The Ontario Teachers' Pension Plan and the British Columbia Investment Management Corp. have made specific proposals to the Ontario Securities Commission on increasing gender diversity among members of corporate boards.
The C$125.9 billion (US$121.7 billion) OTPP, Toronto, recommends there generally be at least three female directors on the board of all publicly traded companies, while the BCIMC wants 30% of each board to be female. The BCIMC, based in Victoria, oversees $102.8 billion in provincial public pension and other assets.
Both organizations recommended penalties for companies that fail to comply, but did not specify what they should be.
The recommendations were made to the Ontario Securities Commission, which sought input on increasing gender diversity of the boards of publicly traded companies based in the province. (In Canada, each province has its own securities and governance laws.) The OSC call was included in the province's fiscal 2014 budget, which was released May 14.
“Ontario was the first province to do this, though the issue has come up from time to time over the past several years,” said Wayne Kozun, senior vice president and head of fixed income and alternatives at OTPP. Mr. Kozun previously was senior vice president of public equities at Ontario Teachers. He said the fund's three-women recommendation would be contingent on the size of the board in question; those with larger membership would be expected to have 30% women.
Ontario Teachers' proposal would apply to all non-venture issuers that trade on the Toronto Stock Exchange. “The selection of a minimum of three women on a board is rooted in the belief that board diversity yields more effective boards and better results for shareholders, and not based on meeting an arbitrary target simply for the sake of meeting that number,” according to the proposal. “The threshold of three women directors is a means to achieve an end (more diverse boards) and our review of the research has led us to conclude that without such a push it is not evident that sufficient progress in improving diversity would be made.”
The BCIMC, in its proposal, also recommended “an aggressive but achievable” three-year time limit to achieve its recommended 30% target. “Venture issuers should not be exempt though they may need more time to comply. A time limit of five years would be reasonable for venture issuers.”