Board diversity up, C-suite diversity down in second year of required CBCA disclosure

Canada Publication August 31, 2021

Last year, regulations supporting the amendments to the Canada Business Corporations Act (CBCA) regarding new diversity disclosure obligations for publicly traded corporations came into force. As discussed in a previous update, the amendments introduced a “comply or explain” regime whereby CBCA-incorporated publicly traded corporations must disclose, among other things, whether or not they have a diversity policy for their boards of directors and senior management, if the policy includes targets for the representation of four “designated groups” (i.e., women, Indigenous peoples,1 persons with disabilities and members of visible minorities) and statistics on the representation of these groups.

Last year, to mark the first anniversary of the new disclosure regime, we released a number of statistics based on our review of the diversity disclosure of 199 CBCA-incorporated issuers. We have repeated the review for federally incorporated companies listed on the TSX 60 index; the following statistics provide an interesting snapshot of the evolution of diversity and inclusion at the board and senior management levels amongst major Canadian issuers.

On the adoption of targets2 for the representation of designated groups:

Category 2020 2021
 Issuers that have adopted at least 1 target (board or senior exec.)  47.6%  61.9%
 Issuers that have adopted at least 2 targets (board and/or senior exec.)  23.8%  23.8%
 Issuers that have adopted at least 3 targets (board and/or senior exec.)  4.8%  9.5%
 Issuers that have adopted 4 targets or more (board and/or senior exec.)  0.0%   9.5%
 Issuers that have adopted target(s) for designated group(s) other than women (board and/or senior exec.)  4.8%  14.3%
 Average target for the representation of women (board)  28.0%  31.8%
 Average target for the representation of women (senior exec.)  28.8%  32.5%
 Proportion of targets that are already met (board)  70.0%  56.3%
 Proportion of targets that are already met (senior exec.)  0.0%  0.0%
     

On the representation of women:

Category 2020 2021
 Issuers with no women (board)  0.0%  0.0%
 Issuers with no women (senior exec.)  4.8%  9.5%
 Average current representation of women (board)  31.0%  33.8%
 Average current representation of women (senior exec.)    17.5%   20.0%
 Highest current representation of women (board)  50.0%  50.0%
 Highest current representation of women (senior exec.)     33.3%  33.3%
     

On the representation of other designated groups:

Category 2020 2021
 Issuers with no member from any designated group other than women  19.0%  14.3%
 Issuers with at least 1 member from a visible minority (board)  33.3%  61.9%
 Issuers with at least 1 member from a visible minority (senior exec.)  57.1%  57.1%
 Issuers with at least 1 Indigenous (board)  14.3%   14.3%
 Issuers with at least 1 Indigenous (senior exec.)  9.5%  4.8%
 Issuers with at least 1 person with a disability (board)  4.8%  9.5%
 Issuers with at least 1 person with a disability (senior exec.)  9.5%  14.3%
 Average representation of visible minorities (board)  3.8%  7.1%
 Average representation of visible minorities (senior exec.)  11.3%  8.8%
     
 

Bottom line: Relatively limited progress (with some notable exceptions)

The above statistics generally show little year-to-year variation. However some trends are worth noting. 

First, it seems that Canada’s major issuers are becoming increasingly comfortable with formal diversity targets, as a growing number of issuers (61.9% in 2021; 47.6% in 2020) chose to adopt at least one target for the representation of a designated group. A majority of those targets are adopted for the representation of women at the board level. It is also worth mentioning that 43.7% of those targets have yet to be met – this is a significant departure from last year’s data, where 70% of the targets were already met. Interestingly as well, although they are still a minority, a growing number of issuers (14.3% in 2021; 4.8% in 2020) now have a target for the representation of a designated group other than women.

Second, the representation of women on the board (33.8% in 2021; 31.0% in 2020) and in senior management roles (20.0% in 2021; 17.5% in 2020) is pursuing its push forward. This is in line with the increased adoption of written diversity policies and targets.

Finally, we are witnessing some progress on visible minority representation at the board level, with an average representation of 7.1% (3.8% in 2020) among TSX 60 CBCA-incorporated issuers, and 61.9% (33.3% in 2020) of those issuers having at least one board member who self-identifies as a member of a visible minority.

Corporations Canada’s guidance on diversity disclosure

In preparing for the upcoming proxy season, issuers should consult Corporations Canada’s guidance on diversity disclosure, published earlier this year (available here). For additional context and information on those guidelines, consult our recent legal update.

The author would like to thank Philippe Carignan, student-at-law, for his assistance in preparing this legal update.


Footnotes

1   Note that the federal statutes still refer to “Aboriginal peoples.” However, Corporations Canada has moved away from using this terminology.

2 Some issuers have adopted targets that do not comply with the regulatory criteria, for instance by omitting to specify a timeline for reaching a target. Such targets are not compiled in our tables.



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