Hon. Céline Hervieux-Payette:

Honourable senators, I am very proud to speak today at second reading of Bill S-203, as it is the product of painstaking work and brings hope to future generations of women and men.

Bill S-203 would modernize the composition of boards of directors of certain corporations, financial institutions and parent Crown corporations, in particular to ensure the balanced representation of women and men on those boards.

During its study of the now-defunct Bill S-206, the Standing Senate Committee on Banking, Trade and Commerce heard testimony from several experts on the representation of women on boards of directors. After hearing them present their research, which clearly shows that greater diversity on boards of directors leads to greater economic performance, the Conservative members of the committee killed Bill S-206 by refusing the clause-by-clause vote and demanding that the proceedings be in camera. The way in which the Conservative senators tossed this bill aside is quite simply disrespectful of our institution and contemptuous of our parliamentary conventions, not to mention of women.

To start, I would like to point out that the conclusions of their report, the report prepared solely by the group of Conservatives and issued on February 3, in no way reflect the witnesses' conclusions.

In their report, the Conservative majority on the Standing Senate Committee on Banking, Trade and Commerce was quick to point out that gender diversity and strong corporate performance go hand in hand. And I agree. The senators also said that they sympathized with the objectives of Bill S-206. Were they being ironic or were they just not aware of what they were doing when they supported my bill? Then suddenly, the group recommended that the bill not proceed — for reasons I do not know to this day — and it ignored the consensus of the expert testimony, which was that legislation is required to ensure that women are fairly represented on boards of directors.

One of the reasons given by the committee's Conservative majority was that Bill S-206 would have significantly changed the corporate governance provisions of the Canada Business Corporations Act. According to the report, my bill would have disrupted the framework that allows companies to decide how they should operate, which would penalize shareholders. A quick lesson in the law would have been helpful at that point, since it is the shareholders who choose the board, not the officers of the company.

This conclusion is completely false and does not represent the facts presented by the experts during the committee hearings. The idea behind my Bill S-206 was not to tie shareholders' hands but rather to offer them a more diverse range of potential directors.

In her testimony on December 9, 2010, Deborah Gillis, Vice-President of Catalyst Canada Inc., explained why it is important to give shareholders more choice in directors, and I quote:

Of course, shareholders want to have the most qualified people leading and running their organizations, and I would argue that shareholders also would like to see their organizations reflect the marketplace that they serve. When women represent 50 per cent of the population, influence the majority of purchasing decisions — much research says it is 80 per cent or higher — and are the majority of employees in many organizations, reflecting the marketplace also becomes a key consideration for shareholders to consider.

Moreover, how can the Conservative majority on the committee give this as a reason when Bill S-206 was never given a clause-by-clause study or vote?

The Conservative majority on the committee then claimed in its report that the so-called voluntarism of the business world would improve the representation of women on boards of directors, and Conservative committee members innocently wrote that:

Canadian corporations are already increasing the number of women on their boards.

After reviewing the expert testimony, I found that all the witnesses said exactly the opposite. For example, the Norwegian expert, Liv Monica Stubholt, Chief Executive Officer and member of the board of directors of Aker Clean Carbon and the former State Secretary of the Ministry of Petroleum and Energy, explained quite clearly that, and I quote:

[Women] do not come in sufficient numbers unless you introduce legislation, if we are to look at this in an empirical way.

And of course, Norway was the first country to pass legislation, after asking for voluntary compliance. Her view is also shared by several reputable research firms such as Catalyst and the Conference Board of Canada. Anne Golden, current President of the Conference Board, recently said that at the current pace it would take another 151 years — long after our time — for parity to go all the way up the corporate ladder. If we think that reaching parity or balanced representation in 151 years is progress, we have to review our definition of the word.

Finally, the last reason given in the February 3 report by the Conservative majority on the committee was that the requirements of Bill S-206 would have increased the regulatory and paper burden on corporations. This is once again the complete opposite of the testimony provided by Poonam Puri, Associate Professor of Law at Osgoode Hall Law School. She confirmed that the bill was entirely appropriate in the current legislative context and that it would not disrupt the framework established by the affected acts. She added that, and I quote:

Bill S-206 is a technically sound piece of proposed legislation that works with existing corporate law, banking law and insurance law.

And contrary to the concerns expressed in the Conservative majority's report regarding the hypothetically greater regulatory burden that Bill S-206 would impose, Professor Puri — a professor emeritus of law who has a doctorate and is regarded as one of the most remarkable women in Toronto's business community — stated that the bill had been drafted so that the regulations would not become more onerous.

On this point, let me quote from her testimony of December 9, 2010:

[U]nder the bill, companies are given reasonable lead time to put into place the practices and the procedures, the governance and nominating procedures, so that they can comply with the proposed rules and there will not be a shortage of qualified people to meet the new rules.

The ideological conclusions of the Conservative majority on Bill S-206 were thus a complete fabrication.

