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OSC chair Maureen Jensen is seen at the Ontario Securities Commission office in Toronto.Fred Lum/The Globe and Mail

Canadian companies are making disappointingly slow progress adding women to their boards and will face more pressure from regulators to adopt internal targets to spur reform, Ontario Securities Commission chair Maureen Jensen says.

A review of diversity disclosure reports filed this year by 677 companies listed on the Toronto Stock Exchange shows just 21 per cent clearly disclosed they have adopted a policy related to the identification and nomination of women, up from 15 per cent last year. A further 18 per cent have diversity policies that do not specifically address women, and 59 per cent still have no written policies, according to a review released Wednesday by the Canadian Securities Administrators, an umbrella group for provincial securities commissions. Two per cent provided no disclosure.

Ms. Jensen said she is "disappointed in the results" because progress has moved so slowly, but said regulators have pledged to give companies three years to respond to the new standards before reviewing whether to toughen the rules, and only two years have passed so far.

"Am I satisfied? No. I thought we'd make more progress by shining a light on this issue," she said on Wednesday. "It seems, not surprisingly, that it's going to be a hard slog to get there."

Securities regulators adopted new rules in 2015 requiring companies to report on whether they have policies to boost diversity in their senior ranks, including whether they have adopted internal targets for women on their boards and in executive officer roles. The expectation was that disclosure would spur more companies to add women to their senior ranks.

However, the review of 2016 reports showed a slowdown in appointments of new female directors in 2016. Just 10 per cent of companies added at least one woman to their board in 2016, a decline from 15 per cent last year. Overall, women comprise 12 per cent of directors of all TSX-listed companies, a modest improvement from 11 per cent last year.

The report also found 9 per cent of companies have targets for the proportion of women on their boards, up from 7 per cent last year, while 2 per cent of companies have targets for women in executive roles, a proportion unchanged from last year.

Ms. Jensen said OSC staff will focus on the 45 per cent of companies that still have no women on their boards, urging them to look for women as board candidates. The regulator will also place a priority on pressing more companies to adopt internal targets for women, arguing targets are highly motivating for employees. "If you set a target, they work like crazy to meet those targets," she said. "If you set a target of diversity on your board, they will meet it. What this review clearly shows is the companies that are setting targets are really making progress."

Toronto securities lawyer Jennifer Longhurst said Canadian companies risk having more stringent measures imposed by regulators – even mandatory quotas – if they do not respond to the voluntary approach.

"Our message is you've got to do something," Ms. Longhurst said. "Regulators are just unhappy and it's not going away. I know at the Ontario government level, members are advocating they put quotas in place and may go so far as advocating for [director] term limits as well, so people have to do something."

The review found the proportion of companies with no female directors fell to 45 per cent from 51 per cent last year, while 10 per cent of companies have three or more women on their boards, up from 8 per cent last year.

Canada's largest companies have made more progress than small companies, the review said. At companies with market capitalization greater than $1-billion, for example, 18 per cent of board seats are now held by women, up from 16 per cent last year, while companies with market value under $1-billion have just 9 per cent female directors.

Ms. Jensen said many small companies are mostly focused on survival, but added it's important that they also embrace diversity.

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