Institutional Shareholder Services (ISS) and Glass Lewis (GL) have published updates to their proxy voting guidelines that are focused on board diversity and other board composition issues as well as climate-related disclosure. The updated policies also include a new section on cybersecurity and changes to recommendations for long-term incentive plans. Most of these updates will impact shareholder meetings in 2023, while some will not take effect until 2024 following a one-year grace period.

Board diversity – gender

ISS already recommends voting against the chair of the nominating committee of S&P/TSX Composite Index companies where the board does not comprise at least 30% women directors. Beginning in 2023, it will remove the exception for companies that have a formal, publicly disclosed written commitment to achieve at least 30% women on the board at or prior to the next AGM, unless they are new to the index or have fallen below 30% due to an “extraordinary circumstance.” 

Likewise, for TSX-listed companies that are not part of the S&P/TSX Composite Index, the existing requirement to have at least one woman on the board remains, and the exception for those having a formal written diversity policy is being removed unless the company had at least one woman on the board at the last AGM and no longer does as a result of an “extraordinary circumstance.” In addition, the voting guideline will not apply for companies that are new to the TSX or have four or fewer directors.

The GL policy on board gender diversity has also been updated as advised last year. Previously the requirement was for at least two “gender diverse” directors for TSX-listed companies with more than six directors. Beginning in 2023, the requirement is for at least 30% gender diversity for the boards of all TSX-listed companies, regardless of size.

For venture-listed companies, the GL policy on board gender diversity remains the same: there should be at least one “gender diverse” director. GL may refrain from recommending a negative vote if the company has a diversity policy that sets clear targets or a timeline for increasing gender diversity.

Board diversity – race / ethnicity

Beginning in 2024, companies that are part of the S&P/TSX Composite Index will be expected by ISS to have at least one racially/ethnically diverse director. An exception will be made if there was racial and/or ethnic diversity on the board at the preceding annual meeting and the board makes a firm public commitment to appoint at least one racial and/or ethnic diverse member at or prior to the next AGM. While new to Canada, ISS has had a similar guideline in place in the US since 2021.

GL does not have similar voting recommendations applicable to Canadian companies, but in the US requires companies in the S&P 500 index to provide certain racial/ethnic minority demographic information.

While the Canadian Securities Administrators have not published any amendments or proposed amendments to securities regulations regarding diversity disclosure by TSX-listed companies, they have advised they are actively looking at expanding the scope of diversity disclosure beyond gender.


Both ISS and GL have updated their voting guidelines on when they consider a director to be overcommitted and sitting on too many boards – GL for TSX-listed companies and ISS (as was announced last year) for venture-listed companies.

A director of a TSX-listed company is overboarded if  ISS Glass Lewis (updated for 2023) 

CEO sits on more than 2 public company boards besides their own; or

non-CEO director sits on more than 5 public company boards in total

executive officer sits on more than 1 additional external public company board; or

executive chair / vice chair sits on more than 2 additional external public company boards; or

non-executive director sits on more than 5 public company boards in total 
A director of a venture-listed company is overboarded if ISS (new for 2023)  Glass Lewis 

CEO sits on more than 2 public company boards besides their own; or

non-CEO director sits on more than 5 public company boards in total 

executive officer sits on more than 4  external public company boards; or

non-executive director sits on more than 9 public company boards in total

Note that ISS will generally not count a board seat if it has been publicly disclosed in the proxy circular that the director will be stepping off that board at its next annual meeting. On the other hand, it will count as a board seat a nomination even if the shareholder meeting for the election of that seat has not yet taken place.

Climate-related disclosure

ISS and GL have similar new climate-related disclosure policies for companies that are “significant” greenhouse gas (GHG) emitters (ISS) or whose GHG emissions represent a “financially material risk” (GL). Both ISS and GL consider companies identified on the Climate Action 100+ Focus Group list as being in this group, although for GL other companies may belong as well. 

Beginning in 2023, both ISS and GL will generally recommend against the chair of the responsible committee in cases where the company has not adequately disclosed climate-related risk information in line with the Task Force on Climate-related Financial Disclosures (TCFD). For ISS, companies must also have either medium-term GHG reduction targets or Net Zero-by-2050 GHG reduction targets for at least the company’s operations (Scope 1) and electricity use (Scope 2). For GL, the boards of these companies should have explicit and clearly defined oversight responsibilities for climate-related issues and have provided adequate disclosure of such. The ISS policy applies only to TSX-listed companies, while the GL policy appears to apply to all issuers.

ISS has advised it will release an FAQ document providing more information about its climate-related policies before the policy goes in effect.


GL has introduced a new section to its guidelines on the topic of cybersecurity oversight and disclosure of cyber risk, stating that such risk is material for all companies. GL expects all companies to provide disclosure on the role of the board in overseeing issues related to cybersecurity and the steps taken to properly educate directors on the topic.

Long-term incentive awards

ISS has removed the requirement for deferred share unit plans applicable to non-executive directors (NEDs) to have a maximum potential dilution, together with all other equity-based compensation, of 10% or less of the outstanding common shares. ISS recognizes that issuers use such plans to issue shares in lieu of director fees that would otherwise be payable in cash, and may assist in aligning the interests of NEDs with those of shareholders by developing an equity stake.

GL has updated its threshold for the minimum percentage of a long-term incentive grant that should be performance based from 33% to 50%.

Other amendments

GL has made clarifying amendments to its proxy voting guidelines, including on the following topics:

  • Multi-class share structures with unequal voting rights (exempting directors from a negative recommendation in case of exemplary governance practices and responsiveness to shareholders)
  • Grants of outsized awards (or “mega-grants”)
  • Company responsiveness to say-on-pay proposals
  • Additional required disclosure related to one-time awards
  • Grants of front-loaded awards
  • Compensation committee discretion on payouts of short- and long-term incentives

The 2023 policy guidelines for GL are available here and the ISS updates are available here.


Partner, Director of Knowledge
Senior Partner, Canadian Head of Corporate Governance
Managing Partner, Québec Office

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