2019 Board Gender Diversity in Canada: The Success of TSX-Listed Companies

In 2016, the organisation Status of Women Canada set a national goal to have  30% of  women on boards by 2019. While the overall numbers fell short at 2018-year’s end, with just 18.2% of board seats being filled by women at all boards across Canada, TSX-listed companies did meet this goal with just over 30% (30.2% of S&P/TSX 60 companies, to be exact) of board seats being held by women. This was revealed in the 2019 report on Women in Leadership Roles in Canada, released in September 2019 by Osler.

2019 Board Gender Diversity in Canada: The Success of TSX-Listed Companies

Diversity at the managerial and board level has become very important in the last year in Canada. There are two separate forces which are driving this change; a mandate at the federal government level to regulate diversity disclosure and investment trends which include looking at the diversity of a company’s board and management.

What is Driving Success at S&P/TSX 60 Companies? The Short Answer is Investors

Environmental, Social, and Governance (ESG) investing is a movement that has gained traction in the last couple of years. ESG investing grew out of the Socially Responsible Investing (SRI) movement, along with other sustainable investing practices. It has matured to include governance as one of its cornerstones and does not make negative value judgements about companies as past sustainable investing practices did. Instead, ESG looks for value in companies and gives equal weight to governance practices alongside corporate social responsibility and the company’s environmental initiatives. Diversity of gender and minorities  are key factors in the “Social” aspect of ESG investing.

What does ESG have to do with the success rate of appointing female directors at S&P/TSX 60 companies? Institutional investors are carefully considering factors that are included in ESG in their investment strategies such as diversity. investors have a large influence on the policies of Canada’s biggest corporations, as they often hold a number of shares in Canada’s “blue chip” companies. The Ontario Teacher’s Pension Plan, for example, has signaled that as of 2019 it would not support committee actions in votes where there was insufficient representation of women on boards at the company. As of 2018, it required that businesses which it invests in have a minimum of three female directors.

New Canadian & International Regulatory Diversity Requirements

As of January 1, 2020, corporations which are governed under the Canada

Business Corporations Act (CBCA) are required to publicly provide shareholders with diversity policies for board members and company management. This means that shareholders now have an organization’s diversity policy in hand when making investing decisions. Naturally, more Canadian companies have adopted gender diversity policies to comply with this regulation and satisfy shareholder questions about diversity.

There are additional regulations which have been passed recently in both the United Kingdom and the United States. In 2018, California became the first state in the U.S. to require women on boards, which shifted board diversity in the tech sector. The US Security & Exchange Commission and the state of Illinois have also launched new diversity disclosure initiatives. The United Kingdom’s Financial Reporting Council has also released amendments to its Corporate Governance Code which require that gender diversity, among other items, are taken into account when new board appointments are made.

The Wide Diversity Gulf Between TSX 60 & Other Canadian Companies

There are several statistics which demonstrate a gap between gender diversity at Canada’s largest companies and the rest of Canadian businesses. Some of these statistics include the fact that 90% of TSX 60 companies have more than one female director, where only 38.7% of other Canadian businesses can say the same. Plus, there’s the statistic we have already mentioned:  30% of board seats at TSX 60 companies are filled by women, where the national average is only 18.2%.

This wide gap could be due to a number of factors, including the resources available to a larger business to “raise” potential female directors and executive management. From a management perspective, the top five reasons given in the report for not wanting to hire more female executives across all companies were:

  1. Not wanting to compromise meritocracy
  2. Best candidates may not be selected
  3. Targets are not effective
  4. Targets are too restrictive
  5. Company has low turnover


It can be correlated that these may be the same reasons (with the exception of #5) for not appointing new female directors. Without investors driving change, where these attitudes exist, they are likely to continue. Since ESG is a significant market force, it will eventually move old-school businesses in the right direction, as will diversity disclosure requirements