Catherine Philogene, Vice President, Product Management, RBC Global Asset Management

”Asset managers can be thoughtful in their approach to gender diversity on boards by establishing proxy voting guidelines around female board representation.”


Catherine Philogene, Vice President, Product Management, RBC Global Asset Management.

A majority of the world’s institutional investors believe gender diversity on corporate boards is important. But far fewer believe prescriptive targets are the right means for achieving that diversity.

That was a key finding of the RBC Global Asset Management (RBC GAM) Responsible Investment Survey in each of the past two years. 

More than three quarters of investors in the United States, Canada, Europe and Asia said in 2018 that gender diversity on corporate boards was “important to their organization.” The question changed in 2019, when we asked, “should gender diversity targets be adopted?”

A slim majority (52%) of the approximately 800 institutional investors surveyed said no to that question. Responses varied by region: 55% of respondents in the U.S. did not favour targets; it was a 50/50 split in Canada; and in Europe 44% of investors surveyed did not support gender diversity targets.

While investors are split on the issue of adopting targets, support is growing for taking proactive steps to promote greater board gender diversity.

Some European governments have been more aggressive than the U.S. and Canada in mandating gender diversity on boards.1 Countries including Norway2, France3, Italy4, Germany5 and Belgium6 have established legal quotas.

In Norway, for example, a law passed in 2007 mandates that at least 40% of directors on publicly listed corporate boards be female. France passed a bill in 2011 that also requires 40% female representation by the end of 2016. Denmark and the UK are among European countries that have adopted voluntary diversity targets. In Denmark, companies are required to report on steps they are taking to achieve gender balance on their boards (at least 40%/60%).7 In the UK, a 2011 government commission put forth a nonbinding call for companies to have at least 25% female representation on their boards by 2015.8

In May 2018, Canada passed a new law that will require any company that is a “distributing corporation”9 under the Canada Business Corporations Act (CBCA) to provide shareholders with information on its policies for diversity on the board and in senior management10, including women and minority groups. This applies to the more than 700 distributing or publicly held corporations of the 235,000 companies incorporated under the CBCA. This comes after the Ontario Securities Commission introduced a comply-or-explain rule in 2015 that requires most companies listed on the Toronto Stock Exchange to disclose the number of women on their boards and in executive officer positions annually and to disclose whether the company has a policy for identifying and nominating women directors, and if not, to explain why.11

Recent studies on board diversity in the three regions surveyed by RBC GAM — Europe, North America and Asia — appear to illustrate the relatively slow pace of market-based reforms in countries without statutory targets.

In Canada, women held about 15% of board seats as of 2018, up from 11% in 2015, according to a report from Canadian Securities Administrators, which also found that about 66% of companies had at least one woman on their board.

In the U.S., 24% of board directors on S&P 500 Index companies were women, up from 18% in 2013, according to data from consultancy KPMG.12 Last year (2019) was the first in which every S&P 500 Index company had at least one woman on its board, while six now have majority-female boards.13

A more diverse board has also been linked to better performance on other environmental, social and governance (ESG) factors. For example, a more diverse board tends to increase the likelihood of voluntary climate change disclosure, according to research published in the Journal of Business Ethics in 2017.16 

With some companies taking action on their own and many others responding to outside forces, gender diversity on boards is gaining momentum. But given the overwhelming evidence that board diversity is good for business, it’s not coming fast enough.


You can hear more from Catherine at the Women in Finance Virtual Summit on October 22 2020. To find out more and register your free place, please click here.