USA: Board Diversity Is Sacrificed When Companies Underperform, Study Finds

Of note but not particularly surprising:

Companies that are underperforming in comparison to their competitors or to their goals are more likely to experience a decrease in racial and gender diversity rates on their boards, a newly released study has found.

Researchers at Imperial College Business School in London tracked data from more than 700 U.S. firms from 1996 to 2013 to make the assessment.

Dr. HeeJung Jung, Assistant Professor of Entrepreneurship at Imperial College Business School, and lead researcher of the study, tells TIME that this phenomenon is not deliberate, but rather a result of the pressure firms face to better adapt and begin performing well. Leaders search for a quick solution, but boards can become less inclusive as executives minimize their boards, or unconsciously seek directors that have similar ascriptive backgrounds.
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“The board deliberately seeks new expertise and new perspectives among a variety of industries and backgrounds in the belief that it might rescue the company. But while this expertise came from a range of sectors, that’s as far as the diversity goes, in terms of race and gender,” Jung says.

Despite ongoing conversations about racial equity becoming more prevalent across the U.S., particularly after the murder of George Floyd in 2020, when companies made public pledges to better address racial inequality, Jung says that there is still a lot of fluctuation when looking at racial and gender diversity rates across corporate America.

In 2021, women comprised just 27% of board seats among the 3,000 largest publicly traded companies incorporated in the U.S., and only 6% of those seats were held by women of color, according to a report by the Women Business Collaborative. Men of color held 9% of board seats in the same year. Black board membership increased by nearly a third in 2021, but accounted for only 6.4% of directors overall.

Jung notes that companies will always experience periods of growth and decline, making more consistent strides for diversity and inclusion among the workforce difficult. The problem is, diversity is not a priority for companies when profits decrease, Jung says. “In their view, diversity efforts or DEI [diversity, equity and inclusion] matters last, it becomes a second matter or a second goal.”

Some countries in Europe have safeguards in place that would prevent progress on board diversity being rolled back. Gender diversity quotas are common in nations like France, Norway, Spain and Iceland, where women must make up at least 40% of boards at publicly traded companies, according to the Harvard Business Review.

While research about the benefits of gender-based diversity in the U.S. has shown mixed results, Jung says this may be because, despite great strides in female leadership, American corporate culture has not yet normalized it. One of the roadblocks to progress that female CEOs often face is pushback from teams, including constant cross-checking of their decisions to verify that they are acting “correctly,” Jung says.

“That causes an efficiency problem, and in a time of crisis where speed is important for any corporation, having this is a delay in decisions [and] makes directors [from underrepresented backgrounds] doubt their leadership too,” Jung told TIME.

Diversity efforts in corporate America

Currently, the U.S. has no federal policy that mandates inclusivity, though that has not stopped local governments from attempting to implement changes. States like Washington, for instance, require at least a quarter of a public company’s board to be women. In California, a law, passed in 2020, requiring public companies to have greater racial and gender diversity on their boards, was struck down in April, according to the New York Times, but the state still has a 2018 law in effect that forces companies to have at least one woman on their board.

In some cases, business leaders have created their own solutions. Last year, Nasdaq secured regulatory approval for plans to require listed companies to share diversity data about their boards of directors. Companies without at least two diverse directors, including one who self-identifies as a woman and one who identifies as an underrepresented minority or LGBTQ+, are required to explain their lack of diversity.

Having executives from underrepresented backgrounds in positions of leadership helps too. Jung’s study found that when board member chairs come from underrepresented groups, they are less likely to sacrifice the gender and racial diversity of their board in response to a downturn.

But, as Jung states, retaining diverse talent requires companies to take the important first step of creating corporate norms that recognize the value of having diverse teams. “It’s not only about bringing [diverse candidates] in but also making them play an important role in the board and change the norms,” she says. “There’s a lot of positive benefits and corporations have to be very sensitive about and must pay attention to make a better strategy for their boardroom structures and who they are going to appoint.”

