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workplace equality

A threat of quotas for corporate boards would compel companies to address gender issues, Quebec-based corporate director Guylaine Saucier says.Christinne Muschi/The Globe and Mail

Senior leaders in Corporate Canada are urging the Ontario government to go further with its recent proposal to introduce a new rule to boost the number of women on boards of directors, saying it should be accompanied with a threat of firmer regulation down the road if there is no progress.

While some business leaders are questioning the legitimacy of using regulation to control the composition of private-sector boards, the strongest supporters of reform say a voluntary "comply or explain" standard should be backed with a pledge to get tougher if boards do not act.

"People comply with rules. People don't comply with suggestions," said Patrice Merrin, chair of the board of medical services company CML HealthCare Inc.

Laurel Broten, Ontario's minister responsible for women's issues, told The Globe this week her government is working with the Ontario Securities Commission to develop a rule that could require companies to set their own targets for women and report on their progress, or else explain publicly why they opt not to comply with the guideline.

Ms. Broten said Ontario is falling behind other countries. Women comprise about 10 per cent of the directors of publicly traded companies in Canada, a number that is virtually unchanged since 2007.

Ms. Merrin said she would also endorse quotas for boards if there is no progress. She said it has been discouraging to see the lack of action on an issue she has worked on for almost 40 years, since the launch of the "Why Not" campaign led by Bluma Appel in 1975 to try to encourage major companies to add woman to their boards.

"Here we are, a long time later, and in many cases we can't get past zero [women on boards]," she said.

Quebec-based corporate director Guylaine Saucier, who sits on the board of nuclear power company Areva Group, said an additional threat of quotas for women would compel companies to act more quickly on the proposed Ontario standard.

"Given reasonable time, if boards and companies do not make significant progress, I would seriously think of having [mandatory] legislation," she said.

The Canadian Coalition for Good Governance, which represents most of Canada's largest institutional shareholders with combined assets of more than $2-trillion, supports a "comply or explain" standard to boost gender diversity, said executive director Stephen Erlichman.

But the CCGG also argues such a rule should be toughened and become less voluntary in a few years if there has not been demonstrable progress.

The CCGG said a tougher standard could include a rule requiring women be included as half the candidates on a shortlist to fill a board vacancy, but companies would not be required to meet a mandatory hiring quota.

Other business leaders said the "comply or explain" approach is the wrong model and companies should act on their own without regulation.

WestJet Airlines chief executive officer Gregg Saretsky said he believes boards should choose qualified directors "with an understanding that gender diversity is a critical part of overall viability."

"The comply or explain approach is not an approach that we feel is the most effective," he said.

WestJet is a signatory to the Catalyst Accord, which is an agreement sponsored by women's advocacy group Catalyst that requires firms commit to developing an internal target for women that is not disclosed publicly. Mr. Saretsky said signing the accord was an affirmation of WestJet's goal to increase the number of women in senior leadership roles.

David Beatty, who was chair of the board of Inmet Mining Corp. until its acquisition in April, said he prefers a more practical approach championed in the U.S. by Pittsburgh Steelers owner Dan Rooney, who convinced other football teams in the league to voluntarily adopt a requirement to include African-American candidates on hiring shortlists for coaching jobs.

Mr. Beatty said senior board chairmen could agree to take the same approach in Canada, guaranteeing they will have at least one woman among the two finalists for a new board position, saying the idea would spread by example and moral suasion.

Other directors, however, said a "comply or explain" approach is a light regulatory touch because it does not require mandatory compliance.

Bank of Montreal CEO Bill Downe said the Ontario approach "makes sense" for boards.

Eileen Mercier, who is chair of the Ontario Teachers' Pension Plan and sits on the boards of CGI Group Inc. and insurer Intact Financial Corp., said she supports Ontario's approach because comply or explain rules have worked well to spur progress in other areas of corporate governance.

She said the Ontario and federal governments should also mandate parity for their own boards of agencies and commissions as a "gesture" to the business community.

"It would be a good first step," she said.