A decade of diversity disclosure in Canada

The Canadian securities regulators have published their tenth and likely final report on the status of women on boards and in executive officer positions in TSX-listed companies. Ten years ago, more than half of reporting companies did not have any women on the board. Today, 90% have at least one.

Securities law requirements

The Canadian Securities Administrators (CSA) began publishing key findings from its annual disclosure reviews following amendments made to securities regulations in 2014 that established a “comply or explain” gender diversity disclosure regime. The regulations require TSX-listed companies and other non-venture issuers (subject to certain exceptions) to provide disclosure on the representation of women on the boards of directors and in executive officer positions as well as on term limits. It is referred to as a “comply or explain” system since companies are required to either put in place diversity and board renewal policies and targets, or explain why they have not done so.

Key findings

As we look back over the past decade of diversity disclosure, the following are some of the key findings regarding the representation of women on boards and in the C-suite of TSX-listed companies:

• Total board seats occupied by women rose by 18 percentage points in the past decade – from 11% in 2014 to 29% in 2023 – just shy of the 30% minimum target advocated for by various proxy advisory and governance groups.
• While 49% of companies had no women on the board in 2014, in 2023 90% had at least one.
• Concerns that this legislation would lead to companies appointing a “token” female representative to the board have not borne out. While only 8% of companies had three or more women on their boards in 2014, 42% have such representation in 2023.
• The larger the company, the greater the representation of women on the board. At companies with less than a $1 billion market capitalization, women held an average of 23% of the board seats in 2023, which rose to 31% for companies with market caps of $1-2 billion, 35% for companies with market caps of $2-10 billion and 36% for companies with market caps of more than $10 billion.
• In a sign this progress is unlikely to continue apace, the percentage of board vacancies filled by women has decreased to 37% in 2023 (down from 43% in 2022 and a high of 45% in 2021).
• Women have not fared as well in the C-suite. 60% of companies had at least one woman in an executive officer position in 2014, which rose to 72% in 2023, a far cry from the 90% of companies that have at least one woman on the board. The percentage of companies with a woman CEO has risen only marginally since the statistic was first reported on seven years ago – from 4% in 2017 to 5% in 2023. This may prove problematic in the future as the C-suite forms part of the pipeline for future board members.
• One of the reasons for the discrepancy in progress between the board and C-suite is likely that far fewer companies have adopted targets for the representation of women in executive officer positions as compared to board seats. 44% of companies in 2023 had board-related targets (up from 7% in 2014), while only 7% of companies had executive-level targets (up from 2% in 2014).

A look to the future

Following its request for comment in April 2023, the CSA continues to consider potential amendments to securities regulations to require disclosure regarding more than just gender diversity. It is also considering whether the rules should apply to venture issuers as well. A summary of the two alternative approaches proposed by the regulators is available here.

Broadening the scope of diversity to include other designated groups would align the securities regulations more closely with the requirements of the Canada Business Corporations Act (CBCA). Since January 2020, public CBCA companies have had to make diversity disclosure similar to that required by the securities regulations but for four designated groups: women, Indigenous peoples, persons with disabilities and members of visible minorities. The Canadian securities regulators are considering whether to adopt a similar scope of diversity, with the potential addition of a fifth designated group, being LGBTQ2SI+ persons.

The year 10 report indicates that the CSA continues to consider feedback on the two proposed approaches to diversity disclosure, but does not provide any indication of timing of potential future amendments.