With the most recent release of their annual review of disclosure regarding women on boards and in executive officer positions at Toronto Stock Exchange-listed issuers, the Canadian Securities Administrators have now published ten years of key data tracking board representation since 2015. In this report, we compare this data with (i) similar findings from Innovation, Science and Economic Development Canada on public issuers incorporated under the Canada Business Corporations Act, and (ii) our own data on S&P/TSX 60 constituents and reflect on progress and trends observed since the “comply or explain” regime was first implemented.
Highlights of the findings discussed below include the following:
- Between 2015 and 2024, the Canadian Securities Administrators (“CSA”) data shows a significant increase in the percentage of board seats occupied by women, growing from 11% to 29%. However, growth in the percentage of board chairs who are women has been more modest, increasing from 5% in 2019 to 8% in 2024.
- According to CSA data, the percentage of issuers with a woman chief executive officer (“CEO”) has remained stagnant at 5% over the past four years, while issuers with a woman chief financial officer (“CFO”) decreased from 17% in 2023 to 16% in 2024.
- The majority of issuers reviewed by the CSA (64%) have adopted a written policy relating to the representation of women on their boards. 44% of issuers have adopted targets for the representation of women on their board and 7% have adopted targets for representation in executive officer positions. In contrast, only 38% of distributing corporations reviewed by Innovation, Science and Economic Development Canada (“ISED Canada”) had adopted a written policy with respect to the representation of women on boards – a 4% increase from last year.
As we also note, the CSA have indicated that this will likely be the final year of the annual review under the current disclosure framework, as they explore potential changes to diversity-related disclosure requirements.
The Reviews
On October 30, 2024, the CSA published CSA Multilateral Staff Notice 58-317 Review of Disclosure Regarding Women on Boards and in Executive Officer Positions, Year 10 Report (the “CSA Review”). This marked the tenth annual review by the CSA of issuers that were subject to the disclosure requirements of National Instrument 58-101 Disclosure of Corporate Governance Practices (“NI 58-101”) and Form 58-101F1 Corporate Governance Disclosure (“Form 58-101F1”). The results summarized disclosures from 574 issuers listed on the Toronto Stock Exchange (“TSX”) with year-ends between December 31, 2023 and March 31, 2024 that had filed information circulars or annual information forms by July 31, 2024.
ISED Canada has also released its fourth annual report Diversity of Boards of Directors and Senior Management of Federal Distributing Corporations (the “CBCA Review”), which examined the diversity disclosures of 458 issuers. Diversity disclosure requirements under the Canada Business Corporations Act (“CBCA”) apply to all “distributing corporations” incorporated under the CBCA, which include not only those listed on the TSX, but also on other stock exchanges, such as the TSX Venture Exchange, the Canadian Stock Exchange or other foreign stock exchanges. The CBCA requirements go beyond gender diversity to include broader facets of diversity, including visible minorities, Indigenous persons and persons with disabilities.
Since 2016, Stikeman Elliott has also been tracking various corporate governance topics, including gender diversity on boards and in executive officer positions at S&P/TSX 60 constituents.
Progress Made
In terms of total board seats held by women, the CSA Review shows a positive trend, with representation rising from 11% in 2015 to 29% in 2024, reflecting an overall increase of 164%.
However, progress in terms of representation of women in senior management positions, has been considerably slower. According to the CSA Review, in 2024:
- 72% of issuers have at least one woman in an executive officer position – a 9% increase since 2018.
- 5% of issuers have a female CEO, a slight increase from 4% in 2018. Since 2020, this figure has been stagnant.
- 16% of issuers have a female CFO. While this marks a 14% overall increase since 2018, the percentage has decreased from 19% in 2022.
Examining our data for S&P/TSX 60 constituents from 2016 to 2024 reveals notable growth in both the percentage of board seats and executive officer positions held by women. In 2024:
- 39.7% of total board seats are held by women; and
- 29% of total executive officer positions are held by women.
