Gender balance is 'good for business'

As the commission gears up to introduce new gender quotas for women on boards, Evelyn Regner explains why this type of legislation matters.

By Evelyn Regner

Evelyn Regner is Chair of Parliament's Committee on Women's Rights and Gender Equality

19 Jan 2015

Company boards in the EU are characterised by persistent gender imbalances, as evidenced by the fact that only 13.7 per cent of corporate seats in the largest listed companies are currently held by women - 15 per cent among non-executive directors. 

Is this a paradox? Is it inexplicable? No - this traces back to several decade old structures and old boy networks. Does this sound too feminist, too left-wing? No, even the experts, often reputed to be 'conservative', male members of the boards, are aware of this problem. 

But without any binding rules, nothing is going to change. A better gender balance on company boards is good for business and sound management - and good for men and women. 

Equality between men and women is one of the fundamental principles of the EU. Yet this principle is not being respected. There is no equal treatment of women and men in terms of remuneration or promotion prospects, due to women being perceived as having fewer qualifications and less power. However, women have been proving their ability and willingness to work hard day in and day out. 

"Too many skilled, highly qualified and talented women are currently excluded from company boards, simply because of their gender"

Progress in increasing the presence of women on company boards has been very slow, with an average annual increase in the past few years of just 0.6 percentage points. 

The European parliament, in its resolutions of 6 July 2011 and 13 March 2012, called upon companies and member states to increase female representation of women in decision making bodies. The commission was also invited to propose legislative quotas to reach the critical threshold of 30 per cent female membership of management bodies by 2015 and 40 per cent by 2020. 

The directive sets an objective of a 40 per cent presence of the under-represented sex among non-executive directors of companies listed on the stock exchange. Firms which have fewer than 40 per cent of the under-represented sex among their non-executive directors will be required to make appointments to those positions. 

Appointments would be based upon a comparative analysis of the qualifications of each candidate, by applying clear, gender-neutral and unambiguous criteria. Given equal qualification, priority will be given to the under-represented sex. 

The objective of attaining at least 40 per cent membership of the under-represented sex for the non-executive positions should therefore be met by 2020. Public undertakings - over which public authorities exercise a dominant influence - will only have until 2018. 

The proposal is expected to apply to around 5000 listed companies in the EU. It does not apply to small and medium-sized enterprises or non-listed companies. An exemption for large family companies, as suggested by some of the conservative MEPs, was simply unacceptable. In this case, companies such as BMW or Lego would have been exempt from respecting the 40 per cent target. 

Member states will have to lay down appropriate and dissuasive sanctions for companies in breach of the directive. We have harsher penalties for the companies failing to achieve the 40 per cent target. Parliament's S&D group has successfully expanded the list of sanctions to the exclusion of structural funds and the exclusion from public calls for tenders. 

This EU law is a step forward to ensure equal opportunities between men and women for top jobs. Too many skilled, highly qualified and talented women are currently excluded from company boards, simply because of their gender. 

There will be more transparency in recruitment procedures to make sure they are based on merit. We need to end the system of so-called 'old boy networks'. Now, it's up to the council and the member states to reach an agreement and close the file under one of the next presidencies. 

As the German government gears up to introduce a 30 per cent mandatory quota for women on the boards of the biggest listed companies from 2016, there might be a groundbreaking change for all EU women. It is also going to end its opposition to women on EU company boards. 

We now expect the German government to keep up the momentum and break down the minority in the council which is still blocking a similar piece of EU legislation adopted by the European parliament in November 2013. MEPs have done their bit, and now the ball is in the council's court. It is high time the law was used to ensure that all available talents are employed on the labour market.