CSA Reports Slow but Continuing Progress on Gender Diversity in the Boardroom and Provides New Guidance on Gender Diversity Reporting

While some progress is being made in adding gender diversity to boards and executive officer positions of Canadian public companies, progress remains slow, as found by the Canadian Securities Administrators (CSA) in their recently published CSA Multilateral Staff Notice 58-313 Review of Disclosure Regarding Women on Boards and in Executive Officer Positions (Notice). The Notice continues the review, for a seventh year, of “comply or explain” disclosure provided by non-venture public companies concerning the representation of women on boards and in executive positions, as set out in Form 58-101F1 Corporate Governance Disclosure (Form). The Notice also provides new guidance to help improve the consistency and comparability of disclosure relating to women on boards and in executive officer positions. For more information on the CSA’s previous sets of review, see our March 2021 Blakes Bulletin: Getting on Board with Women on Boards Continues to be a Gradual Process, CSA Reports.

SEVENTH-YEAR REVIEW RESULTS

The Notice continues the review of the compliance with gender diversity disclosure requirements by 599 issuers with financial year-ends between December 31, 2020, and March 31, 2021 (thereby omitting large Canadian financial institutions, including major Canadian banks, with October 31 year-ends). As in prior years, slow but incremental progress has been made in the representation of women on boards. However, the proportion of Chief Executive Officer, Chief Financial Officer and overall executive positions held by women has not gained the same momentum, with the CSA reporting levels of representation of women in the executive suite largely consistent with findings from previous periods assessed by the CSA. Nevertheless, the Notice otherwise found mostly positive developments compared to the findings of the sixth-year review:

• Overall percentage of board seats occupied by women increased from 20 per cent to 22 per cent as compared to the prior year (up from 11 per cent six years ago), increasing or remaining relatively constant in a majority of size categories of issuers, with the 56 largest issuers leading the way at 30 per cent (down from 31 per cent in the prior year and up from 21 per cent six years ago)

• 555 vacant board seats were filled during the year, with 35 per cent of the new directors being women (up from 30 per cent in the prior year)

• 18 per cent of issuers still did not have a woman on their boards, down from 21 per cent in the prior year (51 per cent six years ago)

• Six per cent of issuers had a woman as the chair of the board (also six per cent in the prior year)

• 60 per cent of issuers disclosed they had adopted a policy relating to the identification and nomination of women directors, an increase of six per cent compared to 54 per cent in the prior year (15 per cent six years ago), and issuers with such a policy had a greater overall percentage of board seats occupied by women (25 per cent) as compared to issuers without such policies (16 per cent)

• 32 per cent of the issuers had targets for the representation of women on their boards, an increase from 26 per cent in the prior year (seven per cent six years ago), and issuers with such targets had a greater overall percentage of board seats occupied by women (28 per cent) as compared to issuers without such policies (18 per cent)

• 67 per cent of issuers disclosed having at least one woman in an executive officer position, up from 66 per cent three years ago (60 per cent six years ago), with five per cent of issuers having a female Chief Executive Officer (also five per cent in the prior year) and 17 per cent having a female Chief Financial Officer (up from 15 per cent in the prior two years and 14 per cent three years ago)

• Targets for the representation of women in executive officer positions continue to be uncommon, with six per cent of issuers having such targets (up from four per cent in the prior year and two per cent six years ago)

NEW GUIDANCE ON DISCLOSURE PRACTICES

During its review, the CSA noted that issuers generally provide disclosure relating to gender diversity in different ways, resulting in discrepancies in consistency and comparability between issuers. To address these discrepancies, and to make it easier for investors to identify and evaluate disclosure on gender diversity performance, the Notice outlines new guidance that recommends issuers present certain data related to representation, targets and term limits in a common tabular format.

CONCLUSION

Progress continues to be slow but gradual in the seventh year since the Form was amended to require gender diversity disclosures. In connection with releasing the Notice, the CSA also noted that it is “forging ahead with consultations that will give it insight into how to evolve its current diversity disclosure framework to include broader diversity considerations”. Consultations on broadening existing diversity initiatives and disclosure requirements are underway, and will serve to assess how the needs of investors and corporate governance practices have evolved since the existing framework was implemented by the participating jurisdictions in 2014.

For further information, please contact:

Stacy McLean               416-863-4325
Matthew Merkley         416-863-3328

or any other member of our Corporate Governance practice.