Beyond “Comply or Explain”: New Catalyst Report for Ontario Government Makes Bold Recommendations to Advance Women on BoardsJune 7, 2016
Catalyst Recommends 30% Targets, Use of Board Renewal Mechanisms and Written Policies for TSX-Listed Issuers : Ontario Government Accepts All Recommendations, Commits to Track and Publish Progress
Toronto (June 7, 2016)—Canada continues to lag behind other developed nations when it comes to women on boards, and there is a growing urgency to turn the tide. With slow improvement and ongoing systemic barriers hampering progress, Catalyst, the global expert on accelerating progress for women through workplace inclusion, today released Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress. The new report, commissioned by the Government of Ontario, builds on recently introduced “comply or explain” securities law rule amendments and offers 11 recommendations to help companies, business leaders and governments advance gender equity on boards and across all levels of organizations.
Among the 11 recommendations are that TSX-listed issuers set 30% targets for women board directors by 2017 and achieve them within three to five years, use at least one mechanism to facilitate board renewal, and establish written policies to increase the representation of women on boards. Governments are encouraged to reinforce the setting of the targets, renewal mechanisms and written policies, track and publish progress and set a minimum goal of 40% women to their own agencies, boards, commissions and Crown corporations. The report also recommends that more stringent legislative or regulatory approaches be considered, if progress is not made, particularly toward the 30% target.
The Government of Ontario has accepted all 11 recommendations.
“Catalyst commends the Government of Ontario for its commitment to promoting gender diversity on boards and in executive ranks,” says Deborah Gillis, President and CEO, Catalyst. “With the bold action taken today, the Ontario Government is not only helping to accelerate sustainable change for women, it is also setting a powerful example for businesses and governments everywhere.”
In addition to the 11 recommendations, the new report presents a historical trend analysis of the effectiveness of a number of the disclosures now required by the “comply or explain” rule amendments, including board renewal mechanisms such as term and/or age limits, and written policies on gender diversity. To compile the analysis, Catalyst partnered with the Rotman School of Management at the University of Toronto to augment the inaugural “comply or explain” data set released in November 2015 with data secured from proxy filings from issuers listed in the S&P/TSX Composite in 2011 and 2015. The resulting sample of 131 issuers represented those appearing in each of the three lists.
“Our analysis of the proxy filings over five years yielded three important findings,” says Gillis. “First, issuers with the most board renewal had the most diverse boards. Second, issuers with board term limits had more gender-diverse boards than those without. Finally, issuers that explicitly stated they consider women when recruiting for new board positions had more diversity than those that didn’t explicitly state this. It’s clear that to accelerate the advancement of women to director-level positions, board renewal mechanisms and written policies must become a standard.”
Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress also includes a review of global best practices for accelerating women to boards and insights from business leaders representing BMO Financial Group and EY. Among these examples, the Canadian banking sector is highlighted as a leader in championing women’s advancement.
“When it comes to board diversity, it’s imperative that companies keep the issue alive and make it a permanent part of the agenda,” says Bill Downe, Chair, Catalyst Canada Advisory Board, and CEO, BMO Financial Group, who contributed insights to the report. “As long as the issue is on the agenda, and companies are committed to setting measurable objectives and reporting against them, I am optimistic that progress will continue.”
“Women are graduating from post-secondary institutions in greater numbers than men, but are noticeably underrepresented at the executive or board level,” says Fiona Macfarlane, Managing Partner, British Columbia and Chief Inclusiveness Officer, EY, who reviewed leading practices and provided insights for the report. “We now clearly understand the business case for diversity and the fact that women are qualified for these roles, meaning the question is no longer why women should have a seat at the leadership table, but how. The answer lies in the collaboration between men and women that has to take place at all levels of the organization to accelerate the path to gender parity.”
Download a copy of Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress today.
Founded in 1962, Catalyst is the leading nonprofit organization accelerating progress for women through workplace inclusion. With operations in the United States, Canada, Europe, India, Australia, and Japan, and more than 800 supporting organizations, Catalyst is the trusted resource for research, information, and advice about women at work. Catalyst annually honors exemplary organizational initiatives that promote women’s advancement with the Catalyst Award.
11 Recommendations from Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress
Companies and Business Leaders: Set Goals and Champion Women
- Set the following specific targets by the end of 2017, and achieve them within three to five years:
- 30% women board directors for all issuers that currently have at least one woman director.
- One woman board director for all issuers that currently have zero women board directors.
- Use at least one mechanism—such as director term and/or age limits—to facilitate board renewal.
- Establish a written policy describing how the company specifically plans to increase representation of women on its board.
- Review board recruitment policies:
- Require that lists of potential board candidates consist of at least 50% women candidates with the skills and profile sought, and include women from diverse communities.
- Require that women—including women from diverse communities—comprise at least 50% of the interview pool for every open board position.
- Implement board effectiveness assessments, including gap analysis using skills matrices.
- Leverage broad networks—not just the usual suspects—to connect supply with demand.
- Champion senior executive women for board service by:
- Reassessing and removing restrictions on external board service.
- Implementing programs to match talent with board vacancies, for both executive and non-executive director seats.
- Address gender equity at all levels of the organization by:
- Reviewing, on a continual basis, recruitment, promotion, and talent development systems to ensure they are unbiased.
- Investing in inclusive leadership training.
- Monitoring and tracking promotion rates, aiming for proportional promotion and retention at each level.
- Evaluating and addressing pay equity by:
- Conducting periodic pay equity studies to determine if there are wage gaps and, if so, providing funds to rectify them.
- Implementing “no negotiations” policies and paying for work, not potential.
- Adopting pay transparency policies.
Governments: Define Goals, Track Progress, and Be Role Models for Issuers
- Drive greater awareness among broader stakeholder groups and the general public by implementing an action-oriented public awareness campaign. Government has an important role to play in promoting understanding and action on these issues.
- Reinforce and encourage the setting of specific targets, board renewal mechanisms, and written policies as a strong call to action for issuers.
- Ensure progress continues to be tracked and published, as the Ontario Securities Commission has done, on an annual basis to maintain transparency of corporate governance practices relating to the representation of women.
- If sufficient progress is not made, particularly toward a 30% target, consider more stringent legislative or regulatory approaches.
- Model exemplary behavior by reviewing appointments to their own agencies, boards, commissions, and Crown corporations, and setting a minimum goal of at least 40% women in these bodies by the end of 2019.
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