CHAPTER 07 Beyond Gender: Diversity and Inclusiveness Now and Going Forward
What’s Next in Canada? Expect Greater Emphasis on Diversity Characteristics Beyond Gender In light of recent events, we expect that the conversation will continue to expand and grow louder with respect to diversity characteristics beyond gender identity. We also expect that corporate and securities regulators in Canada and abroad will increasingly focus on potential regulatory changes aimed at promoting greater diversity among corporate leadership, on the basis of a broader range of diverse characteristics. Several prominent Black leaders in the Canadian business community are now emphasizing that it is time to put the same level of focus on other under-represented groups as was previously done for gender. “Corporate Canada was bold enough to take up the challenge to add gender diversity to Canadian boardrooms and executive suites by declaring policies, setting specific targets, and holding itself accountable and is now well on the way to reforming the system. Now it is time to do the same thing for Blacks.” – BlackNorth Initiative The July 2020 consultation report released by the Capital Markets Modernization Taskforce (CMMT), which was established by the Ontario government in February 2020 to review and modernize Ontario’s capital markets, is one example of a push for regulatory change. The consultation report proposes an overhaul of the “comply or explain” disclosure regime under NI 58-101, with a focus on extending the obligations of TSX-listed issuers beyond gender to also include Black people, Indigenous people and people of colour (BIPOC). In particular, the consultation report proposes the following amendments to Canadian securities laws: 153
The CMMT consultation report proposes an overhaul of the “comply or explain” disclosure regime under NI 58-101, with a focus on extending the obligations of TSX-listed issuers beyond gender to also include Black people, Indigenous people and people of colour (BIPOC). – TSX-listed companies should be required to set targets and to annually provide data in relation to the representation of women and BIPOC, both on boards and in executive positions. Although the consultation report does not provide a precise recommendation on the appropriate targets, it does reference potential targets of 40% for women and 20% for BIPOC. The consultation report notes that TSX-listed companies should also be required to review and assess the appropriateness of their targets on an annual basis. – TSX-listed companies should be required to adopt a written policy regarding the director nomination process that expressly addresses the identification of candidates who are women and BIPOC during the nomination process. – A 10-year maximum tenure limit for directors should be mandated, with an allowance for 10% of the board to exceed the 10-year maximum for up to two years. This proposed change is intended to encourage board renewal and lead to greater levels of diversity on boards. The CMMT is aiming to deliver a final report to the Minister of Finance by the end of 2020. The final report is expected to include a broader set of prescriptive recommendations, and a decision should then follow on whether any changes will be made to the regulatory framework in Ontario. 154
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