on Africa, , vol. 15(2), pages 169-183, July.
    4. Yulia Gruzina & Irina Firsova & Wadim Strielkowski, 2021. "Dynamics of Human Capital Development in Economic Development Cycles," Economies, MDPI, vol. 9(2), pages 1-18, May.

    More about this item

    Keywords

    ESG; future of work; technology; labor; automation; productivity;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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