Progress on improving board diversity in Canada is slowing – The Globe and Mail

A slowdown in board diversity is surprising, particularly in light of the progress that was made last year, says John Valley, partner, Corporate and Chair of the Environmental, Social and Governance group, in an interview with The Globe and Mail. John is the co-author of Osler’s just-released tenth annual 2024 Diversity Disclosure Practices: Diversity and leadership at Canadian public companies [PDF] report.

“It’s not that progress has stopped; it’s that it has slowed,” says John.

Women accounted for 38.1% of board seats at companies listed in the S&P/TSX Composite Index, and 39.7% of board seats among the largest companies included in the S&P/TSX 60 Index. A key reason for the slowing growth of women on boards is the declining proportion of women filling new or vacant board seats, which fell to 40.4% this year from 45.3% last year.

John also noted that the slowdown may be due to companies reaching the diversity targets set by Institutional Shareholder Services, an influential proxy advisory firm that helps investors vote their shares in board elections, and deciding to stop at that level. He also indicated that companies experiencing a learning curve in their recruitment strategies may contribute to the slow progress in racial and ability diversity.

“There is an element of how the director recruitment process works and companies refining how they recruit directors. So, they are learning how to identify directors who don’t come from traditional backgrounds, and that’s a process that’s going to take time,” says John.

Despite the stalled broader momentum, the number of TSX-listed companies where women hold at least 50% of board seats increased to 41 companies compared with 39 last year. However, in executive-officer positions, the number dropped from 41 companies in 2023 to 39.

If you have a subscription to The Globe and Mail, you can read the full article by author Dominique Gene published on September 26, 2024.