Diversity Report Card: Call to Action
By now we are all familiar with the refrain that gender diversity at senior executive and board levels leads to better decision-making and superior corporate performance. There is a growing body of evidence that points to this conclusion, including a 2015 MSCI ESG Research report, concluding that companies in the MSCI World Index with strong female leadership generated a ROE of 10.1% vs 7.4% without.
Yet, this annual report by the Canadian Board Diversity Council (CBDC) points out that progress in Canada on increasing gender diversity continues to lag the 30% target set by CBDC for 2018. In 2016, women held only 21.6% of board positions on FP500 boards. This is despite the OSC and most provincial security regulators implementing “Comply or Explain” rules in December 2015 with respect to diversity.
Even more concerning is the fact that females comprise only 19.1% of top senior executive roles in the FP500 companies (less than the 21.6% of female board members), as cited in this report. This stands in stark contrast to the fact that women now earn over half of all university degrees in Canada. Absent noteworthy progress in diversifying the ranks of corporate leadership, the task of increasing gender parity in board governance is near-impossible. For those of us within senior leadership roles, this is our call to action to do better.
Perhaps the most shocking data point in the CBDC report was the fact that 78.6% of FP500 directors believe gender parity will be achieved by 2036 – a full 20 years away. Only 34.1% believed gender parity could be achieved in the next decade. And 21.4% believe that gender parity will occur sometime between 30 years and “not in the next century”. Technology is disrupting every industry at a breakneck pace, yet we are unable to find ways to leverage human diversity within corporations in a meaningful way. We ought to expect much more of ourselves.
There are, however, some hopeful signals. In November 2017, CPPIB, which manages over $325 billion for the Canada Pension Plan, advised that it voted 34 times against specific directors who chaired nomination committees that failed to include women as candidates. And in 2016, State Street Global Advisors created the SSGA Gender Diversity Index and SSGA Gender Diversity Index ETF. If we can cultivate and grow the ranks of capable female executives, and couple this with practical actions such as those taken by CPPIB and SSGA, there is every reason to expect that meaningful progress is much closer than decades away.