Fewer than 20% of Canadian directors are women

Statistics Canada has released new data on the representation of men and women on boards of directors in Canada. Only 18.1% of board seats in Canada were held by women in 2017. The number rises slightly to 21.3% when looking solely at director positions in publicly traded corporations. The government statistics are consistent with those of the Canadian securities regulators, which released detailed data from their review of women on boards and in executive officer positions last week. The topic of diversity in the boardroom is a hot one that has resulted in various legislative and policy developments in the past few years. 

Statistics Canada data

The following are some highlights from the Statistics Canada data, which was released on January 28, 2020. 

In 2017:

• 61.7% of all boards were comprised entirely of men (2016 – 61.2%).
  
  
• 27.7% of all boards had one female director (2016 – 26.6%).
  
  
• 11.1% of all boards had more than one female director (2016 – 11.7%).
  
  
• 18.1% of all board seats were held by women (2016 – 17.8%).
  
  
• 21.3% of board seats of publicly traded corporations were held by women (2016 – 20.3%).

Canadian securities regulations

The Canadian securities regulators implemented a “comply or explain” diversity disclosure regime in 2014 in an attempt to increase the representation of women on boards and in executive officer positions. Corporations listed on the TSX must provide certain statistics to shareholders annually and must either disclose the details of their gender diversity policies or, if they do not have one, explain why not. 

In order to measure progress, the Canadian securities regulators release a report every fall that summarizes their review of the required disclosure regarding women on boards and in executive officer positions and corresponding corporate policies.

The Canadian securities regulators released their fifth annual disclosure review in October 2019, which noted a continued modest improvement in female representation. Last week they published the underlying data used to prepare the report. Key information from the report includes:

• 17% of board seats of TSX-listed issuers were held by women (2018 – 15%).
  
  
• 73% of TSX-listed issuers had at least one woman on their board (2018 – 66%), however, 170 issuers had no women on their board (2018 - 218).
  
  
• 5% of the chairs of the board of TSX-listed issuers were women (2018 – no stats).
  
  
• 33% of vacated board seats of TSX-listed issuers were filled by women (2018 – 29%).
  
  
• 50% of TSX-listed issuers have adopted a policy relating to the representation of women on their board (2018 – 42%).
  
  
• 22% of TSX-listed issuers have adopted targets for the representation of women on their board (2018 – 16%).

Canadian corporate legislation

The federal government introduced mandatory diversity disclosure requirements for all publicly listed corporations existing under the Canada Business Corporations Act (CBCA) effective January 1, 2020. These requirements are similar to those of the Canadian securities regulators, with the key differences being that they apply to all publicly listed CBCA corporations (not just those listed on the TSX) and that the requirements apply to a broader concept of diversity than just gender diversity. The federal government will conduct a progress review in five years and has advised that if the level of diversity in the boardroom and the C-suite has not risen sufficiently in that time, it may impose specific targets on federal corporations.

Other diversity-related initiatives

In addition to securities and corporate law developments, a number of corporate governance organizations and proxy advisory firms have recently released policies and guidance in support of increasing the number of women on boards. Even Goldman Sachs has weighed in. 

• Institutional Shareholder Services (ISS) and Glass Lewis both have Canadian proxy voting guidelines related to board gender diversity. ISS will generally recommend withholding votes for the chair of the nominating committee or the chair of the board of S&P/TSX Composite index issuers with no robust gender diversity policy in place and no female directors. Glass Lewis will generally recommend withholding votes for the chair of the nominating committee if the issuer does not have any female directors (regardless of whether or not it has a gender diversity policy). Glass Lewis may also recommend withholding votes if the issuer has not adopted a formal written gender diversity policy.
  
  
• The Canadian Coalition for Good Governance (CCGG) released a new policy on gender diversity in March 2019, updating the one that had initially been published in 2015. In its updated policy, CCGG has taken the position that companies should adopt self-imposed gender diversity targets as a “best practice,” citing research that supports adopting a target of at least 30%. The updated policy also reiterates CCGG’s earlier position that companies should adopt a written gender diversity policy as a "best practice." 
  
  
• An alliance of Canadian not-for-profit organizations released the Directors’ Playbook in October 2018, which contains perspectives, guidance and templates to help corporations achieve greater gender balance on boards.
  
  
• Goldman Sachs announced that, beginning in July 2020, the bank will not help companies in the U.S. and Europe go public unless their boards include at least one “diverse” board member, with a focus on women. The bank further announced it would be moving towards requesting at least two such members beginning in 2021.