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Racial and ethnic minorities make up only 14.1 per cent of board directorships at Canadian public companies, according to a diversity study of companies in the S&P/TSX Composite index.
A report released March 20 by Maryland-based ISS Corporate Solutions Inc. found that while the number of underrepresented minority groups at Canadian company boards as of Jan. 1, 2023 increased from 8.3 per cent in 2020, there’s still “far further” to go when it comes to representation.
The percentage in Canada is also significantly lower than that in the United States, where 23.6 per cent of S&P 500 directorships are held by non-white directors, the study said.
Businesses have been trying to hire people so that the mix of directors and senior management is representative of the communities in which they do business, said Chan Pedris, co-head of the Canadian advisory at ISS Corporate Solutions .
With various recruiting processes, companies can achieve such a goal, he added.
As for board gender diversity, the report said that for the first time, women hold one-third of all board directorships as of Jan. 1
In Canada, the figure stands at 33.7 per cent of all directorships, compared to 27.9 per cent at the start of the study period in 2020. That is slightly ahead of the U.S., where 32.3 per cent of S&P 500 directorships are held by women.
“Canadian companies have a slight edge over their U.S. peers when it comes to board gender diversity, but far further to go as it applies to the prevalence of underrepresented minority groups,” said ISS Corporate Solutions head Marija Kramer.
The report pointed out that while there’s a proportionally significant increase in female representation in leadership positions, their numbers remained low relative to male peers.
The number of women chief executives rose from six in 2020 to nine in 2023, while the number of non-employee chairs who were women grew to 22 from 13 over the same period, it said.
Companies in the utilities sector have the highest proportion of directorships held by women at 39.1 per cent, while those in health care have the lowest proportion at 24 per cent.
Kramer said the trend with racial and ethnic minorities in Canadian boardrooms may well accelerate as regulation and guidance push companies to disclose more on individual director characteristics.
Since 2020, publicly traded companies incorporated under the Canada Business Corporations Act (CBCA) have been required to report such disclosures. These include, among other things, the number of women, Indigenous people, persons with disabilities and members of visible minorities on their boards and in their senior-management ranks.
The disclosures must be made for their annual shareholder meetings.
“The numbers themselves will see a significant pickup from 2023 onwards since the CBCA made the disclosure requirements,” Pedris said, adding that the racial and ethnic diversity numbers will significantly increase as companies get more acclimated to the disclosure requirements, as well as what they see their peers are doing.
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Over the study’s period, board representation of Black and Indigenous directors increased, with a more than three-fold jump for both groups, albeit from a low base.
Black directors hold 3.13 per cent of directorships in 2023, up from 0.9 per cent in January 2020. Indigenous directors went from holding 0.36 per cent in 2020 to 1.22 per cent in 2023, the study said.
Hispanic or Latin American directors have the most representation on boards among racial and ethnic minorities, with 3.3 per cent as of 2023.
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