Mandatory diversity disclosure in the senior ranks of Canadian banks, insurance companies, trust and loan companies and their subsidiaries is a step closer with the posting of proposed enabling regulations. Legislative authority for the requirement was enacted last year with royal assent for the first section of Budget Implementation Act, 2024, but regulations must be put in place through an Order in Council before new rules come into force.

The public is now invited to comment on the proposed disclosure parameters, which largely mimic those already in place for federally incorporated publicly traded entities required to report to their shareholders. This new measure adds 16 federally regulated financial institutions (FRFIs) to the diversity disclosure slate.

As proposed, the additional obligated reporters would annually divulge the composition of their boards of directors and senior management positions, with a breakdown of the numbers and percentage of women, visible minorities, Indigenous peoples and people with disabilities in those positions. They would also be required to report on the status of their diversity policies, and either provide a progress report on their objectives and targets or explain why they do not have written policies and measurable goals.

For the purposes of the regulation, senior management is defined as: the chair and vice chair of the board of directors; the president, chief executive officer and chief financial officer; any vice president in charge of a principle business unit, division or function; and any officer reporting directly to the board of director, chief executive officer or chief operating officer.

“Disclosure requirements seek to improve corporate transparency and provide information to investors to assess a financial institution’s conduct of business. This allows investors to make better and more informed decisions,” the accompanying regulatory analysis states. “The proposed regulations are not expected to result in any significant incremental costs for businesses or Government. The proposed regulations are estimated to impose low costs on distributing FRFIs associated with the collection of information and preparation of the disclosure (measured in terms of hours of work).”

The public consultation is open until March 17, 2025.