Smart Pension has published a human capital assessment across its equity portfolio following analysis by Denominator, which invited other pension funds to share their equity portfolios to create an industry benchmark for human capital performance.

The analysis provided portfolio- and company-level insights into leadership diversity, workforce practices, employee turnover, and pay gaps to identify risks and opportunities.

It covered the public equities in the Smart Sustainable Growth Fund, which accounted for 80 per cent of the fund and spanned 1,751 holdings across 51 countries and 66 industries.

Almost all (99 per cent) of the portfolio companies had one or more women on their board of directors, while the figure was 88 per cent for executive management.

Sectors with the lowest exposure to poor employee turnover rates included utilities, technology, and industrial goods, while sectors with the highest exposure included business/consumer services, basic materials/resources, and transportation/logistics.

“Denominator’s analysis on human capital within the companies in our portfolio offers valuable insight into long-term sustainability and governance practices,” said Smart Pension head of responsible investment, Fiona Smith.

“This data can be an indicator of a company's risk management and resilience. We look forward to using these insights to empower us to engage more effectively and drive meaningful change.”

The findings were published across two reports, one focusing on an asset owner perspective and the other focusing on a data provider perspective.

The reports stated that, in a post-industrial economy where intangible assets were increasingly driving corporate value, human capital was a “critical determinant” of long-term performance.

They argued that while climate and biodiversity risks were now widely embedded in investment frameworks, human capital assessment remained “comparatively underdeveloped”.

Smart Pension said the analysis would enable it to apply a diagnostic approach to risk management, resilience, and long-term value; strengthen voting policies; and prioritise stewardship priorities and targeted engagement with portfolio companies and asset managers.

“Our collaboration with Smart Pension shows how human capital intelligence can power more informed, responsible, and resilient investment strategies,” commented Denominator CEO, Anders Rodenberg.

“Portfolio-wide visibility into people-related risks and opportunities enables asset owners to act with greater confidence and consistency.”

The organisations said the publication of the reports marked the first step towards creating the UK’s first industry benchmark for human capital performance.

The benchmark, building on Denominator's previous experience with Nordic pension funds, will look to establish a shared baseline for UK asset owners to better understand performance, strengthen engagement, and track progress over time.

“Evaluating the human capital value in underlying investments can be a challenge for UK pension funds,” said Investors for Purpose director and board chair, Karen Shackleton.

“Therefore, the starting point needs to include a baseline assessment so that any improvements from strategy changes can be benchmarked.”

Denominator invited UK pension funds to participate by sharing their equity portfolio.

It noted that results will be anonymised, as the objective was not to rank funds, but to create a shared standard and baseline for benchmarking and progress, and asset owners will be offered detailed insights into their own portfolio.

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