Human Capital: a key asset not yet fully appreciated by the financial industry
This paper aims to assess 792 financial companies rated by Vigeo Eiris on their ability to enhance opportunities and limit risks in relation to their human capital.
Human capital is defined by the OECD as “the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being”.
According to Vigeo Eiris methodology, which is rooted in international standards, such as International Labour Organization Conventions and Recommendations, UN Declarations and OECD Guidelines, human capital development is a key asset for companies and is closely linked with organisational success. Indeed, a company’s capacity to attract and retain talent, and to create a cohesive and cooperative workplace, is strongly influenced by the way in which it manages workforce issues including restructuring, respect of labour rights, prevention of discrimination, career management, and improvement of health & safety conditions.
Vigeo Eiris has an overall limited assurance on the financial industry’s ability to manage its human capital development in a proactive and responsible way.
Disparities exist amongst sectors and between geographical regions. Diversified Banks in Europe and Asia Pacific appear to achieve the most robust performances (57.2/100 and 51.9/100, respectively) in terms of human capital development and risk management. The weakest performances appear to concern companies in North American and Emerging markets.
At a global level, the Diversified Banks sector achieves – on average – the best performances across the most relevant topics, namely restructuring, labour rights, prevention of discrimination, career management, and improvement of health & safety conditions.
Focus: Digitalisation and automation will continue to bring structural adjustments to the composition and size of the banking industry workforce. In 2018, UNI Europa Finance1, suggested that solutions to mitigate the impact of digitalisation on sector employees include continuous training and lifelong learning to maintain employees’ skills, and the provision of healthy working conditions and an appropriate work-life balance. Vigeo Eiris’ study, however, shows that only a minority of banks describe training programmes aimed at promoting the employability and lifelong learning of all employees, including older workers. The study also demonstrates that the sector has not been able to avoid redundancies or to limit the impact of reorganisation through, for example, internal mobility or re-training.
Financial companies face severe controversies in relation to restructuring, health & safety, non-discrimination and labour rights. With particular reference to allegations faced by the Diversified Banks sector, it could be argued that the size of these companies implies that they are more exposed to stakeholder scrutiny.
Vigeo Eiris (V.E) was acquired by Moody’s Corporation in 2019 and officially became a part of Moody’s ESG Solutions Group in 2020. The V.E brand name is now being retired and replaced with Moody’s ESG Solutions. Existing customers: please note that your access to our platforms and data services will continue without interruption. From December 1st 2021, the content pages on the V.E website will no longer be updated. However, content on this website will remain active for archive purposes only. Please visit www.moodys.com/esg-solutions to find our latest product information on ESG data and assessments, Second Party Opinions, Sustainability Ratings, as well as ESG research and insights. Moody’s ESG Solutions is committed to producing superior ESG insights that empower organizations to better understand ESG performance and make better decisions. Please contact us at MESG@moodys.com if you would like to know more.