The number is decreasing in some cases, and a group of institutional investors say it’s time for change
Despite the well-reported benefits of having female representation in high levels of management and directorial positions, it seems that Canadian corporations are still falling short.
In its ninth Annual Report Card, PhaseNyne — the parent company of Women’s Executive Network (WXN), Canadian Board Diversity Council (CBDC), and Stevens Resource Group — has revealed that representation of women on Canadian boards and at C-suite level is borderline stagnant.
“The 2018 ARC results show an increase of women and visible minorities serving on boards, by 1.9 per cent and 1.6 per cent, respectively,” said Sherri Stevens, president and CEO of PhaseNyne.
The report identified three key gaps that must be addressed:
- Underrepresentation of women at the executive level (19.6 % in 2017 versus 19.5 % in 2018) of FP500 companies is causing issues in the talent pipeline for future board appointments;
- FP500 boards are not reaching their "Critical Mass" (i.e. three or more female directors sitting on board threshold to increase their organization innovation); and
- Current board members should use their current network to identify board-ready women to fill open board positions
The report noted that out of the FP500 group of Canadian companies, 43.2% have reached their so-called “critical mass”; 41.9% are just under the threshold with one or two female directors; and 15% have no female representation whatsoever.
In addition, 91.3% of FP500 board members claim to know between two and six women in their network who are qualified to join the board. Among FP500 directors, 46.7% say they had six or more board-ready women in their personal network, and 44.6% said they know two to five women who fit the criteria.
Among the directors who responded to the survey report, 81% felt that they have a diverse board; that’s even though 63% of the respondents were men. And despite the fact that almost 50% of directors know at least six women who are ready to join a board, only 20% of directors are women.
“For the health of FP500 and TSX60 companies and the Canadian economy, we must grow our pipeline's representation, nourish our future talent, and give opportunities to people who provide new perspectives and insights to build innovation,” Stevens said.
Sharing that sentiment is a group of Canadian institutional investors led by NEI Investments (NEI) and Addenda Capital (Addenda). On International Women’s Day, they issued their Voting for Diversity Canadian Investor Statement of Voting Intentions.
The group committed to use their voting rights to withhold votes from relevant director candidates at Canadian boards that lack gender diversity. They also vowed to let Canadian companies know, though transparent reporting of voting guidelines or direct engagement, where absence of diversity may impact or has impacted voting decisions.
“Board gender diversity just makes sense, both from a good governance and gender equality perspective," says Rosa van den Beemt, senior ESG Analyst at NEI. “As investors we can use one of the most direct tools we have available to us to encourage change at company boards: voting our proxies. I think the statement sends a clear message to Canadian companies about investors’ expectations on board diversity."