Gender equality represents one of the founding principles of the European Union and the push for balance on company boards has recently made the headlines.
The European Commission actively promotes measures to ensure equality between men and women. In November 2012, the Commission adopted a proposal for a directive setting a minimum goal of 40% of the under-represented sex in non-executive board-member positions in listed companies in Europe by 2020. One year later, November 20th 2013, the European Parliament tackled this issue and voted for the Commission’s proposal to raise the share of women on corporate boards.
With 459 for, 148 against and 81 abstentions, this vote with an overwhelming majority represents “a historic moment for gender equality in Europe”, says Viviane Reding, the EU’s Commissioner for Justice.
This is a first crack in the “glass ceiling” in Europe where women only share 16,6% of board seats. The percentage has risen since 2010 but progress over the past years has been slow:
* Share of women on the boards of large listed companies.
The next step is for Member States in the Council and the Parliament must reach an agreement on the draft law at their meeting on the 9-10 December 2013, for the legislation to enter the EU statute book.
This draft law requires the establishment of a “procedural quota” based on a new transparent and fair selection procedure which will give priority to qualified female candidates in publicly listed companies with more than 250 employees in Europe and which don’t have 40% of women among their non-executive board members.
It is important to point out that the law places the emphasis on qualification so nobody will get obtain a board seat just because they are a woman. Each Member State will have to introduce “appropriate and dissuasive sanctions” for companies that do not respect this new law.
The law is a temporary measure and will expire in 2028 since gender equality on boards is to be met in 2020 (2018 for public companies). In addition, listed companies are to set themselves individual, self-regulatory targets and report annually on the progress made.
European legislation has been pointed out as necessary to improve the gender balance on boards since voluntary national initiatives have so far failed to improve the situation. Also, some countries such as France and Spain have already started to act by introducing measures to promote gender equality on company boards. Therefore these individual actions can lead to practical problems for the internal European market, especially for multinational companies having to comply with different laws, quotas and sanctions.
In 2012, nine Member States refused the European 40% quota and today still a minority composed of the UK and Eastern European countries are against this legislation. Germany used to be against these quotas but has now decided to take action and agreed to introduce a law requiring German companies to appoint 30% of their board seats to women from 2016.
> Read the official press release
Image source: freedigitalphotos
