So how are Canada’s corporations doing when it comes to putting more women at the helm? A slew of annual reports on the topic come out every fall. Kingsdale Advisors, a strategic shareholder advisory firm, noted that we’re slowly chipping away at the glass ceiling. All 240 companies on the TSX Composite (representing roughly 70% of the total market cap on the Toronto Stock Exchange) now have at least one woman on their boards. In 2019, 92% (55 of 60) of the TSX 60 had at least two women on their boards.

The law firm Osler, Hoskin & Harcourt also looked at diversity disclosure practices this fall and found:

• Among the 657 Canadian companies that report on the number of women directors on their boards, women held 18.2% of total board seats.
• Among TSX 60 companies, women hold just over 30% of seats.
• Notably, 52.7% of TSX 60 companies have adopted a target for the proportion of female directors on their boards, compared to 22.5% of companies overall.

According to latest ranking from Equileap, just 17 Canadian companies have gender-balanced boards.

Notably, 52.7% of TSX 60 companies have adopted a target for the proportion of female directors on the board, compared to 22.5% of companies overall.

On the flipside, the TSX 60 performed abysmally when it came to hiring female CEOs. Just 1.7% of TSX 60 companies had female CEOs, compared to 3.5% of all disclosing companies.

How is Canada faring comparing to our southern neighbours? Back in March of 2019, Equileap called out Canadian TSX 60 companies for scoring lower on its gender equality ranking than American S&P 100 firms. Six months later, the average Canadian company score of 27% may have marginally beat out the wider US average by 2 percentage points, but Equileap notes, “Looking at the country breakdown, Australia, France and the Nordics, led by Sweden, re-main the best performing countries on gender equality overall.”

A version of this story appears in the Fall Issue of Corporate Knights magazine.

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Women rising

Walking the talk: North American diversity policies failing to deliver

As of this year, most corporations have a formal diversity policy, but that doesn’t necessarily translate into higher levels of women at the top.  Case in point: 92% of North American companies have adopted diversity policies, 5% more than European firms. Meanwhile, Canadian and American companies lag behind their European and Australian peers in terms of gender diversity in leadership. It’s a clear sign that having a diversity policy is far from enough.

Target practice: Australian and European firms seeing results with gender targets

Canadian and American companies seem be reluctant to set quantifiable internal gender targets at the risk of being held accountable. Targets continue to remain a more European and Australian practice. Australia, in particular, has shown that even in the industries most traditionally perceived as male, such as mining, these targets produce results by attracting more women in the workforce with management and leadership roles.

% of women in leadership and management positions by country

Canadian corporations at the back of the global pack

To be blunt, Canada doesn’t fare well in LeaderXXchange’s global rankings conducted. First, LeaderXXchange only focuses on the largest publicly-traded companies in North America; it doesn’t rank the entire public company universe. However, it’s pretty clear from LeaderXXchange’s research that Canadian companies are more closely correlated to their American neighbors than they are to Australia (which has a similar industry base to Canada). While 93% of Canadian companies adopted gender policies, just 20.5% of board directors are women(versus 32.5 % in France). While three quarters of French companies disclose the number of women in management, only 31% of Canadian companies do (for more details on the Canadian scene read Don’t Fear the Gender Quota).

“If Canadian companies and regulators were to replicate what Australian companies have accomplished, it would rapidly move from laggard to leader,” says L’Helias. France and Australia adopted similar objectives using different strategies. France and Australia adopted similar objectives using different strategies. France adopted a 40% gender quota for boards and requires reporting on gender pay gaps, promotion gaps and more. Australia adopted the “comply or explain” model.

Changing board rooms, lagging C-suite

It’s become clear that having diversity in leadership and management is critical to attracting and retaining talent – as well as investors. Institutional investors have actually been the driving force behind gender shifts in boardrooms, particularly in Canada and the US. In fact, gender diversity on boards has become the leading issue investors want directors to address, alongside executive compensation and climate change. To hincentivize laggards, several large institutional investors, including New York’s State Comptroller, have adopted strict voting guidelines to vote against nominating committee members of boards that have no women. It’s no wonder that as the proxy season approaches, a number of highly visible companies – particularly in the tech sector – have added women on their boards.

