‘Well-intentioned step… not a singular solution’
Do the “comply or explain” disclosure requirements help speed up the progress towards gender equality in Canada’s boardrooms?
Not very much, according to a report from the Conference Board of Canada.
Since the requirements were implemented, the level of representation of women on corporate boards has risen from 10.7 per cent in 2015 to 15.1 per cent by 2018, increasing by about 1.5 percentage points each year,
Prior to the implementation in 2014, the representation of women across Canada’s corporate boards rose, on average, by 1.9 per cent annually.
In a bid to boost diversity on corporate boards, the federal government passed legislation in 2018 that followed similar steps taken by the Canadian Securities Regulators and the Ontario Securities Commission. The comply or explain model requires publicly traded companies to disclose the number of women in key positions or explain why they have not met their goals.
Slow rate of return
At the current rate in which women are being appointed to corporate boards, it will take another 17 years to achieve gender parity in Canada’s boardrooms, says the Conference Board.
“If disclosure requirements had the intended impact of accelerating the inclusion of women on boards of directors, we would have seen a greater increase in the representation of women on boards since 2015,” says the report. “Instead, the pace of change has remained steady, which suggests disclosure requirements have not achieved the intended goal of accelerating progress over time.”
Despite the heightened awareness of the challenges that women face in the workplace, gender equity is still not a priority for 70 per cent of organizations globally, according to a report from IBM.
In 2017, 59 per cent of companies had at least one board vacancy and 12 per cent of all board seats became vacant. In 2018, these numbers jumped to 65 per cent and 14 per cent, respectively.
However, in 2017, 53 per cent of vacancies went to men and only 20 per cent went to women, with 27 per cent left unfilled or eliminated. In 2018, these figures were 53 per cent for men, 24 per cent for women and 23 per cent unfilled or eliminated.
“That only a quarter of board seats vacated each year are being filled by women is extremely disappointing,” says Susan Black, CEO of the Conference Board of Canada. “If there is a silver lining to be found in the current situation, it is that every boardroom vacancy represents an opportunity.”
If all of the board seats that remained vacant at the end of 2018 had been filled by women, the overall share of board seats held by women would have increased by 6.4 percentage points to 23.1 per cent, according to the report.
“In Canada, comply or explain was a well-intentioned step toward increasing the number of women on corporate boards, but it is clear that it’s not a singular solution,” says Rob Davis, chair of the board and the chief inclusion and diversity officer at KPMG in Canada. “Finding and implementing solutions that work in Canada is not only in the best interest of women, but it’s good for business and the bottom-line.”