Monday, March 08, 2010

International Women's Day: Time to consider gender parity on boards of directors


Today is International Women's Day and to mark the occasion, I thought I would highlight a legislative effort that was launched in the Senate last year and that remains worthy of consideration. Bill S-238, the Board of Directors Gender Parity Act, was introduced by Senator Celine Hervieux-Payette last summer and reached 2nd reading. There are a lot of more pressing concerns for women, I'd put daycare right up there for example, but there are other ideas kicking around that are worth attention too, this one wouldn't require great expenditure at all.

With the Senate now having changed hands and a new legislative agenda needing to be initiated post-prorogation, whether the board parity proposal will re-emerge is unclear. A Prime Minister who really wants to do something for substantive equality, however, maybe to make up for a recently - and colossally - bungled superficial anthem lyrics effort, might give the idea a look. This would be a big deal for women in Canada. If this government won't consider it, a future one should.

Imagine requiring gender parity on Canadian boards of directors. Canada would again make a splash internationally with such a development. And it's not out of the blue either. Quebec has had such a requirement with respect to their Crown corporations since 2006. To his credit, Jean Charest has fully defended it in the face of some high profile and predictable initial jawing. Norway and Spain have public board gender parity requirements but larger G8 countries have yet to go with it. With time provisions to ease it in and give boards the time to adjust, it would be possible.

Here's an excerpt from Hervieux-Payette's 2nd reading Senate remarks on her bill:
The purpose of Bill S-238 is to ensure parity for women on the board of directors of publicly traded corporations, financial institutions and federal Crown corporations. Women are active participants in the business community, as business owners, shareholders, officers, managers and employees, and they also play an important role in the market as consumers, so they should have equal representation in the management of business.

A great many women in Canada have the qualifications and experience to act as corporate directors, but the number of women in top corporate positions does not come close to reflecting their economic importance.
She goes on to cite statistics from 2007 showing women holding 13 percent of board seats in the Financial Post 500. That is remarkably low and clearly in need of a push. These low levels of female board membership continue despite years of more than equal male-female graduation rates in business, doctorate and other degrees. Also of interest in her remarks, a study she cited from Ernst & Young:
Economic analysis by the World Bank, United Nations, Goldman Sachs and other organizations show a significant statistical correlation between gender equality and the level of development of countries. The evidence is compelling that women can be powerful drivers of economic development.

Several studies from a broad spectrum of organizations — including Catalyst, Columbia University, McKinsey, Goldman Sachs and The Conference Board of Canada — have examined the relationship between corporate financial performance and women in leadership roles. Their undisputed conclusion is that having more women at the top improves financial performance.
Nick Kristof recently catalogued a number of new studies on the point. He noted that many different studies, looking at different indicators and from different academic disciplines, are finding that diverse groups achieve better decision making than homogeneous ones, suggesting that Wall Street would have been better off had more women populated those boards.

Whether legislative requirements versus incentives are the better route to go, that's worth a debate. But we know that the voluntary route has not produced anything near parity.

Here's a closing thought from a column yesterday that itemized a number of areas requiring improvement, including representation for women in corporate boardrooms:
These are all areas requiring the serious attention of people everywhere, people of good will who recognize that full equality is both organic and fundamental to truly civilized societies. We may not be anywhere close to that full equality yet, but that's no reason not to keep marching toward it.
Kudos to Senator Celine Hervieux-Payette for having brought the idea forward. Time for others to keep it circulating as an idea that is pursuit worthy.