Banks and credit unions are approaching gender parity at the board level, the report found, but credit unions had 44% female representation in the executive suite compared with 33% at the banks.
The agency looked at 19 financial institutions, including credit unions and co-operatives alongside national and regional banks.
Only 18% of banks had a female CEO — at HSBC Bank Canada and Laurentian Bank of Canada — compared with 38% of credit unions and co-operatives.
Credit unions “have a very long tradition of female CEOs,” said Maria-Gabriella Khoury, the report author and senior vice-president of the global financial institutions group at DBRS Morningstar, in an interview.
The report said few banks have made a concerted effort to ensure the pool of talent from which new CEOs are picked includes enough women.
However, both smaller and larger institutions have issues when it comes to executive roles dealing with profit and loss, it said.
“Indeed, as is typical of the banking industry in other geographies, female executives are usually placed to head either the human resource or legal functions,” the report said.
As a result, even though credit unions had better gender representation among their executive ranks as a whole, both kinds of institutions had low female representation among chief financial officers, at 18% for the banks and 13% for the credit unions.
In some cases, not having leadership experience in the profit and loss area can prevent women from becoming CEOs, said Khoury.
According to Bloomberg’s Gender Equality Index, which the report used as part of its analysis, Canada’s biggest banks are doing well at attracting, retaining and developing women into senior leadership positions.
“So, the question remains: if over half of the sampled Canadian banks’ workforce is female, and the talent and leadership pipeline is ahead of most other U.S. and European peers, why does the proportion of women still decrease markedly at executive levels?” the DBRS Morningstar report asked.
Across the sector, institutions tend to be at or above gender parity in their overall workforces, but the percentages shrink as you climb up the ranks, said Khoury.
“You’ve got more women at the banks, but then they don’t make it all the way to the top,” she said.
There’s no singular reason why the pipeline of female talent seems to shrink going up the ranks, but Khoury said anecdotally, it often comes down to issues with things like recognition, mentorship, support and family care.
“There’s more and more that’s being put in place to help women … to give them enough time to dedicate to climbing up the ranks,” she noted, such as the national childcare program currently underway.
The agency said that scrutiny from investors and regulators on diversity, equity and inclusion has pushed financial institutions to improve transparency around their efforts on gender diversity. But it isn’t always consistent across the sector, making it difficult at times to compare progress across institutions, the report said.
Disclosure and transparency aren’t enough, DBRS Morningstar said — organizations need to start promoting women into higher executive positions.
Khoury said institutional investors play a big role in driving transparency and action on governance and diversity efforts at major institutions.
“As these investors start to question, and want to look at more data and look at more transparency and understand why, I think that will be the driver of change,” she said.
This pressure, combined with regulatory oversight and standardization, will drive action over time, said Khoury.
She said more transparency is needed about gender parity, but regulators need to set standards so that investors can better compare companies’ progress.
“If you don’t put them all on a level playing field, you don’t really see what’s going on.”