With that reminder out of the way, I would like to speak more specifically about Bill S-203, which was inspired by testimony and consultations.

Honourable senators, the new Bill S-203 is different. It is innovative for two main reasons: first, it requires balanced representation of women and men on boards of directors; and, second, at the request of the Pension Investment Association of Canada, it allows shareholders to expressly vote against a director at annual general meetings.

In regard to the composition of boards of directors, unlike my previous bill, Bill S-203 does not impose a quota of 40 per cent or 50 per cent for women's representation on boards of directors. This new bill requires a minimum of 40 per cent for each gender on boards of directors. This change offers a better balance of opportunities for women and men. I feel it sends a clear message of equality of opportunity since, from now on, not only is anything possible for women, it is also probable. As for the process leading to the highest decision-making positions, it will no longer be simply hypothetical.

It is true that women today play a greater role in several areas of civil society. However, it is also true that there are too few women in the upper decision-making levels of our society. This is particularly true of the boards of directors of large corporations, which are probably the last bastion of the "old boys' club."

After the 2008-09 recession, which was the result of mismanagement and countless outrageous financial practices, the time has come to review the effectiveness of governance and management practices. Since boards of directors play a crucial role in the operation of large corporations, it is only logical that certain practices be reconsidered.

The economic uncertainty of the past few years has shown that corporate governance is constantly being put to the test. It is therefore crucial that corporations have qualified and competent directors, both male and female. A diverse board of directors is an indispensable asset for Canadian businesses, and I am not the only one who says so. The Conference Board of Canada came to that conclusion in its 2002 study titled Women on Boards: Not Just the Right Thing. . . But the 'Bright' Thing. Its conclusion was very clear: appointing women to boards of directors significantly improves the economic well-being of Canadian companies. Given that the Conservative government is "greatly" concerned about the health of the Canadian economy, is it not time to take concrete measures to improve Canada's economic performance, such as those proposed in Bill S-203?

The answer is in the question.

This is especially true in Canada, where there is no shortage of competent women. Marie-Soleil Tremblay, a professor at the École nationale d'administration publique, pointed out in committee that Canada has 60,000 female professional accountants, 20,000 female lawyers, more than 16,000 female engineers, thousands of female university professors and hundreds of female actuaries. Why would boards of directors deprive themselves of this rich resource?

According to Paul Tellier, former president and chief executive officer of CN and Bombardier and former clerk of the Privy Council, the deficit of women on boards of directors is a serious problem that is undermining Canadian corporate governance. He raised this issue in a speech to the Conference Board of Canada on November 17, 2010. For Tellier, the problem is simple: if we continue to find reasons to exclude available female talent, Canada's senior decision-making bodies will never reach their full potential.

We must not forget that boards of directors have the heavy responsibility of both ensuring the survival of the business and identifying the means for it to remain profitable. By bringing in new blood and balancing board membership, businesses and investors will benefit from a greater range of experience that can contribute to their success. Passing my new bill would send a positive message to Canadian society, namely that the political class is paying attention to the interests of Canadians by pushing corporations to create structures and conditions in the workplace that enable women and men to become directors.

We must also stop naively thinking that the representation of women on Canadian boards of directors is increasing year by year, as the outrageous report produced last February by the Conservative majority on the Standing Senate Committee on Banking, Trade and Commerce indicated. Unfortunately, the numbers and trends show that women are not valued among boards of directors of Canadians corporations.

In April 2011, the research firm Catalyst reported that even though women make up 50.4 per cent of the Canadian population and 47.3 per cent of the Canadian labour force, they hold only 14 per cent of Financial Post 500 corporate board seats. Moreover, women hold only 3.2 per cent of board chairperson positions, which are clearly coveted solely by men.

Those least amenable to the idea of requiring more women on boards of directors have long argued and still argue that businesses should voluntarily establish action plans to include more women as board members. I would like to know what these same people think of the fact that the proportion of women on boards of directors went from 6.2 per cent to 14 per cent between 1998 and 2009. At this rate, women will not even reach the 30 per cent mark by 2040. This is completely unacceptable for a society like ours that wants to remain open, equal and prosperous and that guarantees the right to equality in the Canadian Charter of Rights and Freedoms.

When I read these statistics, I can only conclude that the so-called voluntarism of the business world has failed. The witnesses who appeared before the Standing Committee on Banking, Trade and Commerce reached the same conclusion. Almost all of these experts agreed that the solution to the stagnant representation of women on boards of directors is undoubtedly a law requiring a minimum number of women.

As Ms. Stubholt indicated during the committee hearings, gender equality, although obviously desirable, is not the main reason for supporting such legislation. In her view, the most important reason is strategic, even economic.

Ms. Stubholt argued that:

. . . in this age, requiring extremely professional boards with a wide variety of backgrounds to assess risks properly, we need women to be able to do that.

Norway's performance in the current crisis clearly demonstrates that this country has met its objectives.

