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Mandatory ESG reporting coming in Canada while anti-ESG backlash builds south of border

The Canadian Securities Administrators (CSA) is the umbrella of provincial securities regulators, which govern Canadian markets, securities issuers, and investors. In early 2023, it proposed two alternative approaches to the rules related to diversity and director nominations for public companies.

“One is quite prescriptive. The other one is less prescriptive,” says Ravipal Bains, a partner at McMillan LLP’s capital markets and securities practice. He says the market has mixed views, and stakeholder discussion is ongoing.

Some European jurisdictions have succeeded with mandatory quotas for female board representation, says Bains, who advises clients on mergers and acquisitions, corporate governance, and corporate finance. He says that Canadian capital markets face “unique challenges” with female board representation, with many junior companies not having a high degree of representation of women on board and executive officer positions. “That is an area where we can certainly do better. But we have seen some progress.”

The Form 58-101F1 Corporate Governance Disclosure of National Instrument 58-101 Disclosure of Corporate Governance Practices requires all issuers listed on the Toronto Stock Exchange (TSX) to disclose annually the number and percentage of women on boards and in executive officer roles and targets for that number or percentage, among other things.

There was a three percent rise in total board seats occupied by women, according to the Year 9 Report of the CSA’s review of disclosure concerning female representation on boards and in executive officer positions, released in late 2023. Their representation went from 24 percent of total board seats to 27 percent. Women assumed 43 percent of new board vacancies, and eight percent of the board chairs were women, a one percent increase from 2022. Only five percent of the companies had a female CEO, and 17 percent had a female CFO.

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