The federal government plans to compel Canada’s banks to be more transparent about their plans to increase diversity among board members and senior executives.
A single sentence in Tuesday’s federal budget promises “new requirements for federally regulated financial institutions to disclose policies aimed at promoting greater diversity on boards and in senior management.”
The budget document says that women’s representation on the boards of Canada’s largest companies “has significantly improved" in the past two decades, but that there’s still significant room for improvement. Yet, it provides few clues about how it plans to hold banks to account. Amendments to the Canada Business Corporations Act proposed last May included requirements that companies disclose statistics on representation by “designated groups,” which include women as well as Indigenous peoples, other minorities and people with disabilities.
Many of Canada’s largest banks already disclose diversity targets in proxy circulars sent to shareholders, primarily focused on gender parity. And banks are already ahead of some other industries on that marker, with women making up an average of nearly 38 per cent of directors on their boards, according to statistics from the Canadian Bankers Association.
Even so, Canada’s biggest banks are well aware that gender diversity remains in issue within their ranks, particularly in certain divisions such as investment banking. And no woman has ever been named chief executive of one of Canada’s six biggest banks.
Last year, new legislation in Britain compelled some Canadian banks to disclose certain gender-based metrics about their British-based staff. The figures in that country revealed that a dearth of women in higher-paying jobs is driving a wide pay gap, with the median hourly pay difference between men and women ranging from 34 per cent to 39 per cent at some banks in 2017. Banks and other companies in Britain have until April 4 to file updated figures for 2018.
Royal Bank of Canada, which is Canada’s largest bank by assets, publishes a board diversity policy noting that 42 per cent of the directors nominated for election at its forthcoming annual meeting are women. The bank already exceeds its target to have each gender representing at least 30 per cent of the board, and also considers other factors such as age and ethnicity. RBC disclosed that 22 per cent of its most senior executives are women.
Toronto-Dominion Bank also has a 30-per-cent gender-diversity target for its board, and 36 per cent of its director nominees are women. One quarter of its top executives are women, and 39 per cent of employees with titles of vice-president and above are women, while the bank has set a goal of reaching 40 per cent in that category by 2020.