Gender diversity during proxy season and National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) are reviewed when CSA releases their staff notice regarding compliance for 2018 (as reported in our Timely Disclosure posts in 2017, 2016 and 2015). In celebration of international women’s day, here is a recap of gender diversity promotion and a preview of discussion points to come at the end of proxy season 2018:
Increasing the number of women in powerful positions has the potential to transform our workplaces and society.
In a report commissioned by the Government of Ontario in 2016, Catalyst outlined recommendations for accelerating progress for gender diversity on boards of directors in Canada. The report noted that Canada continues to lag behind other developed nations in terms of gender balance on corporate boards. Although more women than men graduate annually from Canada’s universities and colleges, Canadian women continue to be underrepresented on boards and in senior management.
Canadian institutional investors have begun to voice their frustration with the slow movement on boardroom gender diversity through their voting policies.
After a round table discussion in 2017, ISS announced it will adopt a board gender diversity policy in 2018 that will promote better disclosure by companies and higher levels of gender diversity in boardrooms. Under the proposed new policy, if: i) the company has not adopted a formal written gender diversity policy, and ii) no female directors serve on the board; then ISS will generally recommend withholding votes for the chair of the nominating committee or equivalent.
Canadian Coalition for Good Governance
While the quality of individual directors is paramount, we also expect boards as a whole to be diverse. A high performance board is comprised of directors with a wide variety of experiences, views and backgrounds which, to the extent practicable, reflects the gender, ethnic, cultural and other personal characteristics of the communities in which the corporation operates and sells its goods or services.
In October 2015, Canadian Coalition for Good Governance (CCGG) provided a board gender diversity policy which outlined the need for enhanced gender diversity on boards and at the executive level, stating the current regulations should go beyond simply requiring disclosure under NI 58-101. Further, CCGG recognizes that a “comply or explain” approach may not be sufficient if the CSA rules do not lead to real progress.
Nearly half of all companies listed on the TSX [in 2017] still had zero women on their boards of directors, virtually unchanged from the year before [and] only 10 per cent had set targets for the number of female representatives on their board, only slightly up from the year before.
Bill C-25 may encourage corporations to place women on boards and in executive positions. Bill C-25 is an Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act to, among other things, (a) reform some aspects of the process for electing directors of certain corporations and cooperatives; (b) modernize communications between corporations or cooperatives and their shareholders or members; (c) clarify that corporations and cooperatives are prohibited from issuing share certificates and warrants, in bearer form; and (d) require certain corporations to place before the shareholders, at every annual meeting, information respecting diversity among directors and the members of senior management. It further amends the Competition Act to expand the concept of affiliation to a broader range of business organizations.
Canadian Budget 2018
Engineers Canada is encouraged by the government’s funding of $5 million per year for Status of Women Canada to undertake research and data collection, including support for a project that analyzes the unique challenges visible minority and newcomer women face in finding employment in STEM occupations.
With Budget 2018, the Government of Canada set a new standard of gender budgeting as a core pillar of budget-making. Going forward, the Government is committed to adopting a comprehensive and permanent approach to gender budgeting. Budget 2018 and future budgets under this Government will be guided by the new Gender Results Framework with its six pillars of i) Education and Skills Development, ii) Economic Participation and Prosperity, iii) Leadership and Democratic Participation, iv) Gender-Based Violence and Access to Justice, v) Poverty Reduction, Health and Well-Being, and vi) Gender Equality Around the World. The framework will outline meaningful indicators under each pillar to track success or failure.