So how’s the Ontario Security Commission’s new “comply or explain” policy doing in nudging our public companies to put more women on their boards?
Well, if the first six months offer any clue, it will take 68 more years before boards will reach gender parity – longer than anyone reading this piece will be alive.
Last week, a preliminary report by law firm Torys LLP revealed that 56 per cent of S&P/TSX companies who filed proxy circulars this year now have policies to promote women to their boards. Most of these were created after Jan. 1, when the new disclosure rule took effect. But only 13 per cent of them had measurable targets for bringing more women on boards.
One of the report’s co-authors, Rima Ramchandani of Torys, told The Globe and Mail: “I would have thought we would have seen more, but I do think it’s early days, and I suspect next year and in a few years there will be an increase in that number.”
Then yesterday, 28 of Canada’s top executives created the Canadian branch of the 30% Club, which is pushing for Canadian boards to have 30-per-cent women by 2020. As their founding chair, Spencer Lanthier, told The Globe: “This is not a quota; it’s really aspirational goals.”
I fear both Mr. Lanthier’s and Ms. Ramchandani’s optimism are misplaced.
The reality is that six months into the new regime, 44 per cent of S&P/TSX companies haven’t yet begun to comply with the OSC rule to create policies to improve gender diversity on their boards. Forget the fairly basic management technique of setting specific targets in order to boost the chances of reaching them.
But overriding this number is an even more disturbing one: Of the 243 companies listed on the S&P/TSX, roughly 75 still have no women on their boards. It seems their nominating committees can’t find even one woman who’s qualified to serve their shareholders with the same skill, diligence and wisdom as the group of men who now steer their company’s fate in a world where corporate success will be all about collaboration, diversity and inclusiveness.
This is maddening. But it isn’t hard to believe. In fact, this corporate foot-dragging is entirely predictable: It’s exactly what happened in Norway, where, since 2006, regulations have required that women fill at least 40 per cent of a company’s board seats.
Because these were quotas and not targets, because they demanded action rather than urged compliance or explanation, the Norwegian business establishment reacted as if board members had been asked to share their toothbrushes and not just their power bases. Indeed, 384 of the 563 publicly traded Norwegian companies subject to the quota took themselves private in order to avoid complying.
Most CEOs lined up against gender parity using what I call the frustrated explorer’s argument, although most were more tactful than Une Amundsen, chief executive officer of office software firm SuperOffice, who said: “Who could find these women? Where would they be? Will we find them on a website as another escort service?”
In the months following the Norwegian quota decision, opponents screamed that it was unfair to men. They used three main arguments:
1. Men would be replaced by less-qualified women.
This turned out to be untrue.
In fact, I can’t find a single instance where employer associations or CEO groups have said they couldn’t source qualified women. Not just in Norway, but in Spain, France, Belgium and Italy, which have similar quotas. Yet in the Torys report, “merit” was the overwhelming reason given for “not having a policy, not considering gender or not adopting targets.”
But even if you define “qualified” according to education, the argument still rings false. In Norway, one study found that 36 per cent of female board members had six years or more of university education, while only 22 per cent of male board members did.
Here, a good proxy for Corporate Canada is our Big Six Banks: Of their 89 board members, 71 per cent of female board members have six years-plus of university education, while only 63 per cent of male board members do.
2. Women don’t have specific industry expertise.
Especially around resources, the lifeblood of Norway’s economy, and Canada’s too. In other words, women may be great on the Loblaw or Hudson’s Bay Co. boards. But not on resource boards such as Bankers Petroleum or the lumber giant Interfor, which have no female board members.
Consider the logic of what the chairman of Daimler said in defence of Andrea Jung, the former CEO of Avon, whom he’d nominated to the German auto maker’s board in 2013: “We don’t make cars on the supervisory board.”
3. Women would be “golden skirts.”
That’s the nickname for the small group of women with multiple board memberships that critics feared Norwegian companies would be forced to sift through in search of qualified prospects.
Again, it didn’t happen. If anything, as The Economist pointed out, “Norway still has more ‘golden trousers’ – male directors are twice as likely to sit on more than one board.”
So, nine years after introducing the 40-per-cent quota in Norway, the great debate the law unleashed has died down completely. The quota has been successful and has gained broad acceptance. What’s more, the calibre of women on company boards is just as high if not higher than their male counterparts.
But did the 40-per-cent quota arrive out of the blue, like an angry Thor, thundering down from heaven?
No, the quota happened because the multiyear period of voluntary compliance put in place by Norwegian regulators failed utterly.
So if Canada’s young new policy of “comply or explain” doesn’t look as if it’s working, why don’t we turn to the model that’s proven over time it works?
Let’s give it a year and see.
That’s how long it took Mr. Amundsen, the foot-in-mouth CEO of SuperOffice, to forge a 50-50 gender balance on his own board. As he told a Norwegian newspaper: “A company that wants to be up to date must have female members on the board of directors.”
It seems that just as Canadian business risks being trapped in a backwater for its securities regulations, Canadian companies with only men at the top risk the same.