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Canadian regulators had considered imposing targets or quotas on companies when the diversity regime was introduced five years ago, but stopped short of that tactic, which has gained traction elsewhere.
In California, for example, a new law required public companies with principal executive offices in the state to have at least one woman on their board by the end of last year. They’ll have to have two female directors by the end of 2021 under the law, which is facing a court challenge from a conservative group over the use of taxpayer funds to enforce the gender quotas.
MacDougall said he is a “big fan” of the Canadian model, which compels companies to comply with a push for more board diversity or explain why they don’t, because he says it can encourage change while avoiding the risk of unintended consequences brought on by more rigid compliance rules.
“However,” he added, “I am on record as advocating for the use of a minimum quota of at least one woman on each TSX company board (that) has four or more directors, in order to accelerate change.”
The push for more diverse boards has been playing out globally for several years, picking up steam among institutional investors. A survey published last summer by Institutional Shareholder Services (ISS), a proxy advisory firm, revealed that 61 per cent of global investors said gender diversity on boards is an “essential” attribute of effective governance.
Norway has one of the strictest gender parity regimes, and used hard quotas to reach 42 per cent board diversity in 2016, according to an earlier ISS report.
In January, David Solomon, chief executive of New York-based Goldman Sachs, signalled the investment bank is prepared to take action to push for board diversity. During a television interview at the World Economic Forum in Davos, Switzerland, he said Goldman would be prepared to take a company public only if it has at least one “diverse” board member, with a focus on women. The new policy goes into effect July 1 for companies planning an IPO in the United States or Europe.
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