For well over a decade, the subject of gender representation and board diversity has grown as a topic of interest in academic circles, with regulators, and in corporate boardrooms. At the highest level, the argument in favour of increased diversity is straightforward: with women representing 50% of the population, board renewal creates the opportunity to introduce new ideas and perspectives that contribute to driving value for shareholders. At a more granular level, it has been argued that board diversity promotes “lower levels of risk-taking, higher levels of firm innovation, and greater overall firm value”.[1] Morgan Stanley Capital International have stated that “…companies with strong female leadership at the board level generated a return on equity 36.4% higher than companies without a critical mass of women on their boards.”[2]

The push for greater board diversity was accelerated significantly in the US and Europe with the launch of State Street Global Advisors’ (State Street) “Fearless Girl” campaign in March of 2017. With Blackrock and Vanguard quickly following State Street’s lead, three of the biggest asset managers in the world had adopted policies against re-electing directors with companies they viewed as making limited efforts to appoint women to corporate boards.[3]

Generally speaking, countries have responded by adopting one of two approaches to increasing board diversity: quotas (such as 40% in countries like France and Norway), and “comply or explain” (Canada, the US, Sweden, and Finland). While the former approach has led to the greater inclusion of women in corporate governance, progress overall would best be described as modest. Despite the adoption of a wide range of policies and initiatives, a 2021 OECD review of 50 jurisdictions showed that female participation on the boards of large, listed companies had only increased from 15.5% in 2013 to 25.1%.[4]

Canada remains a “comply or explain” jurisdiction. For TSX-listed companies, women in 2022 held 26% of corporate board seats. This figure increases for S&P/TSX Composite companies (32.9%), and again for S&P/TSX 60 companies (36%).[5] While Canadian public companies trail other jurisdictions in terms of board diversity, the pressure for increasing participation of women, indigenous, and other diverse peoples is steadily increasing:

• In 2014, Canadian Securities Administrators mandated gender diversity disclosure at the board and executive officer levels rule for non-venture TSX issuers, codifying the “comply or explain” rule.
• Effective January 1, 2020, the Canadian Business Corporations Act (CBCA) was amended to require all corporations governed by the CBCA with publicly traded securities, including venture issuers, to disclose the number and percentage of women, aboriginal persons, members of visibility minorities and persons with disabilities on the board and within senior management.
• Effective February 1, 2023, Institutional Shareholder Services (ISS) began recommending a vote against the chair of the nominating committee for TSX Composite Companies whose board composition does not include 30% women. Further, the ISS now:

o Requires all TSX-listed companies to have at least one woman on their board.

o In 2024, ISS will require all TSX Composite companies to have at least one board member who is racially/ethnically diverse.

• Effective January 1, 2023, Glass Lewis began recommending a vote against the chair of the nominating committee of a board that was not at least 30% gender diverse, or the entire nominating committee of a board with no gender diverse directors, at companies on the TSX.

o For boards of issuers on junior exchanges, Glass Lewis has maintained their minimum threshold of one gender diverse director on the board.

Implications for Canadian Miners

About Frank Galati

For over 15 years, Frank has been leading Bedford’s executive compensation and resource-based recruiting practices.

Frank manages Executive Search and Compensation, including performance metrics, talent succession, talent scouting and organizational effectiveness for companies in mining and metals, construction, power, oil and gas, and is the worldwide mining practice leader for TRANSEARCH International, a leading international association of executive search firms.

Frank regularly advises Boards and executive management on executive pay policy, compensation trends, incentive plans, employment contracts and directors’ compensation. He has authored The Mining Report Executive and Board Compensation and Governance since 2009 (Bedford Mining Report).