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Canadian institutional investors overseeing more than $2.3-trillion in combined assets have signed a statement that acknowledges the existence of systemic racism in Canada and have pledged to promote diversity and inclusion in their portfolios and organizations.

“I think we are in the midst of a racial injustice reckoning,” said Dustyn Lanz, chief executive officer at the Responsible Investment Association, which drafted the statement.

He added: “I think 2020 has been a tipping point. People are obviously taking to the streets, but we know that racism and racial inequities are not just a police issue. We know there are inequities in business as well."

The signatories of the Canadian Investor Statement on Diversity and Inclusion acknowledge the effect that systemic racism has on Black and Indigenous communities and people of colour. But the statement also recognizes the existence of inequities and discrimination based on other factors. These include gender, sexual orientation, age, disability, religion, culture and socio-economic status.

The 31 signatories include many of the biggest names in the Canadian investment landscape, such as Alberta Investment Management Corp., or AIMCo, Caisse de dépôt et placement du Québec, AGF Investments, RBC Global Asset Management, BMO Global Asset Management and CIBC Asset Management.

“It has been shown that diversity is a lever for improving performance, which is why CDPQ has positioned diversity and inclusion as a pillar of its sustainable investment strategy. Moreover, we understand how inclusion is closely related to equal opportunity and social justice,” Kim Thomassin, the Caisse’s head of investments in Quebec and stewardship investing, said in a media release.

In signing the statement, institutions pledge to take steps to strengthen their diversity and inclusion practices within their own organizations.

But the key to the pledge is that it extends to the composition of the signatories' investment portfolios as well – starting with Canadian companies but potentially including international companies if better data become available.

The investors will monitor the diversity and inclusion practices of Canadian public companies, and they will convey their expectations for the adoption of policies, targets and timelines to improve diversity on boards of directors and in senior management roles.

The ultimate goal, according to the Responsible Investment Association, is to have boards and management aligned with the racial and ethnic demography of Canada.

“These investors' portfolios cover all of the major publicly traded companies in the country. So Canadian-listed companies that lack diversity, for example in leadership, will be hearing from these investors,” Mr. Lanz said.

Investors can get diversity data from new disclosure requirements under the Canada Business Corporations Act, which requires companies to disclose the proportion of women, people of colour, Indigenous people and people with disabilities on boards and in key management positions.

A number of reports suggest that Canada’s corporate landscape needs improvement. Mr. Lanz pointed to a Boston Consulting Group report from November, 2019, which surveyed 5,082 working Canadians at companies with more than 1,000 employees.

BCG found that 34 per cent of respondents who identify as people of colour experienced discrimination in the workplace. As well, 40 per cent of Indigenous respondents had been subjected to workplace discrimination.

An analysis from Norton Rose Fulbright, released in July, found that for 199 companies – 21 of them in the S&P/TSX 60 Index – the average representation of visible minorities is just 4.7 per cent within boards and 7.4 per cent among senior executives.

In signing the statement, signatories have made a commitment to report on their diversity inclusion activities, and the data should show up in annual reports and corporate responsibility reports.

“More data, more accountability, more disclosure and more engagement from investors should hopefully lead to more diversity and inclusion in Corporate Canada,” Mr. Lanz said.

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