New regulations that require companies to disclose the number of women on their corporate boards is a good first step toward better gender balance, says Alex Johnston, the executive director of Catalyst Canada.
In December 2014, securities regulators in seven provinces and two territories implemented the new policy requiring disclosure of the number of women on corporate boards. Corporations in Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Quebec and Saskatchewan must now also disclose their internal policies regarding the representation of women on their boards.
This approach, which Johnston describes as "comply or explain," was meant to address the underrepresentation of women on corporate boards. According to current estimates, women hold between 10 and 20 per cent of the seats on corporate boards in Canada.
Johnston says she is already seeing a "momentum shift – part of which is directly attributable to the new regulations."
"Companies have to disclose their targets and their strategies to meet those targets and if they can't disclose, they have to explain why not," explains Johnston, who sits on the board of directors for Desjardins General Insurance Group. "I think that's a really good first step. I think it's the right first step for us in this country."
Over the first six months, the Ontario Securities Commission received almost 1,000 disclosures. In a June speech to the Canadian Coalition for Good Governance, Howard Wetston, the chair of the Ontario Securities Commission, explained that the regulation was not simply "disclosure for disclosure's sake. It is intended to create meaningful dialogue at the highest level – right at the heart of corporate leadership in this country."
The disclosure results have been mixed, says Wetston, who was not available to be interviewed for this article.
"Upon early review, we've seen some good examples, companies that not only provide comprehensive information but that have significant representation of women in key roles and who are willing to push further in setting targets and achieving continual improvement," he said in his speech. "But we've also seen others where, even if it may qualify as 'compliant' disclosure, it is at best technical compliance and does not reflect our overall objective or desired outcome."
This is a concern for Senator Céline Hervieux-Payette, who believes not enough is being done to increase gender parity on corporate boards – and who doesn’t think the security regulatory authorities are taking the right approach.
"That has been tried in other countries and it went nowhere," says Hervieux-Payette, the author of a private member's bill to increase women's representation on corporate boards.
Many countries have tried different approaches to increase the number of women on corporate boards.
Norway, widely considered the world leader on gender parity within corporations, long ago ditched voluntary compliance in favour of strict quotas. Since 2008, most public corporations are required by law to ensure that women make up at least 40 per cent of corporate boards. The penalty for noncompliance can include dissolution of the corporation.
Spain, France, Iceland, the Netherlands, Italy and Belgium have also passed laws requiring an increased number of women on corporate boards. Australia, like Canada, has adopted a "comply or explain" policy.
"There are three approaches around the world – comply or explain, which is what we've adopted; quotas in Scandinavia and parts of Europe; and then a voluntary approach by the United Kingdom," says Johnston. "Out of the three approaches being used globally, all three are showing progress and the common element is goal-setting. So pushing companies to set a goal and pushing companies to meet that goal is, in my view, the most important part of getting from where you are to where you want to be."
The push for gender parity isn’t just about some notion of fairness – study after study shows a clear business case can be made for including women on boards. In its analysis of available studies Catalyst, a non-profit organization dedicated to increasing opportunities for women in business, found that Fortune 500 companies in the United States with more women on their boards will outperform companies with fewer women.
This does not surprise Hervieux-Payette, who says "our economy would be much better served” with more women on corporate boards.
The benefits, according to the studies, included increased stock growth, higher returns on sales and a lower risk of insolvency.
"Increasingly people are talking about strong teams and strong decision-making and you need people to challenge the thinking around the table. Part of that is a diversity of opinions," says Johnston. "There's no area where men and women have completely different perspectives and experiences. There's lots of commonality. But having people that come at things with different experiences matters, and gender is a really big part of that."
“Pushing companies to set a goal and pushing companies to meet that goal is, in my view, the most important part of getting from where you are to where you want to be." – Alex Johnston.
Susan B. Barber, Q.C., chair of the SaskEnergy board of directors and the former chair of the University of Regina board of governors, says the movement to increase the number of women on corporate boards "makes perfect sense."
"When you have a homogenous group governing – and the stereotype of corporate boards is that they are composed of a lot of middle aged white males – the sense that you have is that they are going to have a fairly homogenous approach to governing," she says. "In my view, a diversity of perspectives, which is going to come as a result of diversity in gender, can only lead to a greater breadth of thinking and a greater breadth of approach to looking at problems and analyzing issues."
Barber, who is a partner with McDougall Gauley LLP in Regina, says that she believes increasing the number of women on boards will benefit corporate decision-making.
"I'm not so much a proponent of strict quotas but I am certainly a proponent of a greater degree of attention and mindfulness being paid to expand the composition of boards to include women," she says.
Carolynne Burkholder-James is an associate at Heather Sadler Jenkins LLP in Prince George, B.C. and a regular PracticeLink contributor.