What Oscar-winner Frances McDormand can teach corporate Canada | Jennifer Wells

Good linkage with the failure to strengthen diversity in corporations in C-25 Canada Business Corporations Act:

“I have two words for you: inclusion rider.”

If there was a single indelible moment at the 90th Academy Awards celebration Sunday, it was the fierce Frances McDormand wrapping up her winning best actor speech with a call to arms to A-list entertainers with the power to effect change.

There was a great deal of clapping and cheering and, according to Twitter, a great many people wondering: what’s an inclusion rider?

It’s worth viewing Stacy Smith’s TED talk for the answer. Smith is a social scientist who teaches in the communication and journalism school at the University of Southern California. In a clear and swift 15 minutes she takes her audience through a set list of really dispiriting data. In what she deems the “inclusion crisis in Hollywood,” Smith’s statistics include this fact: not quite a third of movie roles go to women. (To qualify for inclusion in the data set, the actor needs to speak but a single word through the entire script.) Surprised? No, of course not. But Smith extrapolates this data to conclude that much has not changed in a half century.

How about power? Auditing 800 films between 2007 and 2015, Smith and her researchers found only 4.1 per cent were directed by women. A total of three films were directed by black or African-American women. One lone film was directed by an Asian woman. The traits of leadership (commanding a crew, being a “visionary”) are seen to be male in nature, industry insiders confided. Hence the results, as Smith said in her talk, “pull male.” Left alone to its own devices, Hollywood does not change.

What does this remind us of?

That’s right, corporate Canada. As it happens, the Academy Awards came just days after the Senate voted down a proposed amendment to Bill C-25, that is, the Act to amend the Canada Business Corporations Act (and that of co-operatives and not-for-profits, too). That sounds like multiple acts and multiple amendments. The point to glean is this: in hauling the Act into the modern era a group of senators supported the view that publicly traded corporations be compelled to set internal targets to boost diversity, the very ethos of the governing Liberals. The Senate voted against the amendment, 37 to 30, in third reading last Wednesday.

Let’s think about this. Corporations would not be compelled to reach targets by a set date. Corporations would be free to establish for themselves time-lines for the increase of four under-represented groups: women, Indigenous peoples, persons with disabilities and visible minorities. This is a step beyond the “comply-or-explain” declarations of diversity policy. As Senator Paul Massicotte pointed out in tabling the amendment, even with the comply-or-explain rule introduced by the Ontario Securities Commission, the progress of women in leadership roles has been unsatisfactory, budging modestly in board representation, and even more modestly in senior management positions.

Phrased another way, asking nicely doesn’t work.

The result: just as Stacy Smith’s work shows that Hollywood does not reflect the real world, so too corporate Canada.

In supporting the amendment Senator Ratna Omidvar made the case clearly: “This amendment does not ask anyone to climb Mount Everest. It asks for targets, the targets are voluntary, the corporations can set these according to their own history, their own context, their own region and their own industry. This is common business practice.”

The non-partisan bill nevertheless placed Massicotte’s supporters in one corner, and bill sponsor Howard Wetston in the opposing corner. Wetston, readers may recall, is the past chair of the Ontario Securities Commission.

Citing in part Canada’s fragmented securities landscape (can’t we fix that already?), Wetston supported the comply-or-explain model as a “legitimate choice to address diversity at the board and executive level in Canada.” Government can do more within that model, Wetston said in addressing the chamber last week. “They can provide guidelines. They can get the director of corporations candidate to do more. There can be more outreach. Basically, these categories allow for a great deal of opportunity by the government to do more within this model if it so chooses.”

In an interview, Omidvar wonders if part of the failure lies in a lack of clarity. “The lesson I take out of this is that we must do much better at explaining our point of view and making it extremely clear to people that our amendment would not have forced corporations to have quotas,” she says. “Our amendment was simply moving them toward a mature approach to developing strategies. We were told these business corporations have so much work, they can’t do this. That’s not true. Any business corporation that comes under this act is big enough to have people and departments who are devoted to human resources, change management, long-term planning.”

The distinction between the two positions is clear: a soft tap on the shoulder (Omidvar’s description of C-25 as written) and a firm nudge. It goes without saying that the senator is disappointed by the outcome, especially given the aspirations — the brand — of the government of the day.

Stacy Smith had a few suggestions to redress the historic and intractable imbalance in Hollywood. “Just Add Five,” was one, in which scriptwriters would up the presence of roles for women, five at a time. That strategy, Smith concluded, could achieve gender parity in casting in three years. So, goal setting. But remember, a “role” is defined as a single spoken word.

