Evidence of meeting #46 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was shareholders.
A video is available from Parliament.
9:20 a.m.
NDP
Brian Masse NDP Windsor West, ON
—because we've actually required definitions to stop discrimination based on race and ethnicity, and we also pump all kinds of money towards programs every year to try to dissuade that, not only in the workforce but in other places, because we still don't have an equal society. Market forces have not ended discrimination by any means or by any record in North America. In fact, it has taken legislation to do so.
I want to move quickly to say on pay with regard to CEO compensation. The average CEO made $9.5 million in 2015. Essentially they eclipse ordinary workers within days of the new year. Why is it so difficult to get some type of a voting capability in there?
For example the CEO of Target.... It's a sad story. They came in. They bought up Zellers, which had a modest profit at that time and unionized workers, and now we have none of those stores. He walked away with $60 million.
9:20 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
There's a clear mechanism built into this process, which is all about shareholder democracy. The idea behind that is that if you are a shareholder and you have issues around compensation for the CEO, you can reflect that through how you select your board members. I think that mechanism of accountability is very important.
If I'm a shareholder, and you raise a concern about compensation for CEOs, then I can make that a very clear aspect of who I want to sit on the board to talk about that issue. There is a process to deal with that through the selection of board members who can deal with those issues and make sure that they reflect the wishes and the will of the shareholders, if that is a concern that they have.
9:20 a.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much. We're going to move to Mr. Arya.
You have seven minutes.
9:20 a.m.
Liberal
Chandra Arya Liberal Nepean, ON
Thank you, Mr. Chair.
Thank you, Minister, for coming here. You quoted something involving the low percentage of women on corporate boards. I have something else here too.
In the greater Montreal area, 37% of the senior leaders are women. In the greater Toronto area, 33% of the senior leaders are women, which is good but still needs improvement. When you look at Montreal for the racialized minorities who form 20% of the population, you will see that they make up only 1% of the leaders in large corporations. In the greater Toronto area, where 50% of the population is female and 58% of the population are visible or racialized minorities, racialized minorities account for only 12% of the senior leaders. When you look at white women compared to racialized women, you will see that the ratio is 70:1.
I know this bill is good for promoting diversity, including gender diversity, which is a very good thing, but I think we are missing a great opportunity here if we don't give the direction to the corporate sector that we want more indigenous people, more visible minorities, and more people with physical disabilities to be part of the senior management and the board.
What do you say about that?
9:25 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
First of all, I'm a numbers person, so I want to thank you again very much for sharing those numbers because I think they're very important. Numbers tell a very compelling story.
There is some modest progress in some of our urban centres within the corporate world with respect to one area of diversity, which is a better reflection of women in management and at the board level. There is some modest success there, very modest, but there is some success there that we should recognize, as you have highlighted.
Just to take a quick step back, I think fundamentally one of the other outcomes and goals of this particular legislation is to really have individuals see themselves in a leadership role. If you look at our population, you talk about 20% being visible minorities, for example. If they work at a corporation and they don't see themselves reflected at the board and senior management levels, that has a huge impact on their ability to succeed going forward. It really creates these barriers that exist and perpetuates this notion that there's a ceiling, etc.
Those are legitimate challenges with respect to diversity as well, not only for the current context but for future individuals of different backgrounds who are entering the workforce as well.
Also, I've always said that I remember from my experience in the private sector that diversity, again, is not necessarily a reflection of checking off a box and making yourself feel good. It's really about how you provide better outcomes for your customers, how you create a better return on investment, how you drive better business practices, and diversity is very important for that as well. I've seen companies that embrace that do really well.
To answer the question specifically about wanting to see better representation of, in your example, visible minorities, that's the whole objective of this piece of legislation. It's in the diversity policy. It's saying we want you to talk about your diversity policy and if a company does a very poor job and just highlights on, for example, women and excludes visible minorities, aboriginal people, etc., I think it's to their own detriment, especially when their peers talk about this issue and are promoting this.
I'm very confident about our government's objective to promote diversity, in the broadest terms.... We're not here to prescribe diversity with a few key groups. We're not here to talk about diversity through a narrow lens. We want it to be as broad as possible. It's about skill sets. It's about background. It's about perspectives. It's about the different issues you bring to the table, but the bottom line is that the government has shown leadership through this bill to demonstrate that diversity is very important. We have shown leadership that you must have a diversity policy in place, and if you don't, you must clearly demonstrate why not.
I think that kind of public shaming, that kind of public accountability for corporations, is so important in getting them to change their behaviour, and to have better outcomes and see diversity property reflected for all the different perspectives that you've highlighted, including visible minorities and aboriginal people.
9:25 a.m.
Liberal
Chandra Arya Liberal Nepean, ON
Minister, you mentioned the Ontario Teachers' Pension Plan and others. There's a bit of consensus on this bill. We had a representative from the Ontario Teachers' Pension Plan board who is quite active and who I think is an expert in corporate governance. We also had a witness from the Diversity Institute.
