California Gov. Signs Law Requiring Corporations to Have Board Members From Racial or Sexual Minority Groups


Hundreds of California-based corporations must have directors from racial or sexual minorities on their boards under a first-in-the-nation bill signed Wednesday by Gov. Gavin Newsom.

The diversity legislation is similar to a 2018 measure that required boardrooms to have at least one female director by 2019. Like that measure, it could face court challenges from conservative groups who view it as a discriminatory quota.

Supporters evoked both the coronavirus pandemic that is disproportionately affecting minorities and weeks of unrest and calls for inclusion that followed the slaying of George Floyd in May in the custody of Minneapolis police.

After Floyd’s death, many corporations issued statements of support for diversity, but many haven’t followed through, said Assemblyman Chris Holden (D-Pasadena), who co-authored the bill.

“The new law represents a big step forward for racial equity,” Holden said. “While some corporations were already leading the way to combat implicit bias, now, all of California’s corporate boards will better reflect the diversity of our state. This is a win-win as ethnically diverse boards have shown to outperform those that lack diversity.”

By the end of 2021, the more than 660 public corporations with California headquarters must have at least one board director from an “underrepresented community,” according to the measure.

Those who qualify would self-identify as Black, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or as gay, lesbian, bisexual or transgender.

The measure requires at least two such directors by the end of 2022 on boards with four to nine directors. Three directors are required for boards with nine or more directors. Firms that don’t comply would face fines of $100,00 for first violations and $300,000 for repeated violations.

At an online signing ceremony, Newsom said it was important for minorities to have a voice on the boards of powerful corporations.

“When we talk about racial justice, we talk about empowerment, we talk about power, and we need to talk about seats at the table,” Newsom said.

The legislation was part of a package of racial justice measures signed by Newsom before a midnight deadline. Others bar the use of peremptory challenges to remove potential jurors based on racial, religious or gender identity; allow judges to alter sentences that are believed to involve racial or ethnic discrimination; and set up a state task force to study the idea of reparations to African Americans for slavery.

The text of the corporate diversity bill cited the Latino Corporate Directors Association, which said 233 of 662 publicly traded companies headquartered in California had all-white boards as of this year. Nearly 90% didn’t have any Latino directors, although Latinos make up 39% of the state’s population. Only 16% had an African American board member.

The only official opponent in a legislative analysis was former California commissioner of corporations Keith Bishop. He objected that that bill, coupled with the existing diversity law, would make it more desirable for corporations to pick women who also are members of the underrepresented communities to simultaneously meet both sets of quotas, to the detriment of men or women who do not meet the qualifications in the new bill.

Source: California Gov. Signs Law Requiring Corporations to Have Board Members From Racial or Sexual Minority Groups

Bagnall: Is Shopify’s board of directors too male, too white?

Good for Meriel Bradford, who I worked with in the 90s, for calling them out:

It wasn’t the question most of Shopify’s board of directors had been expecting.

The six individuals — all white, five of them male — had just concluded the business portion of the annual shareholders’ meeting Wednesday morning and had opened the proceedings to queries from ordinary shareholders.

Given what a spectacular year Shopify had just concluded — revenue in 2017 had jumped 73 per cent, pushing the share price to record levels — the directors, the stewards of the company, were anticipating a gentle time of it.

Meriel Bradford, a shareholder and retiree, was the first to grasp the microphone. She had warned Shopify’s CEO and co-founder Tobias Lütke privately what was coming, but didn’t know if he had shared this with his fellow directors.

Bradford, a former vice-president of Teleglobe and senior bureaucrat at Global Affairs and other federal departments, spoke with authority. She told the directors diversity was important for any company aspiring to be global.

“This board doesn’t have it,” she said.

Bradford had their attention. “What’s the problem and how can we help you fix it?”

Responsibility for the answer fell to John Phillips, head of the board committee responsible for finding candidates to serve as director. Phillips acknowledged the preponderance of white males on Shopify’s board before adding, “We’re constantly searching for great talent.”

It was a weak response. Bradford pressed the point. “I suggest your search technique is poor,” she said before taking her seat.