Source: Board Diversity Is Sacrificed When Companies Underperform, Study Finds

Osler: Diversity Disclosure Practices – Diversity and leadership at Canadian public companies

Useful comprehensive and detailed report, looking at representation at the board and executive levels, for Canada’s largest publicly trade companies, including sector breakdowns.

Previous reports have only looked at women’s representation, the current report includes all four employment equity groups. Summary below, along with tables for visible minorities, Indigenous peoples and persons with disabilities:

Women now hold over 21.5% of board seats among TSX-listed companies disclosing the number of women on their boards, an increase of almost 3% compared to 2019. The rate at which women are being appointed to fill newly created or vacated board seats declined slightly to 35%, compared to 36.4% in 2019. As in past years, Canada’s larger companies continue to lead the way as women hold 31.5% of board positions among the S&P/ TSX 60 companies and 28.3% of board positions among the 221 companies included in the S&P/TSX Composite Index. All-male boards continue to wither away, representing only 18.5% of the TSX-listed companies.

We anticipate that certain of our 2020 full-year results, including the percentage of board seats held by women, will be approximately 1% lower than our 2020 mid-year results as a significant number of issuers which historically have had below average diversity results took advantage of permitted extensions of normal deadlines to file their disclosure after our July 31, 2020 cut-off for our mid-year results.

The number of TSX-listed companies with written board diversity policies increased to 64.7% and approximately 97% of the time those policies included a specific focus on women on the board. This year we noticed a significant increase in companies disclosing that their board policy also considers other diversity characteristics – the most common of which was ethnicity/race, which was identified approximately 57.5% of the time.

However, we continue to see no progress being made at the executive officer level. The proportion of women executive officers has remained largely unchanged since 2015, and under 10% of TSX-listed companies have targets for women executive officers.

Our review of diversity disclosure by CBCA companies under the new CBCA requirements shows results on the representation of women that are comparable to those reported for TSX-listed issuers under the new CBCA requirements. However, there is a marked absence of directors from other diversity groups. Only 5.5% of the 217 disclosing CBCA company directors are visible minorities. And among the 2,023 board positions of the 270 CBCA companies that provided full or partial disclosure on their practices before July 31, 2020, there were only 7 positions held by Aboriginal peoples and only 6 positions held by persons with disabilities.

The key data tables:


How can boards create anti-racist companies?

Nice to see data-based arguments and practical suggestions:

In the 34 years since Canada’s Employment Equity Act was introduced, we haven’t yet normalized Black professionals in senior leadership or on boards. Black people have been underrepresented, marginalized or plain excluded — and with the added intersectional lens of gender, Black women have the worst experience of all. Being a numbers person, I like to start with data. Thankfully, recent reports have begun to break down representation in employment and on boards by visible minority status (Statistics Canada’s terminology, not my own).

Black leaders occupy less than one per cent of executive roles and board seats at major Canadian companies. What’s more, they hold only 0.3 per cent of corporate board positionsand 3.6 per cent of all board positions in Toronto, despite comprising 7.5 per cent of the city’s total population. In July 2020, just as the first COVID-19 lockdown was ending, the national unemployment rate was 10.9 per cent. In contrast, the unemployment rate for Black women was 7.7 points higher at 18.6 per cent, and for Black men, it was 4.2 points higher at 15.1 per cent. This data suggests that Black workers face systemic and institutional barriers to employment in Canada and therefore advancement to boards.

Embedded in our institutions, systemic barriers are everywhere, and are therefore normalized as “just how things are done around here.” You can’t see these barriers, so this invisibility makes it difficult to measure their impact on people who encounter them. As leaders at the boardroom table, it’s essential that we play a significant role in eliminating anti-Black racism and all forms of discrimination in our organizations.

In the months following the tragic murder of George Floyd, many companies realized they could no longer be silent. Some made public statements, pledged donations, or committed actions to revisit their diversity, equity and inclusion goals. But decades of diversity, equity and inclusion (DEI) work have already shown racial disparities in the advancement of Black professionals into board seats, so it’s safe to assume that doubling down on generic DEI efforts will not address the specific issues surrounding anti-Black racism.

So, how can boards take action to create anti-racist companies?

