Baila Lazarus

A move by the Quebec government regarding the representation of women on boards of public companies is getting reaction all the way to British Columbia, due to the ripple effect it might have on Crown corporations here.

Legislation is expected to take effect during 2007 that would require that, within five years, boards of public companies in Quebec would have an equal number of men and women.

“There are numerous women active in all industry sectors and they have long been ready to shoulder their share of the leadership in public companies,” said Quebec Minister of Finance Michel Audet at a recent Montreal reception organized by the Financial Women’s Association of Quebec (FWA).

“The government has formally recognized this in a recent policy for modernizing the governance of these companies: the policy stipulates that within five years, their boards will comprise equal numbers of men and women.”

The reception was held for the launch of the third edition of Women in the Lead / Femmes de Tête, a 930-page national directory of more than 600 women whose expertise and experience recommend them as candidates for corporate board appointment.

“That is shaking people up; it would be the tip of the iceberg if they start to legislate the number of women on boards,” said Doreen McKenzie-Sanders, executive director, Women in the Lead Inc.

“Not any province in Canada has done it yet, but if they introduce it and are able to get the bill passed, it’d be the beginning of other provinces looking at it, perhaps.”

According to a report on gender diversity on corporate boards by Vancouver-based Patrick O’Callaghan and Associates, this type of governance change may not be far away.

“While legislation for public company boards may not be likely in the next year or two, we believe that the longer the percentage of female directors remains static, the greater the likelihood there will be legislative action,” said the December 2006 study. “Legislative mandates are already being proposed for female directors on Crown corporation boards in Quebec and we expect other provinces to follow with similar actions for Crown corporations. If these types of initiatives prove successful, it is reasonably foreseeable that a case for legislative quotas on public corporations will be made.

“Further, the case for government action for public company boards will undoubtedly gain momentum if the gap between female directorships on Canadian and U.S. boards continues to grow. If boards want to avoid the risk of government interference in this area, they need to ensure that gender diversity on boards improves.”

According to the report, over the past 12 years, the number of female directors of Canada’s 300 largest companies has fluctuated “only slightly” between 6% and 8%.

“In comparison, the number of female directors on U.S. boards has been steadily increasing and is now at 14.7%. Moreover, 84% of U.S. companies have at least one female director, compared with only 48% of Canadian companies.”

McKenzie-Sanders added that recruiting women to boards won’t just be a matter of good governance, but a matter of logistical necessity.

“There is a huge growing interest in appointing women to boards because there is going to be a scarcity of men and women in the coming years and they’re going have to turn to this pool of talent,” said McKenzie-Sanders.

“The new scrutiny [from within the company and shareholders] about the composition of boards, to make sure it’s not just the old boys’ network, means they will be appointing more and more women.”

In response to the decision of the Quebec government, the Financial Women’s Association of Quebec recently presented a brief to the Parliamentary Committee on Public Finance regarding the governance modernization plan, agreeing with the need for legislative measures.

“Would it have been preferable not to have to impose quotas and deadlines?” said the brief. “In an ideal world, possibly, but considering the size of the gap to be made up, we feel the measure is justified and that it will have the desired benefits.”

For her part, McKenzie-Sanders feels the latest changes are due.

“We’ve been at this now, seven years, plugging away, but all of a sudden, it’s becoming apparent that there is a very real interest on the part of those with the power to appoint, they’re now going out and seeking women who are qualified and who have a track record, particularly in finance.”