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Corporate boards at Canada’s biggest companies have more women than their U.S. counterparts, but badly lag in directors who aren’t white.

That’s the conclusion of a new study by ISS Corporate Solutions (ICS), a unit of investment adviser Institutional Shareholder Services that provides environmental, social and governance data and analytics to corporations.

ICS looked at the 200-plus companies in the S&P/TSX Composite Index, Canada’s pre-eminent broad-based collection of stocks, and compared them with companies in the S&P 500, the big U.S. index.

The ICS analysis finds that women now hold 33.7 per cent of all Canadian directorships compared with 27.9 per cent at the start of the study period in 2020. In the United States, 32.3 per cent of S&P 500 directorships are now held by women.

While racial and ethnic minorities now hold 14.1 per cent of Canadian directorships – a big increase from just 8.3 per cent in 2020 – ICS data show that 23.6 per cent of S&P 500 directorships are now held by directors who are non-Caucasian. That’s a share more than nine full percentage points higher.

Black directors, who held just 0.9 per cent of Canadian directorships as of Jan. 1, 2020, comprised 3.13 per cent of directorships in 2023; Indigenous directors grew from holding only 0.36 per cent of directorships in 2020 to 1.22 per cent in 2023.

Hispanic and Latin Americans held 3.3 per cent of Canadian directorships, followed by Asians with 2.78 per cent, Indian/South Asian at 2.78 per cent and Middle-Eastern/North African at 0.7 per cent.

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“Canadian companies have a slight edge over their U.S. peers when it comes to board gender diversity, but far further to go as it applies to the prevalence of underrepresented minority groups,” said Marija Kramer, head of ISS Corporate Solutions.

Increasing gender diversity on Canadian boards and in the executive suite has been a high-profile effort for a number of years. Faced with years of pressure from advocacy groups, provincial securities regulators, led by the Ontario Securities Commission, required gender-diversity disclosures for public companies starting in 2015. But they stopped short of mandating companies adopt formal targets for female board directors.

Still, numbers rose sharply. Then they rose more slowly. And the problem is not solved: The S&P/TSX Composite Index still featured two all-male boards in 2021.

Diversity beyond gender has moved far more slowly, as the ICS numbers show. But there are efforts in that space as well: In 2020, the federal government extended the diversity disclosure rules to race, disabilities and Indigenous heritage, but only for federally incorporated companies. The Globe and Mail’s Board Games adopted the requirements for all companies the same year, then bolstered them in 2022.

Bay Street executive Wes Hall founded the BlackNorth Initiative in July, 2020, asking employers to commit to targets to raise the number of Black employees, ensure no barriers exist for Black employees trying to advance and donate to organizations that create economic opportunities in the Black community. More than 500 Canadian companies have signed that pledge.

ICS’s parent, Institutional Shareholder Services, advises institutional investors to vote against directors on corporate boards who have failed to ensure sufficient gender and racial diversity at their companies.

Ethnicity on boards can be a more difficult matter to sort out, particularly with many companies still not required to make explicit disclosures that identify directors as a member of a diverse group. Ms. Kramer said board representation for racial and ethnic minorities “may well accelerate as regulation and guidance spur companies to disclose more on individual director characteristics.”

ICS said it was able to examine 2,283 Canadian directorships as of Jan. 1 for gender representation. Its analysis of racial and ethnic diversity, however, looked at 575 Canadian directorships. The smaller number, ICS says, “can be attributed to less robust disclosure compared with that for gender,” which has a regulatory disclosure regime that is “more mature.”

ICS used company filings, company websites, disclosures by other companies on whose board the director sits and LinkedIn profiles and other public sources where the directors provided their race and ethnicity.

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