Wes Hall
Courtesy Kingsdale Advisors

Wes Hall knew the stakes were high when he built Kingsdale Advisors from the ground up back in 2003. “If I failed building Kingsdale, I would have failed my family and myself,” he says.

Hall, Kingsdale’s executive chairman, didn’t fail. Over the past 17 years, Kingsdale, based in Toronto with an office in New York, has grown into one of Canada’s top strategic advi-sory firms specializing in shareholder relations and corporate governance.

These days, the stakes are even higher. In June, Hall founded the Canadian Council of Business Leaders Against Anti-Black Systemic Racism. Its flagship project, the BlackNorth Initiative, aims to increase the representation of Black people on corporate boards and executive teams in Canada.

“If this doesn’t work, I’d be failing a whole race of people,” Hall says. “That’s why I’m putting all the time and effort into doing this. My kids are counting on it; friends are counting on it. I can’t let them down.”

Hall traces BlackNorth’s roots to September 2018, when he began reaching out to Black professionals in the financial services industry who were eager for change. The movement picked up steam after Hall wrote an op-ed published in the Globe and Mail in early June.

In that column, published days after George Floyd was killed by police in Minneapolis, Hall described his experience with systemic racism as a successful Black man living in Toronto’s affluent Rosedale neighbourhood.

“That [op-ed column] got a lot of business leaders calling me,” Hall says. “They were very surprised to see that someone like me was experiencing those things.”

One of those calls came from Victor Dodig, president and CEO of Canadian Imperial Bank of Commerce, who was quick to sign on as a co-founder of Hall’s initiative along with Prem Watsa, chair and CEO of Fairfax Financial Holdings Ltd., and Rola Dagher, president of Cisco Systems Inc.’s Canadian operations.

BlackNorth’s CEO Pledge calls on the leaders of Canadian companies to acknowledge the existence of anti-Black systemic racism — and to do something about it.

Among other measures, the pledge requires business leaders to commit to Black people holding at least 3.5% of board and executive positions by 2025. That’s a businesslike solution, Hall says, to a social problem.

“The whole purpose of BlackNorth is to make sure that when a company makes a commitment to the Black community, [the company] follows that commitment,” he says. “When you sign the CEO Pledge and you become a part of BlackNorth, you’re saying: ‘We are part of the solution to end anti-Black systemic racism.’”

By the time BlackNorth held its inaugural summit on July 20, more than 200 Canadian organizations had signed the CEO Pledge, including 30% of companies on the S&P/TSX 60.

Some financial services firms responded prior to the summit. In early July, for example, Royal Bank of Canada set a target for people identifying as Black, Indigenous or people of colour to hold 30% of executive roles.

“It certainly was encouraging that the largest bank in the country has taken it upon itself to go beyond what’s written in the CEO Pledge,” Hall says.

Hall acknowledges that not all companies will volunteer to “do the right thing” — despite the potential benefits to their bottom line. Citing a 2020 study by McKinsey & Co., Hall notes that companies with racially diverse executive teams are, on average, 36% more profitable than their peers.

If, despite the financial and societal benefits of racial diversity, companies still refuse to change, there will be consequences, Hall anticipates.

“[Shareholder activists] are going to go after companies that refuse to change voluntarily,” Hall says. “Not only will the activists do this as a result of their social conscience, they’re going to make money when they force companies to be racially diverse.”

Anti-Black systemic racism, Hall adds, is effectively an investment risk — “a social problem that is a disaster.” Racism, he says, poses a risk to any company that isn’t working to eliminate it.

“[Racism] has caused demonstrations,” Hall says. “In some places, unfortunately, it has caused riots in the streets. How can you ignore [this] as a company and say that you’re a good corporate citizen?”

Racial diversity isn’t the only concern investors will be paying close attention to in the coming months. Covid-19 will cause shareholders to look at companies’ business models “very differently,” Hall says: “There are certain things that investors would find acceptable pre-Covid that would be completely unacceptable post-Covid.”

Boards and management teams will need to address previously unforeseen risk factors in the months ahead.

“Nobody anticipated that hotels or restaurants would be closed down for months with zero revenue,” Hall says. “Was that risk factor there pre-Covid? It didn’t exist — but now it’s going to be a risk factor post-Covid.”

Covid-19 has also underscored the urgent need to update Ontario’s archaic securities laws, says Hall, who is actively involved in the reform.

Hall is one of five members of Ontario’s Capital Markets Modernization Taskforce. In February, the task force was given the mandate to review the province’s securities laws. Ontario’s Securities Act is supposed to be reviewed every five years, but the previous review took place in 2003.

The task force released a consultation paper with 47 policy proposals in July, and its final report is due in the autumn.

So far, the pandemic hasn’t derailed the task force’s progress. In fact, Covid-19 made updating Ontario’s securities laws “even more important,” Hall says.

“We saw how antiquated our laws really were while we were in the middle of drafting our recommendations. We had to address [so many things] that weren’t even on our minds before.”

For example, Hall says, Ontario’s laws didn’t allow publicly traded companies to hold their annual meetings virtually — something that became a necessity during the pandemic and required a court-ordered exemption.

Covid-19, Hall adds, also made sending bulk shareholder proxies through the mail and requiring wet signatures for legal documents impractical.

Hall says he’s enjoyed working with the task force, which he describes as a respectful, “very effective team.”

“It’s been interesting because there are five of us — not 20 or 30 people — and we each have a definitive expertise in the capital markets that we brought to the table. We were very efficient in terms of how we worked.”

The task force will begin work on its final report following a comment period for its proposals that ends Sept. 7. In the meantime, Hall says he’s encouraged by the progress the BlackNorth Initiative has made so far — although there’s still “a long way to go.”

“We’re certainly pleased that companies realize they have to take action,” Hall says. “The CEO Pledge is really just a start to a conversation, but we think the conversation is going to escalate to a different level.”