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  • Jordan Strate

Changes to Diversity Disclosure: the Canadian Securities Regulators' Latest Update

Updated: Apr 8

In a move toward fostering greater transparency and inclusivity within the corporate landscape, Canadian Securities Regulators (CSR) have recently updated diversity disclosure requirements. These enhancements represent a significant step forward in promoting Equity, Diversity and Inclusion within publicly traded companies in Canada.

The revised regulations, which came into effect on December 31, 2023, build upon existing framework to provide investors with a more comprehensive understanding of the diversity landscape within the organizations they invest in. The goal of which is to elicit information regarding how non-venture issuers approach diversity beyond gender and their board nomination process.

Here's a closer look at the key aspects of these most recent updates:

  • Expanded Scope of Disclosure: The new regulations require companies to provide detailed information regarding the representation of various designated groups within their workforce and at the board level. This includes data on women, Indigenous peoples, persons with disabilities, and members of visible minorities.

  • Enhanced Reporting Requirements: In addition to disclosing the representation of designated groups, companies are now mandated to disclose policies and practices related to diversity and inclusion, as well as targets they have set to increase representation. This level of transparency enables stakeholders to evaluate the effectiveness of diversity initiatives and hold companies accountable for progress.

  • Board Diversity Disclosure: Companies are now required to disclose information about the composition of their board of directors, including the number and percentage of women, Indigenous peoples, persons with disabilities, and members of visible minorities. This disclosure aims to highlight areas where representation may be lacking and encourage companies to take proactive measures to address disparities.

  • Annual Disclosure Obligation: To ensure ongoing transparency, companies must provide annual updates on diversity and inclusion efforts, including progress made toward achieving stated targets. This regular reporting cycle enables stakeholders to track companies' commitment to diversity over time and identify areas for improvement.

  • Market Impact and Stakeholder Engagement: The updated disclosure requirements are expected to have a significant impact on market dynamics by promoting greater accountability and driving meaningful change in corporate practices. Investors, shareholders, and other stakeholders can leverage this information to make informed decisions about where to allocate capital and advocate for diversity initiatives within the companies they engage with.

  • Promoting Inclusive Corporate Cultures: Beyond compliance, the updated regulations underscore the importance of fostering inclusive corporate cultures where individuals from diverse backgrounds feel valued, respected, and empowered to contribute their unique perspectives. By prioritizing diversity and inclusion, companies can enhance innovation, decision-making, and overall business performance.

  • Compliance and Enforcement: Canadian securities regulators will monitor compliance with the new disclosure requirements and take enforcement action against companies that fail to meet their obligations. This underscores the importance of prioritizing diversity and inclusion as a fundamental aspect of corporate governance.

The Canadian securities regulators' update to diversity disclosure requirements reflects a broader societal shift toward recognizing the value of diversity and inclusion in driving organizational success. By promoting transparency, accountability, and proactive engagement, these regulations empower stakeholders to advocate for positive change and contribute to the creation of more inclusive and equitable workplaces.

Fun at Work Meetings

However, there have been a number of alternative proposals put forward.  One proposal suggests implementing a universal framework for diversity disclosure across all industries, which would standardize reporting practices and facilitate comparability among companies.

Another proposal advocates for flexibility in reporting, allowing companies to tailor their disclosure practices based on their specific circumstances and industry dynamics. This approach aims to accommodate the diverse needs and capabilities of companies while still promoting transparency and accountability.

Some regulators argue that focusing on materiality, where companies would prioritize disclosing diversity information that is most relevant to investors and stakeholders. This approach aims to streamline reporting requirements and ensure that disclosed information is meaningful and actionable.

Regulators also suggest incorporating feedback from the market and stakeholders to refine diversity disclosure requirements over time. By engaging with investors, shareholders, and other stakeholders, regulators seek to develop a framework that effectively addresses their needs and concerns.

These alternative proposals represent different approaches to enhancing diversity disclosure requirements while balancing the need for transparency with practical considerations and industry-specific challenges. 

As companies adapt to these new requirements, they have an opportunity to not only comply with regulatory mandates but also to embrace diversity and inclusion as strategic imperatives that drive innovation, resilience, and sustainable growth in the modern business landscape. Through concerted efforts and collective commitment, Canadian companies can lead by example and set new standards for diversity and inclusion in corporate governance.

Further Reading:

Armour, Jessie; MacDougall, Andrew; Valley John M., "Divided on diversity: alternative proposals from Canadian securities regulators to update diversity disclosure requirements" May 25, 2023.

"Canadian securities regulators propose changes to corporate governance disclosure practices and guidelines" April 13, 2023.

Kernahan, Tracey; Pollock, Andrew, "Canadian Securities Administrators propose enhanced diversity disclosure" April 19, 2023.

All incidents and examples portrayed in this work are fictitious. No identification with actual persons (living or deceased), places, organizations, and products is intended or should be inferred.


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