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New federal disclosure requirements and growing shareholder pressure have pushed more Canadian companies to add more women and other diverse candidates to their boards

The Globe and Mail’s annual Board Games report on corporate governance in Canada showed progress in 2021 on diversity. The 220 companies evaluated, all members of the S&P/TSX Composite Index, had 675 women directors, or 31.5 per cent of their boards, versus 602, or 29.3 per cent, the prior year.

The improvements come after rules took effect in 2020 requiring federally incorporated companies to disclose details about the diversity on their boards, and how they intend to improve it. Shareholder pressure is also growing, with major institutional investors – and the proxy advisory firms that assist them – watching to see whether companies have added women to their boards.

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Mirroring the new federal rules, in 2020 Board Games introduced a new question measuring progress on board diversity beyond gender – including whether boards have visible minority and Indigenous directors – and raised the bar for the representation of women. When points were totalled for 2021, many more companies received full or improved scores on the measures when compared to the marks in 2020.

In 2020, just four of the 211 companies in Board Games that year received full credit for improving and disclosing information on diversity beyond gender; this year, 19 companies received the maximum two points on the question.

The number of companies receiving no points dropped from 170, or 81 per cent of the companies, to 129, or 59 per cent.

For one point, companies had to do two things. They had to disclose whether they have any board members who are Indigenous, a member of a visible minority or who have a disability. They also had to disclose any details of a process used to consider the representation of any of these groups on the board, such as practices for recruiting board candidates.

Companies got a second point if they disclosed that they actually have a board member who fits those diversity categories. There were 85 companies that received a point for having a diverse director, but more than half of the companies did not report having one. (The Canada Business Corporations Act does not require companies to name the specific directors who are part of the diverse groups.)

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Many companies in the Board Games survey got this point for having a diverse director, but not the first point, as they failed to disclose any policies that would promote a more diverse board.

Board Games also raised its gender standards in 2020, requiring at least two female board members, not just one, for companies to avoid a zero score.

Starting in 2020, a company needed to have more than 33 per cent female directors for the maximum three points on the question; previously, having women in exactly one-third of the board positions was sufficient.

Companies got another two marks if they disclose details of their gender-diversity policies and an internal target, with a timeline, for the proportion of women on the board.

In 2020, just 74 of the 211 companies, or 35 per cent, received the full three points for the number of women on their board, while 22, or 10 per cent, received no points. By 2021, however, 103 of 220 or 47 per cent received three points, and 18, or 8 per cent, received no points.

In 2020, 55 companies, or 26 per cent, received the full five points for the two gender questions; in 2021, that number increased to 76, or 35 per cent.

In 2020, Cameco Corp. was the only company to receive all seven points for gender and other forms of diversity. In 2021, it was joined by 10 more: BCE Inc., Canadian Imperial Bank of Commerce, Canadian Western Bank, Element Fleet Management Corp., Enbridge Inc., George Weston Ltd., Intact Financial Corp., Loblaw Companies Ltd., National Bank of Canada and Telus Corp.

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