This kind of legislation produces concrete results. The example closest to home is certainly Quebec's legislation, An Act respecting the governance of state-owned enterprises, in force since 2006. This law has resulted in a 66 per cent increase in the number of women on the boards of directors of state-owned enterprises since it came into force. Apart from Quebec, which took action, the winds of change blow stronger in Europe than in North America.

The most famous example is certainly Norway, but this Nordic country is not the only one to require more equal representation of men and women on boards of directors.

As I told the Senate in 2010, Spain followed Norway's example in 2007 with a law requiring that women eventually comprise 40 per cent of the directors of publicly traded corporations. In March 2010, it was Iceland's turn to enact a similar law for public and private enterprise. Currently, several other countries, such as Belgium, Germany, Sweden, the Netherlands and the United Kingdom, are working on legislative measures similar to Norway's.

More recently, in January 2011, France adopted its Loi relative à la représentation équilibrée des femmes et des hommes au sein des conseils d'administration et de surveillance et à l'égalité professionnelle, an act respecting the equal representation of women and men on boards of directors and boards of trustees and professional equality. It was this law, and discussions with the law's sponsor, Marie-Jo Zimmerman, that inspired me to make certain changes to my bill on the representation of women on boards of directors. Like the French law, Bill S-203 focuses on balanced representation and flexibility. Not only does the 40 per cent requirement apply to both genders, but its application is also deferred — I want to emphasize the word "deferred" — so that corporations can adapt as easily as possible. Affected corporations will have three years after the law comes into force to give men and women at least 20 per cent of the seats on their boards of directors. The 40 per cent mark must be reached six years after the law comes into force.

Despite all these encouraging developments, the European Union has also seized on the issue, as shown by the report on equality adopted by the European Commission in December 2009 and the resolution of the European Parliament. The commission recently made a strong statement when it denounced the underrepresentation of women in senior management positions in the EU's largest corporations. Although several countries have passed laws establishing quotas for women, the commission is growing impatient that things are not moving as fast as it would like. On July 12, the commission declared that it was even ready to pass legislation in 2012 to encourage increased female representation on the boards of directors of the EU's biggest companies.

Meanwhile in Canada, the status quo reigns, and the Harper government continues to defend the obsolete culture of the old boys' club — unless it has decided otherwise without informing me — even though that was what drove the world into the worst financial and economic crisis since 1929. The current boards of directors are responsible for today's crisis. We must change this culture in Canada and encourage diversity at the highest levels of decision-making. One witness, Ms. Deborah Gillis, told the committee that Canada is trailing, not leading other countries in taking action on an issue that is central to the question of gender equity.

All the experts who testified before the committee last winter think that it is important to follow the example of progressive countries and ally ourselves with those that have already passed legislation to ensure that women are better represented on boards of directors.

The second major innovation in Bill S-203 is that it grants shareholders the power to vote against directors. Everyone agrees that under the current economic and legal framework, the shareholder's role is paramount. It is therefore high time that they be given the option of expressly voting against a director during board elections at annual general meetings.

This position was also expressed by Judy Cotte, General Counsel and Director of Policy Development at the Canadian Coalition for Good Governance in her testimony. In her view, the way directors are elected in Canada is obsolete. She pointed out that shareholders still cannot vote against directors. Under the Canada Business Corporations Act, a shareholder cannot expressly vote against a director. The act offers shareholders only two options: voting in favour or abstaining. Legally speaking, abstaining has no practical effect. Ms. Cotte gave us the completely absurd scenario in which a director could be elected with only one vote, which could be his or her own. This could mean:

If a majority of shareholders or even 99 per cent of shareholders withhold their vote against a director, that director will be elected or, if sitting, will not have to vacate their seat on the board.

Starting from the principle that the shareholders are the owners of large corporations, I believe it is totally logical and legitimate to give them the ability to expressly vote against a director.

Moreover, this type of measure is already in place in certain American states. One example is Delaware, where the Delaware General Corporation Law grants shareholders the ability to vote against a director during board elections. In Delaware, shareholders can therefore vote against directors who hold their seats only because of their network of contacts, who do not have the necessary skills or who do not contribute to the board's deliberations because they are absent or because they have nothing relevant to offer.

So, it is clearly time to give shareholders full voting rights.

Thus, the two main objectives of Bill S-203 are balanced representation of women and men on boards of directors and full voting rights for shareholders.

I would also like to remind honourable senators that, very recently, during a G20 meeting, a communiqué issued by a group of young female delegates from all participating countries stressed the ongoing gender inequality throughout the world and how this ultimately has a detrimental impact on global growth.

The French delegate said political, economic and social representation are essentials that leaders and change makers need to consider in order to sustain long-term growth in their countries.

When the finance ministers met, they realized and were told that having women involved in the decision-making process is essential to economic recovery.

Honourable senators, in this time of economic uncertainty, the Parliament of Canada has the opportunity to move forward with legislation that promotes social justice and economic prosperity. Therefore, in keeping with this spirit of innovation, I ask you to pass Bill S-203.

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