Policymakers in Brussels have agreed to put aside voluntary approaches to improving gender balance of European boardrooms with a move to impose a 40% quota for female non-executives.
But the EU goes a step further with an offer to make the threshold 33% if boards agree rules to include executive roles in their quota calculations.
The move sees Europe impose greater targets than in the UK, where successful voluntary action has seen levels rise to 30%, mostly through non-executive appointments. Meanwhile, a US court has struck down a law that mandated women in Californian boardrooms.
A statement issued by the European Union says: “Evidence has shown that more balanced boards make better decisions. Having more women in economic decision-making positions is also expected to boost gender equality within companies and society more generally. Allowing both women and men to fulfil their potential is crucial for economic growth and competitiveness in Europe.”
Opposition to mandatory gender representation
The agreement comes after EU ministers of employment and social affairs reached accord on a proposal to put before the European Parliament. Three rounds of negotiation have since followed with a settlement reached this week.
A number of EU states, among them Denmark, Hungary, Poland, Estonia and Croatia, had opposed the new rules, arguing that gender representation on boards was a matter for national governments.
When the European Institute for Gender Equality (EIGE) examined gender representation in boardrooms earlier this year it found France had the best numbers at 45.3%, followed by Italy at 38.8%. Both countries have mandated gender quotas. However, the Netherlands, which has no quotas, had achieved 38.1%. The European average is 30.6%. Most significantly, the figures showed the rate of progress had slowed since 2015.
The European landscape, in common with many jurisdictions, is better for non-executives than executives. In 2021, while 33.3% of non-executives were women, they held just one fifth—20.2%—of executive posts .
In its report the EIGE says: “The persistent gender imbalance among key decision-makers in large corporates and financial institutions remains a cause for concern.”
Fiona Hathorn, chief executive of Women on Boards, says she share’s the EU’s frustration with progress made on board diversity and also shares the view that 40% as a more representative figure for women on boards. The FTSE Women Leaders have adopted the figures for their won campaign addressing the FTSE 350.
Yet she feels the emphasis should be shifted. “It is high time the importance of diversity of executive leaders gets the focus that their importance and influence merits. Achieving progress on non-executive diversity has felt painstaking, yet it now seems that has been the easy part. We would also like to see more intersectional data on board diversity collated and published as a first step towards progress in this area.”
‘Diversifying the top jobs’
In February the Fawcett Society found that while women hold 37% of all FTSE 100 board roles, they occupy 13.7% of executive positions. Just six FTSE 100 companies are led by women, and none are from an ethnic minority background. The society said the figures mean that 919 women are missing from top jobs, based on 5,166 positions and an expected rate of employment of 32%.
“The business sector needs to actively work towards diversifying those in the top jobs, setting and achieving the same kinds of targets that it has used for non-executive roles. If not men will continue to dominate these roles for years to come,” said the society’s report.
Meanwhile, the campaign for gender equality took a body blow in Los Angeles last month when a judge struck down a 2020 law which forced publicly listed companies in California to have board members from underrepresented groups, including women, LGBTQ candidates and people from ethnic minorities.
A claim that the law was discriminatory was brought by the campaign group Judicial Watch, which called the law “one of the most blatant and significant attacks in the modern era on constitutional prohibitions against discrimination”.