The push to add more women to boards of directors is slowing at Canadian companies as diversity initiatives lose momentum, a new report has concluded.
A review of 610 companies shows women held 29.8 per cent of a total of 4,860 board seats in 2024, a 1.3-percentage-point increase from a year earlier, according to an annual diversity study by law firm Osler, Hoskin & Harcourt LLP. By comparison, the proportion of women on boards climbed an average of 2.1 percentage points annually between 2015 and 2023.
Women accounted for 38.1 per cent of board seats at companies listed in the S&P/TSX Composite Index, and 39.7 per cent of board seats among the largest companies included in the S&P/TSX 60 Index.
A key reason for the slowing growth of women on boards is the declining proportion of women filling new or vacant board seats, which fell to 40.4 per cent this year from 45.3 per cent last year.
Report co-author John Valley said the results were surprising because he had expected to see continued growth, after last year’s increase in diversity. “It’s not that progress has stopped; it’s that it has slowed,” Mr. Valley said.
Anne-Marie Pham, chief executive officer of the Canadian Centre for Diversity and Inclusion, said the slowing progress is concerning, and urged companies to tackle the underlying issues.
“I hope that people are looking at the statistics and reflecting on what is happening in each of their organizations, what barriers might be causing a slowdown in representation, and what they can do within their sphere of influence to create change,” Ms. Pham said.
Mr. Valley said the slowdown may be due to companies reaching the diversity targets set by Institutional Shareholder Services (ISS), an influential proxy advisory firm that helps investors vote their shares in board elections, and deciding to stop at that level.
In 2021, ISS said it would recommend voting against the chair of the nominating committee at S&P/TSX Composite Index companies that do not have at least 30 per cent female directors. In 2024, ISS went further, saying it would recommend that investors vote against the nominating committee chair at companies that do not appear to have any members from racially and ethnically diverse groups on their boards, and that have not disclosed any commitment to add at least one racially and ethnically diverse director at or before next year’s general meeting.
Despite that change, members of visible minorities held 10.2 per cent of board seats this year, while 0.7 per cent are held by persons with disabilities, both unchanged from last year. The percentage of board seats held by Indigenous directors only increased by 0.1 percentage points.
Mr. Valley noted that companies experiencing a learning curve in their recruitment strategies may contribute to the slow progress in racial and ability diversity.
“There is an element of how the director recruitment process works and companies refining how they recruit directors. So they are learning how to identify directors who don’t come from traditional backgrounds, and that’s a process that’s going to take time,” he said.
Despite the stalled broader momentum, the number of TSX-listed companies where women hold at least 50 per cent of board seats increased to 41 companies compared with 39 last year. However, in executive-officer positions, the number dropped from 41 companies in 2023 to 39.
Companies incorporated under federal legislation – the Canada Business Corporations Act – have been required to report annually on all forms of diversity on their boards since 2020. However, many other companies that incorporate provincially do not face the same reporting requirements.
Mr. Valley said it is encouraging to see more companies opting to add other forms of diversity disclosures even when not required.
There has been a significant increase in the number of companies voluntarily disclosing information about visible minorities, rising to 133 from 99 last year. Additionally, 53 companies reported having Indigenous directors, and 43 reported including persons with disabilities.
“I wouldn’t want to oversell the progress because that’s all companies that have something good to say, whereas those under the CBCA requirement have to disclose it,” Mr. Valley said.
Another indication of improvement is the new disclosure for LGBTQ2S+ representation. Despite it not being a current requirement in Canada, 35 companies disclosed the number of LGBTQ2S+ members on their boards.
However, Mr. Valley noted that continued progress will require voluntary efforts: “Companies are going to have to continue to think about board composition and the makeup of their senior leadership teams and consider what they’re able and prepared to do outside of what is being required by regulation or requested by institutional shareholders.”
Regarding best practices for increasing diversity, Ms. Pham encourages companies to review their recruitment and hiring practices.
“It’s not just about finding the right people for the role, but about creating an environment and a culture in an organization that truly values diversity, understands systemic inequities, and works with conscious effort and good intention to address those inequities,” she said.