The scarcity of women in Canadian boardrooms has the country's biggest regulator pushing for mandatory changes that would shame corporations for their lack of gender diversity.

The Ontario Securities Commission said Wednesday it will recommend to the provincial government that companies listed on the Toronto Stock Exchange should be required to disclose how they're increasing the number of women in their highest executive ranks.

'If we're serious, and we really want to make that difference and we really believe in it, set up (quotas) for seven years from now as a target' -  Jim Leech, Ontario Teachers' Pension Plan

The voluntary "comply or explain" policy would be put in place to encourage publicly-traded companies to annual report their internal targets and progress — and be questioned if they refuse to comply. The OSC will take its recommendations to the government this fall.

Some observers say the plan is too soft, and anything short of enforcing hard quotas or penalties will result in slow change, if anything happens at all.

"Let's skip this intermediate step we don't think is going to work," urged Jim Leech, head of the Ontario Teachers' Pension Plan.

"If we're serious, and we really want to make that difference and we really believe in it, set up (quotas) for seven years from now as a target," he said, noting that Canada has fewer women on corporate boards than countries like Turkey and Poland.

Proposed quota rule

The pension fund, which manages more than $100 billion of assets, wants to see at least three women on every corporate board of nine or 10 members by 2020, or have the company delisted on the Toronto Stock Exchange.

"It's clear to us that better boards have better diversity and that's what we as institution shareholders should be pushing," Leech said.

The OSC said it wants corporate Canada to enact their own internal policies that would put more women onto boards and in management.

Other countries have launched various gender diversity policies with varying degrees of success.

Since enacting a voluntary "comply or explain" policy in January 2012, Australia has seen gender diversity on corporate boards grow by about one per cent across all sectors. It also reports that 90 per cent of its publicly-listed companies now have an internal policy in place to promote more women as viable candidates for director positions.

In the U.K., the government is asking companies to aim for 25 to 30 per cent of their board members be female or be faced with stiffer quotas and penalties. France and Norway have penalties in place for companies that don't comply to their gender quotas.

One of the issues concerning a quotas system, is that companies fear that they will be forced to promote unqualified candidates solely to meet gender requirements. But the panellists argued that this could be prevented if companies look beyond their industry and experience background and more at skill set when recruiting at the executive level.

Few companies have policies to promote women

Pamela Jeffery of the Canadian Board Diversity Council, said research shows that only 18 per cent of Canadian companies have internal policies in place for gender recruitment.

Jeffery said at the current pace, 20 per cent of board seats will be held by women by 2015. While complete gender parity, where half of those who sit on corporate boards are women, isn't expected to be achieved until 2097.

"By 2097 we're all dead. Our children are all dead," she said, highlighting the urgency for immediate action.

Annette Verschuren, the chair and chief executive of renewable energy storage firm NRStor Inc., said companies need to know that gender diversity is not just a numbers game, but rather it's a smart business decision.

"Women see things through a different lens and the lens is changing on corporate boards," said Verschuren, who was previously the president of Home Depot Canada, and has held board positions at mining and tobacco companies.

Mentoring needed for early hires

One of the key issues is recruitment, where early hires must be mentored and groomed so they will be ready for future corporate board positions.

"We have to build the pool because more and more will float to the top," she said.

Kathleen Taylor, who will chair the board at the Royal Bank of Canada (TSX:RY), said that a gender diversity agenda begins with a company's chief executive who will make it a priority to not only seek out the best candidates for a position, but ensure that the selection is made from a diverse list.

"When women are there in strong visible numbers, there is a catalyst for change," said Taylor, who takes on the new role in January.