It’s difficult to deny the boardrooms of many high-tech firms lack diversity, whether it involves gender, colour or sexual orientation. But was Bradford’s assertion fair?

This newspaper examined the makeup of the boards that guide 15 companies that Shopify considers its peers, at least when it comes to the important matter of compensation for executives and directors. (These included firms such as HubSpot, Zendesk, Cornerstone OnDemand, Atlassian and Etsy, which were listed in the circular distributed in advance of Wednesday’s meeting of shareholders.)

Most of the peer firms have eight or nine directors, more than Shopify’s six, and do exhibit more diversity, especially when it comes to gender. Half of Zendesk’s eight directors are women, for instance, as is the case at Etsy.

Given that high-tech firms tend to draw heavily from the male-dominated worlds of engineering and finance for their board talent, this is all the more notable.

Just two of Atlassian’s nine board members are women but one, Shona Brown, runs the show as chair.

As for colour, well, let’s just say visible minorities in this group are generally the exception. Nevertheless, the companies do appear to be making some strides diversifying in general.

For instance, Cornerstone OnDemand, a California software firm, has nominated former Jiva Software CEO Elisa Steele to serve as chair of the board. Steele is expected to be confirmed in this role June 14.

Boston-based Wayfair, another software firm that Shopify counts among its peers, last month named Andrea Jung to its board. Jung, the former CEO of Avon Products, is a well-known pioneer for businesswomen and also serves on the board of Apple.

Five weeks ago, another Boston-based software peer, HubSpot, revealed that India-born, Brazilian-raised entrepreneur Avanish Sahai had joined the firm’s directors.

At the conclusion of Shopify’s shareholders’ meeting at the firm’s Elgin Street headquarters, Bradford chatted amiably with fellow shareholders. A couple of Shopify employees came by to introduce themselves, but none from management or the board. “It surprises me that no one is reaching out,” she said referring to the top guns.

It’s perhaps less puzzling if you examine the detail of the management circular distributed in advance of the meeting.  In it, there’s a section that deals with the company’s policy on diversity. It notes the board of directors “values diversity of abilities, experience, perspective, education, gender, background, race and national origin.”  When considering nominees for the board, the policy reads, “diversity is taken into consideration. Currently, one of our six directors (Gail Goodman) is a woman.”

Bradford’s point was simply that Shopify can do better than that.

Source: Bagnall: Is Shopify’s board of directors too male, too white?

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

Ryerson study highlights severe lack of visible minorities on corporate boards

Important study.

The approach of the Employment Equity Act to require federal public sector and regulated companies to publicly report on designated group representation has shown the benefits of transparency and regular reporting:

Visible minorities make up more than half of Toronto’s population, but only 3.3 per cent of corporate boards and 9.2 per cent of the private sector’s senior management, a new study finds.

While the percentage of women on large corporate boards has steadily grown, from 14.8 per cent in 2012 to 23.6 per cent in 2017, the representation of visible minorities in leadership has stalled, inching up from 2.8 per cent to 3.3 per cent over the five years, said the study by Ryerson University’s Diversity Institute, released Wednesday.

“Diversity is more than gender,” said Wendy Cukier, the institute’s founder and professor at the Ted Rogers School of Management, at a forum on advancing diversity and inclusion in Canadian Business. “If you look at the minority representation on boards, it is not a pretty picture.”

The six-year study, funded by the Social Sciences and Humanities Research Council, analyzed data on senior leaders from the largest organizations in Greater Montreal and the GTA in six sectors — elected, public, private, volunteer, education and agencies/boards/commissions.

Although the representation of women has improved, the gains are primarily made by white women, said Cukier.

“While equally represented in the workforce, white women outnumber racialized women 16 to 1 on corporate senior management teams,” noted Cukier.

In Toronto, 24 per cent of companies have more than 30 per cent women on their boards while 28 per cent have none. By contrast, only 3 per cent of firms have 20 per cent visible minorities on their boards and 90 per cent have none.