More powerfully, A-list actors could insist on inclusion riders in their contracts, and start to dictate directly how to fix the diversity gap.

That’s what Frances McDormand was advocating.

In corporate environments, this could be a call to arms. Does any incoming A-list CEO have the nerve to insist upon a diversity rider? Now that would be progressive. Ground-breaking, even.

In the meantime, the amendment-sponsoring senators will be stuck monitoring what progress is made as a result of C-25. I’m not holding my breath.

via What Oscar-winner Frances McDormand can teach corporate Canada | Toronto Star

John Ivison: Senate amendments to gender diversity bill set to test Trudeau’s feminist principles

Find Ivison overly alarmist here. Requiring companies to have diversity plans but allowing them to set their own targets, with annual reporting, is a reasonable balance between doing virtually nothing and moving the yardstick.

There are likely some changes that may be needed (e.g., size of companies that are covered).

Bu is meritocracy really at risk as Ivison argues? Seem to recall same argument being used each time organizations want to increase diversity:

Are there any limits to how far Justin Trudeau will go to foster diversity and inclusion? We may be about to find out.

While he was in Davos, the prime minister made a big deal about the representation of women on corporate boards.

“Companies should have a formal policy on gender diversity and make the recruitment of women candidates a priority,” he said in his speech to the World Economic Forum.

To this end, the Liberal government has introduced a bill (C-25) to amend the Canada Business Corporations Act, which (among other things) requires companies to place their diversity policy before their shareholders, and if they fail to do so, to explain why (the widely adopted “comply or explain” approach).

Even that level of intervention has some free marketers wondering what business it is of the government to interfere in the running of private corporations.

But the current proposal is tame compared to amendments being proposed by a group of influential senators that will have many executives choking on their Porterhouse steak.

The six senators — Serge Joyal, Frances Lankin, Paul Massicotte, Lucie Moncion, Ratna Omidvar and André Pratte — have written to their colleagues saying they believe the current bill “lacks teeth.”

They would like to add amendments that would force the 270,000 companies incorporated under the CBCA to adopt diversity policies that set numerical goals and timetables on female, indigenous, disabled and visible minority board representation. Companies would have to report their progress not just to their shareholders but, “for the purposes of monitoring,” to the government. Ministers would be required to prepare and publish a report on the data – a clear indication that further corrective action could one day be taken.

“To be clear: our amendment would not set quotas,” the senators say.

Nonetheless, quotas would be set, even if, at this stage, by the companies themselves.

The senators are now rallying their colleagues and if they have the votes, bill C-25 will be sent back to the House of Commons. One source said there appears to be a critical mass of senators in favour of the amendments, which will likely be introduced next week.

At that point, Trudeau will have a decision to make. While the government has not looked kindly on Senate amendments, Trudeau charged senators to use their independent judgment to improve government legislation. He is unlikely to want to shirk what he sees as his moral duty to promote diversity and inclusion.

Carol Hansell, senior partner at the Toronto law firm Hansell LLP, is critical of the bill in its existing form for a number of reasons, principally because it will force companies to hold annual elections of individual directors — the concept of majority voting. She said she believes governance should flow from securities regulation, not corporate statute, which she deems too rigid to respond to changing circumstances.

Hansell thinks the same is true of the diversity issue and that many people would find the imposition of government oversight “objectionable.”

“I think everyone is uncomfortable with quotas. It’s too blunt a tool,” she said.

Even Trudeau shied away from anything that resembled a quota in the legislation. When Economic Development Minister Navdeep Bains introduced the bill, he said it would “contribute to an inclusive economic growth agenda” but would not unduly burden business.

The bill was deemed sufficiently benign by the Conservatives that they supported it – pointing out much of it was based on their economic action plan.

The “comply or explain” model has already been adopted by the Canadian Securities Administrators, covering most of Canada’s publicly traded companies.

The dissenting senators point out the results have been unspectacular over the past few years — 14 per cent of board seats are now occupied by women, up from 11 per cent in 2015.

Only 1.1 per cent of board members are Indigenous, 3.2 per cent have disabilities and 4.3 per cent belong to visible minorities.

As a share of the population, all four groups are under-represented (women and girls make up 50.4 per cent of the Canadian population; three per cent are Indigenous; 19.9 per cent are visible minorities and 13.7 per cent report some kind of disability).

Smart companies are moving toward board representation that more accurately reflects their shareholders and customers.

