An array of business groups and corporate directors have thrown their support behind an Ontario Securities Commission proposal to require companies to disclose their gender diversity policies, and many are now urging the regulator to go even further to make the standards stricter.
Wednesday was the deadline for comments to be submitted to the commission about proposed new rules that would require all public companies that trade on the Toronto Stock Exchange to report annually on their approach to gender diversity for their boards and senior management ranks. The so-called "comply or explain" rules will require companies to disclose if they have diversity policies and internal targets for the proportion of women in senior roles, or else explain why they have opted not to have such policies.
The proposed policy received broad support from most who submitted comments to the commission, but some groups urged the OSC to strengthen the proposed rules further to make them less voluntary or leave less wiggle room for non-compliance.
The Coalition for Real Equity, a group of seven organizations and 15 individuals promoting diversity causes, urged the OSC to expand beyond gender to include reporting on diversity in areas such as race, ethnicity and aboriginal status. The coalition includes the Canadian Association of Black Lawyers, the Federation of Asian Canadian Lawyers and advocacy group Maytree.
"We do not agree that it is appropriate to limit this initiative to women, even for the time being," the group said.
The Institute of Corporate Directors, which represents 8,000 directors on boards in Canada, also urged the OSC to broaden its definition of diversity to include ethnicity and other factors such as age, experience, expertise and geographic background.
"We believe the proposed amendments should be considered a first step towards a broader diversity agenda," ICD chief executive officer Stan Magidson said.
Other groups urged the OSC to insist that companies must develop target levels for the proportion of women they want to have in their senior ranks, rather than leaving it up to companies to create targets voluntarily if they choose.
The Women's Executive Network, Canada's largest organization for professional women with 17,500 members, said targets with timelines will compel change to occur more quickly. Companies should be given until the end of 2016 to develop their targets, said WXN founder Pamela Jeffery.
The Public Sector Pension Investment Board, which manages federal employee pension plans, echoed the call for mandatory targets. Stéphanie Lachance, PSP's vice-president of responsible investment, also said the OSC should impose sanctions on companies if there is no progress on diversity within three years, but her submission did not specify what the sanctions should be.
The British Columbia Investment Management Corp., one of Canada's biggest investors with $110-billion under management, not only told the OSC it should mandate required targets, but also said it should require companies to have written diversity policies, which would be voluntary under the current proposal.
The WXN also urged the OSC to more tightly define that a company's diversity policy must be a written policy, and not simply an informal or oral policy. Ms. Jeffery said that the implementation of similar rules in Australia shows many companies haven't adopted formal diversity policies or provide little detail about their policies in their reporting.
"We feel there is still a significant risk that the intentions of the OSC will be thwarted in the absence of more explicit requirements,"she wrote.
One of the most controversial elements of the new policy is a requirement for companies to disclose whether they have term limits to restrict tenures for their directors, which the OSC said would encourage more turnover on boards and allow women to fill vacancies.
A group of unidentified public companies banded together to submit an anonymous comment letter through law firm Norton Rose Fulbright, saying they support the diversity policy in general, but want the OSC to exclude term limits until there can be "further consultation on board renewal." The Institute of Corporate Directors separately urged the OSC to remove the term limits proposal, saying it is a complex issue that should be dealt with in a separate consultation.
However, a group of 52 prominent board directors in Canada submitted their own comment letter lauding terms limits as "an essential tool to the renewal and revitalization of Canadian corporate boards."