Mandatory "comply and explain" requirement aims to boost diversity of corporate ranks at Canadian public companies
TORONTO—Geologist Tabetha Stirrett still remembers a work dinner she was at nearly two decades ago with other managers from a Canadian oilfields services company.
There she was, the only woman at a table with 20 of her colleagues, when the waitress approached her, assuming she was the group’s secretary.
“The waitress asked me: ‘Are you here taking notes?'” recalls Stirrett, president of the non-profit group Women in Mining Canada. “That’s the perception—that women should only be in this group taking notes.”
Over her career, Stirrett has witnessed gender bias start at the hiring stage, when managers would pass up women for field positions because they assumed they weren’t tough enough, or were unable to leave their families for days or weeks on end.
But Stirrett said the same gender bias also exists in the upper ranks of the mining and oil and gas industries, where it is still uncommon to find a female manager, let alone a female board member.
The lack of diversity in corporate Canada may be in for some change.
Beginning Jan. 1, firms listed on the Toronto Stock Exchange (TSX) will be required to make public the number of women on their boards and in executive officer positions, as well as policies regarding the representation of women at the director level and director term limits.
The move, spearheaded by the Ontario Securities Commission (OSC), is supported by seven provinces and two territories.
The Yukon, Prince Edward Island, British Columbia and Alberta have not opted in.
A recent survey by the Ontario government found that out of 448 Canadian companies, 57 per cent had no women directors, while 53 per cent had women in fewer than 10 per cent of their executive officer positions.
Women make up 48 per cent of the workforce, but account for only about 16 per cent of board members at the country’s largest companies, according to a Top 500 list compiled by the Financial Post earlier this year.
OSC chair Howard Wetston said the hope is that the mandatory “comply and explain” requirement will give shareholders more information on the composition of executive and corporate ranks at Canadian public companies.
“When you have greater transparency, there is a greater likelihood that a greater number of stakeholders will take an interest in what the company is doing and what it is trying to achieve,” he said.
It’s expected that companies will divulge online or in documents, such as their spring proxy circulars, targets for the number of women they want on their boards and in executive positions and the actual number of women in those roles.
There are no penalties for companies that don’t reveal this data and the OSC will review the practice in 2017 to assess compliance and decide if more measures or fines are needed.
“I’m hopeful that we’re going to see a lot of progress and frankly, from what I can see, and in my discussions with firms and others, we’re already starting to see progress,” Wetston said. “Gender diversity, simply put, is good corporate governance.”
The Women’s Executive Network argues that although the new OSC rules are a reasonable first step, the policy does not provide companies with any recommended targets or other guidance.
Founder Pamela Jeffery said the worry is that corporate Canada may follow the lead of Australia, which enforced a similar policy on their publicly listed companies in 2011.
Although a majority of firms reported they had diversity policies in place at the board level, they refused to provide details on what these policies were or if they were able to meet their targets or say why.
The main benefit of having more women on corporate boards is more diversity among the decision-makers at Canadian companies.
But some in corporate Canada have long argued that it’s not that they don’t want to hire more women; they say there just isn’t a large enough pool of qualified female candidates to choose from—especially in male-dominated industries.
It’s an excuse Jeffery doesn’t buy.
“We believe that half of the talent pool has often been overlooked. There are many women in this country who are qualified to sit on boards and are simply not being asked,” she said.
“We think for boards, (diversity) will lead to better decision-making and … will lead to better financial performance for companies.”
Regardless, she’s optimistic that Canadian companies will want to do the right thing without being forced to meet strict quotas.
But the British Columbia Securities Commission (BCSC), one of the regulators that opted out of the initiative, questioned whether securities regulators are overstepping their duties by telling companies how they should be run.
“It’s an important issue but we also see it as a corporate governance matter,” said BCSC spokesperson Pamela McDonald.
The BCSC said it declined to involve venture companies, which it oversees, under the new requirement because it has yet to determine whether there would be a cost benefit to do so.
B.C.’s largest companies, such as Telus Corp. and Teck Resources Ltd., already fall under the comply and explain policy because they’re listed on the TSX.