Authors: Andrew MacDougall, John M. Valley, Joanna Cameron, and Jessie Armour
Overview
A ten-year retrospective
Welcome to Osler’s 2024 Diversity Disclosure Practices report. This is our tenth annual report. We are proud that our report has become the preeminent publication on the diversity practices of Canadian public companies, covering all publicly traded issuers subject to reporting requirements on the representation of women under Canadian securities laws as well as all corporations subject to reporting requirements on the representation of women, visible minorities, Indigenous Peoples and persons with a disability under the Canada Business Corporations Act (CBCA). In addition to reporting statistical information regarding women and other diverse groups on boards and in executive officer roles, we also provide information on new developments in diversity domestically and internationally, as well as best practices.
We launched our report in 2015 with the goal of better informing boards and executives to help them identify, address and articulate diversity considerations in their organizations and to strengthen Canadian business as a whole. Over the last decade, that same impetus has led us to evolve and enhance our report in the following ways:
- In 2016, we added the names of companies achieving 50% representation of women in board and executive officer roles in order to show that gender equity can be achieved.
- In 2018, we added data on the representation of women among new director appointments and board chairs and chief executive officers.
- In 2019, we began highlighting best practices in disclosure to assist organizations seeking to improve their diversity disclosure and, by extension, their diversity practices.
- In 2020, we added disclosure on the representation of women for all companies incorporated under the CBCA and added data on the representation of women among committee chairs, as well as disclosure by CBCA companies on diversity beyond gender.
- In 2021, we added details on non-CBCA companies which voluntarily provided diversity disclosure beyond gender.
- In 2023, we added a trend line showing the increase, over five years, in the number of companies with 50% or more women directors and with 50% or more women executive officers.
- In 2024, we began reporting on the number of chief executive officers from visible minorities.
In this year’s report we note the progress made and recognize those companies that have made a conscious effort to enhance their diversity, equity and inclusion (DEI) practices and those that have achieved success.
It takes a village working together with passion on a common goal to generate this report. This work would not be possible without the dedication of the co-authors of the report, the enthusiasm of our team of student volunteers and the support of our talented marketing team at Osler.
It has been my pleasure to have co-authored all of our reports over the last decade. When I launched our reporting initiative in 2015, I believed it was important. But I did not realize what an impact it would come to have, the fervid responses it would provoke or the amount of work that it would involve. I have been happy to share that load with John Valley, who has co-authored eight of the past nine editions of this report with me, and Joanna Cameron, who joined the team this year. I am extremely grateful for the unwavering support of the firm and my colleagues at Osler, Hoskin & Harcourt LLP over the years.
The 2024 Diversity Disclosure Practices report provides general information only and does not constitute legal or other professional advice. Specific advice should be sought in connection with your circumstances. For more information, please contact Osler’s Corporate Governance group.
Introduction
Canadian public companies have come a long way over the last decade. Women directors are no longer a rarity, and token female representation on the board is now the exception, with the average number of women on a board among TSX-listed companies having increased from less than one woman per board to 2.37 women per board. Most pleasantly, the proportion of directors from visible minorities directors has almost doubled since 2020, the first year this metric was recorded, moving from 5.5% to 10.2% this year. Executive teams have also become more diverse. The average executive team now includes 2.07 women (versus 1.44 in 2015) and 0.96 executive officers from visible minorities (versus 0.5 in 2020).
But our results this year suggest that the drive for diversity is losing momentum in Canada. The year-over-year increase in the representation of women on boards is the smallest we have seen since 2016 (the second year of our report), and we saw a marked decline in the rate at which women are being added to boards compared to recent years. No less concerning, compared to last year there has been almost no change in the proportion of visible minorities, Indigenous Peoples and persons with a disability on CBCA boards.
Diverse senior leaders speak up
This year, we reached out to diverse senior leaders for their perspectives on the journey to creating more diverse, equal and inclusive organizations and they shared their own hopes and trepidations about the potential for future progress. The recordings may be found in the Diverse Voices chapter of the report. We would like to thank all of our contributors and greatly appreciate their support for our report.
Progress slowing for women on boards
From 2015 to 2023, the year-over-year increase in the proportion of board seats held by women has averaged 2.1 percentage points each year. We expected the average percentage of board seats held by women would finally top 30% this year. However, Canadian boards fell just short of that mark with women only holding 29.8% of available board seats, an increase of only 1.3 percentage points over last year — the lowest year-over-year increase since 2016.
As we noted last year, the increased representation of women on boards in recent years has not been consistent across listed companies, and improvement has been primarily driven by the S&P/TSX Composite Index companies. At companies within that index, women hold 38.1% of board seats, compared to only 23.1% of boards seats at companies not included in the S&P/TSX Composite Index. This is not surprising as the diversity of S&P/TSX Composite issuers has received particular focus from institutional investors. Our data shows that there is an increase in the number of women directors with each change to the proxy voting guidelines adopted by Institutional Shareholder Services, which have typically focused first on S&P/TSX Composite companies.
The 38.1% of board seats held by women at S&P/TSX Composite companies represents an increase of almost two percentage points from 2023, consistent with the longer-term average. But tellingly, among the S&P/TSX 60 companies, there was only a 1.5-percentage-point increase, to 39.7%.
We also noticed a marked decline in the percentage of women being appointed to newly created or vacated board seats, falling to 40.4% compared to last year’s record-breaking 45.3%.
Companies led by women do better on diversity
Sifting through our data, we noted a significantly higher level of diversity where women hold senior leadership roles. Although on average women hold 29.8% of board seats, when the board chair is a woman, women constitute, on average, approximately 39% of the board and where the CEO is a woman, women constitute, on average, approximately 35% of the board.