The Ontario Teachers' Pension Plan person said that he needs direction from the government on what to include in the diversity policy, other than the gender diversity. He was looking for some sort of direction, some sort of thing in the bill or in the legislation. It was the same from Wendy of the Diversity Institute. She too said that we have to include some sort of definition or direction in the legislation. One of the suggestions was that a definition of diversity—other than gender diversity—may include in the legislation the designated groups mentioned in the Employment Equity Act. Why don't we consider that?
9:30 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
That's a very thoughtful question, and I know we've had private conversations about this, so I'm glad you're putting it on the record as well.
To your point on the federal Employment Equity Act, it defines designated groups as women, aboriginal people, persons with disability, members of visible minorities, and for example, even the Charter of Rights and Freedoms sets out factors of discrimination based on race, national ethnic origin, colour, religion, age, or mental or physical disability, just to name a few, and that's not very exhaustive.
The point is that we already have those benchmarks. The point is that's already reflected in pieces of legislation, but I think diversity goes beyond that. As I mentioned, I think those are very important criteria. Those are very important factors, but if I'm a corporation I would go beyond that as well with respect to diversity.
I think that's the kind of imagination, that's the kind of thoughtfulness, that we want to see from corporations, because again, I think this is such a unique opportunity for Canada to really shine. By highlighting diversity at the most senior levels in terms of corporate governance and management, we can really differentiate ourselves.
When I travel now and when I go to China or India, these emerging economies, for example, they're no longer talking about being the jurisdiction of the cheapest products. They no longer want to produce cheap products or services. They want to produce innovative and smart products. In order to do that, they need diversity of thought, diversity of ideas, and diversity of perspective. This is why they look to us with a great deal of envy. It's because of our multicultural society, because of the fact that we promote diversity, because we have social cohesion. That's where I see a real value proposition for us. If we really promote diversity it will allow us to out-innovate and out-think a lot of our international competitors so that our companies can succeed. That's the objective of this legislation.
9:30 a.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We are going to move on to Mr. Dreeshen.
You have five minutes.
9:30 a.m.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
Thank you very much, Mr. Chair.
It's nice that you're here, Minister, to take some of our questions. The last time you were here you talked about inclusivity and how important it was and we were talking about under-represented groups. I think one of the aspects, one of the things we have been trying to discuss is how you can get more training into different areas. You had mentioned 3,500 women who are now part of a pool that one can access. Of course, there are so many other groups and we had spoken earlier about aboriginal groups and the great leadership that you see there. I think that's important.
I want to tie this a bit into our broadband study, because you talked earlier in your discussion about the digital divide and how important that was.
9:30 a.m.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
A lot of the training that you can get isn't somebody coming to some university or some corporate board training centre to get information. I'm wondering if you can give us a bit of an update of where we're going with that, and how the different institutions can help with training for those who are in more remote centres.
9:30 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
Again, good ideas can come from anywhere, anyone. Urban centres do not have a monopoly on good ideas. I think we really need to leverage the expertise, creativity, and ingenuity that exists in many of our rural and remote communities across Canada.
With respect to the bill specifically, I'll speak to that and then I'll speak to the connect to innovate program as well.
With respect to the bill, it's really about modernizing shareholder communications. It's really about getting away from a paper-based process and taking advantage of digital technology and using technology to be able to communicate with shareholders. I think that's a very important development. As I was saying before, I think that's long overdue. This change is something that I think you'll find consensus on and that's reflected in your remarks as well.
It would allow rural and remote communities, individuals in those communities, if they have access to high-speed Internet and broadband connectivity, to be able to get that information in a timely manner and to be able to digest that information in a timely manner and act accordingly.
With respect to connect to innovate, I think that speaks to our government's overall commitment to do a better job of dealing with the digital divide. Every company now is becoming a tech company. We are part of a digital economy; therefore, we need proper infrastructure to help facilitate meaningful progress and growth in some of our rural and remote regions.
9:30 a.m.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
On the infrastructure side of it, and I was part of a conference call getting information on that, I'm concerned about whether or not we are going to end up losing other construction seasons as we extend all of the required work for this particular infrastructure. It's the immediacy of the infrastructure associated with this that I'm concerned about. Are there opportunities for us to get some information there?
9:35 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
We extended it by five weeks to, again, deal with some of the challenges that some of the remote and smaller communities were facing in putting together a meaningful proposal. This is really about our desire to help those smaller, remote, and rural communities, but we're very confident that we can roll this out in a timely manner, that we can see not only meaningful investments in the short term but in the long term as well, and also leverage other investment opportunities.
This fund that we put forward is a $500-million initiative from the federal government, but we'll leverage with the private sector potentially. We believe it can easily be up to about a billion dollars and that's a significant investment to the probably 300 to 400 targeted rural and remote communities that will benefit from it.