Furthermore, on average, S&P/TSX 60 constituents have 5 women board members and 4 women executive officers, compared to last year’s ratio of 2.6:2.
As noted in previous years, the CSA Review found a positive correlation between issuers adopting certain diversity measures and the proportion of board seats held by women. Where issuers had adopted targets for the representation of women on their boards, there was a greater percentage of women on their boards (35%) as compared to issuers without board targets (22%). Similarly, adopting written board policies was also linked to greater representation of women. Issuers with written board policies had a greater proportion of women on their boards (33%) than issuers without written board policies (20%).
The CSA Review also shows that 25% of the issuers that were reviewed had adopted director term limits. Among these issuers, 32% adopted age limits alone, 37% adopted tenure limits alone and 31% adopted both age and tenure limits. In comparison, our tracking shows that 43% of S&P/TSX 60 constituents had director term limits which were, on average, 13 years long. Additionally, 43% of issuers set age limits on retirement from director positions, with an average age limit of 73 years.
Looking Beyond Gender Diversity
In addition to gender diversity, we also track progress in other facets of board diversity, including the representation of visible minorities, Indigenous persons, and persons with disabilities. In 2024, on average, the boards of the S&P/TSX 60 constituents were composed of 1.6% Indigenous persons, 14% visible minorities (reflecting an increase of 4% from last year) and 0.76% persons with disabilities. In comparison, the CBCA Review also discloses similar diversity statistics among its sample issuers, with boards comprised of 0.7% Indigenous persons, 5% visible minorities and 0.5% persons with disabilities.
Current Regulations on Board Diversity Disclosure under NI 58-101
As a refresher, NI 58-101 has required most reporting issuers in Canada to disclose board diversity practices since 2015. This instrument adopts a comply-or-explain framework, requiring issuers to disclose whether they have policies and practices supporting the representation of women on boards and in executive officer roles, along with other measurable diversity targets. If no such policies or targets exist, issuers must explain why.
The disclosure requirements currently include the number and percentage of women on boards and in executive roles, the existence of written policies on identifying and nominating women for board positions, and whether gender diversity is considered in recruitment processes. While the framework does not mandate specific policies, it emphasizes transparency to encourage greater diversity at leadership levels without mandating specific quotas.
For more information about NI 58-101, please see our previous discussion of this topic.
In April 2023, the CSA published for comment proposed amendments to Form 58-101F1 and proposed changes to National Policy 58-201 Corporate Governance Guidelines which would require disclosure on aspects of diversity beyond the representation of women. The CSA are considering stakeholder feedback and working towards publishing final amendments to these rules and policies. As a result, after ten years of publishing annual board diversity reports, the CSA have indicated that they expect that this will be the final report under this disclosure regime.
Guidance from Proxy Advisory Firms
The two main proxy advisors, Institutional Shareholder Services (“ISS”) and Glass Lewis, have distinct approaches to diversity in their Canadian proxy voting policies. ISS has incorporated both gender and racial diversity into its guidelines, while Glass Lewis predominantly emphasizes gender. Key elements of ISS’ policy include:
- For S&P/TSX Composite Index companies: ISS recommends a “withhold” vote where women hold less than 30% of board seats, there is no racially or ethnically diverse director, or the company has not committed to adding a racially or ethnically diverse director by the next AGM.
- For all other TSX companies: ISS recommends a “withhold” vote if there are no women on the board.
- Under its SRI Proxy Voting Guidelines: ISS recommends a vote against or withhold votes from members of the Nominating Committee where the board is less than 40% of the underrepresented gender or lacks at least 20% racial or ethnic diversity.
Meanwhile, Glass Lewis’ diversity policy for TSX companies recommends voting against the chair of the Nominating Committee if the board is not at least 30% gender diverse, or against the entire Nominating Committee if no gender diverse directors are present.
For some of our previous discussion of board and executive diversity, please see:
The author would like to acknowledge the support and assistance of Mamraj Mahboob, articling student at law.
[View source.]
