EU ministers agree on how to get more women on boards

Author Moonshot.news

Published on: 14/03/2022

The European Union has taken another step towards ruling that women should have minimum 40% of non-executive director positions in listed companies. EU’s employment and social affairs ministers have agreed on a “general approach” on proposed EU legislation aiming to improve gender balance among non-executive directors of listed companies. Next step is negotiations between the Council and the European Parliament to find a common position.

”Today’s agreement in the Council is an important step forward. I call for a swift start to negotiations with the European Parliament with a view to the final adoption of this directive, which will help to address the glass ceiling with which women are still too often faced in the world of work”, says Élisabeth Borne, French minister for labour, employment and economic inclusion. France holds the presidency of the EU during the first half of 2022.

The directive aims to set ”a quantitative target for the proportion of members of the under-represented sex on the boards of listed companies” – in the vast majority of cases, the “under-represented sex” is women.

Companies would have to by 2027 reach the minimum target of having 40% of non-executive director positions held by members of the under-represented sex, or 33% if all, and not only non-executive, board members are included.

Companies that fail to reach these targets would have to apply clear, unambiguous and neutrally formulated criteria when appointing or electing directors.

Companies must also give priority to candidates of the under-represented sex when choosing between candidates who are equally qualified in terms of suitability, competence and professional performance.

Countries that already have measures, such as national targets to achieve more balanced representation of women and men, may suspend the requirements of the directive in relation to the appointment or election of board members. The same applies for countries that have already made progress towards the targets set in the directive.

The Council position also clarifies that it is up to member states (and not companies) to choose between the two proposed targets: 40% for non-executive directors or 33% for all board members.

”Although progress has been made towards greater gender equality on corporate boards, this progress remains uneven. In October 2021, only 30.6% of board members and just 8.5% of board chairs were women. The gap between member states is wide. Those where measures have been put in place are making much faster progress than those in which they have not”, the Council says in a statement.

”Increasing the proportion of women in economic decision-making positions is expected to have positive spill-over effects throughout the economy. Furthermore, around 60% of new university graduates in the EU are women. Improving the gender balance on company boards would thus also allow the large number of highly qualified women in Europe to realise their full potential.”