Les nouvelles données des Autorités canadiennes en valeurs mobilières (les ACVM) sur la représentation des femmes aux postes d'administrateurs et de membres de la haute direction démontrent que la présence des femmes a augmenté au cours des six dernières années. Les données publiées par Innovation, Science et Développement économique Canada (ISDE Canada) confirment que, malgré les progrès réalisés au chapitre de la représentation des femmes, il existe toujours un écart pour les autres groupes sous-représentés au sein des conseils d'administration et des équipes de haute direction.

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The Canadian Securities Administrators' (the CSA) updated data on women in  corporate leadership shows that women's representation has increased over the last six years. Data published by Innovation, Science and Economic Development Canada (ISED Canada) confirms that while progress has been made with respect to female representation, there remains a gap in corporate leadership for members of other diverse groups.

  • The representation of women on boards and in executive officer roles continues to increase with 79% of issuers having at least one woman on their board (49% in 2015) and 65% of issuers having at least one woman in an executive officer position (60% in 2015).
  • Larger reporting issuers generally have more diverse boards and leadership teams than smaller and venture issuers. In particular, larger issuers have greater female representation at the board level, with 31% of board seats occupied by women for issuers with over $10 billion market capitalization (as compared to 20% of board seats being held by women overall).
  • The first year of broader diversity data with respect to visible minorities, indigenous persons and persons with disabilities shows that Canadian public companies are generally lacking diversity outside of gender diversity.
  • More than half of the issuers reviewed by the CSA (54%) have adopted a written policy relating to the representation of women on their board, with 26% of the issuers adopting targets for the representation of women on their board and 4% adopting targets for representation in executive officer positions. Only 32% of issuers reviewed by ISED Canada had adopted a written policy with respect to the representation of women on boards.

On March 10, 2021, the Canadian Securities Administrators (CSA) published CSA Multilateral Staff Notice 58-312 Report on Sixth Staff Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (the Staff Notice) summarizing results from their review of the disclosure of 610 TSX-listed issuers with year-ends between December 31, 2019 and March 31, 2020 (the TSX Issuers). The results in the Staff Notice represent the sixth annual review conducted by the CSA of public disclosure regarding women on boards and in executive officer positions, as required by National Instrument 58-101 Disclosure of Corporate Governance Practices and Form 58-101F1 Corporate Governance Disclosure (together, 58-101).

ISED Canada has also published the results of its review (the CBCA Review) of the diversity disclosure of 469 distributing corporations (the CBCA Issuers) incorporated under the Canada Business Corporations Act  (the CBCA) as required by the new diversity disclosure obligations in the CBCA that became effective on January 1, 2020. Differences between the results in the Staff Notice and the CBCA Review are noticeable as the CBCA diversity disclosure requirements apply to all "distributing corporations" incorporated under the CBCA, which includes venture issuers, and addresses more facets of diversity, namely women, visible minorities, Indigenous persons and persons with disabilities (Designated Groups). The findings of the CBCA Review establish a baseline that will be used to measure progress over the years. In publishing the CBCA Review, the Honourable François-Philippe Champagne asserted: "It is clear that the numbers in this report fall well below what would accurately represent the diversity of Canada. This reflects the reality today that women, racialized persons, those who identify as LGBTQ2 and those living with disabilities (including invisible and episodic disabilities), as well as First Nations, Inuit and Métis peoples, are under-represented."

Together, the Staff Notice and the CBCA Review provide insight into the composition of corporate leadership for both large and small Canadian public companies, and, as stated in the CBCA Review, evidence a "disparity in the representation of designated groups on boards of directors and among senior management."

Women on Boards

Both the CSA and the CBCA require that issuers disclose data with respect to the number of women on their boards of directors. According to the Staff Notice, a majority (79%) of TSX Issuers reviewed had at least one woman on their board, which is significantly higher than the 49% of issuers reporting in the CSA's first annual review published in 2015 (Year 1). Comparatively, the CBCA Review found that only 50% of CBCA Issuers had at least one woman on the board of directors, evidencing that venture issuers generally have fewer women on their boards. Of the TSX Issuers, 20% of board seats were held by women, in comparison to 11% reported in Year 1. This number tended to increase with the size of the issuer and varied by industry. Once again, this number was lower (17%) in the CBCA Review evidencing a different level of representation of women among venture issuers.

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In addition, the Staff Notice found that:

  • 6% of TSX Issuers had a female chair of their board.
  • 724 board seats of TSX Issuers were vacated during the year, and 30% (168 of the 561 seats filled) were filled by women, which represents a 3% decrease (vacated board seats filled by women) from last year.
  • The manufacturing, real estate, and retail industries had the highest percentage of issuers with one or more women on their boards, while the biotechnology, mining and oil & gas industries had the lowest percentage of issuers with one or more women on their boards.

