Women in Business Fall 2017

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30 | WOMEN IN BUSINESS—FALL 2017 PUBLISHED BY BUSINESS IN VANCOUVER WHY THE GLASS CEILING NEEDS MORE CRACKS DEB ABBEY | Research shows having more women on boards and in senior management roles leads to better corporate performance. Investors want more women too You can decide to work for companies with better gender diversity policies and, for added impact, your investments can make a difference You’ve probably heard a lot about those cracks in the glass ceiling. Most of us assume that women are well represented on boards and in senior management in corporate Canada. Turns out we’ll need a lot more cracks if we want to break through any time soon. Despite the growing body of evidence that gender diversity in the boardroom leads to stronger financial performance, Canadian women hold only 12 per cent of corporate board seats in Canada. And nearly half of Canadian corporate boards don’t have any female representation at all. There are a number of reasons why companies with diverse leadership are linked to stronger financial performance. Research has shown that having more women on boards and in senior management leads to a greater capacity for creativity and innovation, employee productivity, commitment, satisfaction and a focus on customer needs. These are all drivers of financial performance. A study by the Peterson Institute for International Economics and EY shows that companies with at least 30 per cent women in leadership roles could increase profit margins by 15 per cent compared to those with lower levels of diversity. That’s a big number and investors are paying attention. A survey published by the Responsible Investment Association and sponsored by OceanRock Investments Inc. looked at investor perspectives on gender pay equity and women on boards. In it, 82 per cent of respondents said they believe women should be better represented on boards and 73 per cent said that they disapprove of companies with zero or very few women on their boards. When asked about the gender pay gap, 92 per cent of investors said that women and men should receive equal pay for equal work and 76 per cent said companies should be required to disclose how much they pay women compared with men. More than half of Canadian investors would be willing to divest of a company that does not pay men and women equally for equal work while another 25 per cent would consider doing so. “Having more women on boards and in senior management is not only about gender equity; it also makes good business sense,” Fred Pinto, CEO of OceanRock Investments and vice-president and head of wealth and asset management at Qtrade Financial Group, said in releasing the survey earlier this year. “It’s good for the company and it’s what investors want.” The Ontario Securities Commission has been paying attention to investors’ concerns and, since 2015, requires companies to “comply or explain” their policies on gender diversity on their boards and in senior management. Companies with diversity targets had, on average, female board representation of 25 per cent compared to 10 per cent for those that did not have a target. The results have been positive but improvements are slow in coming, with only marginal increases in the percentage of women on boards in the first two years. Investors are part of the solution. OceanRock Investments and other responsible investors have been asking Canadian companies to improve their gender diversity policies. It’s not a big ask. In most cases they simply want the companies to develop a formal diversity policy that outlines how they plan to increase the numbers of women and minorities on boards and in senior management. In 2016, OceanRock Investments and the Shareholder Association for Research and Education filed a shareholder resolution on gender diversity with Restaurant Brands International, owner of Burger King and Tim Hortons. The proposal garnered majority support from independent shareholders and 16 per cent overall. They filed the resolution again this year and overall support increased to more than 22 per cent. Not a decisive victory but it’s moving the company in the right direction. In addition to OceanRock Investments, NEI Funds and IA Clarington Inhance SRI Funds have engaged in dialogue with companies and incorporated board diversity into their investment decision-making process. In 2016, BMO launched its Women in Leadership Fund, which invests in North American companies that promote gender-diverse leadership. You can decide to work for companies with better gender diversity policies and, for added impact, your investments can make a difference. Deb Abbey is the CEO of the Responsible Investment Association. She was the founder and CEO of the first investment management firm in Canada to focus exclusively on responsible investment. She is the coauthor of The 50 Best Ethical Stocks for Canadians (2001 edition) and the author of Global Profit and Global Justice: Using Your Money to Change the World (2004).
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Women in Business Fall 2017

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