Canada still lags U.S. in board gender diversity, study finds

TORONTO The gender diversity of Canada’s corporate boardrooms continues to lag that of the United States, and “stronger headway” needs to be made in the country’s resource sectors and small firms, a Toronto-dominion Bank economist says in a new report.

There has been “noteworthy progress” since the country’s largest securities regulator in 2015 implemented a so-called comply-or-explain rule aimed at increasing board diversity, but the S&P/TSX still shows lower aggregate female diversity at 24 per cent, compared to 25 per cent on the S&P 500, said Beata Caranci, TD’S chief economist.

The Canadian benchmark index is resource industry-heavy, and has more smaller firms, relative to the U.S., she said. “Ultimately, to move the needle in corporate Canada as a whole, stronger headway needs to be made among smaller firms, and disproportionately within the resource sector,” she said in the report.

In 2015, the Ontario Securities Commission introduced a comply-or-explain rule, that requires most companies listed on the Toronto Stock Exchange to disclose annually how many women are on their board and in executive officer positions. It also compels disclosure on related aspects including whether the company has a policy for identifying and nominating female directors, and whether there are targets at either the board or executive level, and if not to explain why.

The latest data gathered from Canadian securities regulators shows that among the 648 issuers, 15 per cent of board seats were held by women, up from 11 per cent four years earlier.

Caranci says the comply-or-explain policy has been “highly effective in a number of areas,” such as an increase in the share of women on boards across all industries and firm sizes and a decline in the share of boards with zero women.

But corporate Canada’s journey is not yet complete, as most publicly traded firms fall short of the minimum 30 per cent threshold that constitutes critical mass, she wrote. The comply-or-explain policy has not resulted in a marked improvement representation of women within the senior executive rankings of firms, TD added.

Institutional investors are pushing for greater female representation on boards.