Since Year 1, progress has been made with respect to women on boards:

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Women in Executive Officer Positions

Of the TSX Issuers, 5% had a woman chief executive officer (CEO) and 15% had a woman chief financial officer (CFO). 65% of TSX Issuers and 47% of CBCA Issuers had at least one woman in an executive officer position, in comparison to 60% of TSX Issuers in Year 1.

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The real estate, retail and utilities industries had the highest percentage of issuers with one or more women in executive officer positions. The mining, oil & gas, and technology industries had the lowest percentage of issuers with one or more women in executive officer positions.

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Designated Groups

As noted above, the CBCA requires that distributing corporations not only report on the representation of women but disclosure about Designated Groups is required. The data set out in the CBCA Review shows that the leadership teams of CBCA Issuers are generally lacking broad diversity, particularly when it comes to representation of Indigenous persons and persons with disabilities. 

Indigenous Persons

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Persons with Disabilities

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Visible Minorities

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Targets, Term Limits and Other Mechanisms of Board Renewal

The 58-101 and CBCA diversity disclosure requirements mandate that issuers disclose whether they have adopted targets, terms limits or other mechanisms of board renewal. In the Staff Notice, the CSA found that 26% of TSX Issuers adopted targets for the representation of women on their boards, in comparison to 7% in Year 1. ISED Canada found that only 14% of CBCA Issuers had adopted targets for women on boards. With respect to executive officer positions, only 4% of TSX Issuers (compared to 2% in Year 1) and 5.5% of CBCA Issuers had adopted targets. Almost no CBCA Issuers (generally less than 1%) had adopted targets with respect to the representation of visible minorities, Indigenous persons and persons with disabilities.

Most issuers have not adopted term limits or other mechanisms of board renewal:

  • 23% of TSX Issuers adopted some form of director term limits (alone or with other mechanisms of board renewal), in comparison to 19% in Year 1.
  • 34% of TSX Issuers adopted other mechanisms of board renewal but did not adopt term limits.
  • 39% of TSX Issuers disclosed that they did not have director term limits nor had they adopted other mechanisms of board renewal.
  • 16% of CBCA Issuers that disclosed diversity information adopted some form of mechanism for board renewal.

Reasons cited for not adopting term limits or other mechanisms for board renewal included the loss of valuable experienced and knowledgeable directors, a reduction in continuity or experience on the board or a lack of necessity because the corporation regularly assesses board members for effectiveness.

Per the Staff Notice, 54% of TSX Issuers adopted a written policy relating to the representation of women on their board, representing a significant increase from 15% in Year 1. In the CBCA Review, 32% of CBCA Issuers had adopted written policies with respect to the representation of women on their board and 26% had adopted a written policy for representation of other Designated Groups.

Proxy Advisors on Women in Corporate Leadership

In recent updates, proxy advisory firms, including Institutional Shareholder Services (ISS), Glass Lewis (GL) and the Canadian Coalition for Good Governance (CCGG) (together, the Proxy Advisors) have placed heightened emphasis on gender diversity for the upcoming proxy seasons.

Institutional Shareholder Services

Effective for meetings held on or after February 2022, ISS will recommend in respect of companies on the S&P/TSX Composite Index, a withhold vote for the Chair of the Nominating Committee (or committee with nominating responsibilities) where less than 30% of the board of the company is comprised of women, and

  • the company has not disclosed a formal written gender diversity policy; or
  • the company's formal written gender diversity policy does not include a commitment to achieve at least 30% women on the board over a reasonable timeframe.

With respect to targets, ISS will look for an explicit percentage or numerical target for women's representation of at least 30% of the board.

As part of its updated rationale for these policy positions, ISS cites the fact that gender diversity has remained a high-profile corporate governance issue in the Canadian market. ISS also states that it has become clear that a higher standard of representation by women is expected on Canadian boards, with S&P/TSX Composite Index constituents playing a vital role in this process as market leaders. According to ISS, the 58-101 disclosure requirement has catalyzed female representation on boards of widely held TSX-listed reporting issuers, with boards lacking policy commitments or having no female directors considered outliers.

While ISS has heightened its expectations with respect to female representation, we note that existing Governance QualityScore factors (GQS Factors) also highlight the importance of female representation. The number of women on the board is a factor scored in all regions and GQS suggests that better long-term financial performance is correlated with increases in the number of women on boards. Full credit of this factor is earned when three or more women are on the board. The percentage of women is another factor that is scored in all regions and maximum credit is received when women hold at least 50% of board seats. For details on ISS's updated policy please see our blog post on this topic.

Glass Lewis

As previously discussed, in regards to gender diversity, GL will note as a concern an issuer that has less than two female board members and, in 2022, recommend withholding votes from the chair of the nominating committee. For boards with six or less members, GL will only require that a board have one female member. However, GL will take into consideration an issuer's disclosure of their diversity considerations, targets and timelines and may refrain from a negative recommendation where the issuer has provided sufficient rationale or a plan to address the lack of diversity.

