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Under the so-called comply or explain standard, companies do not have to comply and can instead explain why they have chosen not to adopt the policies.

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Just 14 per cent of companies on the Toronto Stock Exchange have adopted a formal policy for improving the proportion of women on their boards in line with recommendations introduced this year by securities regulators, while the vast majority have rejected gender diversity policies.

A review of the first year of compliance with the new diversity guidelines, which took effect Dec. 31, shows many of the provisions championed by regulators found little support in Canada's business community, although the results vary widely by company size and industry sector.

The new rules require listed companies to disclose how many women they have on their boards and in executive roles, and recommends they adopt policies to improve their gender diversity and consider women in the hiring process.

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Under the so-called comply-or-explain standard, companies do not have to comply and can instead explain why they have chosen not to adopt the policies.

The review of 722 TSX-listed companies that reported under the new rule as of July 31 found just 14 per cent said they have adopted a written diversity policy, while 65 per cent decided not to adopt one. The remaining 21 per cent either have an unwritten policy or disclose a general policy without provisions specifically related to women.

Louis Morisset, who heads Quebec's securities regulator, said the disclosure requirements are intended to give investors "meaningful additional information" they can use in their investment and voting decisions, and said regulators "strongly encourage" all companies to review recommendations published Monday about how to better comply with the reporting requirements.

The report concludes many companies "require additional guidance" about the disclosure necessary to satisfy the reporting requirements. For example, while companies must report on the proportion of women on their boards and in executive roles, the review found 12 per cent did not comply with the board reporting rule and 15 per cent did not disclose their proportion of female executives.

Larger companies were the most likely to comply and adopt written diversity policies. Almost 40 per cent of companies with market capitalization over $10-billion adopted a written diversity policy, while just 5 per cent of companies under $1-billion in market cap reported having a policy.

The results also varied widely by industry, with 30 per cent of insurance, utility, communications and entertainment companies reporting they have diversity policies. Adoption rates were below 10 per cent at energy, mining and technology companies.

Alex Johnston, executive director of women's advocacy group Catalyst Canada, said companies are doing a better job at promoting women than the reporting statistics suggest, which she said means there is a disclosure gap.

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For example, 49 per cent of companies in the survey have at least one female director, and 15 per cent of companies added a woman to their boards this year. The review showed 60 per cent of companies have at least one female executive officer.

"I think that people are making a choice that 'I don't feel I need to disclose targets, I don't feel I need to disclose strategies, I don't feel I need a formal policy,'" Ms. Johnston said. "But I think that is separate from the activity that is happening that is not being reflected in their disclosure."

She said it is the first year of reporting and companies are still figuring out what regulators want to see, so it is too early "to declare victory or defeat."

The review showed companies are especially unwilling to adopt concrete internal targets for diversity. Just 7 per cent of the companies said they have set a target for women on their boards, and 39 per cent of those with targets had already met them. Only 2 per cent said they have targets for women in senior executive roles.

Ms. Johnston said many people think targets are the same thing as mandatory quotas, but they are instead internal goals, which businesses set all the time to spur improvement in every area.

"There's clearly still a lot of discomfort around targets, and we've just got to crack that nut," she said.

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The new rules also require companies to report on their "mechanisms of board renewal" to explain how they encourage necessary turnover on the board. The report said 19 per cent of companies have term limits – either retirement age limits or tenure limits – while 56 per cent said they have other mechanisms, primarily performance reviews for directors. The remainder have no mechanisms for board renewal or did not report on the topic.

The new diversity standard has been adopted by 10 provinces and territories, with only British Columbia, Alberta and Prince Edward Island not participating. Because Ontario is a participant, the rules cover all companies listed on the Toronto Stock Exchange, effectively making it a national standard.

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