The fish rots from the head

As an individual board member, now is the time to add anti-racism to your core values. Start by educating yourself on anti-Black racism in the workplace. Build your networks to include Black people and organizations that serve Black communities. Ask willing Black people about their experiences, but come with humility and be prepared to have your views on race and privilege challenged without getting defensive.

As a Chartered Professional Accountant (CPA), I have internalized the adage “tone at the top,” which describes an organization’s approach to preventing fraud and other unethical practices in the workplace. Racism in both overt and covert forms is an ethical issue that companies must address in the same way.

The board is ultimately responsible for establishing the tone of the organization, so it must embed anti-racism into its strategic priorities — not just pay lip service to it. Anti-racism objectives will be unique to each organization, depending on its industry, customers, suppliers and other stakeholders. For instance, a tech company writing complex algorithms to identify faces for law enforcement wouldn’t have the same anti-racism policy as a farming operation employing temporary foreign workers from the Caribbean.

The only constant is change

Board composition is important to its overall effectiveness when it comes to meeting shareholder expectations and the demands of regulators. Several factors in board composition can slow down the advancement of Black people — most notably, skills matrices, term limits and qualifying criteria.

Board governance practices have embraced the skills matrix to identify competencies needed to increase board effectiveness, but these skills cannot remain static. Why not include anti-racist skills and competencies, such as learning how to talk productively about race with fellow board members or reviewing decision-making and policies from an anti-racist lens? If the current makeup of your board falls short in these competencies, consider training or increasing the size of the board and its committees.

The lack of term limits only serves to reinforce the status quo. Regulators and companies should adopt a maximum tenure for board members. It wasn’t too long ago that a requirement for a majority of independent directors on publicly traded companies was new, but now, it’s common practice. Companies can commit to recruiting and nominating at least one Black leader to its board as the next available term comes to an end.

Corporate boards also need to examine informal requirements for board members to be former CEOs or other senior executives or to obtain excessive credentials. Is this truly what is needed, or does it serve as another mechanism to reinforce exclusion? I know many talented Black professionals in the not-for-profit sector whose qualifications would be well-suited for a public board, even though they’ve never held a corporate c-suite title. Similarly, I know many Black professionals who carry a well-respected ICD.D designation (granted by the Institute of Corporate Directors) and still are not on any corporate boards.

Your choice: Carrot or stick

Some corporations will look at policies and processes to advance Black leaders as being good for business, such as reaching new markets, addressing skills shortages, and maintaining global competitiveness, or — even better — for social justice reasons. That’s the carrot approach. Others will require a direct strategy, such as tying results to CEO performance and compensation, or through legislation. Monetary penalties for non-compliance is the stick approach.

In Canada, federally incorporated companies and TSX-listed companies are subject to diversity disclosure requirements. Bill C-25 requires federally incorporated companies to report gender and race, as well as representation from Indigenous people and people with disabilities, in the composition of its board and leadership. “National Instrument 58-101Disclosure of Corporate Governance Practices” (NI 58-101) requires TSX-listed companies to disclose the numbers, targets and mechanisms to address representation of women in their director and executive ranks. If these companies do not comply, they must explain why. But NI 58-101 has defined diversity as the advancement of women only, neglecting how gender intersects with race, sexual orientation and disability.

The Canadian diversity rules lack teeth because there are no consequences for non-compliance. You might even say it’s easier to avoid reporting and instead just explain why, in the case of Bill C-25, non-existent targets were not met, or in the case of NI 58-101, why internal company targets were not met. Needless to say, it’s unsurprising that recent data suggests the proportion of women in executive leadership has remained unchanged and that there’s a marked absence of directors from other equity-seeking groups.

Other countries have established targets and enforced them. In the U.S., NASDAQ may become the first major stock exchange to mandate board diversity reports, and to require board diversity by having at least one member identify as a woman and one who identifies as being from LGBTQ+ communities or another underrepresented group. Under the NASDAQ-proposed diversify-or-delist rules, if companies do not publicly disclose board diversity data or fail to meet diversity requirements and do not publish a reason explaining why, they could be delisted from the stock exchange. These proposals, specifically the possibility of delisting, could have greater impact on diversification of corporate boards because NASDAQ sets the rules for 3,000 corporations listed on its exchange.