What is interesting about GL's approach to gender diversity on boards is that, while there is an accommodation for a board comprised of less than six members, it has otherwise adopted an absolute number irrespective of the size of the board. This contrasts with the typical percentage threshold (generally 30%) that has been set by other investor advocacy groups like ISS, the Catalyst Accord 2022 and the 30% Club Investor Group.

Canadian Coalition for Good Governance

CCGG also believes that gender diversity is a critical matter of corporate governance. In achieving gender diversity, boards should adopt a written gender diversity policy. While CCGG does not take any position regarding to the content of a company's gender diversity policy, CCGG notes that as a matter of best practice, gender diversity policies should incorporate targets.

CCGG also suggests that in setting an appropriate target, boards should consider the research that supports the adoption of at least a 30% target, as "this level constitutes a 'critical mass' whereby the views of the diverse members of a group are viewed not through a prism of tokenism but carry the same weight as the opinions of other group members."

Recent Diversity Developments in Corporate Leadership

As evidenced by the recent amendments to the CBCA, over the past year there has been growing legislative and regulatory recognition of the importance of overall diversity in corporate leadership.

Legislative Changes

The lack of representation in Canadian corporate leadership of black, indigenous and people of colour (BIPOC) has expanded the focus from gender parity alone to a more expansive lens of diversity. As previously discussed and noted above, in January 2020, Canadian federal legislation echoed the need to advance diversity in corporate leadership by amending the CBCA to require all distributing corporations (including venture issuers) to report on the representation of Designated Groups on boards of directors and within senior management.

Specifically, the CBCA requires that corporations either disclose information about their diversity policies and targets with regards to, at minimum, the Designated Groups, or explain why they do not have such a policy and targets. These new requirements represent a recognition that board diversity is key to developing vibrant capital markets. To assist CBCA-incorporated issuers address the CBCA disclosure requirements, ISED Canada recently published guidelines intended to encourage more consistent diversity disclosure.  Notably, corporations are encouraged to disclose information in tabular format, separate disclosure with respect to boards and senior management, and specifically indicate timelines for targets. CBCA issuers are also reminded that filing a proxy circular on SEDAR will not satisfy the requirement to send diversity information to Corporations Canada. Rather, CBCA issuers must also submit this information to Corporations Canada either though their Online Filing Centre or by email to IC.corporationscanada.IC@canada.ca

In light of the new CBCA disclosure requirements, we reviewed circular disclosure published by issuers in the S&P/TSX 60 Index (the S&P/TSX 60 Study). Our review reveals that among CBCA-incorporated issuers on the S&P/TSX 60 Index:

  • 24% of board members and 17.21% of executive officers are identified as women;
  • 86% of board members and 4.49% of executive officers are identified as visible minorities;
  • 53% of board members and 0% of executive officers are identified as Indigenous persons (First Nations, Inuit, and Métis); and

0.27% of board members and 0% of executive officers are identified as a person with a disability.

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Further, necessary improvement to the current landscape is generally desired as according to a recent study published by McKinsey & Company, boards that are more ethnically and culturally diverse are 43% more likely to earn higher profits. Reporting on the representation of BIPOC is an important step in fostering an environment where companies are encouraged to remain innovative and competitive, both domestically and internationally.

Ontario's Capital Markets and Modernization Taskforce

Similar to the CBCA amendments, the Ontario's Capital Markets and Modernization Taskforce (the Taskforce) recommends improvements in corporate board diversity. Although 58-101 includes a "comply or explain" model regarding its representation of women on boards of directors, the Taskforce notes that there had been only a marginal increase in representation since the adoption of these requirements - from 11% in 2015 to 17% in 2019. To improve these efforts, the Taskforce has proposed that TSX-listed companies adopt written policies that "expressly addresses the identification of candidates who self-identify as women, BIPOC, persons with disabilities or LGBTQ+ during the nomination process." Further, the Taskforce recommends that public issuers set aggregate targets of 50% for women and 30% for BIPOC, persons with disabilities, and LGBTQ+, with implementation to be completed within five and seven years, respectively

If the Taskforce recommendation is adopted, it would mark a significant change to current practice, particularly as our TSX/S&P 60 Study reveals that:

  • the average gender diversity target was set at 30% women;
  • the average percentage of women on boards was 30.36%; and
  • 34% of boards were comprised of 21% to 30% women.

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Notably, the Taskforce's recommendation that public issuers set aggregate female targets of 50% mirrors the GQS Factors, whereby maximum credit is also earned at the 50% threshold. This symbolizes a recognition of gender equality and that organizational targets cannot plateau once reaching the typical 30% threshold that has been recommended by investor advocacy groups such as ISS, Catalyst Accord 2022, 30% Investor Club and CCGG.

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