Discussions about board diversity may have resulted in more women being appointed to boards this year, but there’s still room for improvement when it comes to visible minorities and other marginalized groups, says a Tuesday report from Toronto-based Osler, Hoskin & Harcourt LLP.
The report, 2020 Diversity Disclosure Practices, examines the leadership practices at Canadian public companies. To collect data, Osler leveraged new disclosure requirements under the Canada Business Corporations Act (CBCA) — which focuses on women, visible minorities, Aboriginal peoples and persons with disabilities — as well as rules from securities regulators that have required greater governance transparency since 2016.
According to the report, as of mid-2020, women held more than 21.5% of board seats at TSX-listed companies that disclosed the number of women on their boards, which is 3% higher than in 2019.
Canada’s larger companies led the way, with women holding “31.4% of board positions among the S&P/ TSX 60 companies and 28.3% of board positions among the 221 companies included in the S&P/TSX Composite Index,” the report added.
Yet, the “rate at which women are being appointed to fill newly created or vacated board seats declined slightly to 35%, compared to 36.4% in 2019,” the report said.
Once the full set of 2020 data can be assessed, Osler expects to see an approximate 1% decrease in board seats held by women due to “a significant number of issuers which historically have had below-average diversity results” putting off making changes due to extensions to disclosure deadlines.
At the end of the first half, the percentage of companies with written diversity policies rose to 64.7%, up from 58.1% in 2019 and 51.9% in 2018. The vast majority of companies (97%) included a specific focus on women.
“This year we noticed a significant increase in companies disclosing that their board policy also considers other diversity characteristics — the most common of which was ethnicity/race, which was identified approximately 57.5% of the time,” the report noted.
Progress for women has been minimal at the executive officer level, the report said, given that “only 9.8% of TSX-listed companies have targets for women executive officers.” That number was largely unchanged from 2015.
The report noted there was “a marked absence of directors from other diversity groups” among TSX-listed issuers.
For example, “only 5.5% of the 217 disclosing CBCA company directors are visible minorities. And among the 2,023 board positions of the 270 CBCA companies that provided full or partial disclosure on their practices before July 31, 2020, there were only 7 positions held by Aboriginal peoples and only 6 positions held by persons with disabilities.”
The report also looked at full-year results for 2019, both for women on boards and female executive officers, noting that more women (19% in 2019, up 2.5% from 2018) held board seats among companies providing diversity disclosure. Compared with 2018, results were flat for women in executive officer roles, the report said.
“Companies that disclosed the number of women executives reported an average of 1.69 women executives and a total of 1,114 executive officer positions held by women,” the report said. “Among those that disclosed the percentage of women executives, an average of 16.8% of executive officer positions were held by women.”
Still, the report noted, multiple companies in Canada — including Bank of Nova Scotia and Toronto-Dominion Bank — have tied diversity targets to executive compensation, and more data is being provided to promote inclusion and progress.
Institutional investors are also pushing for change by updating their proxy voting guidelines and putting pressure on listed companies. (A recent policy survey from Institutional Shareholder Services Inc. found that investors want more disclosure on the racial composition of boards.)
On a global scale, women have advanced in the corporate world, the Osler report found. For example, women account for more than 30% of board spots in Australia and the U.K., and U.S. data show improvements as well.
Looking ahead, and considering the effects of the pandemic, Osler found there’s “been a renewed focus on social issues.”
Pointing to social unrest in the U.S. in particular, the the report said that “there has been a strong drive to address the impediments, both express and hidden, to the advancement of underrepresented communities to leadership positions in organizations.”