Ontario Teachers’ Pension Plan (OTPP), one of Canada’s largest investors, set new board diversity expectations for large-cap companies I developed markets, aimed at achieving representation of women on boards of at least 40%.

The new expectation was unveiled as part of OTPP’s 2023 Proxy Voting Guidelines, and marks an increase from the firm’s prior policy of advocating for 30% representation.

Anna Murray, Senior Managing Director and Global Head of Sustainable Investing at OTPP said:

“Although we still consider a 30% goal to be meaningful, we’re raising the threshold to challenge public companies in developed markets to keep improving as we strive for truly diverse and representative boards.”

According to OTPP, the new policy comes as gender diversity at large public issuers in developed markets has been gaining momentum, already exceeding 30% in most of the developed markets in which it invests.

The guidelines also focus on clear and timely diversity-related reporting, and OTPP said that it is encouraging companies to separate diversity disclosure between gender and other forms of diversity in order to improve transparency.

The company said the guidelines reinforce focus areas for publicly traded companies such as Diversity, Equity and Inclusion (DEI) and increased participation of women in board roles, and that the framework continues to require boards to set and disclose timebound targets to increase the number of board directors identifying as a member of an underrepresented group.

The guidelines ask boards to set and disclose timebound targets to increase the number of board directors identifying as a member of an underrepresented group, and encourage reporting on achievement against those targets.

Murray added:

“We believe improved diversity is key to board effectiveness, leads to better performance and delivers long-term value for shareholders.”