Pressure mounts for EU quota of women on company boards

In July 2011, the European Parliament called for a binding minimum quota for women’s representation on company boards, of 30% by 2015 and 40% by 2020. Some governments and business groups introduced quotas or voluntary charters to begin working towards these targets, but progress remains slow. The European Commission has warned that it may propose legislation if companies do not make satisfactory progress towards increasing the presence of women at board level by 2012.

Background

The European Commission’s database on women and men in decision-making includes information on the gender composition of the boards of directors of the EU’s 600 largest publicly quoted companies. In 2010, only 12% of the members of these boards, and 3% of the boards’ chairs, were women. Around a third of the companies had no female board members.

According to the Commission, the share of female board members in the EU has increased by just over half a percentage point per year during the past seven years. At the current rate of progress it will take another 50 years before there is a ‘reasonable gender balance’ (at least 40% either of men or women) on company boards.

Governments and business organisations in some member states have acted in response to the low level of women’s participation. Belgium (BE1106021I), France (FR1101031I), Italy, the Netherlands (NL0911019I) and Spain have introduced legislative quotas to increase women’s board representation, while countries such as Denmark, Finland, the Netherlands and Sweden have adopted corporate governance codes and/or voluntary charters that appear to have helped increase female representation.

Commissioner proposes ‘Women on the board’ pledge

The Commission stated in its 2010-15 gender equality strategy 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, met chief executives and board chairs from major companies to discuss how to achieve greater representation of women in top jobs, and the Commission also held a ‘mini-hearing’ on the subject with the EU-level social partners.

After the meeting, Commissioner Reding called on publicly listed companies to sign a ‘women on the board pledge’ by March 2012, making a voluntary commitment to increase women’s presence on their boards to 30% by 2015 and 40% by 2020, by actively recruiting qualified women to replace outgoing male board members.

The Commission will assess in March 2012 whether there has been significant progress and whether ‘credible’ self-regulatory initiatives have been developed to increase women’s participation. If not, it will consider proposing EU legislation on the issue.

By 17 August 2011, the Commission reported that a total of eight companies had signed the pledge.

Parliament calls for quotas

On 6 July 2011, the European Parliament added its voice to that of the Commission by adopting a resolution on ‘women and business leadership’, which calls for a binding quota for women’s representation on company boards if rapid progress is not made.

The resolution invites the Commission to present, as soon as possible, comprehensive current data on female representation in all types of companies, and on the obligatory and non-obligatory measures taken by the business sector and governments, aimed at increasing women’s representation.

If the action taken by companies and the member states is found to be inadequate, the Parliament calls on the Commission to propose legislation, including quotas, by 2012. The goal would be to increase female representation in ‘corporate management bodies’ to 30% by 2015 and 40% by 2020 (the same proportions set out in the Commission’s pledge), while ‘taking account of the member states’ responsibilities and of their economic, structural (ie company-size related), legal and regional specificities’.

The resolution also asks the Commission to draw up a ‘road map’ setting out specific, measurable and attainable targets for the achievement of balanced representation in decision-making in enterprises of all sizes, and invites the member states and the Commission to implement a range of policies to enable more women to become involved in managing companies.

Commissioner Reding responded:

It is good news that the European Parliament supports the European Commission's approach towards more women in economic decision-making positions. Today’s vote confirms that the Commission is acting at the right time and in the right way. We need to act now because in economically difficult times it’s essential to use the untapped potential of the well-educated female workforce. We are taking the right approach because we want to give companies a last chance to act through credible self-regulation … However, if there has not been credible progress by March 2012, I stand ready to take the necessary legislative steps at EU level. The European Parliament’s contribution to this debate is crucial.

Mark Carley, SPIRE Associates

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