Commission to consult on boardroom gender imbalance

The European Commission has been working on redressing the gender imbalance in company decision-making for some time, although progress has been slow. On 5 March 2012 it launched a consultation of stakeholders on the issue, which will run until 28 May 2012. It will feed into an assessment of possible EU-level measures to enhance female participation in economic decision-making, and will help the Commission decide whether to propose action and what form such action might take.

Background

The issue of the gender balance on the boards of companies and the general involvement of women in decision-making has been a policy focus for EU institutions for some time.

The Commission stated in its 2010-15 gender equality strategy (56Kb PDF), that it would address the gender imbalance in business decision-making through targeted initiatives.

In March 2011, Viviane Reding, Commissioner for Justice, Fundamental Rights and Citizenship (also now Commission Vice President) called on publicly listed companies to sign a ‘women on the board pledge’ by March 2012. This would involve them making a voluntary commitment to increase women’s presence on their boards to 30% by 2015 and 40% by 2020 (EU1109021I).

At the time, the Commission said it would assess in March 2012 whether there had been significant progress. If not, it would consider proposing EU legislation on the issue. By February 2012, 24 companies had signed the pledge.

In a separate development, in July 2011, the European Parliament adopted a resolution on ‘women and business leadership’, calling for a binding minimum quota for women’s representation on company boards of 30% by 2015 and 40% by 2020.

2012 progress report

On 5 March 2012, Commissioner Reding presented a progress report on women in economic decision-making in the EU (384Kb PDF). The report states that women are still strongly outnumbered by men in the boardrooms of the largest listed companies in all EU countries, despite some improvements in cases where governments have recently introduced gender quotas or taken other initiatives.

Although there have been some improvements, it states that the latest figures from the European Commission database on women and men in decision-making show that in January 2012, women occupied on average 13.7 % of board seats of the largest publicly listed companies in EU Member States (up slightly from 12% in 2010). There is also wide disparity between Member States. The number of women occupying the top position of chairperson or president has fallen slightly from 20 in October 2010 to 19 in January, and all-male boards are still far too common in many EU Member States.

The report does note, however, that a range of initiatives aimed at improving the situation have been launched in Member States by governments, EU social partners, individual businesses and other stakeholders.

These encompass legislative measures, voluntary initiatives including corporate governance codes, charters, training, mentoring and networking programmes, and databases promoting female candidates.

Making an impact

Some measures have had a substantive impact, particularly where they are backed by sanctions. For example, progress was seen in France following the adoption of a quota law in 2011. Belgium, France and Italy have now enacted fully-fledged quota legislation for company boards that includes sanctions.

The Netherlands and Spain have also passed legislation in this area, but the effects have been muted as they are not binding or tied to any significant sanctions.

Austria, Denmark, Finland, Greece and Slovenia have enacted legislation relating to the gender composition of boards in state-controlled companies.

Limited progress

The report concludes that, despite some movement, progress remains limited:

The EU cannot afford to permit systematic gender imbalance at the top level of economic decision-making any longer…persistent failure to encourage and enable women to make full use of their professional skills undermines EU economic performance.

The Commission therefore intends to explore policy options for targeted measures to enhance female participation in decision-making at European level.

Consultation of stakeholders

Accordingly, on 5 March the Commission launched a consultation (67Kb MS Word doc) of stakeholders on this issue, which will run until 28 May 2012. The aim is to feed into an assessment of possible EU-level measures to enhance female participation in economic decision-making, which will inform the Commission's decision on whether to propose action and on the form it should take. The consultation asks seven questions:

  1. How effective is self-regulation by businesses to address the issue of gender imbalance in corporate boards in the EU?
  2. What additional action (self-regulatory/regulatory) should be taken to address the issue of gender imbalance on corporate boards in the EU?
  3. Would an increased presence of women on company boards bring economic benefits, and if so, which ones?
  4. Which objectives (e.g. 20%, 30%, 40%, 60%) should be defined for the share of women on company boards and in what timeframe? Should these objectives be binding or a recommendation?
  5. Which companies (e.g. publicly listed/of a certain size) should be covered?
  6. Which boards/board members (executive/non-executive) should be covered?
  7. Should there be any sanctions applied to companies that do not meet the objectives? Should there be any exception for not reaching the objectives?

Commentary

This consultation is a step forward in EU efforts to achieve greater gender equality on corporate boards across the EU. It is clear that although some progress on the gender composition of boards has been made in Member States, the Commission believes this is too slow and something needs to be done to accelerate progress.

The Commission is not excluding some form of regulatory proposal, but clearly wants to explore all the options and gather views on key issues such as self-regulation, quota levels, coverage of quotas, type of boards to be included, and sanctions.

The Commission’s next step will follow later this year once the consultation has been concluded and examined.

Andrea Broughton, Institute for Employment Studies

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