Gender quotas: Who else has them and does Canada need them?
A bill introduced last month will require publicly traded companies to disclose the gender makeup of their corporate boards and senior management. If, in a few years, the government doesn’t see the progress they’re looking for, Economic Development Minister Navdeep Bains said he’d consider imposing gender targets.
While the concept would be new to Canada, several governments around the globe have already taken that step in varying degrees and with varying results.
WATCH: Justin Trudeau on why his cabinet is gender balanced? Because it’s 2015
What regulations already exist in Canada?
Most provinces and territories signed on to an agreement requiring listed companies to report annually on the ways in which they are trying to increase the female representation on boards and in senior management. Ontario was the first province to take this step; seven other provinces and two territories jumped on board in 2014.
Prince Edward Island, Alberta, British Columbia and Yukon have yet to sign on to the non-binding “comply or explain” regulatory approach.
The regulations are too new in Canada to accurately assess their effectiveness and impact, according to Catalyst, a non-profit organization working to increase and accelerate female representation in the workplace.
This raises the question of whether federal legislation is necessary considering the steps most provinces and territories have already taken.
It’s difficult to say, according to Aaron Dhir, a corporate lawyer, author and associate professor at Osgoode Hall Law School at York University.
The relevant amendment in the bill indicates certain businesses will be required to reveal “prescribed information.”
“But they haven’t defined what that entails,” Dhir said. “So we don’t know exactly how it will work.”
What is the current landscape in Canada?
A May 2015 report from Catalyst indicated that 37 per cent of managers in 2009 were women, an increase of nearly 23 per cent since 1979.
Still, there was only one woman CEO of a Canadian TSX 60 company; men hold almost 80 per cent of board seats at Canadian Stock Index Companies, the report found.
WATCH: IMF’s Lagarde ‘appreciative’ of Liberal government’s role on gender equality
According to Catalyst, any progress in getting women into senior management positions has stalled. In fact, men are upwards of three times more likely to be in a senior management position than women.
Canada is lagging behind other developed countries in terms of increasing the number of women on corporate boards, according to the study. Norway was the first jurisdiction to have a government impose a gender quota for company board members (boards need to be at least 40 per cent female) and has had the law in place since 2006. Today, the Nordic country boasts one of the best records. (Never mind the fact that the sanctions for failing to meet the quota include the state’s power to dissolve the company.)
How does it look in other countries?
Around the world, many countries have legislated quotas for women on corporate boards of publicly listed countries.
These include: Belgium, France, Germany, Iceland, India, Israel, Italy, Norway and Spain, according to a 2016 report from the World Bank Group entitled Women, Business and the Law.
The requirements vary by country – India, for example, requires one woman hold a seat on a board, while in Iceland, Norway and Spain, women have to make up 40 per cent of boards, according to the report.
While some countries without quotas, such as Denmark, the UK and Sweden, have a higher percentage than Canada of women sitting on boards, research shows countries that have made the biggest jumps in female representation on boards are those with laws and regulations on the books.
The countries with the highest percentage of women who hold seats on stock index companies are Norway (35.5 per cent), Finland (29.9 per cent) and France (29.7 per cent), according to Catalyst. Each of those countries has government-legislated quotas for including women on boards.
How have those countries responded?
For his recent book, Dhir, the professor and lawyer at York University, travelled to Norway to gather information and testimony about their experience with the quota.
“Most of the directors initially had been skeptical of the law, even against it,” he said in an interview. But during his discussions with those directors, almost all had very positive things to say about the overall effects, Dhir said.
“Gender diversity positively affected boardrooms and companies in a few ways,” he said. “Bringing more women in brought in a new range of perspectives. Many directors found the decision-making process became more rigorous.”
That effect is likely the result of bringing outsiders into previously closed networks, said the author of Challenging Boardroom Homogeneity. “There was no more ‘group think,’” he said.
One reason for that, Dhir said, is because in order to bring more women into boardrooms, companies were forced to go outside of the existing networks traditionally tapped for promotions.
What are perceived cons of imposing quotas?
Some studies have found the positive effects of hiring women high up on the corporate ladder don’t reach down to women in the rank and file.
“Moreover the reform had no obvious impact on highly qualified women whose qualifications mirror those of board members but who were not appointed to boards,” wrote the authors of a 2014 report for the U.S.-based National Bureau of Economic Research.
Another concern floating around is that promotions will no longer be merit-based – that women will be promoted based on their gender and men skipped over based on theirs.
“If the government doesn’t think there’s a qualified pool of candidates, then there shouldn’t be a quota,” Dhir said. “But that’s certainly not the case or problem in Canada.”
What are perceived pros of imposing quotas?
At the core of gender quotas is the principle of equity, the authors of the World Bank Group’s report wrote.
“Quotas can enable a more equitable representation of women in leadership positions … which may translate into a more equitable representation of women’s interests in decision making,” they wrote.
A recent Credit Suisse report also found that companies with women on their boards outperformed those with only men by 3.5 per cent since 2005.
“More women in senior management positions improves companies’ financial performance and makes a difference for investors in terms of equity market returns,” according to the study that looked at more than 3,000 companies worldwide with 27,000 senior managers.
Dhir said he chalks results like that up to the difference women bring to the table.
“It’s less about dollars and cents, and more about improved decision making,” he said.
© 2016 Global News, a division of Corus Entertainment Inc.