Quotas May Be Next to Counter Lack of Women on Canada Boards

  • Dart happy to be ‘quota woman’ to level Canada playing field
  • Almost half of TSX-listed companies have no women on board

After years of ineffectual cajoling, new targets and quotas may be the only way to get Canadian companies to boost representation of women on corporate boards, according to Beatrix Dart, a University of Toronto business professor.

“I’m happy to be a quota woman if that sets the level playing field,” said Dart, who serves on the board of construction company EllisDon Corp. Dart was speaking at a panel discussion at Bloomberg LP’s Women on Boards event Tuesday in Toronto. “Just get over it. Change it. Put it out there and get it done. Thirty years of talk? How much more do we need?"

Representation of women on boards rose only one percentage point to 12 percent in 2016 from a year earlier even after Canadian regulators announced a “comply-or-explain” rule in October 2014. It required companies on the Toronto Stock Exchange to disclose the number of women directors and in senior executive roles as well as their diversity plans. The federal government proposed a similar law in September that would affect about 40 percent of publicly listed firms.

Women filled 15 percent of 521 vacant Canadian corporate board seats this year, according to a September review published by the Canadian Securities Administrators, an umbrella group of provincial regulators. Almost half of the TSX-listed companies still have zero women on the board, according to a report by Osler, Hoskin & Harcourt LLP, a Toronto-based law firm.

‘Just Shocked’

The government could lead the way in imposing quotas and giving procurement contracts to companies with good diversity policies, said Dart, who is also the country lead for the 30% Club Canada. “By putting a quota in for crown corporations, it also signals that the government might not shy away from a quota,” Dart said. “That stick is out there and the government might use it if there is no other corrective mechanism.”

The government is open to review a few years after the bill’s adoption, Philip Proulx, a spokesman for Innovation Minister Navdeep Bains, said in an e-mail. “At that moment, we will review the impact of the legislation and will evaluate if we must adjust.”

Sarah Kavanagh, former commissioner at the Ontario Securities Commission who worked on the new rules, said the results of the first year were incredibly disappointing. “I am just shocked by the results,” said Kavanagh, who sits on the board of Valeant Pharmaceuticals International Inc. and HudBay Minerals Inc. “I thought it would make a much bigger difference."

Kavanagh said she hopes Canada doesn’t have to go to targets right away. “I’m pretty sure this year you’re going to see a little movement on the disclosure and a little more emphasis on the importance of adding women.”

Defining Merit

Changing the definition of merit to include broader skills and not just executive experience will also help get more women onto corporate boards, she said.

By contrast with Canada’s lackluster performance, the average number of women serving on boards of the 26 companies in the Bloomberg Financial Services Gender-Equality Index has almost doubled over the past three years.

Small investors have a big role to play in improving corporate diversity because large investors perceive it to be riskier, said Fred Pinto, head of wealth and asset management at Qtrade Financial Group, including its OceanRock Investments Inc. unit. Both are part of the Desjardins Group, the largest cooperative in the country with about C$261 billion ($194 billion) in assets.

Fred led OceanRock’s unsuccessful challenge to push Burger King parent Restaurant Brands International Inc. to add women to its all-male board.

“Investors are waiting for someone else to speak up on the issue,” he said.

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