But we are veering into dangerous territory when we reject the notion of meritocracy as a mechanism that merely re-inforces male privilege.

Change is happening before our eyes, even if it is not as rapid as some might like.

But it is simply not the role of government to dictate who should be running the nation’s businesses.

Source: John Ivison: Senate amendments to gender diversity bill set to test Trudeau’s feminist principles

Senate proposal would force companies to set diversity targets for board of directors

Clear from current data that a nudge needed, with annual reporting to provide accountability:

In an effort to bolster the number of women, Indigenous people and racial minorities sitting on corporate boards, a group of senators is poised to amend government legislation that would force companies to set internal diversity targets.

Independent Ontario Sen. Ratna Omidvar, one of six members of the Red Chamber backing the amendment, said the Liberal government’s current approach in Bill C-25, which would simply encourage companies to boost gender diversity without applying any sort of target, is too timid.

The amendment would compel all publicly traded Canadian companies — roughly 600 on the Toronto Stock Exchange (TSX) — to set targets for increasing underrepresented groups, but would leave it up to each company to decide on what the target should be.

“The bill, as it currently stands, is just a tap on the shoulder, whereas our amendment turns the tap into more of an intentional nudge in the right direction,” Omidvar, an expert in diversity, said in an interview with CBC News. The amendment is expected to be introduced by Independent Sen. Paul Massicotte on Thursday, some 18 months after the bill was first tabled in the House of Commons.

Voluntary approach not good enough: senator

Under the government’s bill, a diversity policy is not mandatory. If a company does not develop one, they would simply have to tell their shareholders why, the so-called “comply or explain” approach adopted by other regulators in Canada.

“For us, that’s too soft a nudge,” Omidvar said. “What we may well get, as a result of this bill, is corporations developing diversity policies and putting them on the shelf and no action.”

Omidvar points to research from the Canadian Securities Administrators (CSA), an umbrella group of provincial securities regulators, which suggests a voluntary approach to diversity has led to little improvement.

Only 14 per cent of board seats are occupied by women, a three-percentage-point progress from 11 per cent in 2015. Forty-five per cent of all publicly listed companies do not have a single woman sitting on their board of directors. As for senior management, only 15 per cent of positions are filled by women, a proportion that has not progressed at all since 2015.

The research found that 1.1 per cent of board members are Indigenous, 3.2 per cent are persons with a disability and 4.3 per cent are members of a visible minority.

CSA also found that only 9 per cent of companies have internal targets for women on their boards, with a mere 2 per cent having targets for women in executive positions.

Omidvar said targets are not “quotas” per se as each company would be able to decide how many diverse candidates should be added to a board, but, at the very at least, they will have to commit to doing more.

Those targets, and a company’s success in meeting them, would then have to be reported to the federal government on an annual basis.

In turn, the minister responsible, the innovation minister, would prepare a public report documenting how well companies in Canada, writ large, have done in adding women and minorities to the seats of power at these companies. The company would also have to disclose progress to shareholders at their annual meetings.

Importantly, the amendment would actually define what exactly “diversity” is as the government’s bill, as currently written, is vague on that question.

If passed, the amended bill would compel companies to replicate definitions used by the federal government, namely that “diverse” candidates would include women, visible minorities, Indigenous people and those with disabilities. Notably, LGBTQ people would be excluded under such a definition.

Innovation Minister Navdeep Bains is unconvinced amendments are necessary and will not support this move to alter his bill.

“The minister has been clear that the act and the forthcoming regulations are an appropriate and balanced approach that will facilitate a conversation on diversity between shareholders and the management and boards,” a spokesperson said in a statement to CBC News.

The spokesperson pointed to the success of the “comply or explain” model in the United Kingdom and Australia, where the number of women on boards stands at more than 20 per cent in both jurisdictions.

“Given this, we believe Bill C-25 is a good bill for corporations, stakeholders, shareholders, and all Canadians, and hope for its quick passage through the Senate,” he said.

Opposition to quotas

There is a reluctance from some in the business community to set hard quotas — as has been done in Norway, for example, where 40 per cent of all seats must be occupied by a woman.

Paul Schneider, a senior executive at the Ontario Teachers’ Pension Plan Board, one of the largest institutional investors in the country, told the Senate committee studying Bill C-25 last month that he’d like to see a culture shift rather than the imposition of quotas.

“To be truly impactful, boards must take ownership of diversity. With a quota, they can abdicate ownership to the government,” he said.

