A company’s Board of Directors is a group that leads the business and maintains corporate governance — the system of rules, practices, and processes guiding executives in executing strategy and ensuring accountability. A seat on this board holds a lot of influence and responsibility, as they are collectively accountable for a firm’s performance and strategic direction.

Canadian boards have historically been predominantly composed of white men. However, as the racial demographics of major cities such as Toronto and Vancouver have evolved — with racialized individuals making up 55.7 per cent of Toronto’s population and 54 per cent of Vancouver as of 2021 — there has been increasing attention to board diversity. 

While some progress has been made, it has been slow, and a noticeable gap remains. This disparity is especially visible for Black communities — according to a 2020 study conducted by Toronto Metropolitan University’s (TMU) Diversity Institute, there were only 13 Black board members out of 1639 corporate board members surveyed. 

The current state of representation

The TMU study examined board representation across eight major Canadian cities in Ontario, Alberta, and Nova Scotia and across multiple sectors, including corporate, public, and educational institutions. They found that Black individuals remain significantly underrepresented in governance roles. 

Although Black people comprised 5.6 per cent of the total population across these cities, they held two per cent of all board positions. This disparity was even more pronounced in the private sector, where 0.8 per cent of corporate directors were Black. 

In Toronto — Canada’s primary corporate hub — the gap is especially large. While 7.5 per cent of the city’s population is Black, 0.3 per cent of corporate board members in Toronto-based companies are.

Why does representation matter? 

Board members are often required to navigate complex situations and decisions. A well-balanced and effective board considers the interests of a wide range of stakeholders and draws from a variety of perspectives, skill sets, and lived experiences. This is to determine the best long-term outcomes for the firm and those it affects, including employees, shareholders, and the broader community. 

For this reason, boardroom diversity is not simply a symbolic measure. Rather, the practice has greater implications for the quality of governance. 

It is important to emphasize the role of businesses within the broader economic and social ecosystem. Board decisions extend beyond shareholder returns, materially impacting local employment, environmental conditions, economic growth, and social well-being. A board composed of individuals with different backgrounds, experiences, and perspectives is better positioned to anticipate these broader implications and ensure that the organizations’ goals align with the interests of wider communities. 

Economic theory suggests that when individual perspectives are more diverse, collective judgements become more reliable and robust. While characteristics like gender, race, et cetera are not, in themselves, determinants of board effectiveness, they often serve as markers of differing lived experiences and professional paths. Because individuals with varied identities experience distinct social and institutional contexts, members can challenge traditional norms, spot any gaps, and spur innovation. 

Why is there little representation?

The Harvard Business Review (HBR) found in 2020 that in board rooms that had no racial or ethnic minorities, racialized candidates were rarely considered for executive roles, at about 0.2 minority candidates per vacancy on average. In practical terms, this means that if five executive positions were open, only one minority candidate would be considered across all five roles, and many individual vacancies would likely have none at all. 

This might arise from the nature of professional networks. In corporate spaces, having a strong professional network is a huge determinant of an individual’s success at all levels from start to finish. This sentiment is the same at the very top, where director recruitment is heavily determined by informal relationships and existing social circles. 

Board members relying exclusively on their social networks to hire new individuals may have reinforced existing patterns of representation — when board members choose their successors primarily from circles of individuals like themselves, racial disparities tend to be reproduced. 

Beyond the barriers to entry, significant structural challenges within the boardroom itself exist. For one, Black directors are typically less likely to hold more of the influential leadership positions, like board chair, despite having the same, if not stronger, qualifications than their white counterparts. According to the HBR, while 37 per cent of white survey respondents held board chairman positions, only 25 per cent of Black survey respondents reported the same.

Moreover, the same HBR study suggests that Black professionals, particularly those who are the sole racial or ethnic minority on a board, are more likely to feel that their contributions are overlooked or undervalued. This calls into question the extent to which formal representation can make meaningful contributions to shape deliberations. 

Regulatory frameworks such as Bill C-25 — an amendment to the Canada Business Corporations Act requiring that federally incorporated companies disclose board diversity — have increased transparency and have seen minor improvements in increasing gender and racial diversity. However, disclosure alone will not bring about structural reform.

In a climate where corporations are scaling back Equity, Diversity, and Inclusion (EDI) initiatives, institutions must make commitments to ensure more diversity. This should move corporations to make meaningful progress.