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Gender diversity on boards was a top priority at the Ontario Securities Commission under former chair Maureen Jensen, who was also part of Wednesday’s discussion.

Carlos Osorio/The Globe and Mail

Senator Howard Wetston – the former top securities regulator in Ontario – says the federal government may have to step in and require corporate boards to set targets for diversity if the provinces can’t get it done.

“The bottom line is today [diversity] is no longer a matter of whether or not we should do it – we must do it,” Mr. Wetston said in comments Wednesday at the Ontario Securities Commission’s annual Dialogue day.

“The fact [is] we haven’t gone far enough and we need to do better. … I think the time has come, perhaps for us to take the next step, to be more ambitious to advance the opportunity for diversity in our public companies.”

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To date, Canada has adopted what’s called a “comply or explain” approach to matters of board diversity. Many provinces, including Ontario, mandate that companies disclose the gender composition of their boards and, if they do not have a target for women membership, explain why.

For 2020, the federal government extended the approach to visible minorities, the Indigenous and the disabled – but the changes to the Canada Business Corporations Act (CBCA) only apply to companies with federal incorporations, which is slightly more than half of Toronto Stock Exchange listed companies.

Mr. Wetston did not suggest the country should mandate that boards include a certain number of women or minorities, but said companies should be required to set, and disclose, some sort of target. He said he’s had discussions with three other senators on the matter, but does not know if the current Liberal government will embrace the idea.

John Power, a spokesperson for Minister of Innovation, Science and Industry Navdeep Bains, did not say whether the ministry would endorse Mr. Wetston’s suggestion. He said the recent CBCA changes reflect the ministry’s belief “that business outcomes are better when the decision-making table reflects the diversity of Canadians.”

In its 2020 Governance Insights annual report, law firm Davies Ward Phillips & Vineberg LLP said that of 338 Canadian companies it studied, 43 per cent disclosed a target for gender composition for their boards, and just 1 per cent disclosed a target for visible minorities, Indigenous or disabled board members.

Requiring companies to set a target was suggested when the federal government made its last set of diversity changes to the CBCA, but Mr. Wetston acknowledges he didn’t support it at the time, because he preferred to have federal rules be similar to provincial ones. He’s changed his mind, he says, because there simply hasn’t been enough progress.

Gender diversity on boards was a top priority at the Ontario Securities Commission under former chair Maureen Jensen, who was also part of Wednesday’s discussion. She described how after the OSC started talking about diversity, “the amount of pushback was shocking, quite frankly.” The Canadian Securities Administrators, an umbrella group that tries to harmonize provincial rules in the absence of a national regulator, cannot come to consensus, she said.

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The issue began to fade from view after the election of Doug Ford as Ontario Premier in 2018. Ms. Jensen, asked by former OSC chair David Wilson why the OSC simply doesn’t move on its own to set a target, said, “obviously, we would need to have government approval to proceed that way.” Ms. Jensen resigned from the chair role in January, more than a year before her term was to end.

Emily Hogeveen, a spokeswoman for provincial Finance Minister Rod Phillips, did not disclose what direction the Ford government has given the OSC on diversity. Instead, she pointed to Ontario’s Capital Markets Modernization Taskforce, which is preparing its final report on potential changes to the regulation of financial markets in the province.

On Wednesday, as part of the Dialogue conference, task force chair Walied Soliman said the final report “will include recommendations on increasing diversity in our issuer and regulatory community,” but was not more specific.

OSC spokeswoman Kristen Rose said “reporting on the gender diversity of boards and senior leadership of TSX-listed companies remains a focus for the OSC, and we plan to engage in dialogue with our stakeholders on broader elements of diversity over the coming year.” She also said the OSC has signed the BlackNorth Initiative’s CEO Pledge to end anti-Black systemic racism.

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