In Montreal, where minorities make up more than 20 per cent of the population, almost 10 per cent of corporate boards actually had more than 40 per cent women, while 25 per cent had none. Only 3 of 60 of the largest companies there had any racial minorities on their boards.

“We have a problem,” said Cukier, adding that the research findings underline the significance of moving forward two government bills currently before the Parliament and Queen’s Park — that aim at tracking racial diversity data in organizations.

Navdeep Bains, federal minister of innovation, science and economic development, said Bill C-25, which is now before the Senate, requires publicly traded corporation to report on diversity data and policies.

“Diversity is not just the right thing to do. It has a strong economic case,” Bains told the Toronto forum attended by business leaders, diversity and industry experts. “Canadian competitiveness and strength and resourcefulness come from our people and diversity.”

Michael Coteau, Ontario’s children and youth services minister and minister responsible for anti-racism, said Bill 114 will extend reporting requirements on race, gender and other demographic characteristics to provincially-funded agencies.

“Eliminating systemic racism and advancing racial equity is integral to our plan to create jobs, grow our economy and help people in their everyday life,” said Coteau, who was also on the panel. “We believe that data is the foundation of an effective strategy to advance inclusion.

Tiffany Gooch, a public affairs consultant in Toronto, said she was not surprised by the little progress made by visible minorities as the hope was that changes would trickle down from gender diversity to other aspects of diversity representation.

“You need a critical mass for any conversation to take on,” said Gooch, who believes both proposed government bills can help build a good foundation for meaningful conversations about organizational diversity.

Andi Shi, executive director of the Chinese Professionals Association of Canada, was disappointed by the poor minority representation in leadership roles despite Canada’s celebrated pride in multiculturalism.

“There is still the unconscious assumption that racial minorities are not good enough, and the fear that we are not going to perform as good as a white person,” said Shi. “We need quotas to force organizations to make changes.”

Overall in 2017, women are faring well in taking senior leadership positions in all sectors in Toronto compared to private companies, representing 42 per cent in agencies, boards and commissions, 40.1 per cent in education, 42.5 per cent in the volunteer sector, 44.4 per cent in the public sector, and 41.5 per cent among elected officials.

However, visible minority representation is still dismal in 2017 in all areas, accounting for just 17.2 per cent in agencies/boards/commission, 23.1 per cent in education, 12.3 per cent in the volunteer sector, 9 per cent in the public sector, and 29.8 per cent among elected officials.

Source: Ryerson study highlights severe lack of visible minorities on corporate boards | Toronto Star

Canada could be corporate diversity leader, says study |

Slow progress:

But this is unlikely, says the CBDC [Canadian Board Diversity Council], because the pace at which corporate diversity is improving is too slow. In fact, the report card reveals women currently hold 19.5% of FP500 organization board seats. That’s up from 17.1% in 2014, but Canada is still behind when it comes to bringing women on board. In the UK, for example, there are no all-male FTSE100 boards, while there are 109 such boards in Canada.

“The pace of change for board diversity is encouraging, but there’s more work that needs to be done,” says CBDC founder Pamela Jeffery. If each organization on the FP500 replaced one retiring male director with one female director, says CBDC, Canada would be among the leading countries for gender board diversity—at 30% female representation.


According to the CBDC’s report card, the OSC’s corporate diversity disclosure requirements are making a difference. When surveyed, almost half (49%) of directors indicated their boards have written diversity policies, up from 25% last year.

However, this data contradicts findings from OSC, adds CBDC. In a recent report, the regulator found that only “14% [of boards] clearly disclosed the adoption of a written policy, whereas 65% disclosed that they had decided not to adopt a written policy.”

“The findings of this year’s Annual Report Card show board disclosure requirements on diversity are having a positive impact,” says Michael Bloom, vice president of Industry and Business Strategy for The Conference Board of Canada. “However, achieving the goal of truly diverse boards with representation from women, Aboriginal peoples, visible minorities and people with disabilities will require much more of a leadership focus.”


  • Since 2014, there has been a significant increase in the number of directors who self-report to be a visible minority, nearly tripling to 7.3% from 2% last year.