The diversity advantage: Studies are revealing that diverse groups make better decisions. Researchers are finding that diversity brings a level of complexity to the decision-making process that reduces blind-spots and increases the probability of better identifying and assessing risks and opportunities.

Regardless of progress at the board level, the glaring reality is that the world’s largest corporations are stalled in second gear when it comes to hiring women in C-suite leadership roles. Top senior executive officers with the letter C in their title (CEO, CFO, CIO, COO, CSO) lag behind on gender in all markets.

It’s a problem that’s not going to fix itself. Says L’Helias, “Companies need to expand their efforts to fix the leakage in the gender leadership pipeline if they aim to close the gender gap in those critical roles.”

Average % of women in leadership and management positions by region

Some sectors are leading the way

Sectors can and do change. Once a notorious “boys club,” the financial sector now has the largest number of companies that outperform LeaderXXchange’s median score. What gave? For one, L’Helias points out that the 2008 financial crisis created a crisis of confidence. Investors and regulators used their new leverage to focus on improving the industry’s governance, particularly the banking industry. Employees and clients were also adding pressure.

After massive layoffs, the sector had became less attractive to young recruits. Moreover, clients (institutional retail and high net worth) voiced their concern about the lack of gender diversity.  Finally, in the United States in particular, the financial industry was subject to a number of class action lawsuits for racial and gender discrimination.

Number of companies performing above the global average

by sector

Percentage of companies performing above the global average

Nonetheless, while the financial industry has made great strides, and exceeds the median score, few financial institutions land in the top 50. That’s because there is significant room for progress for the C-Suite.

Notably, utilities and manufacturing have also statistically outperformed LeaderXXchange’s median grade.  The sectors are fighting to attract and retain talent at a time of intense competition and new disruptive technologies.

“By creating cultures that are more inclusive and closing the gender gap, these industries are signaling to female candidates, who may not have thought of working in these sectors, that they are welcome,” says L’Helias.

“Perhaps that is what the data is telling us: companies that want or need the change – make the change.”

The LeaderXXchange Gender Diversity in Leadership ranking uses a proprietary methodology created by Sophie L’Helias, President of LeaderXXchange, an international corporate governance expert, experienced board director, former managing director of an activist hedge fund and international M&A attorney in New York and Paris.

LeaderXXchange is a change-driven organization that promotes diversity and sustainability in governance and leadership with investment methodologies and other solutions – most recently the Gender Diversity Exchange, the award-winning search engine dedicated to Gender Diversity in leadership.

The proprietary data used for the ranking is provided by Vigeo-Eiris, a global provider of environmental, social and governance (ESG) research to investors and companies. Based in Paris, with offices around the world, the Vigeo-Eiris team is composed of a diverse team of more than 200 experts from 28 countries dedicated to bringing high quality data.

The post Who runs the world? The global status of women in leadership appeared first on Corporate Knights.

Women are increasingly driving the global economy. According to a 2009 Harvard Business Review article, women controlled $20 trillion in consumer spending each year. Morgan Stanley reports that women control $11.2 trillion of the United States’ investable assets, too — assets held in one’s bank account, stocks, bonds and certificates of deposit.

Furthermore, investing that takes environmental, social and governance — ESG — issues into account has grown in popularity as women seek more meaningful investment options than traditional investors have. Commenting on a recent surveyof high-net-worth individuals, Jackie VanderBrug, a senior vice president and investment strategist at U.S. Trust, said just over half of respondents expressed interest in social and environmental impacts of their investments. For women and millennials, that rate jumped to 73 percent, according to VanderBrug — suggesting that as women invest more, ESG investing could become the norm.

