Comply or Explain – Your Board of Directors needs qualified female talent and inclusive practices
The face of today’s Board of Directors is rapidly changing, influenced by evolving regulatory requirements, increased shareholder activity, demands for diversity, changing technologies, and the growth of new markets, it is vital that your board has the right composition and people in order to navigate today’s critical issues, and position it for what the future demands.
With the new amendments to corporate governance disclosure rules, Canadian non-venture issuers reporting in Ontario, Quebec and other jurisdictions (excluding British Columbia, Alberta, the Yukon and Prince Edward Island), will need to report on the following requirements in its annual proxy circular:
- Disclose the number and percentage of women on your board.
- Disclose any targets for increasing the representation of women on your board, and report annually on the progress in achieving them. If your board does not have targets, you must explain why;
- Disclose whether your board has a written policy as to how it considers the representation of women in the director identification and selection process, and demonstrate how your board measures the implementation, effectiveness, and progress of same, or explain the absence of such policies and processes;
- Disclose your boards written policies for director renewal such as: term limits, retirement policies, performance criteria, or any other mechanism for renewal, or explain the absence of such policies;
- Disclose the number of women in executive officer positions including major subsidiaries, and;
- Disclose how the organization considers women when making executive officer appointments. If women are not considered, you must explain why.
Your board needs to take the steps to change its composition and tap into a new pool of highly qualified, and relevant female talent – the very talent pool to which LBI gives you unprecedented access. Your board will need to search beyond the traditional networks of ‘obvious’ candidates with a view towards building a board composed of highly qualified, diverse, independent-minded and relevant candidates who will represent the company’s evolving business needs.
Bringing the Benefits of Diversity on Board
Boards that are comprised of members with a blend of differing skills, experience, perspectives, knowledge, ages, genders and cultural backgrounds are better equipped to provide advice, consultation, and oversight. Diverse boards are also less prone to “group-think” and thus achieve a more robust understanding of opportunities, issues and risks. By having a variety of experiences and perspectives to draw from, the quality of your board’s decision-making will improve, sensitive topics will be more openly discussed, overall performance will be stronger, and both sustainability and employee engagement will be enhanced.
When you create a diverse Board of Directors, particularly one with a positive female presence, an abundance of benefits will naturally follow:
- With greater board oversight, better governance and more inclusive policy-making comes a heightened ability to attract and retain top talent;
- With fresh insight into product marketing and strategy-building comes a more modern adaptation to your clients’ evolving needs.
- With innovation, diversity and creativity in the boardroom comes a stronger performance on a number of financial measures, including return on equity, sales and capital.
- With a female perspective comes better representation of the often under-represented female sector of your labour and customer base.
Bias in all its forms is the bane of the recruitment industry; yet, most organizations, boards and recruiting firms have processes that inhibit the recruitment and contributions of diverse candidates. In order to demonstrate true commitment and reap the benefits of diversity, your board must develop inclusive practices. Without them, any recruitment effort is likely to result in a less than positive outcome and may even prove to be counter-productive.
Lansdowne Board Intelligence