Visible minorities vastly underrepresented in the boardroom, new disclosures suggest

2020/06/17 Leave a comment

Early and incomplete data but dispiriting:

Canadian companies may be making progress on gender diversity, but a Financial Post analysis suggests that the boardrooms of some of the biggest businesses in the country have much further to go when it comes to including members of visible minorities, Indigenous peoples and people with disabilities.

That analysis is based on a relatively new source of data. Starting this year, publicly traded companies incorporated under the Canada Business Corporations Act (CBCA) are required to report, among other things, the number of women, Indigenous people, persons with disabilities and members of visible minorities on their boards and in their senior-management ranks. The disclosures must be made for their annual shareholder meetings.

The Post looked at companies on the S&P/TSX 60 stock-market index that were both incorporated under the CBCA and had filed management information so far in 2020 — a total of 23 companies — to gather a preliminary picture of the state of corporate diversity. Disclosure was not entirely consistent from company to company and the findings and assessments presented here are based on self-reported information about proposed or current slates of directors, at the time the filings were made.

Combined, however, the Post found that, out of the 23 boards and 255 director positions total, only 14 directors — or approximately 5.5 per cent — identified as belonging to a visible minority. The Post also found only three Indigenous directors (or about one per cent of all directors in the sample) and two directors with disabilities (less than one per cent) among the 23 boards.

Fourteen of the companies reported they did not have a member of a visible minority on the board, while 20 companies reported no Indigenous peoples and 21 reported no persons with disabilities as directors. Eleven companies had no representation from any of those three groups on their board.

By comparison, 22.3 per cent of Canada’s population identified as a visible minority and 4.9 per cent as an Aboriginal person during the 2016 census. And according to Statistics Canada, as of 2017, 22 per cent of Canadians aged 15 and older had one or more disabilities.

All 23 firms included in the Post’s analysis had at least one director who identified as a woman, and 31 per cent of all directors on the Post’s list of companies were women.

Representation of the federal government’s four diversity groups in senior management varied, but were not much better for the 23 companies as a whole.

Discount retailer Dollarama Inc. reported two of its six executive officers (33 per cent) and two of its nine directors were women (22 per cent), but that members of the federal government’s other three designated groups were in zero of those positions. It was similar for e-commerce company Shopify Inc., which reported two of its seven executive officers and two of its six directors were women, but that no other groups were represented.

“We recognize our areas for improvement and are actively working with our Diversity & Belonging team to ensure stronger representation across our senior leadership and Board by hiring and retaining diverse talent,” a Shopify spokesperson said in an email.

Big banks and insurers in the S&P/TSX 60 index were excluded from the Post’s analysis [banks covered under the Federally Regulated Sectors EE reporting]. While some report diversity information (Royal Bank of Canada had said, among other things, that 46 per cent of its executives in Canada were women and 19 per cent were visible minorities), they are incorporated under financial legislation and not subject to the recent CBCA changes. Companies that are incorporated provincially were likewise excluded.

Ratna Omidvar, an independent senator from Ontario, said she was not surprised by the Post’s findings. Omidvar, who was a well-known diversity expert before being appointed to the Senate in 2016, was previously among lawmakers backing an ultimately unsuccessful push to force public companies to set internal diversity targets.

“Certainly I recognize the government has to not over-regulate corporations, because we want them to survive and thrive and make money and lift all our boats, et cetera,” Omidvar said. “But the lifting of all boats is clearly not happening, so we need something else.”

The recent changes to the CBCA also put companies in a position to “comply or explain” in reporting on their diversity policies and targets, the latter of which most of the companies looked at by the Post did not have for members of visible minorities, Indigenous people or persons with disabilities.

For example, the Desmarais-family-controlled Power Corp. of Canada (which reported two of its 13 directors were women, but zero were from any of the other three groups) said in its 2020 management circular that it had not adopted a target regarding the representation of the four groups on the board “as the Board believes that such arbitrary targets are not in the best interests of the Corporation.”

Still, there is a “prevailing view” in the corporate world that diversity is a good thing, which helps create momentum for efforts such as the recent CBCA amendments, according to Rahul Bhardwaj, the president and CEO of the Institute of Corporate Directors.

“It’s a journey for organizations to enhance their diversity,” he added.

While it is the first year for the new federal disclosure requirements, securities regulators were already requiring companies to report figures and targets regarding the number of women on boards and in executive positions. A recent report on the approximately 230-company S&P/TSX Composite Index found the percentage of women on its boards had increased to 27.6 per cent in 2019 from 18.3 per cent in 2015.

Corporate Canada’s latest disclosure requirements, intended to further improve corporate transparency and diversity, are also now in place at a time when firms are pledging to do their part to fight racism following the death of George Floyd, a Black man who was killed while in police custody in Minnesota. Four officers are now facing charges in connection with the killing.

Directors should be aware of the narrative of the day, what people living in the communities in which they operate are thinking, and what customers are feeling, because those directors are setting strategy, according to Omidvar.

“So I would say those are competencies that should be even more hotly searched for and located when corporate directors are appointed to boards,” she added.

Some companies are now redoubling their diversity efforts. On Wednesday, the formation of the new Canadian Council of Business Leaders Against Anti-Black Systemic Racism was announced, as well as the launch of the BlackNorth Initiative, which is aimed at increasing the representation of Black people in Canadian corporate boardrooms and executive offices.

Wes Hall, the founder and chair of the council, and the executive chairman and founder of shareholder services firm Kingsdale Advisors, noted companies were fine when they began actively trying to solve their gender-diversity issues.

“We believe that if you now add another segment of the population to your board, it’s probably going to make your business even better,” Hall said. “So why not do it?”

Source:  Visible minorities vastly underrepresented in the boardroom, new disclosures suggest

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

2018/03/08 Leave a comment

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

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