  • The number of Aboriginal board members rose from 0.8% in 2014 to 1.3% in 2015.

  • Nearly all FP500 corporate board respondents (96%) say board diversity is very important or somewhat important, and that’s a substantial increase from 85% in 2010.

  • In the Utilities and Finance sector, representation of women stands at 27.1%. Meanwhile, women are represented at 27% in the Insurance sector.

  • In the Mining/Oil/Gas sector, representation of women lags behind at 12.2%. Same goes for the Construction sector at 9.3%.

  • Despite the higher-than-average rates of female directors on TSX60 boards (22.6%, up from 20.1% in 2014), there are only 20 visible minority directors, two Aboriginal directors and one person with a disability among the 31 organizations that completed the 2015 TSX60 survey.

Source: Canada could be corporate diversity leader, says study |

Securities regulators urged to make gender diversity policies mandatory

Hard to argue with greater transparency and reporting as a way to encourage change, which should also apply to visible minorities:

Canadian securities regulators should make gender-diversity policies mandatory for companies on the Toronto Stock Exchange after a majority of companies rejected voluntary standards this year, according to Women’s Executive Network founder Pamela Jeffery.

Ms. Jeffery, who heads the Toronto-based advocacy organization for women in business, told an Ontario Securities Commission round-table forum that Britain’s corporate governance code requires companies to report annually on their diversity policies, and the country has seen rapid improvement in the proportion of women on its boards and in senior executive roles.

“Given that only 14 per cent of [Canadian] issuers have disclosed the adoption of a written policy, we’d like to see issuers required to disclose a written board and executive board diversity policy,” Ms. Jeffery said.

Canadian companies should also be required to report annually on their internal targets for women, she said.

The OSC forum Tuesday was organized to discuss compliance to date with new voluntary standards, introduced this year, that recommend companies should create gender-diversity policies to get more women in senior roles.

A report released Monday by securities regulators shows only 14 per cent of 722 TSX-listed companies have created formal diversity policies in the wake of the new standards, while 65 per cent said they have decided not to have a policy and a further 21 per cent reported only informal policies or policies that do not mention gender diversity.

Osgoode Hall law professor Aaron Dhir, who specializes in issues of corporate diversity, told the OSC forum his research shows Australia and Britain both saw significant increases in the proportion of women on their boards after they introduced new reporting standards.

In Australia, for example, the proportion of women on ASX 200 boards grew to 20 per cent in 2014 from 8 per cent in 2011 after regulators introduced a rule similar to Canada’s new standard. In 2011, 61 per cent of Australian companies reported having a diversity policy, which has grown to almost 100 per cent this year, Prof. Dhir said.

Canada’s new standard is one of the best Prof. Dhir said he has seen compared to diversity rules in other countries like the United States, but companies need time to respond. He is “cautiously optimistic” more will adopt diversity policies in coming years.

Source: Securities regulators urged to make gender diversity policies mandatory – The Globe and Mail

Don Cayo: Time for corporate boards to take diversity seriously

More of corporate board diversity (or lack thereof) and the work of Pamela Jeffery of the Canadian Board Diversity Council to change this:

If you, like me, think most big Canadian companies have too few women on their boards of directors, then what should we make of the under-representation of aboriginals and other visible minorities?

The numbers for these two groups are much worse. To compare:

  • Women comprise 50.4 per cent of the Canadian population, or 51 per cent in Metro Vancouver. They hold just eight per cent of the executive positions in Canada’s 500 largest companies, but their representation on boards of directors has inched up and now is 17.1 per cent.
  • Aboriginals comprise 4.3 per cent of Canada’s population, although less than half that in Metro Vancouver. They hold 0.8 per cent of big companies’ board seats — a percentage that has been stalled for years.
  • Other visible minorities comprise 19.1 per cent of the population, but the number is much higher and growing briskly in Metro Vancouver. It had reached 45.2 per cent, mostly people of Asian extraction, by 2011. In 2010, members of this group held 5.3 per cent of big companies’ board appointments, but by 2014 this number had slipped to two per cent.

