Corporate Board Diversity

The Issue

Women and minorities continue to be under-represented on corporate boards in Canada, while too few directors have real expertise on corporate sustainability issues. Many boards consist of long-serving directors from similar backgrounds who may no longer be serving the interests of shareholders and other stakeholders, and who select new colleagues from a closed circle of "who they know".

ESG Perspective

Research shows that companies with gender-diverse boards are also more likely to achieve financial out-performance — making diversity an imperative that all boards should be considering as part of their duty to shareholders. Further, a correlation has been demonstrated between board diversity and out-performance on sustainability issues — an important consideration for consumer and resource companies where environmental and social missteps can impact corporate value dramatically. In 2015 new disclosure requirements come into force in Canada, requiring major companies to disclose on board gender diversity policy, practices and targets.

Our Response

We engage companies in dialogue on:

  • Increasing diversity of identity on the board including representation of women and minorities

  • Increasing diversity of perspective on the board including expertise on environmental, social and governance issues

  • Implementing tenure policies to support board independence and prevent the board from becoming entrenched

We apply diversity principles in our proxy voting and provide feedback to companies on how we voted, and why.

We engage with regulators and standards-setters on enhancing diversity practices and disclosure.