Ruth Saldanha: International Women's Day is on March 8th, and this year DBRS Morningstar has reviewed the role of Canadian banks in establishing norms for gender parity at the workplace. They have found that even though over half of the sample Canadian banks workforce is female and the leadership pipeline is ahead of most other U.S. and European peers, the proportion of women decreases markedly at the executive levels. So, why does gender diversity in banking matter? Maria-Gabriella Khoury is the Senior Vice President of Credit Ratings at DBRS Morningstar, and she is here today to tell us what she thinks.
Maria-Gabriella, thank you so much for being here today.
Maria-Gabriella Khoury: Thanks for having me.
Saldanha: So, what are some of your key findings?
Khoury: So, interestingly enough, Canadian banks do fare better than their peers in other countries, such as the U.S. and Europe. What we found in a sample of 19 banks, including 8 credit unions and cooperatives that we cover, that there is almost parity at the board level – 45%, it's better than many of the other Canadian corporate sectors and thanks to a lot of concerted effort that's been in putting quotas on the board level, et cetera. However, the story is very different when it comes to the composition of the executive teams.
Saldanha: So, Maria, how do some of the Canadian numbers compare to the U.S. and EU, for example?
Khoury: So, the Canadian banks themselves have around 33% women at the executive level versus 26% for our sample of U.S. and European banks. However, if you look at our credit unions, they're almost at parity as well at 45%. So, we know that there is room to maneuver, but it's more of a gradual process. And what we also found, interestingly enough, is at the CEO level particularly, we only have two female CEOs at banks in our sample versus credit unions who have a very long-standing tradition of female CEOs. That also is a better statistic than the U.S. who have only one female CEO of a major bank and Europe whose representation is 4% of our sample.
However, if you look at the rest of the makeup of the executive team, that is kind of telling of the story of why the talent pipeline to become CEO at the banks isn't as clear as the credit unions, where women will predominantly take on executive roles of either Chief of Human Resources or Chief of Legal and Compliance, and these are not profit and loss roles. So, the more women you have who are doing different stints at the banks and profit and loss centers as executives, that's more of a clearer transition to a CEO role.
Saldanha: So, let's take a step back here and understand why does gender diversity matter for Canadian banks.
Khoury: It matters because some studies have shown that the large institutional investors will have a direct role in the composition of executive teams. So, many of these banks have the large Canadian institutional investors, many of whom have signed onto the Canadian Investor Statement on Diversity & Inclusion. And gradually, these investors will want more clarity, will want more transparency on DEI initiatives and gender parity at these institutions and will start to drive further more diversity at the executive level.
Saldanha: Great. That sounds good. Thank you so much for being here today, Maria-Gabriella.
Khoury: Thank you.
Saldanha: For Morningstar, I'm Ruth Saldanha.
