CSA Releases Results of Tenth Gender Diversity Review

On October 30, 2024, the Canadian Securities Administrators (CSA) released CSA Multilateral Staff Notice 58-317 – Review of Disclosure Regarding Women on Boards and in Executive Officer Positions, which outlines key trends from the CSA’s most recent review of gender diversity disclosure by non-venture issuers. This tenth and likely final diversity review completed by the CSA under the current disclosure standards reveals that the proportion of women on boards and in executive officer positions among such issuers continues to trend upward.

The CSA is exploring potential changes to diversity-related disclosure requirements, as outlined in its April 2023 notice and request for comment regarding proposed amendments to Form 58-101F1 Corporate Governance Disclosure of National Instrument 58-101 – Disclosure of Corporate Governance Practices (“NI 58-101”) and proposed changes to National Policy 58-201 – Corporate Governance Guidelines (“NP 58-201”).

Current Regulations and Potential Changes

Since 2015, NI 58-101 has required all non-venture issuers to disclose certain information regarding gender diversity among its board of directors and executive officers. These requirements aim to increase transparency for investors and other stakeholders regarding the representation of women on boards and in executive officer positions, and the approach issuers take in respect of such representation.

The gender diversity disclosure requirements in NI 58-101 currently consists of a “comply or explain” regime under which issuers must disclose, among other things:

• the number and percentage of women on its board of directors and in executive officer positions,
• whether the issuer has targets for the number or percentage of women in board and executive officer positions (and if not, why not),
• whether the issuer has a written policy relating to the identification and nomination of female directors (and if not, why not), and
• whether consideration is given to female representation in the director and officer recruitment process.

If implemented, the proposed changes to NI 58-101 and NP 58-201 would expand diversity disclosure requirements for non-venture issuers and provide enhanced (non-prescriptive) guidelines for all issuers, including with respect to adoption of a written diversity policy and setting diversity objectives (e.g., numerical targets and training programs).

For further details about the potential amendments, see our April 17, 2023 Update, Canadian Securities Administrators Proposes Amendments and Changes to Corporate Governance Disclosure Practices and Guidelines.

Key Trends

In its tenth consecutive gender diversity review, the CSA reviewed the gender diversity disclosure of 574 issuers that had year-ends between December 31, 2023 and March 31, 2024.

Some of the key trends highlighted in the report include:

• Women currently occupy 29% of director positions (up from 27% in 2023 and 11% in 2015),
• 37% of vacated board seats were filled by women in 2023 (down from 43% in 2023 but up from 26% in 2017),
• 90% of issuers have at least one woman on their board (up from 89% in 2023 and 49% in 2015),
• 44% of issuers have adopted targets for the representation of women on their boards (up from 43% in 2023 and 7% in 2015), with those issuers having an average of 35% of their board seats held by women (compared to an average of 22% for issuers without targets),
• 64% of issuers have adopted policies for identifying and nominating female directors (unchanged from 2023, but up from 15% in 2015), with those issuers having an average of 33% of their board seats held by women (compared to an average of 20% for issuers with no such policy),
• Issuers with director term limits or other board renewal mechanisms generally have more women on their boards (35% for issuers that have adopted term limits compared to 26% for issuers with no such limits; 29% for issuers with alternative mechanisms for board renewal compared to 23% for issuers with no such mechanisms in place), and
• Only 5% of issuers have a female CEO and 16% have a female CFO.

Guidance from Proxy Advisory Firms

Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. will recommend a vote against the chair of the nominating committee of a S&P/TSX Composite Index or TSX issuer, respectively, whose board is comprised of less than 30% women. The latest guidelines published by ISS also include racial and ethnic diversity guidance and, in particular, indicate that a vote against recommendation in respect of the chair of the nominating committee will be made where a S&P/TSX Composite Index issuer board has no apparent racially or ethnically diverse members and the company has not provided a formal, publicly-disclosed written commitment to add at least one racially or ethnically diverse director at or prior to its next annual general meeting.

For further details about current ISS and Glass Lewis guidance, see our December 20, 2023 Update, ISS and Glass Lewis Update Canadian Proxy Voting Guidelines for 2024.

Future of Gender Diversity in Canada

The representation of women among issuers, and for board positions in particular, has improved remarkably since the implementation of NI 58-101 and the CSA’s inaugural review. The CSA expects this to be its final gender diversity review under the current disclosure standards as it continues to work towards a harmonized national disclosure framework.

Issuers should expect continued scrutiny of diversity practices and disclosure from proxy advisory firms, the CSA and investors.

For further information regarding this update and diversity requirements, please contact any member of our Capital Markets Group.

The authors would like to thank Mikaela Wang, Articling Student-At-Law, for her assistance in writing this Update.