“In the short run, quotas can indeed lead to greater diversity, but we fear that while establishing a quota incents boards to hit a specific number, it may hinder any progress over and above that target … Diversity should be achieved because it is good, sound business, not because it is a rule,” he said.

Omidvar said many companies are naturally sceptical of more regulation. “Generally, this is not particular to this bill, business leaders feel the less encumbered they are, the more capacity they will have to succeed in their business goals … but, as I’ve pointed out, [the amendment] just takes the bill from a tap to a nudge.”

And yet the proposed reporting regulations have the potential to be onerous as the more than 600 companies would have to take stock of how each of their board members (some have more than 20) identify, and then report that information to the government where the data would then be analyzed and catalogued, taking up time, money, and other resources.

Others, including Conservative Sen. Betty Unger, have said appointments should simply be based on who is best for the business.

“People invest in corporations to get a return on their investment, and this is best accomplished by appointing merit-based people to boards … As a woman — and, as you can see, I am not young — I could never feel good about myself if I knew that I got a position simply because I am a woman,” she said at a Nov. 30 committee meeting on the bill.

via Senate proposal would force companies to set diversity targets for board of directors – Politics – CBC News

 

Why Ottawa needs to nudge Canada’s boards toward greater diversity: Senators Massicotte and Omidvar

Agree – sensible amendments that provide latitude for companies to set their objectives with accountability and transparency provided through regular company and overall reporting:

This week, the Senate will vote on Bill C-25. The bill proposes to reform the process for electing directors of distributing corporations and co-operatives and modernize communications between corporations and their shareholders. It also requires distributing corporations to provide shareholders, at annual general meetings, information about diversity among directors and senior management.

The goal of the legislation is to increase diversity among corporate boards and among their executive ranks. The intent of the legislation is right. We need more diversity. But the measures proposed are not enough.

Three years ago, the Canadian Securities Administrators adopted a “comply or explain” model that is specific to the representation of women on boards and applies to most publicly traded companies in Canada. Bill C-25 emulates this approach.

Results have been disappointing: Only 14 per cent of board seats are now occupied by women, a meagre three-percentage-point progress from 11 per cent in 2015. Regarding senior management, only 15 per cent of positions are filled by women, a proportion that has not progressed at all since 2015.

Women are better represented on boards and in senior executive positions at larger firms. But even in FP500 companies, other groups are unacceptably underrepresented. Only 1.1 per cent of board members are Indigenous, 3.2 per cent are persons with a disability and 4.3 per cent are members of a visible minority.

Why would an approach that has yielded so few advances in recent years work better in the future? The government is asking Canadians to be patient, but shouldn’t we request an improved approach? We strongly believe we should.

This week, we will table an amendment in order to ensure we do more than what is timidly proposed in Bill C-25. This amendment puts forward an approach that is both progressive and respectful of corporations’ choices and strategies.

The term “diversity” is not defined in Bill C-25. When diversity is left undefined, even on the most basic level, as we saw in the United States, it loses its emphasis. It becomes experiential rather than identity-based. Given the myriad interpretations possible, the term risks being diluted beyond recognition, with very little accountability in place.

Our amendment would require publicly traded corporations to set self-determined numerical goals, such as percentages and timetables, to bolster the representation of at least four underrepresented groups within boards and senior management. It would specifically target the designated groups identified in the 1995 Employment Equity Act: women, Indigenous peoples, persons with disabilities and visible minorities.

To be clear: Companies would be allowed to establish numerical goals for these four groups, considering industry and company-specific factors and also include other forms of diversity if they so wish.

We know this approach works. According to the Canadian Securities Administrators, issuers that set themselves targets for the representation of women on boards do more than twice as well (reaching a 26-per-cent female composition of their boards) than companies that do not set such goals (12 per cent being their proportion).

So, by requiring corporations to report policies and goals to their shareholders, this amendment is designed to nudge them to accelerate change.

But if we are to know whether real progress is made, we need a periodical, complete, up-to-date picture of the situation in the upper echelons of the corporate world. That is why the amendment would require that corporations also send diversity and numerical goals information to the government. As well, each year, the minister would be required to prepare and publish a report presenting the aggregate data received.

The approach that we propose seeks better representation for women and other underrepresented groups, while leaving corporations free to take into account their particular circumstances. It is not a one-size-fits-all approach and it is a much better alternative than the wait-and-see approach proposed by the government.

This is an important piece of legislation. Diversity is our strength but inclusion is our choice. We need to make these changes to improve the bill and accelerate progress.

via Why Ottawa needs to nudge Canada’s boards toward greater diversity – The Globe and Mail