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‘Comply or explain’ just makes sense

In Closing
|Written By Antoinette Bozac
‘Comply or explain’ just makes sense

The Ontario Securities Commission invited the public to submit comments to its proposed disclosure requirements regarding the representation of women on corporate boards and in executive officer positions. The closing date for submissions was mid-April, and now we wait for the outcome and next steps with anticipation.

This issue is near and dear to me as I am currently involved with programs to increase gender leadership and diversity membership in boardrooms and executive offices. Together with my experience as a corporate secretary and board member, I was inspired by a meeting that I had last year with a cabinet minister who helped to frame the Ontario government’s initiative aimed at increasing the number of women directors and executives.  

Like many others, I support the government’s initiative and commend the OSC for taking the lead. As we know, Canada is lagging behind other countries on this issue, and I believe it is time for governments and regulators in Canada to take positive measures as has been done elsewhere. The OSC’s progressive proposal represents such a measure and will help Canada to evolve on the issue.

The current Ontario Liberal government is not the only government that has looked at this issue. Quebec’s Liberal government adopted the requirement in 2011 that boards of state-owned enterprises include an equal number of women and men, thereby legislating “gender parity” for that group. The federal Conservative government established an advisory council in 2013 to promote the participation of women on corporate boards.

The reasons for the focus on this issue are simple. There are numerous studies showing boards are better governed, and organizations more successful, when there is gender balance in executive offices and boardrooms. From a governance perspective, it is important for boards to focus on renewal and to have the best people around the table who bring diverse viewpoints, backgrounds, and expertise. From an economic perspective, productivity and GDP numbers include women, which form fifty per cent or more of the workforce and of consumers.  

Simply put, better “diversity and gender representation” practices make for better boards, better organizations, and better economies.

Other countries have already adopted measures to increase women representation and recruitment. For example, Norway (in 2003), Spain, and France established strict gender quotas for publicly traded companies, while the U.K. and Australia implemented accountability disclosure requirements.

The “comply-or-explain” model proposed by the OSC requires TSX-listed companies and other non-venture issuers to inter alia disclose their policies and targets regarding the representation of women on their boards and in their executive offices, as well as report the number of women directors and executives.  

In my opinion, this model is the preferred action for our evolution towards better gender representation, in part because it allows organizations to strategically and meaningfully develop their policies and targets towards broader diversity overall. Forced quota regimes may result in token executives or directors.

Organizations ought to be the driving force for change and all levels, from shop floor to boardroom, ought to be involved in efforts to make change happen “from within.” If organizations develop their strategy for diversity and ingrain a culture of accountability across their functions and operations, more champions will exist to influence change, foster transparency, and promote inclusiveness.

Adaptability however is key to success and, since good governance requires the regular review of policies, ostensibly the OSC and other regulators would periodically assess the effectiveness of the “comply-or-explain” model, once adopted, to determine whether another approach is warranted.

As we await the outcome on the OSC’s proposal let us all aim for better diversity and gender representation within our respective organizations. Let us put our efforts towards a stretch goal for Canada’s 150th birthday in 2017 — say, 40 per cent DGR in our executive offices and boardrooms.  

Now, that would be a progressive corporate social responsibility achievement for organizations, employees, consumers, economies, and Canada’s competitiveness and productivity.

Antoinette Bozac is a legal, compliance & corporate services executive, and corporate board director with extensive experience leading companies in diversified industries and global markets.


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