Board Games is The Globe and Mail's annual corporate governance rankings. Find this year's rankings table here and the full Board Games 2012 website here.
When France announced it was creating a quota requiring corporate boards to have 40-per-cent female directors, Guylaine Saucier was an opponent.
The veteran Canadian corporate director sat on three French company boards at the time – including then chairing the audit committee at food giant Danone – and told media interviewers the quotas would lead to token appointments of unqualified women and reduce respect for experienced women who had earned their positions.
Almost two years later, however, Ms. Saucier says her views are softening – much to her own surprise.
"I'm beginning to evolve," she confesses. "Yes, they appointed some token women, no doubt about that. But at the same time, I do see coming on board women that really were not known and are really good … And I'm sure I can bet you that they would never have been invited to boards without this legislation … I am more pleasantly surprised than I thought I would be."
Ms. Saucier is not alone. While quotas remain a difficult sell for many in the business community, there is clear evidence of softening views around the world. Legislation to boost women on boards has spread like wildfire as lawmakers globally grow frustrated with the minuscule representation of women at the very top of the corporate pyramid.
Diversity champions say there is more at stake than basic fairness. Research has suggested diverse groups make better decisions because more perspectives are considered. Some studies have found better performance by firms with more women on their boards, although those findings are contradicted by other studies that find no single factor can explain corporate success.
Since 2008, at least nine countries – including Norway, Spain, France and Italy – have adopted some form of quota requirements for diversity on corporate boards, according to an April report (pdf) by women's advocacy group Catalyst.
Other countries don't have fixed quotas, but have set targets for women that companies are either required to comply with or must explain publicly why they are not.
(Find a slide show of global initiatives to increase the number of women on boards here.)
About 20 countries without quotas – including the United States, Britain, Australia and Germany – have adopted some form of requirement for companies to discuss board diversity in their annual shareholder filings in the hope that greater discussion and disclosure will lead to more action.
"There really is a global conversation going on right now about the issue of women on boards," says Deborah Gillis, chief operating officer at Catalyst.
And then there's Canada. While reforms swirl outside our borders, the issue has received no legislative action at home. There are no requirements for private sector boards to hire women as directors, and no requirements for companies to discuss their diversity practices or plans.
Progress in the meantime has been glacial. In Canada, women accounted for about 10 per cent of directors on boards of publicly traded companies in 2011 – a proportion that was unchanged from 2009, according to Catalyst.
The Globe and Mail's annual Board Games report on corporate governance found 41 per cent of companies in the benchmark S&P/TSX index still have no women on their boards, although that is an improvement from 45 per cent last year. It is unclear whether there is permanent improvement, however, because 41 per cent had no women in 2009, and the proportion then worsened in 2010 and 2011.
The result of such lacklustre progress is that even many who don't support mandatory quotas for women are growing keen to see a national study or task force consider various policy options to encourage progress on one of the most intractable corporate governance concerns of the past decade.
Patrick O'Callaghan, the Vancouver-based co-founder of the not-for-profit Women on Board mentoring program, says he doesn't support quotas for women on boards, but he nonetheless believes Canada needs to develop a national plan to advance women on boards. He argues even good private sector initiatives don't replace the need for government leadership.
"One of the problems for us in Canada is that we have no Canadian position on this … No one has brought together a bunch of people who said, 'Okay, here's the position we should take,' " Mr. O'Callaghan says.
Other countries have seen marked improvement. In France, where mandatory quotas will take effect in 2017, women comprised 16.6 per cent of directors in 2011, up from 9.1 per cent just two years earlier. Even without the threat of pending quotas, Australia and Britain both saw rapid increases in female directors.
Britain rejected quotas following the 2011 recommendations of a high profile government-backed task force headed by Lord Davies of Abersoch.
The Davies report instead recommended Britain's top 100 companies voluntarily aim to reach a target of 25-per-cent women by 2015, and proposed companies should have to disclose their diversity plans annually to shareholders. Those disclosure requirements were adopted and legislated this year. Between 2011 and 2012, the proportion of women on FTSE 100 boards climbed to 15.6 per cent from 12.5 per cent.
In the March federal budget, Canada's Conservative government included a brief mention that it was planning to create a committee of business executives who could be advisers on promoting women's participation on corporate boards.
But committee membership has still not been announced, and there is no indication it will prepare reform recommendations.
The only significant effort at legislative reform in Canada has come from Liberal Senator Céline Hervieux-Payette who has tabled a private member's Senate bill that would require corporate boards to have 40-per-cent female directors. "We're supporting women on boards because they would be bringing something to the performance of the company," Ms. Hervieux-Payette argues. "It's not charity, and it's not a right. It is, in fact, an intelligent decision so that the company does better."
Her legislation has not won the support of the Conservative government, however, and has not been embraced by many in the private sector, with critics either opposing the mandatory quotas it proposes, or simply arguing there is little point in championing an opposition private member's bill with little chance of being adopted.
Royal Bank of Canada director David Denison, who previously headed the Canada Pension Plan Investment Board, says he does not support the proposed quotas in the Senate bill, and says there should instead be a "consultative process of stepping back and saying, 'Is there an alternative way to advance this issue?' "
For his part, Mr. Denison favours rules that would require more disclosure of diversity practices to encourage change. "Over and over again, where you see this issue around clear disclosure and companies having to explain what it is they do – whatever their practice is – it does influence the outcome, no question around it," he said.
