Soon, the Senate will vote on Bill C-25. The bill proposes to reform the process for electing directors of distributing corporations and co-operatives and modernize communications between corporations and their shareholders. It also requires distributing corporations to provide shareholders, at annual general meetings, information about diversity among directors and senior management.
The goal of the legislation is to increase diversity among corporate boards and among their executive ranks. The intent of the legislation is right. We need more diversity. But the measures proposed are not enough.
Three years ago, the Canadian Securities Administrators adopted a "comply or explain" model that is specific to the representation of women on boards and applies to most publicly traded companies in Canada. Bill C-25 emulates this approach.
Results have been disappointing: Only 14% of board seats are now occupied by women, a meagre three-percentage-point progress from 11% in 2015. Regarding senior management, only 15 per cent of positions are filled by women, a proportion that has not progressed at all since 2015.
Women are better represented on boards and in senior executive positions at larger firms. But even in FP500 companies, other groups are unacceptably underrepresented. Only 1.1% of board members are Indigenous, 3.2% are persons with a disability and 4.3% are members of a visible minority.
Why would an approach that has yielded so few advances in recent years work better in the future? The government is asking Canadians to be patient, but shouldn't we request an improved approach? We strongly believe we should.
We will table an amendment in order to ensure we do more than what is timidly proposed in Bill C-25. This amendment will put forward an approach that is both progressive and respectful of corporations' choices and strategies.
The term "diversity" is not defined in Bill C-25. When diversity is left undefined, even on the most basic level, as we saw in the United States, it loses its emphasis. It becomes experiential rather than identity-based. Given the myriad interpretations possible, the term risks being diluted beyond recognition, with very little accountability in place.
Our amendment would require publicly traded corporations to set self-determined numerical goals, such as percentages and timetables, to bolster the representation of at least four underrepresented groups within boards and senior management. It would specifically target the designated groups identified in the 1995 Employment Equity Act: women, Indigenous peoples, persons with disabilities and visible minorities.
To be clear: Companies would be allowed to establish numerical goals for these four groups, considering industry and company-specific factors and also include other forms of diversity if they so wish.
We know this approach works. According to the Canadian Securities Administrators, issuers that set themselves targets for the representation of women on boards do more than twice as well (reaching a 26% female composition of their boards) than companies that do not set such goals (12% being their proportion).
So, by requiring corporations to report policies and goals to their shareholders, this amendment is designed to nudge them to accelerate change.
But if we are to know whether real progress is made, we need a periodical, complete, up-to-date picture of the situation in the upper echelons of the corporate world. That is why the amendment would require that corporations also send diversity and numerical goals information to the government. As well, each year, the minister would be required to prepare and publish a report presenting the aggregate data received.
The approach that we propose seeks better representation for women and other underrepresented groups, while leaving corporations free to take into account their particular circumstances. It is not a one-size-fits-all approach and it is a much better alternative than the wait-and-see approach proposed by the government.
This is an important piece of legislation. Diversity is our strength but inclusion is our choice. We need to make these changes to improve the bill and accelerate progress.
Serge Joyal, Paul J. Massicotte and André Pratte are senators representing Quebec. Lucie Moncion and Ratna Omidvar are senators representing Ontario.
This article appeared in the December 13, 2017 edition of The Globe and Mail.