Pamela Jeffery, the founder of both the Toronto-based Women’s Executive Network and the Canadian Board Diversity Council, is pleased to see at least women making progress — although not enough, in her view, and not at a fast enough rate.

But she has a sinking feeling that women’s successes in getting seats at the boardroom table may come at the expense of aboriginals and other visible minorities. When boards decide to recruit beyond their usual source of new directors — that is, their old boys’ network — the easy way is to find a well-qualified woman and then look no further.

So, to tackle the worst problem first, Jeffery is working with the Canadian Council for Aboriginal Business to beat the drum for more aboriginal representation on boards that oversee Canada’s biggest companies. The council has held back-to-back summits, one in Vancouver and one in Calgary, to engage business leaders on the issue.

Jeffrey doesn’t advocate quotas, and neither do I. The problem is that quota-driven recruitment can lead to candidates being selected solely on the basis of their ethnicity, not what they can bring to the table.

But boards undermine their own potential effectiveness when all their members are near clones of each other, with similar backgrounds, experience and attitudes.

Diversity can bring new insights to the table — new ways of looking at under-served markets, whether geographically or demographically distinct from the tried-and-true, as well as ties to new talent pools that a company could tap.

Don Cayo: Time for corporate boards to take diversity seriously.

Diversity on boards means more than gender

More on corporate board director diversity (or lack thereof) by Anita Anand and Vijay Jog (see earlier post Women gain on corporate boards but visible minority representation dips):

In light of these arguments in favour of board diversity and given the ever changing mix of the Canadian population in general, one might think visible minority directors would be more present on Canadian corporate boards. But this is not the case. We have found they represent 5.5 per cent of directors of TSX-listed firms (and less if certain foreign-owned firms are excluded). Visible minorities represent only 4.2 per cent of those graduating from director-education programs, some of whom have previous board experience as an admission requirement.

The percentage of women is much higher in both cohorts; white women comprise 26 per cent of graduates of director programs but only 12 per cent of public company board members. Thus corporate boards have much fewer visible minority directors relative to both white women and white men.

But does diversity even matter? Prior academic research has been somewhat inconclusive. We find that firms with white male boards do not show significantly better performance than firms with boards comprised of females and visible minorities. We do not claim that these results show causality since it is possible that firms that demonstrate superior stock performance are forward-thinking or that investors respond positively to such proactive measures. At the very least, our results suggest that there is no performance deterioration by having a diverse board.

Visible minorities contribute significantly to GDP and represent a high growth segment of the population. Let’s open up the conversation about board diversity beyond gender parity and consider whether boards should bear some demographic similarity to the society in which the corporation operates. Corporate Canada will need to face this issue at some point: why not now?

Diversity on boards means more than gender | Toronto Star.

Women gain on corporate boards but visible minority representation dips

Incredibly low number for visible minorities:

Women have climbed slowly but steadily in recent years from 10.9 per cent of directors in 2001 to 13.7 per cent by 2009 and 15.6 per cent in 2013, the study shows.

However, visible minorities hold just 2 per cent of board seats, a decline from 5.3 per cent in 2010, and people who report having disabilities fill just 1.4 per cent of board seats, down from 2.9 per cent in 2010. Aboriginal directors hold 0.8 per cent of board seats, a number unchanged from 2010.

Diversity council founder Pamela Jeffery said it is disappointing to see a decline in visible minority directors while Canada’s population – especially in major cities where head offices are located – becomes steadily more diverse.

“I think it underscores what we know, which is that most board seats are filled in a less-than-desirable way, with board members sitting at the table asking each other who they know,” she said. “Sadly, aboriginal people or people with disabilities are not in their networks.”

Ms. Jeffery said she is encouraged, however, that the rate of increase for women on boards has accelerated, growing by 1.5 percentage points between 2013 and 2014 after increasing by just 0.32 percentage points in each year on average between 2001 and 2012.

However, Ms. Jeffery said the level of gender diversity remains low compared to many other major countries. Britain, for example, will have 25 per cent women on boards of its top 100 companies by next year, she said.

Women gain on corporate boards but visible minority representation dips – The Globe and Mail.