When Prime Minister Justin Trudeau unveiled his cabinet, composed of 50% women, he established gender parity, not just diversity, as the progressive ideal. Corporate Canada is a long way from meeting that standard, but the efforts of policy-makers now at least are pushing companies in the right direction.

Trudeau sent a strong message to the country – indeed, the world – about the importance of advancing the cause of gender equality. He reiterated that message at the World Economic Forum in Davos, Switzerland, in late January, where he appeared on a panel to discuss the issue. There, Trudeau touted the approach to encouraging gender diversity that has been adopted by securities regulators in all of Canada’s provinces and territories except Alberta, British Columbia and Prince Edward Island.

At the end of 2014, the Canadian Securities Administrators’ (CSA) rule came into effect in most provinces. This rule requires senior listed issuers to make disclosure to shareholders about gender diversity at the firm. These companies must disclose both the quantity (the number of women on the board and in senior management) and the quality (the firms’ policies on boardroom recruiting and renewal) of their gender diversity.

The CSA rule aims to improve the representation of women in corporate boardrooms and executive suites by requiring companies to expose their performance in this area – which, in turn, empowers shareholders to evaluate companies’ records and agitate for improvement.

In the first year under the new rule, the CSA carried out an initial review of both companies’ compliance with the new requirements and the substance of that disclosure. That review found that most firms still have a long way to go before gender equality can be contemplated among their senior management and boards of directors. According to the CSA review, half of the firms have no women on their board and 40% have none in the executive suite. Fewer than one-third of firms have even one woman on the board or in senior management. And only 21% of firms have more than one female director.

While certain financial services firms, such as the big banks, often lead the way in enhancing governance, the financial services sector overall is not particularly progressive in gender equity. For example, the data compiled by the CSA shows that fewer than 11% of directors in the financial services sector (including the insurance industry) are women, and slightly fewer than 19% of senior management is female. In addition, more than 40% of the firms in financial services don’t have a single female director.

Corporate Canada in general, and the financial services sector in particular, is falling far short of gender parity at the highest levels. Nevertheless, the new disclosure requirements establish a starting point, which will allow regulators and shareholders to track and evaluate the future performance of public companies.

So, when the upcoming proxy season gets underway in the next couple of months, shareholders will get their first look at whether the CSA’s disclosure-based approach is having any notable effect on the number of women in the senior ranks of public companies in Canada, and whether the CSA policy is leading to any changes in governance policies at these companies.

The regulators will be watching, too. “This was the first year for these detailed disclosures on women on boards,” notes Huston Loke, director of corporate finance at the Ontario Securities Commission (OSC). “And we hope to see progress between this proxy season and next.”

Loke reports that the regulators are “continuing to monitor progress in this area and, where appropriate, will conduct targeted outreach to issuers.”

Critics of the CSA’s approach complain that simply mandating disclosure is not enough. Instead, they would like to see firms being required to set quotas or establish hard targets for female representation in the senior ranks. Several countries in Europe have taken such measures – which may yet come to Canada if the gentler tactics now in use don’t work as hoped.

However, to date, Canadian policy-makers have been reluctant to impose quotas. As Trudeau noted in Davos, the disclosure approach that the CSA is using “puts a tremendous amount of positive pressure on people” to improve diversity – without actually mandating it.

Whether Canada’s new federal government, which has yet to deliver its first budget, continues to pursue this sort of strategy in its policies remains to be seen. The previous administration did address the issue in its final budget, which was handed down in April 2015. In response to an advisory council report published in 2014, which called for the government to aim for 30% female representation on corporate boards by 2019 – the 2015 federal budget proposed amending corporate law to adopt the same sort of disclosure requirements as the CSA.

Of course, that government was defeated before those revisions could take place. And, while Trudeau demonstrates a commitment to gender equity when he named his cabinet, whether his government is prepared to impose something more intrusive on corporate Canada to accelerate the move to gender parity is not yet clear.

Trudeau’s marching orders to Patty Hadju, the new minister of the status of women, includes the directive to “encourage an increase in the number of women in senior decision-making positions and on boards in Canada.” But that directive sounds more like a nudge than a command, and the new government has yet to set out its plans in this area.

For now, securities regulators appear to be leading the way on this issue. And, while they hope the upcoming proxy season will reveal concrete changes in the makeup of Corporate Canada, the regulators at least are sparking the conversation about the need to encourage greater diversity.

“What we have seen so far is momentum and engagement,” Loke notes. “There has been a significant increase in the level of discussion about women on boards, and stakeholders are better informed as a result of the disclosures. The policy is starting to accomplish what we hoped it would.”

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