Ontario's securities watchdog is mulling whether to force public companies to set targets for the number of women in director positions and executive roles.
The move is just one of several being considered by the Ontario Securities Commission after participants at a roundtable event on Tuesday said current requirements don't go far enough to compel meaningful change. Other ideas being floated include revising or expanding the current guidelines, providing companies with more examples of best practices and setting limits on how long directors are permitted to serve, which would increase board turnover and could accelerate the pace of change.
"I think there is an absolute imperative for the OSC to keep going," said Carol Hansell, founding partner of Hansell LLP, a law firm specializing in corporate-governance issues.
"This issue has been around for as long as most of us has been around," Ms. Hansell added. "I worry that if the OSC does not continue on its very innovative and vocal strategy, this too will die."
Another idea floated by several roundtable participants is to require companies to professionalize their board recruitment process. Currently, companies choose their board members by looking within their own existing networks. Making that process more regimented would help filter out unconscious bias and could ultimately improve the odds of women being selected, according to several roundtable participants.
Progress has been slow in the three years since securities regulators implemented rules requiring companies to disclose, on an annual basis, the number of women in executive positions and on their boards. In the first year, women occupied 11 per cent of the board seats at Toronto Stock Exchange-listed companies. In year two the percentage of women had barely budged, inching up to 12 per cent, and by the third year, it was 14 per cent.
Meanwhile, the number of companies with at least one woman on their board rose from 49 per cent in the first year to 61 per cent in the third year. That means that 39 per cent of the companies didn't have a single woman on their board at the time of reporting.
The OSC also started collecting a new data point during year three of the project – the number of board vacancies filled by women. In year three, 26 per cent of vacant board seats were filled by women.
Maureen Jensen, chair of the Ontario Securities Commission, says that even if that rate increases to 50 per cent, it will take 30 years for women to reach parity on the boards of corporate Canada. "We're encouraged by these trends, but more needs to be done," she said.
Under the current rules, which took effect Dec. 31, 2014, companies are not required to implement formal targets or have a diversity policy. The "comply or explain" model simply requires companies to explain the reasons why they choose not to implement such policies.
Companies that opt to explain rather than comply typically cite their belief in meritocracy as the reason for their reluctance to implement written policies or formal targets. However, meritocracy is rife with unconscious bias, says Tanya van Biesen, executive director of Catalyst Canada, a non-profit organization aimed at helping women advance in the workplace.
It's unclear what the minimum requirement would be if the regulator were to force companies to adopt formal targets. Judy Cotte, head of corporate governance at RBC Global Asset Management, said companies should be given the flexibility to decide where to set their targets.
"But there is a lot of research showing that you need at least 30 per cent of women to create the critical momentum, so that the woman isn't token and that she feels like her voice can be heard," she added.
The OSC will take the feedback from Tuesday's discussion to the Canadian Securities Administrators as it ponders its options, Ms. Jensen said. "There's options about adding targets. There's options about putting in guidelines that are more specific and calling out certain behaviour … so now we just need to consider them. But it's a very important topic that we are not giving up on."