Bill C-25 and NI 58-101 need to go one step further by penalizing companies that fail to comply with the rules that establish racial diversity targets. Following an anti-racist approach means always remembering that race is in every room — including the boardroom.

There are no quick fixes to the complexity of dismantling anti-Black racism on corporate boards. Change will need to be deliberate, purposeful and prolonged, but board members are uniquely positioned to challenge “how things are done around here.”

Source: How can boards create anti-racist companies?

Lente marche vers la mixité [corporate board diversity]

May have missed the english media coverage:

C’est droit devant, inexorablement. Les gains sont là, mais la marche vers la mixité des conseils d’administration et de la haute direction demeure lente. On l’imagine, la cible se veut encore plus éloignée lorsqu’on élargit le parcours de la représentativité à la diversité.

La plus récente étude sur la question de la diversité a été publiée lundi par l’Institut sur la gouvernance d’organisations privées et publiques (IGOPP). Sur la mixité, on y lit que « même si les gains réalisés au cours de la dernière décennie sont notables, il reste beaucoup à faire en matière de représentativité des femmes sur les conseils d’administration (CA) ainsi qu’au niveau de la haute direction des entreprises ».

L’IGOPP proposait, il y a 10 ans, une cible de 40 %. Une référence mondiale situe, d’ailleurs, la zone de parité hommes-femmes optimale au sein de l’équipe de gestion entre 40 et 60 %. Cette représentation féminine a, certes, presque doublé depuis 10 ans, mais, à un peu plus de 29 % au sein des conseils d’administration des grandes entreprises inscrites en Bourse et à 26 % au niveau de la haute direction, on se retrouve encore loin de la cible.

Que dire des minorités visibles, qui comptent pour 22 % de la population canadienne, mais qui occupent moins de 5 % des sièges aux conseils et moins de 9 % des postes de haute direction ?

Le regard de l’IGOPP a porté sur 76 entreprises d’incorporation fédérale pouvant représenter le tiers des sociétés composant l’indice boursier S & P / TSX. L’exercice vient mesurer un premier effet des modifications apportées par le gouvernement à la Loi canadienne sur les sociétés par actions ayant pour objectif « d’augmenter la diversité observée au sein des conseils d’administration et de la haute direction des sociétés inscrites en bourse », en vigueur depuis janvier 2020.

Outre la présence des femmes, ces modifications visaient plus large en s’étendant à la représentation des peuples autochtones, des personnes handicapées et des personnes qui font partie des minorités visibles, explique l’Institut.

Cet élargissement suit l’entrée en vigueur, au 31 décembre 2014, de la réglementation sur l’Information concernant la représentation des femmes au sein des conseils d’administration et des instances des émetteurs assujettis. Au Canada, les autorités de réglementation n’ont pas retenu la formule de quotas, préférant plutôt une approche de divulgation s’étendant à la haute direction selon la formule « se conformer ou
s’expliquer ».

L’on parle donc d’un engagement moral, mais non contraignant, qui s’insère cependant dans une mouvance plus généralisée d’adoption des critères environnementaux, sociaux et de gouvernance auprès des investisseurs reconnaissant la portée et la contribution de la diversité.

Beaucoup à faire

Certes, l’exercice de l’IGOPP comporte ses limites et l’on admet une probable surévaluation de la représentation mesurée pour les postes de haute direction, mais l’on peut se faire une idée sur le chemin restant à parcourir et sur le rythme de renouvellement des administrateurs et des hauts dirigeants, qui constitue un frein aux yeux de l’IGOPP.

Et l’on retient que seulement 47 % des entreprises observées s’étaient dotées de cible à atteindre en matière de représentativité des femmes au sein des CA. À peine 18 % se sont fixé des objectifs précis touchant la haute direction.

