Feb 21, 2020
Executive search consultants say the No. 1 ask from boards recruiting new directors is CEO or CFO experience. In many sectors, where relatively few women attain CFO and, especially, CEO positions, this can hamper companies seeking to cultivate a diverse roster of directors.
But then there is St. John’s-based Fortis Inc. — a utility with $8.4 billion in revenue, $52 billion in assets and operations in five Canadian provinces, nine U.S. states and three countries in the Caribbean. Fortis has five women on its 11-member board. In addition to their diverse range of director experience, three are former CFOs, one is a former president and CEO, and the other is a former COO.
How did they get there? The short answer is that Fortis didn’t restrict its search to women from its own sector. It’s a practice that many diverse boards have applied — yet, at first glance, one that seems more widely embraced in utilities and pipelines, which leads all sectors both in terms of the percentage representation of women directors on boards and in executive officer positions in the C-suite.
Along with Fortis, for example, boards at companies like Enbridge, Emera, TransAlta, Hydro One and Capital Power all count four or five women directors — former CEOs, presidents, CFOs, managing directors, group heads and the like.
However, even in this sector, there are examples of boards with only one woman director or none. The results achieved by other companies in this sector suggests those boards either just aren’t trying hard enough or aren’t making diversity a priority.
Latest diversity data
As noted, overall sector data compiled for Osler’s 2019 Diversity Disclosure Practices report establishes utilities and pipelines as the industry to emulate. In terms of the percentage of women directors, it leads with a mid-year 2019 mark of 30%, compared to 18% for the entire group of 657 TSX-listed companies that disclosed. The average of 3.11 women directors per utilities and pipelines board is more than double the TSX-listed average of 1.44 (657 companies disclosed).
Breakdown of number and percentages of women directors in 2019
In terms of women executive officers at mid-year 2019, utilities and pipelines ranked first overall in the average number of female executive officers per company at 3.84, compared to 1.73 for all the TSX-listed firms in Osler’s report (609 companies disclosed). On a percentage basis, women made up 22% of executive officers in the sector as of mid-year 2019, tied for third with the consumer products and services sector, behind real estate and forest products and paper. The average for all the TSX-listed companies reporting in this category (588 companies) was 17%.
Breakdown of number and percentages of women executive officers in 2019
Trends since 2015
This sector’s positive story is also reflected in gains for women since 2015, both on boards and in the C-suite. The percentage of women directors at mid-year 2019 was up by 50% (30% versus 20% in 2015). The average number of women directors per board increased at roughly the same rate (3.11 at mid-year 2019 versus 2.06 per board in 2015). The percentage of women executives in the utilities and pipelines sector also grew by nearly 50%, according to Osler’s data (22% as of mid-year 2019 versus 15% in 2015) while the number of women executive officers per company increased at a more modest rate (3.84 versus 3.0). In comparison, the percentage gains for all TSX-listed companies between 2015 and mid-year 2019 was 50.7% for women directors and 20.7% for female executive officers.
Women executive officers in the utilities and pipelines sector
Similar data compiled by the Canadian Board Diversity Council (CBDC), focusing exclusively on FP500 companies, shows a slower rate of change — at least among large utilities, which the CBDC measures separately rather than combined with pipelines. In that group, the percentage of women on boards grew from 27.1% in 2015 to 30.1% in 2018. The change was even more gradual for female executive officers (which the CBDC only started tabulating in 2016), going from 23.2% to 24.3% in 2018.
And according to Osler’s data, 21.4% of the CEOs of companies in the utilities and pipelines industry are women, compared to 3.5% for companies overall.
Best practices and sector leaders
The CBDC’s annual report card points to a couple of sector-wide trends that might help explain the relatively high rates of diversity in utilities and pipelines. According to that report, the utilities sector ranks first in the percentage of boards (55.6%) that have diversity targets for the number of women directors and second for boards that have a written diversity policy (66.7%).
Osler’s research has highlighted a pair of individual companies that have shown leadership in these specific areas.
- TC Energy — Has goals for the number of women in senior management and progress is formally monitored and reviewed annually by the board’s human resources committee and the company executive.
- Hydro One — Promotes culture change and the removal of systemic barriers by using gender-neutral language in external and internal communications and by promoting a culture that embraces women as leaders in senior roles.
Dawn Farrell, president and CEO of TransAlta since 2012, is a high-profile leader committed to advancing best practices for diversity. A strong advocate for mentoring and networking programs and for women having an equal voice and equal pay in the workplace, she is a key member of the Canada-U.S. Council for Advancement of Women Entrepreneurs and Business Leaders.
Periodically, international consulting firm EY publishes a Women in Power and Utilities index that tracks diversity at the top 200 global utilities by revenue. Based on that data, women are under-represented in this sector in all regions around the world. But there are some significant differences.
The percentage of non-executive women directors on power and utility boards in North America (25%) and Europe (26%) is high, but those figures dwarf percentages in Latin America and the Caribbean (7%); Africa and the Middle East (11%) and Asia-Pacific (13%).
North America utilities have the highest percentage of women in senior management (22%) according to EY, followed by those in Europe (15%), Latin America and the Caribbean (13%), Africa (9%) and Asia-Pacific (9%).
The uneven progress between regions, and at a remaining handful of companies in Canada, is a target for further improvement. But in this sector, unlike some others, leaders and role models are close at hand.