‘Because it’s 2015’ fell on deaf ears of corporate boards

Despite new diversity laws almost half of firms on TSX have zero female directors

Nearly half of all companies listed on the TSX still have zero women on their board of directors — virtually unchanged from last year, according to a boardroom diversity study released Tuesday.

The parity gap persists despite securities rules enacted in 2014 that require companies to disclose the number of women on boards of directors and in the C-suite offices. They also require companies to “comply or explain” policies aimed at putting more women on boards or why they are not in place. Women hold an average of one board seat per Canadian company, representing an average of 13 per cent of the board, said the “2016 Diversity Disclosure Practices” report by law firm Osler, Hoskin & Harcourt LLP.

Women held about 12 per cent of all board seats of TSX-listed companies for the full 2015 calendar year.

“I frankly expected to see more women in director positions,” said Andrew MacDougall, who heads the firm’s corporate governance practice.

Osler found 34 per cent of companies have written diversity policies, a slight uptick from 30 per cent last year. Just 10 per cent had targets for the number of female representatives on boards, up 2 per cent from last year. The number of women in board rooms was slightly better among Canada’s 60 largest companies, where women held about 24 per cent of board seats. Only three of those industry leaders had no women on their boards.

“I think the big companies take a hold of these governance issues and they do it earlier . . . partly because the spotlight’s on them and partly because they look ahead to these types of issues,” MacDougall said.

“With the smaller companies, I think it’s a matter of time, they’re not moving quite as fast as we would like in terms of changes.”

By industry, the utilities, media and financial services sectors led the way with the highest number of female directors, while mining, energy and forestry had the fewest.

The business case for gender diversity on boards and executive suites has been well-established, said Serena Fong, vice-president of government affairs at advocacy group Catalyst.

Companies that increased the number of women in the executive suite saw a 15-per-cent increase in their financial performance, a recent study by the Peterson Institute for International Economics found.

Still, the securities rules are relatively new, so companies should be given some time to make that progress, MacDougall added.

“It really depends on the change in the board structure and in those seats that will really determine how fast change is made.”

A Catalyst report in June provided suggestions for accelerating progress.

Some of those suggestions include: setting targets, concerted efforts to facilitate renewal on the board, recruitment policies requiring a diverse slate of candidates and ensuring that women represent 50 per cent of interviewees.

Investor appetite for more women on boards has been mixed. Proposals brought forth by shareholders at BCE Inc. and Restaurant Brands International for board diversity targets each received less than 20-percent support.

At the same time, the number of funds and indices focusing on companies led by women has grown.

The Ontario government in June announced it would aim to have women comprise 40 per cent of appointments to provincial boards and agencies within three years.