Increased market attention to social and environmental issues is helping these issues gain broader public recognition. But the most important thing we can do to maximize women’s influence on finance and sustainability is to place more women in positions of power in boardrooms and C-suites.

One study from the Haas School of Business at the University of California, Berkeley, that looked at ESG categories across more than 1,500 companies found that companies with more women on their boards were more likely to address and reduce environmental risk through actions such as measuring carbon emissions, avoiding biodiversity disturbance and investing in renewable energy.

At the executive level we see companies such as Estée Lauder Companies Inc. — where women make up close to one-third of the executive team — committed to managing and understanding environmental, social and economic impacts throughout their value and supply chain, focusing on energy, waste, recycling and workplace safety. In a message to stakeholders, Pamela Gill Alabaster, vice president of global corporate responsibility for Estée Lauder, wrote that the company is planning to implement new governance structures, develop climate change policies and weave sustainability across its brands. Alabaster went on to note that Estée Lauder is continuing to increase how it transparently communicates on progress with its stakeholders, a critical component of long-term corporate improvement.

Estée Lauder is not alone. A Barclay’s report in partnership with the Economist Intelligence Unit highlights that gender diversity — specifically, the presence of women in senior management — is a main indicator of a company’s commitment to ESG criteria.

Estée Lauder is also one of the leading companies on the Pax Ellevate Global Women’s Index Fund, headed by Sallie Krawcheck, former president of the Global Wealth & Investment Management division of Bank of America and a notable promoter of gender diversity in the workplace. Krawcheck is working to ensure that the positive influence of women within companies grows. The Pax Ellevate Global Women’s Index Fundis the first of its kind dedicated to companies highly rated for advancing women. Every company in the fund has at least one woman on the board and 99 percent have two or more, resulting in women holding 32 percent of total board positions and 25 percent in senior management — compared with worldwide averages of 12 percent and 11 percent, respectively.

According to Kathleen McQuiggan, senior vice president of global women’s strategies for investment firm Pax World Management LLC — part of a partnership forming Pax Ellevate Management LLC, which manages the Pax Ellevate Global Women’s Index Fund — “If you have more women on the board, you see more women in senior management. It’s a simple cause-and-effect scenario.”

That’s exactly what the Thirty Percent Coalition is trying to accomplish. The group of over 70 women’s organizations, institutional investors, corporate governance experts and others is committed to placing women in 30 percent of board seats across public companies by 2016. Sponsors of the coalition include big brands with big dollars, such as Avon, Wal-Mart and Prudential. Members include representatives from companies such as Trillium Asset Management, an ESG-focused investment management firm, and the Sustainability Group, a wealth management firm that centers on a commitment to sustainability and human dignity founded by Amy Domini, an investment advisor focused on ethical investing.

In 2014, for the third time, investors who support the 30 Percent Coalition — and who represent more than US$3 trillion in assets — sent letters to 100 prominent companies calling on them to boost the presence of women on their board. Efforts so far have resulted in about 20 major companies adding women to their boardrooms.

Meanwhile, it’s never been easier for consumers to support companies committed to gender diversity — and the ecological and social consciousness it brings with it. The BUY UP Index, for example, is an app that rates brands and the companies behind them based on their gender diversity in the boardroom, C-suite and workforce as well as on their philanthropy and how they market to women. Amy-Willard Cross, founder of the BUY UP Index, states, “It’s important to bring capital to women, or to women-owned companies, not just sell us stuff.”

As more women become embedded in high-level investment, executive positions and boardroom decision-making, the conversation is shifting toward one that incorporates sustainability as the new norm. Therefore, it’s critical that those with the ability to promote gender diversity in companies continue to do so. And it’s just as important for the rest of us to put pressure on them to recognize the benefits of gender diversity. As we do, we can help usher in a future where, as U.S. Trust’s Jason Baron puts it, “no discernible distinction will exist between investors in ESG and investors in general.”

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