Ensuring Gender Balance in Europe

The push for gender balance and female representation on company boards in Europe is making the headlines, and momentum is gaining around the issue. Following years of marginal and insignificant progress, the EU Vice-President and Commissioner for Justice Fundamental Rights and Citizenship, Viviane Reding, has stepped in to propose a directive designed to put career progression of both men and women on par, and to do away with the far from proverbial glass ceiling which exists in too many organizations. The figures speak loudly, clearing indicating which gender dominates – women make up 17% of non-executive boards and 10% of executive boards.

The proposed directive has been established to pave the way for the less represented gender to take top management positions, with the objective being to reach 40% of non-executive directors on the boards of big listed companies by 2020.

Obviously, the qualifications and merits of candidates remain the key criteria for board positions. The directive demands a minimum harmonization of corporate governance requirements, as appointment decisions will have to be based on objective assessment. Imperative sanctions will be taken against companies not following the legal requirements for quotas. The sanctions will be determined by Member States themselves. The minimum objective of 40% is to be attained by publicly listed companies by 2020, and by 2018 by public undertakings.

Despite the flexibility of the legislative proposal, it is hotly contested by certain Member States and companies. Others welcome it. National quota legislation has already been implemented in 11 EU Member States. The vast majority of the parliaments of EU Member States have chosen to support the EU proposal. However, the directive divides politicians, businesses and corporations. It is controversial, yet supported by experience.

One good example to note is the economic performance of Norwegian companies after the introduction of mandatory quotas – with a much larger scope than the envisaged EU legislation. Studies from various countries show that enterprises with a better gender balance deliver stronger organizational and financial performance, e.g. “Women matter” by McKinsey (2007, 2008, 2009, 2010, and 2012). The latest research carried out by Credit Suisse Institute (2012) shows that companies with at least one woman on their board outperformed companies with no women by 26% over the course of six years. Boards then have an opportunity to serve as role models by creating gender balance within their structures.

In these difficult economic times, women have a crucial role to play in getting things back on track. Women account for 50% of the population and 60% of all university graduates. Why waste this potential?

The European Parliament and the Council, the body that represents EU Member States, will start their discussions on the proposed directive in the coming weeks with a view to adopting the proposal by the end of 2013. Both institutions stand on equal footing, with the Council voting by qualified majority and the Parliament by simple majority.

Author: Silvana Koch‐Mehrin is a Member of the European Parliament since 2004. Her parliamentary work focuses on trade policy and gender equality. She holds several honorary functions and was named a Young Global Leader by the World Economic Forum in 2005 .

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