Some disconcerting findings on the lack of diversity in the boardrooms of Canada's largest corporations were released today in the Canadian Board Diversity Council's Second Annual Report Card.
While 73 per cent of corporate board members feel their boards are diverse, the reality is that women are significantly less likely than men to serve on corporate boards. In fact, most board members oppose the development and adoption of a formal diversity policy.
Pamela Jeffery, Founder of the Canadian Board Diversity Council (CBDC), says it is time for Canada's board directors to speed up the pace of change. "Directors whose boards have re-defined diversity believe they make better board decisions as a result of this diversity," Jeffery explains. "That's because important, diverse perspectives on customers, international markets and stakeholders that were once missing are now being represented. This helps avoid groupthink and leads to better discussion and an improved ability for directors to carry out their director responsibilities and increase shareholder value."
The Second Annual Report Card examines the representation of women on the boards of Canada's Top 100 charities and Canada's 500 largest corporations as measured by assets in five sectors: utilities; finance and insurance; retail trade; manufacturing; and mining, quarrying, oil and gas. The Founding and Corporate Members of the CBDC, 46 leading Canadian organizations, initiated the project to encourage greater diversity within the boardrooms of the country.
"Organizations with diverse boards are often better at innovation and decision making, which can enhance their competitiveness," says Anne Golden, President and CEO, The Conference Board of Canada, a sponsor of the Second Annual Report Card.
Based on the results, the CBDC has issued a call to action to ensure Corporate Canada reflects the diversity of the broader Canadian population. "It will take courage and enlightened leadership to change the composition of Canada's boards," Jeffery says. "With the large number of directors retiring over the next five years, now is the time for action."
The Council calls on boards to replace at least one of every three retiring directors with a director of a diverse background, and Nominating/Governance Committees to consider three board-ready diverse candidates for each open seat.
Key findings of the survey include:
- Women hold the greatest percentage of corporate board seats (1 in 5) in the utilities; finance and insurance; and retail trade sectors. Discouragingly, only 9.7 per cent of women, or 1 in 10, hold board seats in the manufacturing sector. Only 1 in 15 board seats (or 6.6 per cent) in mining, oil and gas sectors are held by women.
- An overwhelming majority of male and female board members say board diversity is an important issue. Still, 59 per cent of corporate board members continue to oppose the development or adoption of a formal diversity policy.
- Charity board members tend to value diversity more than corporate board members (61 per cent versus 47 per cent) with women representing 40 per cent of board seats at Canada's largest 100 charities. Still, 48 per cent of charity board members do not support a formal diversity policy.
- The CBDC's first-ever review of age and language skills reveals 73 per cent of board members learned English as their first language. Board members bring a significant number of years of experience to their boards: 42 per cent are 60-years-old or older.
- Two thirds of Top 500 corporate board members have international business experience with a significantly larger portion of males (61 per cent of males versus 41 per cent of females) with international experience.
"Studies have consistently shown that a diverse team - which includes both visible differences such as gender and ethnicity, as well invisible difference, such as diversity of thought and education - can have significant impact on both the top and bottom lines of an organization. Having a diverse board is just as important as having a diverse staff. In fact, it's the key to success," says Michael Bach, Director of Diversity, Equity and Inclusion at KPMG LLP, a sponsor of the Second Annual Report Card.
The Report Card presents the findings of a survey of nearly 400 directors in Canada's largest corporations and top charities. The research was conducted in partnership with KPMG, The Conference Board of Canada and The Beedie School of Business.
The CBDC will undertake its next corporate director survey of Canada's Top 500 organizations in the spring of 2012 and report on the progress made in the 24 months since the Council's first Report Card which reported on Canada's Top 500 organizations in 2010.
The 2011 Annual Report Card is available at: www.boarddiversity.ca
The Conference Board of Canada undertook the survey on behalf of The Canadian Board Diversity Council. The survey was distributed in July 2011 to 1,733 Charity Board Chairs and Directors and 2,444 Corporate Board Chairs and Directors. An individual serving as a director of two boards received two surveys. The survey was completed by 218 charity board members and 164 Top 500 corporate board members, for a total of 382 people. No individual companies or board members were identified. Results of the survey are accurate within +/-4.92 per cent at a 95 per cent confidence level.
About the Canadian Board Diversity Council
The Canadian Board Diversity Council (CBDC) is the leading Canadian organization advancing diversity on Canada's boards. The Council's vision is to improve the diversity of Canada's corporate boards by increasing the representation of women, visible minorities, Aboriginal Peoples, including First Nations, Inuit and Métis, persons with disabilities and members of the LGBT community over the next five years.