Legal and Social Affairs Division
Canadian women earn a third of master’s degrees in business administration and play a greater role in the business sector than at any time in Canada’s history, yet they remain under-represented in the highest echelons of business in Canada – on corporate boards.
Over the past decade, players in the business world, such as investors, consumers and local communities, have started demanding that company leadership reflect the composition of the workforce and society more broadly. As a result, many corporations are taking steps to ensure the representative participation of women on corporate boards, and are moving towards increasing the representation in leadership positions of visible minorities, Aboriginal peoples and individuals with disabilities.
In Canada, recent efforts aimed at increasing the number of female board directors have been spearheaded by federal, provincial and territorial governments, as well as by individual corporations and not-for-profit groups (such as Catalyst Canada and the Canadian Board Diversity Council). Women are starting to make important progress.
International Women’s Day, observed on 8 March every year, is a time to celebrate such progress. Canada’s theme for International Women’s Day 2015 is Strong Women, Strong World: Improving Economic Opportunities for All.
Around one in five corporate directors is female
Women’s representation in business leadership positions drops at every step up the management ladder in Canada. While women in 2014 made up around 47% of the Canadian labour force, they held only 20.8% of board seats at Canadian stock index companies.
At the international level, Catalyst data from 2014 show that the representation of women on corporate boards varies widely, from a high of 35.5% in Norway to a low of 3.1% in Japan. A 2013 Deloitte publication reviewed global initiatives, particularly quotas, in this field.
Why women are under-represented: Corporate culture
The under-representation of women on corporate boards does not reflect a lack of interest or ability among business women in Canada. A 2012 Catalyst report indicates that there is a large pool of qualified female candidates for such positions.
Research suggests that a central reason for women’s under-representation is a corporate culture that unintentionally upholds gender stereotypes. Stereotypical perceptions serve to undermine recognition of women’s capabilities and effectiveness as leaders.
Women are at a disadvantage from the start of their careers. A 2013 Catalyst publication reports that women in their first post-MBA job earn around $8,000 less than their male counterparts and are more likely to start in an entry-level position. Furthermore, evidence indicates that women are less likely than male colleagues to be offered high-profile assignments that may lead to a position on a corporate board.
Other studies, such as a 2011 Ernst and Young report and a 2010 Catalyst report, suggest that women have greater difficulty than men in securing “sponsorship,” whereby a business leader actively advocates on behalf of, and creates advancement opportunities for, a high-potential individual.
Gender balance: It’s good for business
While the principle of gender equality is the central argument for increasing representation of women in the boardroom, having women on corporate boards is also good for business. Recent research suggests that companies with a relatively high proportion of female board directors financially outperform those with a low proportion.
A 2013 Conference Board of Canada report commissioned by the Federal-Provincial-Territorial Ministers Responsible for the Status of Women lists other benefits for companies of having women in the boardroom, including:
- an enhanced ability to attract and retain top talent;
- heightened innovation;
- enhanced client insight;
- improved board effectiveness; and
- stronger performance on non-financial indicators, such as support for the environment and human rights.
Federal initiatives to promote gender balance
The Government of Canada, through Status of Women Canada, established an Advisory Council in April 2013 composed of leaders from the private and public sectors, with the goal of advancing women’s participation on corporate boards.
The Advisory Council’s report, released in June 2014, highlighted how the public and private sectors can increase the representation of women on boards. It recommended that the Government of Canada “aspire to 30% over five years (2014–2019) as a reasonable national goal to achieve gender balance, with the longer term goal being gender balance on boards.”
Bills have been introduced in Parliament that would require no less than 40% of directors of either sex on the boards of directors of parent federal Crown corporations and/or federally regulated, publicly traded corporations. The most recent versions of such bills are Bill C-407 and Bill S-217.
Initiatives at the provincial/territorial level
The Government of Quebec passed legislation in 2006 requiring equal representation of men and women on corporate boards of Crown corporations by 2011. The provincial government announced in November 2011 that gender parity had been achieved on the 22 Crown corporations covered by legislation.
In June 2013, the Government of Ontario asked the Ontario Securities Commission (OSC) to study the possibility of introducing disclosure requirements regarding gender diversity on corporate boards. The OSC’s review process, which included a public consultation, resulted in proposed amendments to National Instrument 58-101: Disclosure of Corporate Governance Practices, one of the national instruments that govern securities markets.
In October 2014, following the OSC’s leadership, the Canadian Securities Administrators announced that nine jurisdictions (Newfoundland and Labrador, Nova Scotia, New Brunswick, Quebec, Ontario, Manitoba, Saskatchewan, Nunavut and Northwest Territories) would be implementing amendments to National Instrument 58-101.
These changes took effect on 31 December 2014. They require all non-venture issuers, which include companies listed on the Toronto Stock Exchange, to report annually on their plans and policies with respect to the representation of women on their boards of directors and in senior management.
- Canadian Board Diversity Council. Report Cards: 2014 Annual Report Card.
- Catalyst. 2014 Catalyst Census: Women Board Directors, 13 January 2015.
- Conference Board of Canada. Board Diversity: Assessing the State of Diversity in Canada’s Boardroom, 15 December 2014.
- Status of Women Canada. Good for Business: A Plan to Promote the Participation of More Women on Canadian Boards, June 2014.