Covid-19 not derailing board diversity for RBC GAM

RBC Global Asset Management (RBC GAM) will continue to press companies on board diversity amid the Covid-19 pandemic.

RBC GAM this year updated its guidelines to state that it would vote against certain directors if a board does not have a minimum of 25 percent female members. The firm is a signatory to the 30% Club Canada investors group, which aims to have women fill 30 percent of positions on the boards and the executive management teams of all S&P/TSX Composite Index companies by 2022.

Asked whether the issue of board diversity may take a back seat this year during the pandemic, Melanie Adams, vice president and head of corporate governance and responsible investment at RBC GAM, tells Corporate Secretary that she has not heard companies say the outbreak has been a distraction in achieving those goals and that the firm continues to vote according to its guidelines. ‘Good corporate governance is important [whether] in a crisis or not,’ she adds.

At the same time, RBC GAM is also keeping an eye out for potential problems as many companies switch to holding virtual AGMs given the Covid-19-related concerns of hosting in-person events. Virtual-only AGMs have traditionally raised concerns among some investors, which fear for negative impacts on shareholder rights, such as being able to have questions heard at the meeting.

RBC GAM and others recognize the necessity of working with virtual meetings this year. The Council of Institutional Investors (CII) has generally opposed virtual-only shareholder meetings in favor of a hybrid approach. In the context of the pandemic, however, ‘it is entirely reasonable that some companies will go to virtual-only annual meetings,’ CII executive director Ken Bertsch said in a March 16 statement.

RBC GAM also prefers a hybrid approach to ensure, for example, that shareholder questions are not vetted, Adams explains. She expects that more companies will hold hybrid meetings going forward. She does not think suppression of shareholder voices is intentional and – as of last week – had not seen any issues so far but will remain vigilant.

In addition, Adams says her firm is conducting a lot more engagement this year regarding companies’ business continuity planning in relation to Covid-19, and that companies have been open to such discussions. She also notes that cyber-security risk is a serious concern and that the pandemic raises additional risks, such as the security of online video group chats that have become a staple of business life while so many people are working remotely.