It’s no secret that the mining industry is behind the curve when it comes to hiring women and appointing female board members. What will it take to get them onboard? Although the last couple of years have seen some increase in women representation at senior executive and director positions, the pace of change is glacial. There are plenty of rationales provided, but none provide a reason why the typical important factors of improvement to financial, social and general corporate well-being and similar economic considerations are not driving the right decision-making in Canada and in particular in this important sector of the Canadian economy.
But it appears the tide might indeed turn in light of the recent disclosure rules of the Canadian Securities Administrators (CSA) and the recent federal budget — each announcing “comply or explain” policies requiring companies to implement a gender-diversity policy or publicly explain why they haven’t, as well as the increased industry conversation surrounding the importance of engaging women in mining in order to drive positive change and innovation.
The recent CSA initiative hit this year’s shareholder disclosure for annual general meetings. It requires companies that have shares listed on the Toronto Stock Exchange to comply with, or explain why they don’t comply with, the expectation that women are represented in the identification and selection process for director seats on boards and executive officer appointments, and that they set targets regarding the representation of women in these positions.
The companies are specifically required to: disclose the number of women on their board or in executive positions and the proportion of the total persons in those positions; identify whether the company has adopted a written policy regarding identification and nomination of women directors and if not, why; if the company has adopted a policy, disclose the objectives and key provisions, provide actions specifically taken, progress in achieving the objectives and how the company measures the effectiveness of its policy, if at all.
These requirements are intended to accelerate gender diversity in corporate Canada at the leadership level. A number of studies have indicated that diversity in decision-making, specifically in the boardroom, results in better social performance, better economic results and overall better health for the organizations served. Mining companies need to be put resources into exploring this valuable asset.
The implementation of requirements surrounding the representation of women in corporate Canada has been in process for a few years, however, it has now become political.
In 2012, the federal government’s Economic Action Plan announced the creation of an advisory council to promote the participation of women on public and private corporate boards, stating that “Canadian women have high levels of education and business experience … yet they remain under-represented on boards of directors and in top leadership positions. Increasing opportunities for women to serve on corporate boards makes good business sense … for Canada’s economy … (and the government) will work with the private sector to link corporations to a network of women with professional skills and experience.”
The council was to report back in the fall of 2013 with recommendations on how the federal government could “recognize leaders in industry and applaud companies that have succeeded in reaching their targets” for representation of women on corporate boards.
Meanwhile in May 2013, the Ontario government’s budget included the following statement: “The government strongly supports broader gender diversity on the boards and in senior management of major businesses … In conjunction with others, including the Ontario Securities Commission, the government will consider the best way for firms to disclose their approaches to gender diversity, with a view to increasing the participation of women on boards and in senior management.”
From 2013 to 2014, the OSC conducted a number of initiatives to obtain input on a proposed regulatory initiative on diversity in the boardroom including research, public consultation and a round table.
At the round table, McKinsey & Company, a global management consulting firm, outlined its research on the subject, which started in 2007 and consisted of five major research papers being published. The first study looked for empirical evidence of women’s representation on management teams and boards, and whether there was an empirical correlation with financial performance of these companies. They found that relationship, and others that had done the same kind of analysis later on have also found the same relationship. McKinsey also noted the relationship between high-level representation of women on management teams and boards and things like employee engagement, a sense of direction and renewal. They also discovered that women and men often have different leadership strengths that are complementary and help build stronger leadership.
On Dec. 31, 2014, the new securities rule came into effect. It took a middle ground, as outlined above, of “comply or explain.”
In April 2015, the federal government used its budget to propose a “comply or explain” requirement for companies incorporated under the Canada Business Corporations Act. The government indicated that the proposed legislation will likely stay in line with the CSA Rule.
Looking at other jurisdictions, the jury is still out on how successful the approach of quotas has been, with the U.S. the most opposed to quotas.
Germany recently adopted quotas on the basis that little change occurred in the representation of women on boards and in senior management under the non-mandatory regime in place since 2001. This brings the European Union to the leader in prescribing quotas, which range for 30-40%.
Most studies show that increasing women representation is a slow process without a quota system. A recent study by Women in Mining UK and PwC, Mining for talent 2015: A review of women on boards in the mining industry 2012-2014, revealed that despite the fact that there are considerably fewer women on mining boards, 7.9% in the top 500 mining companies, those women made a huge difference to how those companies performed.
Canada is one of the largest mining nations in the world and according to the Mining Association of Canada, mining contributed $54 billion to Canada’s gross domestic product in 2013. Both the federal and Ontario governments have used budget speeches to address this issue, a good indication that this is an economic pressure. If women help companies perform better, it makes very good economic sense for governments to force the issue of representation through the use of quotas. This could very well change the face of the mining industry in Canada.
— Catherine Wade is a partner at Dentons LLP’s Vancouver office, and is an expert in corporate governance and mining. She can be reached via email at firstname.lastname@example.org.Visit www.dentons.com for more information.