How Canadian investors can take action against systemic racism

By Shalini Ramgoolam, SHARE Researcher

This week, over 200 corporate leaders across Canada have taken part in the inaugural BlackNorth Initiative and pledged their organizations to policies and specific targets to address systemic anti-Black racism. Among the participants were Canada’s top decision-makers in business from a broad range of sectors, including major finance companies and institutional investors. Together the coalition of business leaders represents $1 trillion – or more than a third of the TSX’s total market cap.

This is an important first step. Canada is not immune to systemic racism. We have a long history of building and reinforcing institutions that privilege Canada’s white population at the expense of Black, Indigenous and other communities of colour. This continues today despite the common misconception that Canada, unlike its southern neighbour, is a nation that fully embraces diversity.

The data tells a different story. Just look at Canada’s board rooms. Of the S&P/TSX 60, in 2020 there were only six Black senior executives (0.7%) and four Black board members (0.5%) out of the 1,485 senior positions at Canada’s largest public companies. This represents less than 1% of Canadian business leaders.

Canada’s wage gap is another persistent problem with a disturbing racial element. In an analysis of 2016 census data, racialized women earned on average 59 cents for every dollar earned by white men and 87 cents for every dollar earned by white women. Meanwhile, racialized men earned 78 cents for every dollar earned in comparison to non-racialized men. In the labour market discrimination continues and the wealth gap along racial and gendered lines will undoubtedly grow amid the COVID-19 pandemic.

Investors have an important role to play in holding companies accountable to their newfound pledges and targets. The responsible investment community will be critical to ensuring that companies are moving beyond performative activism and contributing to meaningful changes within their organizations and more broadly in capital markets. Now is the time to build on the momentum of previous campaigns to push for the full suite of diversity and inclusion initiatives. For example, companies can commit to paying all employees a living wage, set targets to increase business with Black or Indigenous-owned suppliers, or provide accessible grievance mechanisms for employees to report instances of harassment or discrimination. Most importantly, companies will need to publicly report and measure their progress to achieve specific goals to advance racial equity in the workplace.

This is the low hanging fruit. While diversity, equity and inclusion programs are important first steps, the fight against systemic racism in corporate Canada must move beyond just a human resources lens.

In addition to reviewing internal policies and programs that guide hiring, promotions, education and compensation practices, the C-Suite must think critically about how its own business models contribute to racist systems. More specifically, leaders in the corporate sector should be analyzing how its products, research & development, marketing strategies and supply chains are working to either create, reinforce or dismantle systems of oppression.

Investors also have a role to play by leveraging their responsible stewardship practices to advocate for systemic changes. For example, shareholders have moved the needle in recent cases to address racist business practices. Last month a shareholder proposal at Thomson Reuters drew attention to the company’s provision of specialized software to US immigration authorities (ICE) to help the agency systemically target undocumented immigrants for detention and deportation. Shareholders also pressured Nike, PepsiCo and FedEx, sponsors of the Washington, DC football franchise, to change the team’s name and logo from a racial slur. A similar decision that was adopted by the Canadian Football League’s (“CFL”) Edmonton franchise in response to Indigenous-led calls and pressure from corporate sponsors. Lastly, investors continue to put pressure on companies like H&M and Gildan to address the human rights risks in their supply chains, which have been found to systematically abuse workers in contemporary forms of slavery.

As the veil begins to lift on corporate Canada, we at SHARE will continue to ask investors and companies to employ a more comprehensive human rights approach, and to practice anti-racism. Rather than limiting our scope to the human resources department, we recommend that companies and investors conduct a thorough review of their organization’s exposure to racist systems. In what ways does your organization participate in racist systems? And in what ways can your organization actively support the creation of new anti-racist systems?

No company operates in a vacuum. Instead, the work to become a truly anti-racist company must be approached with a view to transform the whole business and not just parts. Only by employing a broader, systems approach can the corporate sector better identify and address the persistent inequities faced by Black, Indigenous and other communities of colour.

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