We obviously want to take advantage of the construction season. We obviously want to see this rolled out in a timely manner. We're working on this and it's a priority for our government.
9:35 a.m.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
Bill C-25 also speaks to a number of other items. Basically, we've been talking about the diversity of boards at this point in time, but it also talks about the prohibition of bearer shares, certificates and bearer share warrants and where that is going to go. I wonder if you can touch on that, the technical aspect of it and the rationale for doing this and how deep you plan on getting into analyzing whether or not that is successful.
9:35 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
Very quickly...and if we have another opportunity I'd be more than glad to respond. If you're not happy with the answer, feel free to email me or my office and we'll be more than willing to provide you with a more thorough and detailed answer if you require it.
Basically, bearer shares are recognized as a convenient mechanism to facilitate money laundering and that is really the issue we feel is at hand. It's an outdated way of dealing with shares. We have been very explicit about eliminating bearer shares because of that primary concern. We, again, can provide you with technical details of how we plan to roll that out.
9:35 a.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to move to Mr. Sheehan.
You have five minutes.
February 14th, 2017 / 9:35 a.m.
Liberal
Terry Sheehan Liberal Sault Ste. Marie, ON
Thank you very much.
I'll be splitting my time with Majid, as well.
First of all, Minister, thank you very much for presenting to us this morning. It was very informative.
During your presentation you talked about various groups that could be defined as involved in the diversity. One of the groups you talked about was age. My question is going to be around how Bill C-25 might engage young people or get young people involved, because young Canadians transcend a whole diverse group of people.
In your opinion, the changes to Bill C-25 bring about, will they be beneficial to engaging young Canadians?
9:35 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
I hope so.
I am very familiar with the university and colleges model where, when they have a board of governors, for example, in that board of governors they have representation from the student body. If you look at corporations, I think they need to be very strategic and thoughtful about identifying young individuals who have a certain expertise and understanding of technology, trends, or understanding of certain tastes and aspirations of a certain market segment. That's so critical.
Companies need to be forward looking. They need to develop long-term plans. They need to have an understanding of where the market is going, where the trends are going, and where the opportunities exist. To have someone who is younger, who is potentially tech savvy, who understands the changing dynamic a bit differently from some of the individuals in a different age segment, brings in that diversity of thought that I was talking about, that diversity of perspective.
It's also very empowering for young people as well. I think to have that kind of dynamic and dimension is really important. It speaks really to what our Prime Minster has done. Our Prime Minister is the Minister of Youth. He fundamentally believes in empowering young people. He's created a youth council with which he often engages. He often works very closely with them to get their ideas.
Just recently in Calgary, I met with his youth council to talk to them about their views on innovation, their views on the economy, their views on government. It's incredibly impressive to hear their thoughts, their perspectives, which are often not heard in the House of Commons, for example, or often not heard with traditional stakeholders. They bring a very unique perspective. They have a lot of energy. They think in big terms, in a longer-term perspective. I think those are the kinds of qualities, those are the kind of attributes we need to see more of at the board level.
I'm hoping when we're talking about diversity that it's a dimension that companies really understand, appreciate, and focus in on because I think it will create opportunities for them going forward. At the same time, it empowers young people, which is a win-win situation.
9:35 a.m.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thank you, Mr. Chair. Thank you, Mr. Sheehan.
Minister, welcome.
In your opening remarks, you talked about investor and shareholder confidence. Typically shareholders balance risk and reward and use indicators such as earnings per share. Can you shed some light on the rationale that you, in considering this bill, will use to increase investor-shareholder confidence in this matter?
9:40 a.m.
Liberal
Navdeep Bains Liberal Mississauga—Malton, ON
I think investors are always looking for areas of a good return. They're looking for a stable return on investments. They obviously want to see companies that are robust, that have earning growth potential year over year, that are innovative, and that understand market trends and can succeed going forward in the long run.
There have been numerous studies. There's been a fair amount of literature and data out there that demonstrate that companies that are more innovative succeed. They reinvent themselves. They understand market trends. In order to be innovative you need to be creative. You need to think outside the box. You need to think differently. You need to have a unique perspective. I think in order to achieve that you need to promote diversity. You can't simply have that diversity at an operational level. You need to have that diversity at a senior management level and at the board level.
I think that's what this bill really does well. It really promotes that idea of the diversity of thought, as I've said, diversity of perspective, and diversity of experience that would really allow companies to be more innovative. Especially now, the scope and speed of change is phenomenal. The number of companies that are basically becoming irrelevant because their business models are outdated and the number of companies that are emerging because they're finding new, unique opportunities are growing at a much faster rate than we've seen in the past.
That kind of disruption and change really requires diversity at the forefront for a company to succeed, to drive the innovation agenda. Ultimately, that leads to a better return on investments. I think investors look for that. I think this is clearly an area that's not only good for corporate Canada, I think it's good for Canada in general as we brand ourselves internationally as a destination that really promotes, again, our people and our ideas, that promotes diversity.