Ce constat vient rejoindre d’autres études sur le sujet. En décembre dernier, le cabinet KPMG indiquait que 96 % des 100 plus importantes entreprises inscrites en Bourse soumises à la loi fédérale comptaient au moins une femme dans leur conseil d’administration au 31 mai 2020, contre 67 % au 31 mai 2014.

Inversement, 4 % de ces sociétés avaient un conseil d’administration composé uniquement d’hommes et 24 % avaient une équipe de direction entièrement masculine. Ces pourcentages s’établissaient respectivement à 33 % et à 29 % au 31 mai 2014.

L’on écrivait aussi que, s’il y a amélioration, il y a toutefois disparité entre les postes de conseil d’administration et ceux de la haute direction. KPMG a mesuré que deux fois plus d’hommes que de femmes ont accédé à des fonctions d’administrateurs entre le 31 mai 2014 et le 31 mai 2020, et trois fois plus à des postes de haute direction.

À l’évidence, il reste encore beaucoup à faire. Dans une étude mondiale publiée par le cabinet Deloitte datée du 30 octobre 2019, on lisait que, globalement, les femmes occupent 16,9 % des sièges aux conseils d’administration, soit une maigre hausse de 1,9 point de pourcentage par rapport à l’édition 2017 de l’étude.

À ce rythme, il faudra plus de 30 ans pour atteindre la parité, disait Deloitte. Et l’on ne parle pas des fonctions de haute direction.

Source: Lente marche vers la mixité

Germany Moves Toward Requiring Women On Large Companies’ Executive Boards

Of note to Canadian regulators, broadening to visible minorities and Indigenous peoples:

Germany has taken a step toward requiring what has not happened voluntarily: putting women on the management boards of the country’s largest companies.

On Wednesday, Germany’s cabinet approved a draft law that would require stock exchange-listed companies with executive boards of more than three members to have at least one woman and one man on those boards.

The rule would affect about 70 companies – of which some 30 currently have no women at all on their management boards, the Justice Ministry said. These companies generally have more than 2,000 employees.

The draft law will now go to the Bundestag, Germany’s parliament, for a vote.

The legislation also contains a provision intended to improve the effectiveness of a 2015 law that requires leading companies’ supervisory boards — which are generally chosen by shareholders and don’t have executive powers — to have at least 30% of their positions occupied by women.

The new law would extend the 30% requirement to companies in which the federal government is the majority shareholder. That includes Deutsche Bahn, the German railway company. In addition, executive boards – responsible for managing the company – that have more than two members will be required to have at least one woman. These measures would affect about 90 companies.

Federal Minister for Family Affairs, Senior Citizens, Women and Youth Franziska Giffeycalled the law a “milestone” that would ensure there will no longer be women-free boardrooms in these large companies. The law would make Germany better prepared for the future, she said, and more able to capitalize on its potential.

“We have seen for years, not many changes are made voluntarily, and progress is very slow,” Giffey said in a statement.

An October 2020 report by the AllBright Foundation, which advocates for boardroom diversity, found that Germany lags the U.S., France, the U.K., Poland and Sweden in the proportion of women on executive boards at leading companies.

The study found that in the U.S., women comprise 28.6% of the executive boards of the 30 largest publicly traded companies. In Germany, that figure is just 12.8%. And only four of Germany’s largest 30 listed companies had more than one woman on their executive boards.

Janina Kugel, a former Siemens executive who is now an equality advocate, told Deutsche Welle the new quota would be an important signal.

“The perception of Germany is that, because we’ve had a female chancellor for the last 15 years, Germany is very progressive in that matter, but actually it is not,” she said.

The U.S. has also begun to confront the issue of gender disparity in boardrooms.

In 2018, California became the first U.S. state to require companies based there to have women on their boards of directors.

And the U.S. stock exchange Nasdaq announced diversity requirements last month. Under the rule submitted to the Securities and Exchange Commission, Nasdaq would require companies traded on its exchange to appoint at least one woman and at least one member of an ethnic or racial minority or LGBTQ+ person to their boards of directors.

Source: Germany Moves Toward Requiring Women On Large Companies’ Executive Boards

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 |