Quotas of women is discrimination judge says

Author Moonshot.news

Published on: 17/05/2022

While the European Union and member states work on laws to get more women directors into companies, a judge in California has come to the conclusion that using quotas is discrimination. California is since 2018 requiring that boards of public companies have multiple women directors. The judge now says this is discrimination on the basis of sex and therefore violates California´s constitution.

The European Union recently took 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.

But in California, quotas mean discrimination according to Superior Court Judge Maureen Duffy-Lewis.

“In support of women in the boardroom, the defence offered the testimony of stereotypical virtues of women such as ‘consensus builders’ and ‘less risky behaviour in investments. The court is unpersuaded by this offer of stereotypes for a justification”, she wrote ordering the state of California not to enforce the law.

A conservative legal advocacy group had argued the quotas were reverse discrimination. Bloomberg reports that hundreds of companies already have complied with the law’s deadlines to seat female directors.

DISAPPOINTED

“We’re disappointed and appalled at this setback for women to be advancing in business,” said Betsy Berkhemer-Credair, CEO of 50/50 Women on Boards.

It is not known is the state of California plans to appeal.

A recent study by leadership consultancy Heidrick&Strugges shows that 45% of all board members in Fortune 500 companies appointed last year were women. The percentage of women on the boards increased from 19% in 2015 to 29% in 2021. The biggest increase was in 2017 when there was a lot of focus on the Me Too-movement.

When the EU´s employment and social affairs ministers agreed on a general approach to improve gender balance in the EU, Elisabeth Borne, at that time French minister for labour who now is President Macron´s new prime minister, said:

STEP FORWARD

”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”.

The EU 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.

PROGRESS

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.”