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Women will account for 40 per cent of directors on the boards of Canada's financial services companies within five years at current appointment rates as the financial industry moves toward greater gender diversity, a new study concludes.

A review by executive search firm Spencer Stuart of board appointments in 2012 found that women accounted for 32 per cent of new directors added to Canada's 100 largest company boards, the highest proportion ever of female appointees.

The financial services and utilities sectors are outpacing other sectors for the growth of women on boards, the report said. Women made up 46 per cent of new directors in boards of utility companies in the past three years, and 40 per cent of new directors on bank and insurance boards.

At industrial companies, by comparison, women made up only 7 per cent of directors. At energy companies, women made up 11 per cent of board hires, and mining firms had 22 per cent women among their additions.

Financial sector trends are important because those companies are among the largest in Canada and big banks and insurers typically play a leading role in influencing broader corporate governance changes.

The report includes an in-depth look at 26 boards of financial firms in both the public and private sectors. At current appointment rates, the report concludes that women will average 40 per cent of directors on their boards within five years, and some boards should reach parity for women within that time period.

In financial services, the proportion of women has climbed because the appointment rate for new women is higher, and the industry is also starting from a higher starting base of women directors, he said.

The report also found that financial firms in the private sector have a far greater proportion of industry experts on their boards, while public sector firms have been slower overall to embrace the trend to add more people with specific financial sector expertise.

Andrew MacDougall, leader of Spencer Stuart's board practice in Canada, said he expects the example being set by Canada's largest boards to spread to other firms, especially the large proportion that have no women on their boards or only one female director. "It really is the next level down that needs the most attention," he said.

Mr. MacDougall said some boards of pension plans or other government agencies have requirements to put people on their boards to represent various stakeholders or employee groups, and many of the directors do not have financial industry backgrounds as a result.

"I think the bylaw constraints need to be addressed," he said.

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