Amendment to Bill C-25: An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act
On February 8, 2018, I had the pleasure of moving the amendment to Bill C-25 which my colleagues and I have been working on for several months. In this speech I stated that considering the slow pace of progress regarding the proportion of women and diversity within Canadian businesses, the “comply or explain” system proposed by the federal government is simply not rising to the challenge. As we enter 2018, it’s high time we met that challenge.
Hon. Paul J. Massicotte: Honourable senators, this is the second time I rise to speak to the chamber on Bill C-25, An Act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. During our deliberations at second reading of this bill last October, I expressed my concerns regarding the system proposed to encourage federal companies listed on the stock exchange to increase women’s participation and diversity in corporate leadership.
Clearly, considering the slow pace of progress regarding the proportion of women and diversity within Canadian businesses, the “comply or explain” system proposed by the federal government is simply not rising to the challenge. As we enter 2018, it’s high time we met that challenge.
Let’s face it: Despite the world’s perception of Canada as a leader on women’s rights and multiculturalism, this country’s corporate leadership remains overwhelmingly dominated by White men. No later than a couple of weeks ago in Davos, Prime Minister Trudeau made a strong plea for the advancement of women and diversity in the corporate world. He said:
. . . not just because it’s the right thing to do, or the nice thing to do, but because it’s the smart thing to do.
Several studies have linked diversity with superior performance and have demonstrated that boards that are composed of people from a range of backgrounds, experiences and expertise outperform those that aren’t. None of this implies accepting less experienced or less competent individuals.
If we really and truly want to achieve gender equality — a reasonable and logical objective, given that women make up 48 per cent of the workforce and 60 per cent of university graduates in Canada — we need to bring in tougher measures to live up to Prime Minister Trudeau’s statements.
First, let’s take a look at how the proposed system is inadequate. If we go along with the existing provisions and simply ask the companies in question to present their diversity policy to shareholders every year — if they have one — and, if they do not have one, to explain why, we will not make any significant progress with respect to diversity on boards in senior management. Just look at the results so far from similar measures taken with respect to women.
Three years after the Ontario Securities Commission moved forward with the comply-or-explain rule for women, 53 per cent of companies listed on the Toronto Stock Exchange still don’t have any gender diversity policy. Board seats occupied by women in those same companies only rose from 11 per cent to 14.5 per cent between 2015 and 2017.
As to women in senior management roles, the percentage sits at 15 per cent, and it has been there since 2015. At this rate, how many decades will it take to reach equality?
As to non-gender diversity in the corporate world, the situation is even worse. In Financial Post 500 companies, only 1.1 per cent of board members are indigenous, 3.2 per cent are persons living with a disability, and 4.3 per cent are members of a visible minority.
Of course, one has to recognize that the merit of Bill C-25 is that its application is more extensive than previous comply-or-explain measures. The bill covers diversity in general, not only women, which is significant progress. The minister also recently accepted to define diversity based on, but not limited to, the four groups designated in the 1995 Employment Equity Act: women, visible minorities, indigenous people and people with disabilities. We are very happy that the government has acknowledged the need to define diversity.
However, what good is this definition if companies have no obligation to set objectives and report on their progress in increasing the representation of diversity?
The statistics that I gave show that we are so far behind, that a system of voluntary compliance with diversity policies will clearly not be enough to accelerate the increase in the representation of women and other forms of diversity on corporate boards, let alone in senior management positions.
So let me explain what we are proposing today.
We need to give teeth to the current provision in Bill C-25: Federally registered, publicly traded corporations need to be required to set self-determined numerical goals, such as percentages, to bolster the representation of diversity within boards and senior management. In fact, Innovation Minister Bains recently said to a group of students in Windsor that corporations should have a diversity policy that has targets. Since this is not in the legislation, we are proposing to put it in there.
As well, companies should be asked to send their diversity numbers and targets to the government so that each year the minister publishes a report presenting the aggregate data received.
Let me elaborate on these elements.
I repeat that our proposal is about targets, not quotas — not the quota system we see in Europe or in many countries. In our case, it is about targets. I am convinced that we can reconcile the need to increase diversity and avoid the rigid, artificial and cumbersome side that quotas can entail. We are not setting any minimums, and corporations would have the flexibility to adopt goals that are best suited to their markets and their communities. And although companies would have to report on a yearly basis on the progress made to reach these targets, we are giving them full flexibility to fix their own goals and timelines, in light of their own strategies and particularities.
We know that this approach accelerates a path towards diversification. According to the Canadian Securities Administrators, issuers that set their own targets for the representation of women on boards do more than twice as well — reaching a 26 per cent female composition of their boards — than companies that do not set any such targets, with that number sitting at 12 per cent.
I reiterate that corporations would be free to establish their own goals, either strictly for the four designated groups, or to expand groups to other categories of diversity of their choice, such as linguistic minorities, regional background, et cetera.
In that way, one ensures that both the goals and the targeted diversity groups are adapted to specific industry constraints and circumstances, as well as with the social fabric of the markets served by these companies.
Finally, I would like to expand on the reporting dimension.
If we are to know whether real progress is made in the representation of women and diversity in the corporate world’s boards and senior management, we absolutely need a periodical, complete, up-to-date picture of the situation. That is why we ask that federal public corporations also send to the government the diversity report that they must provide to their shareholders. There is no additional work here. The government would be required to prepare and table, every year, with both houses of Parliament, a report with the data from the previous year. This report would also be made public.
Dear colleagues, the flexible system that we are proposing strikes the best possible balance between the optional self-regulation proposed in Bill C-25, which we already know has limitations, and a one-size-fits-all system, such as quotas.
By asking companies to adopt their own diversity policies and objectives, we are fulfilling our duty as a collective to give women and minority groups the opportunity they deserve to contribute to the highest echelons of business, to be recognized for those contributions and to benefit the companies they work for.
Motion in Amendment
Hon. Paul J. Massicotte: Therefore, honourable senators, in amendment, I move:
That Bill C-25, as amended, be not now read a third time, but that it be further amended in clause 24,
(a)on page 9, by adding the following after line 31:
“172.01 A prescribed corporation shall establish numerical goals, such as percentages, for the representation of persons in each designated group, as defined by regulation, among its directors and among members of senior management, as defined by regulation, and shall establish a timetable for attaining those goals, within one year after the day on which this section comes into force.”; and
(b)on page 10,
(i)by adding the following after line 2:
“(1.1) The directors shall also place before the shareholders, at every annual meeting beginning one year after the day on which the numerical goals referred to in section 172.01 are established and until the corporation has attained those goals, a report on the progress made by the corporation in the previous year in terms of attaining those goals.”,
(ii)by replacing lines 3 to 5 (as replaced by the decision of the Senate on February 7, 2018) with the following:
“(2) The corporation shall provide the information referred to in subsections (1) and (1.1) to each shareholder, except to a share-”, and
(iii)by replacing lines 7 to 9 (as replaced by the decision of the Senate on February 7, 2018) with the following:
“they do not want to receive that information, by sending the information along with the notice referred to in subsection 135(1) or by making the information available along with a proxy circular referred to in subsection 150(1).
(3) The corporation shall concurrently send the information referred to in subsections (1) and (1.1) to the Director in the form that the Director fixes and the Director shall file it.
(4) The Director shall, within three months after receiving it, provide the Minister with the information filed under subsection (3).
(5) The Minister shall prepare and cause to be laid before each House of Parliament, on any of the first 15 days on which that House is sitting after October 31, an annual report for the previous year containing an aggregate of the data from the information received under subsection (4). The Minister shall also, after it is tabled, make the report available to the public.”.