Canadian Firms Pull Back on DEI Transparency, Report Reveals

Fewer Canadian public companies are trumpeting their records on diversity, equity and inclusion, though many are quietly pressing ahead with the initiatives despite the DEI backlash in the United States, a study by a national law firm has found.

 

U.S. President Donald Trump signed a number of executive orders aimed at stamping out the practice of promoting diversity in workplaces, saying hiring and promotion should be done solely on merit. These actions could be influencing Canadian companies to pull back on reporting data, Osler, Hoskin & Harcourt LLP said in its annual diversity disclosure report.

 

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The shift halts a years-long trend of increasing reporting for metrics such as the percentages of women on boards of directors and executive teams, the report said.

 

The report found the percentage of female directors among Toronto Stock Exchange-listed companies increased, rising above 30 per cent of board seats for the first time to 30.5 per cent. But the rate of increase fell to 0.7 percentage points from midyear 2024, the slowest in the 11 years Osler has conducted the study.

 

Despite reduced public disclosure, institutional investors still demand this information from companies in their portfolios, and many corporations see maintaining DEI programs as key to attracting top talent they will require as demographics change, said John Valley, chair of Osler’s corporate governance practice and co-author of the report.

 

“What they are saying, the amount that they’re saying, the way in which they are expressing it, may have changed, but the core focus on diversity as an area of importance for the organization, or for providers of capital making investment decisions, has not necessarily changed in the same way or at the same rate,” Mr. Valley said.

 

Beyond the U.S. government backlash, there have been a number of recent developments showing diversity initiatives under strain, along with other aspects of environmental, social and governance performance, such as climate-related reporting.

 

Early this year, proxy advisory firm Institutional Shareholder Services Inc. announced it would no longer consider the gender or racial and ethnic diversity of a company’s board when making vote recommendations for the election or re-election of directors at U.S. companies.

 

In April, Canadian Securities Administrators, the umbrella group of provincial and territorial securities commissions, shelved its plan for disclosure rules to go beyond gender diversity to address how Indigenous people, racialized people, people with disabilities and LGBTQ+ people are represented on boards and in executive ranks. It blamed this suspension, and another of a plan to mandate climate-related disclosure, on the changing “global economic and geopolitical landscape.”

 

In a report this month on the BlackNorth Initiative, a voluntary campaign to increase the number of Black employees at Canadian companies, The Globe and Mail quoted human resources and DEI experts saying enthusiasm employers once had for diversity projects has waned considerably.

 

Mr. Valley agreed with that assessment, saying corporate Canada is at an inflection point at which companies are no longer publicizing their gains on the diversity front, but still see advantages. Some companies are tying the data directly to its impact on their prospects rather than broad objectives, he said.

 

“There are a number of examples where the disclosure got shorter, but I think in some ways it got more meaningful because it was more tied to the underlying business, and how diversity is really driving the business, creating a more resilient organization,” he said.

 

Among findings in the report, the number of women being appointed to new or vacant board seats at TSX-listed companies fell 8.5 per cent from last year. The proportion of companies with a written policy for identifying and nominating female directors fell 5.5 per cent. Nearly 8 per cent fewer companies, meanwhile, disclosed whether they consider representation by women when they make executive appointments.

 

In the past year, there were slight changes to representation on corporate boards by other diverse groups, including visible minorities: 10.7 per cent, up from 10.2 per cent; Indigenous peoples: 1.1 per cent, up from 1 per cent; and people with disabilities: 0.5 per cent, down from 0.7 per cent.

 

 

 

 

This article was first reported by The Globe and Mail