Gender Diversity in the Boardroom: Raising Questions About the "Comply or Explain" Model and Targets in Canada

Effective corporate governance requires diversity in perspectives. Nevertheless, gender disparity continues to be a long-standing and prevalent problem on Canadian boards of directors and in executive roles. A “business case” argument that asserts that diverse leadership achieves better financial results has been put forward in support of rectifying gender disparity; however, recent meta-analyses research denies the validity of the “business case” argument. This paper argues that conclusions regarding the invalidity of the business case should be approached with caution. In 2014, securities regulators in Canada implemented amendments to Form 58-101F1 Corporate Governance Disclosure in order to address gender diversity. Unfortunately, progress has been slow because the new diversity disclosure rules are not based on a true “comply or explain” model. This paper argues that securities regulators should require publicly traded companies to adopt a policy relating to the representation of women on their boards. Furthermore, this policy should include a target percentage, chosen by the company, for women on a company’s board of directors and in their executive officer positions.