Taking action on the Gender Pay Gap in Canada

By January 12, 2018News

Research from McKinsey & Co, RobecoSAM, and Credit Suisse, among others, has found that companies with greater gender balance in leadership outperform both the stocks of companies with low gender equality and the overall market.[1]

There are now signs this same outperformance is seen in companies with greater equality in representation and pay company-wide.[2] Mercer and McKinsey both find that tracking and correcting gender pay gaps is critical to improving gender equality in the workplace and enhancing representation of women in professional and executive roles.[3]

Companies in the UK, Australia and Iceland are now required by law to study and report on gender pay differentials. Meanwhile, in the US shareholders have asked companies in finance and technology (sectors at high risk for pay gaps) to study and disclosure gender pay gap information.

OceanRock Investments (Meritas SRI Funds) and SHARE are asking Canadian companies to do the same.

OceanRock worked with SHARE to reach out to Canadian companies about their own action on gender pay equality. We looked at public reporting by 60 Canadian companies in the Jantzi Social Index, recognized for their general performance on environmental, social and governance issues. We found that only 12 of those companies or 20% track and report gender pay related data.

Of those companies that do study and report on the gender pay gap, most found gaps in some or all areas of their company where women are being paid less then men for the same type of work. In response to this finding several have launched concerted efforts to reform pay practices and remedy gaps.

With SHARE’s support, OceanRock wrote to the remaining 80% of companies to inquire as to whether they study gender-based pay differentials and asking them to follow their peers in Canada and internationally in evaluating and reporting on gender pay gaps. We heard back from half of these companies. Of the respondents:

  • Five reported that they collect some pay equity information on male or female dominated job categories as required by employment law
  • Seven conduct comprehensive studies of gender pay gap internally but are not willing to publish information about this study.
  • Based on our engagement, four have committed to conduct a study and report on either their method for addressing gender pay gaps or the data itself.

Some companies responded that they do not consider the issue important for their company or that they believe their compensation and advancement practices are gender blind, so they do not need to look into the issue. Given that most of the Canadian companies SHARE looked at that did study the issue found evidence of a gender pay gap, it seems prudent for companies to evaluate their own record to see if these assumptions are accurate.

Further, according to a survey of Canadian investors conducted by the Responsible Investment Association and OceanRock,[4] the majority want more and better information about gender pay equity and representation of women in leadership at Canadian companies.

Over the coming months SHARE will be following up with nonresponding or unsatisfactory responses to urge them to analyze and address any gender pay issues, and will continue working with leading companies so that Canadian women have their hard work fairly compensated, and Canadian companies make the best use of all their talent.

[1] See for example Julia Dawson, Richard Kersley and Stefano Natella, “The CS Gender 3000: The Reward for Change”, Credit Suisse (2016); Vivian Hunt, Dennis Layton and Sara Prince, “Diversity Matter”, McKinsey & Company (2015); RobecoSAM, “Does corporate gender equality lead to outperformance”, (2015).

[2] RobecoSAM, “Does corporate gender equality lead to outperformance”, (2015).

[3] https://www.mercer.com/our-thinking/when-women-thrive-2016-report.html, https://www.mckinsey.com/business-functions/organization/our-insights/promoting-gender-parity-in-the-global-workplace 2015

[4] 2017 RIA Investor Opinion Survey – In Focus: Gender Diversity, online at: https://www.riacanada.ca/investor-opinion-survey/ .