No change in board representation for other diverse groups
Recent years have also seen a rapid rise in the representation of visible minorities on the boards of CBCA companies since reporting began in 2020. But this year, only 10.2% of board seats were held by visible minorities, unchanged from last year. We also noted no change in the percentage of directors with disabilities and only a slight increase (by 0.1 percentage point to 1.0%) in the proportion of CBCA company board seats held by Indigenous Peoples.
Diversity among executive officers continues to increase slowly
Among companies subject to the Diversity Disclosure Requirement, there are, on average, approximately two women on each executive team (representing an average of approximately 21% of the executive team). However, this reflects an increase of only three-quarters of a percentage point compared to 2015 (when there were 1.27 women executive officers on average). And despite this progress, the proportion of companies with a woman CEO declined to 4.5% (compared to 5.2% in 2023).
We also noted a small increase in the proportion of executive officers from visible minorities on the executive teams of companies subject to the CBCA Requirement. Now there is almost one executive officer from visible minorities per executive team (0.96), compared to an average of 0.88 last year.
The prospect of continued progress on diversity is dim
It has been reported that U.S. public companies are retrenching and re-examining their approach to DEI — or at least the disclosure they provide regarding the DEI initiatives — in response to recent legal challenges to certain corporate DEI initiatives and customer pressure in certain parts of the U.S. In comparison, we did not see a material change in disclosure practices among Canadian companies and there was little change in the rate at which companies adopted targets for women directors or women executive officers.
At the same time, however, some of the historic external driving forces for further change are becoming less effective. Institutional investors and proxy advisory firms are currently focused on board diversity targets of 30% women directors and one racially diverse director. In the case of women directors, current averages for S&P/TSX Composite Index companies are close to the 30% target. But the target for racially diverse directors did not have much impact this year as S&P/TSX Composite Index companies on average have close to only one-half of a racially diverse director. Furthermore, the Canadian Securities Administrators have been unable to agree on changes to diversity disclosure rules. Corporate Canada has not adopted voluntary targets pushing for representation beyond the 30% level originally advocated by the 30% Club, and has seemingly not been inspired or influenced by the federal government’s 50 – 30 Challenge.
Absent renewed pressure, it appears that continued diversity progress will depend on companies recognizing the strategic value of enhancing DEI practices and building a pipeline of capable diverse senior leaders.
Highlights
40.4%
is the rate at which women are being appointed to fill new or vacant director positions of TSX-listed companies
29.8%
of board seats among TSX-listed companies are held by women, compared to 37.8% among S&P Composite companies and 39.6% among S&P/TSX 60 companies.
10.9
of TSX-listed companies have targets for women executive officers
9.6%
of the time the chair of a TSX-listed company is a woman
4.5%
of the time the CEO of a TSX-listed company is a woman, which is relatively unchanged from 2022
3.2%
of the time the CEO of a TSX-listed company is a woman, which is relatively unchanged from 2022
43.9%
of TSX-listed companies have targets for women directors and 30% is the typical target
2
women and 1 visible minority are, on average, among the executive officers
No change
in board representation for other diverse groups:
Visible minorities: 10.2% in 2024 (10.2% in 2023)
Indigenous Peoples: 1.0% in 2024 (0.9% in 2023)
Disabled persons: 0.7% in 2024 (0.7% in 2023)
The Diversity Disclosure Requirement requires disclosure:
- Whether or not the issuer has adopted a written policy relating to the identification and nomination of women directors. If the issuer has not adopted such a policy, it must disclose why it has not done so. If an issuer has adopted a policy, the issuer must disclose:
- a short summary of its objectives and key provisions
- the measures taken to ensure that the policy has been effectively implemented
- annual and cumulative progress by the issuer in achieving the objectives of the policy
- whether, and if so how, the board or its nominating committee measures the effectiveness of the policy
- Whether the issuer considers the level of representation of women on the board in identifying and nominating candidates for election or re-election to the board. If so, the issuer must disclose how and, if not, disclose the issuer’s reason for not doing so.
- Whether the issuer considers the level of representation of women in executive officer positions when making such appointments. If so, the issuer must disclose how and, if not, disclose the issuer’s reason for not doing so.
- Whether the issuer has adopted a target regarding the appointment of women to the board. If so, the issuer must disclose the target and the annual and cumulative progress of the issuer in achieving the target. If not, the issuer must disclose the reason for not doing so.
- Whether the issuer has adopted a target regarding women in executive officer positions of the issuer. If so, the issuer must disclose the target and the annual and cumulative progress of the issuer in achieving the target. If the issuer has not adopted a target, it must disclose why it has not done so.
- The number and percentage of women on the issuer’s board of directors.
- The number and percentage of the issuer’s women executive officers, including all major subsidiaries of the issuer.
The CBCA Requirement requires substantially the same disclosure as the Diversity Disclosure Requirement, but separately with respect to each “designated group” — which it defines to include, but not be limited to, designated groups as defined by the Employment Equity Act (Canada).
Accordingly, disclosure is required with respect to
- women
- Indigenous Peoples (First Nations, Inuit and Métis)
- persons with disabilities
- members of visible minorities
Companies subject to the CBCA Requirement may also elect (but are not required) to provide disclosure in respect of additional “designated groups” identified in their information circulars.
We recognize that there are a range of terms used to reference the various diversity characteristics referred to in this report. Different companies make different choices in this regard. Since our report is based on disclosure made by companies in response to legislated disclosure requirements, we have generally used the same terms as the legislation where applicable to avoid confusion. However, we have chosen to use the term “Indigenous peoples” to include references to “Indians”, “Inuit” and “Métis” peoples covered by the term “Aboriginal peoples” in the legislation referenced by the CBCA Requirement.
