Policy Update: Demonstrating and Enabling Innovation

Jan 07, 2017
When we think about innovation, we tend to think of “great leaps forward” like the
iPhone or artificial intelligence, but innovations much smaller in scale and scope can
also have a big impact. Recently, the Institute of Corporate Directors collaborated
with law firm Osler Hoskin & Harcourt LLP to make available to all Canadian public
boards a complimentary board diversity policy template designed to simplify the
process of drafting a gender diversity policy and to provide a tool for boards to begin, or advance, their process of diversification.

After discussing with the Ontario Securities Commission recent disclosure results that found gender diversity is not yet reflected in the composition of most corporate boards, we began to look at the diversity challenge through a different lens.

In 2015, only 21 percent of issuers reported having a formal policy to help them identify and nominate female
directors. Looking at this number, the assumption might be that most issuers either do not care about diversity or do not prioritize it. But what if many of these companies don’t have the resources to initiate the drafting of a
gender diversity policy? What if some smaller-cap issuers don’t feel they have the in-house or external expertise to diversify in a way that will advance their business and strategy?

The ICD’s template is a tool meant to test these questions. It offers companies simple and standardized diversity-policy language and includes three distinct diversity clauses from which companies can choose, including a customizable clause that allows users to determine a diversity percentage target and a year by which that target will be achieved. For those companies that have yet to do so, the template provides a gateway through which they can begin the diversification process.

In the few weeks it has been available online, hundreds of organizations have downloaded the template. Other services offered by the ICD to help boards diversify, including the Directors Register and our curated
research service, BoardInfo, have also experienced increased activity. To us, this shows that the question of “why” diversify has been answered for many companies and that they are ready to begin to think about “how” to diversify.

The future ability of Canada to expand our economy, compete globally and improve social outcomes for more
Canadians lies largely in our ability to continuously improve the products we produce, the services we offer each other and the world, and the skills and labour force needed to underpin and sustain these shifts.

Such results, though, depend on the existence of innovative corporate cultures, which must be structured, encouraged and, crucially, demonstrated. Boards can play a leadership role in fostering innovation across all sectors of our economy by empowering new thinking around the table and embodying the idea of innovation through their own diversification.

Matthew Fortier
Vice President, Policy
Institute of Corporate Directors

Source: Director Journal (January/February 2017)