In 2017, a group of Canada’s largest institutional investors and asset managers, known as the 30% Club, called for a boost in the representation of women on boards and in executive management at S&P/TSX composite index companies to 30 per cent by 2022.
While members say significant progress has been made in the past two years, more is required for that goal to remain realistic. So how is the industry putting this commitment into action?
Taking a vote
On any issue, the proxy voting process is one of the building blocks of engagement. In expressing views on gender diversity, investors either vote against the formation of a board, against the addition of a new member or strategically abstain from voting to demonstrate dissatisfaction with the board’s choices.
In guiding its voting, the Alberta Investment Management Corp. takes an iterative approach, says Kevin Uebelein, its chief executive officer, noting it keeps in mind a goal of 20 per cent women on an investee’s board. Over the next couple of years, he says, it will ramp that up to 30 per cent and might head even higher in the future.
Setting iterative goals is important, says Jennifer Coulson, vice-president of environmental, social and governance issues at the British Columbia Investment Management Corp. Since companies can’t be expected to flip members overnight, the BCI set its women on boards goal at 25 per cent, she adds. “We wanted to make sure we were being fair and reasonable and giving companies enough time to respond.”
If a company doesn’t meet that requirement and has no plan in place to move in the right direction, the BCI votes against the chair of the nominating committee. However, Coulson says it’s better to ensure engagement with companies is collaborative and encouraging, rather than just scold them for current practices.
Beyond voting policies, a good conversation is a strong tool, she adds. “It’s always constructive. We’re investors, so we want the company to do well; we’re not trying to catch anyone out. We’re simply raising constructive issues with the company.”
For instance, if a company’s board diversity isn’t up to scratch, just asking why can have an impact. “We’ll simply ask questions about why that is,” says Coulson. “Do you have a policy? Do you have a process in place to try to address that? How are you changing your recruitment processes and practices to make sure you’re getting a diverse slate?”
Once the investor gains a clearer picture of the company’s perspective, it can connect directors with resources, she says, such as the Canadian Gender and Good Governance Alliance’s CEO Blueprint, which provides a step-by-step framework for companies keen to improve their boards’ gender diversity. “Positive engagements really do work,” says Uebelein. “They don’t work miracles, all the time or instantaneously, but thoughtful conversations at the board level about this issue work over time.”
Follow the leader
Institutional investors and asset managers can’t engage effectively with their portfolio companies on board diversity if their internal corporate structure doesn’t reflect that philosophy, says Judy Goldring, president and chief administration officer at AGF Management Ltd.
“We’ve gone out and revamped our board to make sure that, as individuals were retiring from our board, we would be very conscious around making sure we brought on women directors. So from a director perspective, we now have 40 per cent women representation as members of our board and we do believe we’re leading edge on that.”
Dominique Barker, a portfolio manager at CIBC Asset Management Inc., says her firm also prioritized walking the talk. “If we’re telling companies they need more women in their executive ranks, they need more women on their boards, they can turn around and say, ‘Well, what about you?’”
In order to make progress, it’s integral to talk to companies about the barriers they’re still facing, says Barker, noting one that’s often brought up is that fewer women have C-suite experience compared to men. “It’s demonstrated leadership qualities that count. You don’t have to be a CEO . . . but if you have leadership abilities and skills, if you were the treasurer or head of research at a bank, you’re managing people, you understand what it’s like to manage the human capital and you’re making decisions strategically for a business unit; that’s what’s important.”
Many companies also tend to hide behind the biases in their own sectors, says Mirza Baig, global head of governance at Aviva Investors. “The mining companies were the first to come out and say, ‘We completely buy in to your agenda, we believe it’s absolutely critical and important and we share your agenda, but you need to understand our starting point — it’s not our fault women are not interested in our sector.’ . . . And that became an expected excuse to some extent for some time.”
To help other businesses in a sector take action, it’s key to find companies that break the mold and don’t use industry heritage as an excuse, says Baig. For example, Aviva is engaged with a mining company that has started working on educational programs with female students to raise awareness that the industry’s traditional physical challenges are largely a thing of the past due to new technologies.
Once Aviva discusses initiatives like this one, it can suggest similar strategies to other companies in the sector, says Baig. “When you show those types of examples, the conversation becomes a little bit harder for them.”
Martha Porado is an associate editor at Benefits Canada.