Diversity Disclosure Requirements for CBCA Public Companies Potentially Changing

Since January 1, 2020, distributing corporations (generally, public companies) governed by the Canada Business Corporations Act (CBCA) have been required to provide diversity disclosures regarding “designated groups,” as defined in the Employment Equity Act (EEA). A recent report by the Employment Equity Act Review Task Force (Task Force) has made recommendations to, among other things, update the definition of, and categories included in “designated groups.” Any such updates could impact diversity disclosure requirements under the CBCA.

For background information, see our July 2019 Blakes Bulletin: Additional Diversity Disclosure Required of CBCA Corporations in 2020.

Current CBCA Diversity Disclosure Requirements

Under the CBCA, distributing corporations (i.e., public companies) are required to provide certain diversity disclosures in their management information circulars regarding “designated groups,” the meaning of which is set out in section 3 of the EEA. Currently, the EEA defines “designated groups” as women, Aboriginal peoples, persons with disabilities and members of visible minorities, the latter three of which are also defined terms under the EEA.

The diversity disclosure requirement for corporations governed by the CBCA generally follows a “comply-or-explain” format and includes, among other things: (i) for each designated group, the number and percentage of members of such group on the board of directors and who are members of senior management; (ii) whether the corporation has adopted a written policy relating to the identification and nomination of members of the designated groups for election as directors; (iii) whether the level of representation of designated groups is considered in identifying and nominating candidates for election or re-election to the board of directors or when appointing members of senior management; and (iv) whether the corporation has, for each designated group, adopted a target for members of the specific group on the board of directors or as senior management by a specific date.

Recommended Updates to “Designated Groups” in the EEA

The Government of Canada established the Task Force in 2021 to conduct a comprehensive review of the EEA. From February to April 2022, the Task Force engaged in consultations, which ultimately resulted in the submission of findings to the federal Minister of Labour in April 2023 and publication in December 2023 of the Task Force’s final report: A Transformative Framework to Achieve and Sustain Employment Equity (Report).

The Report sets forth over 180 recommendations and notes that virtually everyone consulted by the Task Force agreed that much of the terminology in the EEA, including “designated groups” and the terms used therein, needed to be modernized. In that vein, the Report includes the following recommendations with respect to the equity groups covered by the EEA and, therefore, CBCA diversity disclosure requirements currently:

• Employment Equity Groups. The term “designated groups” should be replaced by the term “employment equity groups.” As the CBCA currently hardwires the importing of its diversity categories through the term “designated groups,” which it provides as having the same meaning as in section 3 of the EEA, it is unclear as of yet how the CBCA regime will operate if the EEA no longer employs that term.

• Women. Women should remain an employment equity group, with enhanced attention to disaggregation and an intersectional approach.

• Racialized Groups. The term “visible minority” should be replaced by the term “racialized workers.”

• Black People. Black workers should constitute a separate employment equity group for the purposes of the EEA framework.

• Indigenous Peoples. The term “Aboriginal peoples” should be replaced with the language of “Indigenous peoples,” with a distinctions-based approach to First Nations, Métis and Inuit peoples.

• 2SLGBTQI+ People. 2SLGBTQI+ workers should comprise a new employment equity group under the EEA framework, with the EEA and accompanying regulations providing for the language of 2SLGBTQI+ to be updated as appropriate, in meaningful consultation with 2SLGBTQI+ communities concerned.

• Disability. The definition of disability in the Accessible Canada Act (Act) should replace the current definition of “persons with disabilities” in the EEA, and the EEA framework should draw inspiration from the Act and the Canadian Survey on Disability to identify appropriate subgroups.

• Religion. The inclusion of religious minorities under the EEA should be considered for comprehensive study by the newly re-established Law Commission of Canada.

Effects on Diversity Disclosure Under the CBCA

Currently, no amendments have been proposed in the House of Commons nor have any changes been made to the EEA. Likewise, no changes to the diversity requirements set out under the CBCA have been directly proposed as a result of the publication of the Report.

That said, the news release (News Release) announcing the publication of the Report notes that the Canadian federal government broadly supports the Task Force’s recommendations to the EEA. In the News Release, federal Minister of Labour, Seamus O’Regan, announced the government’s initial commitments to modernize the EEA, which include: (1) creating two new designated groups: Black people and 2SLGBTQI+ people; (2) replacing the term “Aboriginal Peoples” with “Indigenous Peoples,” updating the definition to include First Nations, Métis and Inuit and ensuring consistency with the UNDRIP Act; (3) replacing the term “members of visible minorities” with “racialized people” and updating the corresponding definition; and (4) updating the definition of “persons with disabilities” to align with the Act. The News Release notes that these are first steps, and that the government will soon begin consultations with affected communities and organizations, including unions and employers, to determine how to effectively implement these recommendations.

With respect to the CBCA, however, it is noteworthy that the Report only once mentions the CBCA (while the News Release does not), claiming that it requires corporations to also report on any other groups (i.e., beyond the “designated groups”) they believe contribute to diverse representation on their boards and senior management teams. Accordingly, the ultimate impact of any EEA amendments on the CBCA remains unclear.

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