According to Deloitte’s Global Human Capital Trends report, organizations that invest in human sustainability - well-being, skills, equity - consistently outperform their peers. Yet, most companies still treat people as costs rather than assets. This paradox lies at the heart of today’s human capital dilemma: the gap between what leaders say and what they measure.
At a political hearing sparked by Denominator’s Danish pension fund analysis, pension fund leaders agreed: people and diversity are critical to long-term growth. Yet, few could effectively track these factors in their investment strategies.
Despite CEOs frequently referring to their workforce as their "greatest asset," legacy accounting practices haven’t evolved. However, Deloitte’s findings show that prioritizing human sustainability correlates with 2.2% higher 5-year ROE (return of equity) and 50% lower carbon emissions per revenue dollar. For instance, PayPal’s investment in frontline workers’ financial wellness led to measurable business gains - saving $500,000 annually for every 1% drop in turnover.
Still, only 10% of companies are leading the way, but these are x1.8 more likely to achieve desired business outcomes, and x2.1 to achieve positive human outcomes.
Why this matters for investors
Human capital is no longer a soft topic, it’s a strategic asset. Intangible factors like workforce quality now dominate company valuations, yet traditional metrics often overlook their impact.
According to the latest human capital report released by Moodys’ Ratings, for which Denominator was a data provider, “A company’s ability to manage its workforce [...] directly affects its productivity, profitability, and ultimately, its credit quality”
Effective labor management is increasingly recognized as a material factor in credit quality assessments. Strikes, labor disputes, and non-compliance with labor laws can lead to operational losses and reputational damage.
Reliable, standardized data on how organizations treat their people is becoming essential.
The ESG Blind Spot: Measuring What Matters
While environmental data is rigorously tracked, social metrics still lag. Only 19% of organizations have robust tools to measure human sustainability.
Deloitte’s research reveals the top challenges threatening human sustainability today include:
- 53% of workers cite rising work stress and deteriorating mental health
- 28% worry about AI replacing jobs
- 25% are concerned with the rising demand for new skills due to tech and business model changes
- Others point to safety risks, lack of belonging in hybrid environments, and increased digital surveillance without consent
These concerns reflect the real-world impact of not measuring or managing the “S” in ESG effectively.
Leading organizations are beginning to close this gap by tracking human-centric metrics across key dimensions such as:
- Skills development (e.g., AI-reskilling outcomes, internal mobility)
- Well-being (e.g., burnout indicators, health equity trends)
- Societal impact (e.g., living wages, workforce inclusion across supply chains)
This isn’t just about compliance, it’s about value. Organizations that treat employees well tend to outperform. The challenge has been converting good intentions into investment-grade insights. That’s where better data makes the difference.
The Transparency Dilemma: Trust as Competitive Advantage
Trust is emerging as a core differentiator. Deloitte finds that while 86% of executives believe transparency builds trust, but there’s a fine line. Misapplied surveillance and opaque data use can drop confidence, only 37% of workers today trust their employer’s data practices.
High-trust organizations are seeing returns: up to 4x greater market value than their peers. But building trust requires more than dashboards. It means using data responsibly, communicating clearly, and involving employees in the process.
That’s why having dependable insights into social and workforce practices matters. When companies can quantify outcomes like pay equity, career progression, and retention, they move from promises to performance.
From Paradox to Performance
Organizations at the forefront of value creation are those that move beyond outdated trade-offs and embrace a more integrated approach to performance and sustainability. The future will not be defined by binary choices but by strategic alignment between business outcomes and human outcomes.
- Organizations that invest in workforce well-being, equity, and capability development are increasingly demonstrating stronger financial returns.
- Responsible, collaborative data practices foster trust, one of the most critical assets in today’s workplace.
- Environmental and social impact are not checkboxes, they are fundamental levers for innovation, resilience, and long-term growth.
As intangible assets such as talent, culture, and capability now comprise the majority of enterprise value, the ability to effectively measure and manage human capital is emerging as a key differentiator.
Data-driven insights provide leaders with the clarity to move beyond rhetoric, ensuring that strategies related to people are not only aspirational, but actionable and accountable.
In a landscape shaped by rapid change and increasing stakeholder expectations, organizations that operationalize human sustainability will be best positioned to thrive. Because what gets measured gets managed, and what gets managed drives performance.
Contact us and discover how Denominator can help you to optimize your human capital strategy.