Even if the value is never mathematically proved, corporate director Mary Mogford, who is on the board of Potash Corp. of Saskatchewan, says she is convinced board discussions are better when there is diversity at the table. "Based on 20-plus years in many different boardrooms across more than 20 different boards, I believe that diversity in all its forms creates a richer, more productive environment for board discussion and decision-making," she says. "The cause and effect may not be there in measurable terms – I just believe in it instinctively."
Many corporate directors say the time has now come to debate ideas for reform. News earlier this month that the EU Commission has drafted a bill requiring 40-per-cent quotas for boards in all member countries is further evidence that legislative action is a less radical idea than it once was.
Kathleen Sendall, a Calgary-based corporate director who is on the board of CGGVeritas in France, says the status quo has been "a pretty strong immovable force." Her experience with quotas on a French board, meanwhile, has been very positive. "If you had asked me this question three years ago, I would have said, 'Absolutely not' [to quotas] … But I'm not as positive about that any more, because I see a lot of those women who aren't making their way on to boards."
Nevertheless, she still favours a less stringent approach to start.
Norwegian director Liv Monica Stubholt, a former Norwegian deputy minister of energy, says she was not a fan of the quota idea when it was first introduced in Norway, but has changed her views in the decade since, after seeing boards find enough qualified women. Opposition to the rule has been all but silenced, she adds.
Indeed, Ms. Stubholt, now a senior vice-president of strategy and communications at Kvaerner ASA, believes the quota law could even be rescinded and firms would likely keep a similar proportion of women because of a widespread belief the diversity has improved boards.
Leslie Rahl, a New York-based financial executive who sits on the board of CIBC and founded a New York chapter of private networking group Broads on Boards, says she has always hated the idea of "quotas for anything." But more recently, she says she has concluded change will open happen if there is some form of regulatory pressure on companies. "It's not going to happen organically," she says. "It's not going to really happen until there is some form of exogenous stimulus. But hopefully it will be something that even if it behaves like a quota, they'll find another name for it."
And would she serve on a board as a "quota" member? Ms. Rahl says she believes she has already been chosen for boards at least in part because she is a woman. "I'm not offended," she says. "If it's somebody who clearly doesn't have the credentials and wouldn't have been selected if not for the fact they're a woman, I think that's offensive. But if it is 'we're looking for a qualified candidate and you'll get an extra point for being a woman,' I'm not offended by that. It works against us in so many other ways over the years."
The sentiment is echoed by Beatrix Dart, a director on the board of construction firm Ellis Don who runs the Initiative for Women in Business at the University of Toronto. She says she would join a board that chose her because it wanted a female director as long as she thought she had the skills to perform as well as other, male directors. "At least it provides the opportunity to showcase myself, which I wouldn't have otherwise," she says. "I'd say, 'Okay, let me prove myself to you.' "
Nonetheless, many still reject legislation, arguing the idea is either offensive or unnecessary. Gail Cook-Bennett, chair of insurance giant Manulife Financial, said quotas unfairly tie a board's hands, and companies like hers do not need more restrictions on their operations.
She believes companies can set targets for themselves, then make good use of recruiting firms to watch the marketplace for strong female candidates for boards. Manulife is one of the earliest signatories to the Catalyst Accord, a program launched this year by the advocacy group that asks companies to set diversity targets for their boards, aiming for at least 25-per-cent women by 2017. The insurer now has five women on its 18-member board, or 28 per cent, an increase from two women three years ago.
"We had no problem in stating an internal goal [for women] here at Manulife," Ms. Cook-Bennett says.
The Institute of Corporate Directors, which represents over 5,000 board directors in Canada, has argued the issue should be tackled by companies directly and should not be the subject of regulation. ICD head Stan Magidson says many boards are taking it seriously and looking to add a more diverse array of directors. "From our discussions with folks who think about these issues, diversity is top of mind in the boardroom," Mr. Magidson said. "We think you will see movement in this direction."
To be sure, there are strong private-sector initiatives. The Canadian Board Diversity Council has prepared a database of 50 top candidates to recommend for boards. And the Women on Board mentoring program is pairing female executives with senior male executives who can help them break into critical personal networks to find board positions.
Inmet Mining chairman David Beatty says the issue of board diversity is still relatively new for many firms – especially those in the resource sector – and they should be given more time to implement solutions before regulation is forced upon them. Canada has a relatively small and collegial business community where moral suasion works well to compel reform, he says. "I'd probably give it another five years to see how we do … I think making awareness the No. 1 job for the next little while is the first logical step."
Others, however, complain it will take many decades for women to reach parity at the current pace of change. Veteran corporate director Phyllis Yaffe, chair of Cineplex Entertainment, says she's grown weary of suggestions she often hears that Canada needs to wait another five years to see what happens, saying leaving it to boards' best intentions has led to minimal change.
"So what's the answer if it's not targets or quotas or rules or something that says to people, 'Take this seriously and work at it,' " she asks.
Ms. Yaffe believes the pace of change has been slower on board diversity than any other board governance issue in the past decade because board membership cuts to "the heart of the matter" where it is most difficult for people to change their deeply held attitudes.
"You look around the room and you want to see what you're comfortable with," she says of many board chairmen who control appointments. "And what people are comfortable with are the people they know."
BY THE NUMBERS
Women on boards of companies in the S&P/TSX composite index in 2012:
Companies with no women on the board: 101 companies or 41%
Companies with one woman on the board, but less than 25% women: 115 or 47%
Companies with between 25% and 33% women directors: 21 companies or 9%
Companies with at least 33% women directors: 7 companies or 3%