The European Parliament backed on Wednesday (20 November) the European Commission's proposal to increase the number of women in Europe's company boardrooms, which in 2013 stood at only 17.6% for non-executive boards.
After four different committees approved the proposed law to improve gender balance on company boards, the European Parliament has voted with an overwhelming majority (459 in favour, 148 against and 81 abstentions) to break the so-called glass ceiling, and allow more women in top management level.
Recent figures confirm that the share of women on boards across the EU has been on the rise for the past three years and has now reached 16.6%, up from 15.8% in October 2012, but the upward movement remains marginal and still very slow.
The proposed directive introduces an objective of at least 40% female non-executive board members in large listed companies operating across all sectors by 2020. But the objective is more flexible for executive directors.
"Companies do not hire men or women, they hire talent. However, in the process, companies often neglect to value women's skills. Therefore, I very much welcome the adopted resolution, guaranteeing greater transparency, enhanced meritocracy and equal opportunities for women and men", noted centre-right MEP Rodi Kratsa-Tsagaropoulou, who was one of the co-rapporteur of the Parliament's position.
"It is essential for listed companies to evolve so as to include highly-skilled women in the decision-making process, in accordance with our core principles and values of equality, but also in view of achieving economic growth and a competitive internal market," she added.
The vote comes just days after German Chancellor Angela Merkel's conservatives agreed with the Social Democrats (SPD) to introduce national legislation requiring German companies to allot 30% of their non-executive board seats to women from 2016.
Germany introduced voluntary targets for women in top management positions in 2001, but little changed. In 2011 blue-chip companies agreed to try to boost women on boards, again through voluntary targets. The centre-left SPD had pushed for 40% women on boards from 2021.
Merkel has long opposed such quotas, which are popular elsewhere in Europe. In April, the German chancellor persuaded members of her political party the Christian Democratic Union to defeat a measure in Parliament which would have mandated that 20% of public companies’ supervisory boards be comprised of women by 2018. The proportion would have risen to 40% by 2023.
"Today the Parliament has made the first cracks in the glass ceiling that continues to bar female talent from the top jobs," the EU's justice commissioner, Viviane Reding, said after the vote. "The Council of Ministers, the EU's second Chamber, should now rise to the challenge and make swift progress on this draft law, which places qualification and merit centre stage," she added.
Ministers are next due to discuss the draft law at their meeting on 9-10 December 2013.
"The resolution clarifies and improves the open, transparent procedure for appointing non-executive board members to listed companies. Parliament has done its homework, and now it's the turn of the Council to move on, finish this directive together with us and the Commission before the European elections, so as to move closer to gender equality within European companies. This will demonstrate to our citizens that we are fighting for non-discrimination and equal opportunities for all in the labour market", said legal affairs committee co-rapporteur Austrian MEP Evelyn Regner (S&D).
German MEP Silvana Koch-Mehrin, ALDE spokesperson for the committee on women's rights noted that progress was too slow. “If we want to get more women into top roles, we cannot wait anymore. Europe needs a culture shift within companies. Modern companies cannot avoid addressing the quota issue. This legislation is not just about fairness but it also makes economic sense. A company performs much better if it has a diverse leadership team that brings a wide and relevant set of skills to the table, " she said.
"Quotas might address the symptoms but they do nothing to treat the disease itself. We instead need more training, more opportunity, more encouragement for women rather than compulsion for companies,” said Conservative MEP Marina Yannakoudakis (ECR).
"A recent survey showed that only six per cent of businesswomen themselves want quotas. They know when they are being patronised,” she added. "A diverse boardroom, freely appointed, is good for business, whether that be reflective of gender, race, religion or whatever. That is why progress will be made. Quotas are no way to get there."
Commenting after the vote, Green equality spokesperson Marije Cornelissen said: "It is now accepted that self-regulation will not lead to significant improvements any time soon. The legislation approved by MEPs today will mean companies will have to adjust their recruitment, selection and appointment procedures. Failure to do so would lead to sanctions. This would be a major step forward,” since the voluntary approach has unfortunately failed.
She added there is no shortage of qualified women, with 60% of university graduates in the EU being women and binding obligations for companies have already proven successful in addressing this equality gap in European countries and it is time we built on this success by introducing binding EU-level legislation.
In November 2012, the European Commission adopted a proposal for a directive setting a minimum objective of 40% of the under-represented sex in non-executive board-member positions in listed companies in Europe by 2020, or 2018 for listed public undertakings.
Main elements of the draft law: If a publicly listed company in Europe does not have 40 per cent of women among its non-executive board members, the new law will require it to introduce a new selection procedure for board members which gives priority to qualified female candidates.
The law places the emphasis firmly on qualification. Nobody will get a job on the board just because they are a woman. But no woman will be denied a job because of their gender either.
The law only applies to the supervisory boards or non-executive directors of publicly listed companies, due to their economic importance and high visibility. Small and medium enterprises are excluded.
Individual EU Member States will have to lay down appropriate and dissuasive sanctions for companies in breach of the Directive.
The law is a temporary measure. It will automatically expire in 2028.
The law also includes, as a complementary measure, a "flexi quota": an obligation for companies listed on a stock exchange to set themselves individual, self-regulatory targets regarding the representation of both sexes among executive directors to be met by 2020 (or 2018 in case of public undertakings). Companies will have to report annually on the progress made.
- 9-10 December 2013: EU ministersto discuss the draft law