As policymakers mull whether to step up action on corporate diversity in Canada, proxy advisory firm Institutional Shareholder Services Inc. (ISS) is planning to step up pressure from shareholders.

Rockland, Md.-based ISS has launched a consultation on its voting policies for the upcoming proxy season. For Canada, the firm is contemplating changes to its approach on two issues: board diversity, and directors that sit on too many boards.

On the diversity issue, ISS is proposing to start withholding votes from directors that chair a company’s nominating committee, or from the chairperson of the board, at companies that don’t have a disclosed policy on gender diversity and don’t have any female directors on the board.

According to ISS, 5% of the companies included in the Toronto Stock Exchange (TSX) composite index, and 50% of TSX-listed companies that aren’t part of the index, still don’t have even a single female director.

“Canadian institutional investors have begun to voice their frustration with the slow movement on boardroom gender diversity through their voting policies,” IIS says in its draft policy. It adds during a roundtable discussion on the topic in the summer, its “Canadian institutional clients overwhelmingly urged ISS to adopt a board gender diversity policy, (applicable to all TSX-listed companies) that would promote better disclosure by companies and higher levels of gender diversity in boardrooms.”

Additionally, ISS reports that institutional shareholders say that the quality of disclosure should also be considered, including the disclosure of diversity targets, and whether companies fall back on boilerplate language.

“Under the proposed policy, a robust gender diversity policy should include a clear commitment to increase board gender diversity. Legal boilerplate or contradictory language may result in withhold votes for directors,” the ISS draft policy says. “The gender diversity policy should include measurable goals and/or targets denoting a firm commitment to increasing board gender diversity within a reasonable period of time.”

On the issue of so-called “over boarding”, ISS is also considering a policy change that would see it recommend withholding votes for non-CEO director nominees who sit on more than four public company boards, and to recommend withholding votes for CEOs that sit on more than one outside board.

ISS reports that if the policy change is adopted, based on current data, more than 300 proposed directors (167 CEO directors and 148 non-CEO directors) would have warranted a withhold recommendation during the most recent proxy season.

The consultation period on the firm’s voting policies for the year ahead runs until Nov. 9, with the aim of finalizing its policies by the end of the month. Once finalized, the new policies will be in effect for company meetings starting Feb. 1.