The pandemic is threatening the pipeline of emerging female leaders and risks thwarting the progress Corporate Canada has made in diversity and inclusion efforts, the head of the country’s largest pension fund is warning.
The pace of change, particularly in diversifying executive teams, was already slow, said Mark Machin, president and chief executive officer of the Canada Pension Plan Investment Board, in an exclusive interview with The Globe and Mail. Now, with the COVID-19 pandemic, “you see some particularly alarming trends. … It could leave a permanent scarring and a setback for a lot of the progress that’s been made in the past,” he said.
The pandemic pushed women’s participation in the labour force down to a three-decade low, he noted; though there’s been a partial recovery in recent months, he cited recent surveys showing women are experiencing severe stress and burnout during the pandemic, with many considering quitting or reducing hours.
“It is fragile,” he said of the current situation, ahead of a gender diversity white paper that CPPIB will publish on Monday.
Female directors now account for 30 per cent of the board seats at TSX 60 index-listed companies – and just 15 per cent of the C-suite for the same group of companies, it noted.
To address that dearth, companies should set measurable targets for diversity on both boards and executive positions, Mr. Machin said. “I am a huge believer in targets. As business people, once we know what the target is, then we’ll solve for it.”
Few companies in Canada, however, have publicly stated targets: 29 per cent of companies say they have targets for women on boards, while just 7 per cent have targets for female executive officers, according to a report last month by Osler, Hoskin & Harcourt LLP.
With so few companies setting diversity targets, some say the federal government may have to step in. Last week, Senator Howard Wetston, the former chair of the Ontario Securities Commission, said Ottawa may have to require corporate boards to set targets if the provinces fail to do so. “We haven’t gone far enough and we need to do better,” he said.
Boosting diversity in leadership is also crucial to Canada’s economic recovery, Mr. Machin said, citing studies showing that businesses with diverse work forces came through the previous recession in better shape.
As long-term investors, “it’s something that matters for us,” he said. “If you have companies that have diverse senior managements and diverse boards, they’re more likely to produce better risk-adjusted returns, because they make better decisions over time. It’s not just a belief – we’ve done that analysis multiple different ways.”
CPPIB, which has a $434-billion portfolio, has stepped up efforts to improve board diversity. In 2017, it started voting against the election of the nominating committee chair if the board had zero female directors. Last year, it voted against 13 Canadian public companies with no women on the board, and another 26 companies with only one female director.
This year, it voted against directors at 10 public companies (nine of which on the S&P/TSX Composite Index had only one woman on the board; the other, not listed on the benchmark index, was a company with none). Globally, it voted against 323 companies for failing to have any women on their boards.
“Watch this space,” Mr. Machin said, when asked if the fund is going to further ramp up pressure in the coming year.
The white paper issued several recommendations to accelerate the participation of women at all corporate levels, among them, giving workers more control over their schedules and removing bias by, for example, running job descriptions through software programs to eliminate terms that may appeal more to men.
It also urged more support for child care. Furloughs and reduced hours "may turn into permanent departures if parents who lack child care are forced to put their professional ambitions on hold,” it cautioned. Businesses can address this by creating more on-site daycares, helping employees source child care and accommodating workers who can’t return to the office because their children remain at home, the report said.
The CPPIB is not the only institution urging a greater priority on child care. Bank of Nova Scotia CEO Brian Porter called on the federal government in September to “significantly” enhance supports for parents with kids in daycare, to enable more women to enter the work force. The Ontario Chamber of Commerce also recently called for child-care reforms to improve affordability and accessibility, saying the COVID-19 crisis is having a “disproportionate” economic impact on women.
In an accompanying opinion piece submitted to The Globe, Mr. Machin noted the looming challenges in the coming months, with the economy projected to shrink by 6 per cent. “We expect a recession more than twice as deep as the one following the global financial crisis in 2008,” he said. "Let’s not hobble ourselves by denying our companies the talents and wisdom of half the population.”
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