Last March, Viviane Reding, EU’s Justice chief sent a pledge to businesses based out of Europe, asking them to “commit to reach the target of 30% female board members by 2015 and 40% by 2020 by actively recruiting qualified women to replace outgoing male board members.” 24 companies sent back their affirmative reply. For her, that just just wouldn’t do. She has gone ahead and intends to introduce a legislation that would ensure corporates in the European Union have “women occupy up to 60 percent of the seats on corporate boards. ”
In her statement, she says, “I am not a great fan of quotas, however, I like the results they bring.” She said that the lack of women in top jobs in the business world harms Europe’s competitiveness and hampers economic growth.The Commission is inviting the public – individual businesses, social partners, interested NGOs and citizens – to comment on what kind of measures the EU should take to tackle the lack of gender diversity in boardrooms. A public consultation will run until 28 May 2012. Following this input, the Commission will take a decision on further action later this year. Upon making the call in 2011, Vice-President Reding said that if “significant progress” had not happened by March 2012, “you can count on my regulatory creativity.”
Reports on gender balance have shown that having women in top positions can significantly increase business performance, improve competitiveness and lead to economic gains. For example, Ernst & Young found that the earnings from the 290 largest publicly-listed companies where at least one woman on the board were significantly higher than in those that had no female board member.
A growing body of evidence points to significant economic benefits from a better gender balance in economic decision-making. Having more women in top jobs can contribute to a more productive and innovative working environment and improved company performance overall. This bolsters competitiveness. Women account for 60% of new university graduates but few make it to the top of companies. Opening the door to senior positions acts as an incentive for women to enter and stay in the workforce, helping to raise female employment rates and making better use of women’s potential as human resources. “If we want to achieve the target set by the Europe 2020 Strategy – the EU’s growth strategy – to raise the employment rate for women and men aged 20-64 to 75%, we need to make gender diversity a growth asset,” said Commission Vice-President Viviane Reding.
The Commission report also points out that while there have been some recent advances, particularly in countries that have introduced gender quotas, progress remains slow. There are also big differences between countries, with women making up 27% of boards in the largest Finnish companies and 26% in Latvia, but only 3% in Malta and 4% in Cyprus.
You can learn more about how the European Commmission is exploring ways to break the “glass ceiling” for women on corporate boards here.