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Quotas proposed for women on EU company boards

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Emma Davis
WVoN co-editor

Companies in Europe could face fines or sanctions if their boards are dominated by men, according to draft proposals by the European Commission.

The introduction of a new quota, which says that no more than 60 per cent of a company’s non-executive director board can be made up of the same gender, is expected to be formally proposed next month by Viviane Reding, European Commissioner for Justice, Fundamental Rights and Citizenship.

Publically listed companies with more than 250 employees or revenues of at least €50m would have to meet the quota before 2020 and state owned organisations would have until 2018, if the legislation is voted in.

According to The Financial Times and The New York Times, who have both reportedly seen the draft directive, the proposals highlighted the limited progress that had been made in the representation of women within top management.

It stated: “Progress in the share of women on company boards is very slow, with an average annual increase of just 0.6 percentage points over the past years The rate of improvement in individual member states has been unequal and has generated highly divergent results.”

The EU Observer reported that earlier this year Ms Reding had said she was not a fan of quotas, but believed they may be necessary to help address the severe gender imbalances within the EU.

She expressed her disappointment that voluntary action schemes had only limited success after an EU commissioned report using data from January this year showed that women represented 13.7 per cent of board positions in large companies; an increase of just 1.9 percentage points since 2010.

Ms Reding said: “I regret to see that despite our calls, self-regulation so far has not brought about satisfactory results.” Later on, she added: “The economic case for getting more women into the workforce and more women into top jobs in the EU is overwhelming.”

Some the 27 EU member countries have already adopted their own quotas, with France, Italy, Spain and the Netherlands all at different stages in implementing minimum thresholds. Other countries, such as the UK and Sweden, have been against quotas in the past.

Statistics from France back Ms Reding’s claim that countries that have quotas “bring the results”. The number of women on boards increased by 10 percentage points to 22 per cent following the year after it introduced quotas in January 2011, the Financial Times reports.

However, an official in the UK’s business department said: ““Our position will still stand – we are opposed to legislation for quotas.”

Other business organisations expressed their concerns with the proposals, including Pedro Oliveira, legal adviser at Business Europe, the EU’s largest employers group, who told the Financial Times: “One-size-fits-all quotas interfere disproportionately with the freedom of companies and shareholders to organise their own affairs.

“They disregard the highly diverse conditions in different sectors/companies and do not take into account the way corporate boards function and are renewed.”

Kimberley Lansford, a senior policy adviser at the European Round Table of Industrialists, a forum for the chairmen and chief executives of major multinational companies, echoed these sentiments when they told the New York Times: “Big divergences among sectors and national traditions mean any measures must remain voluntary.”

An EU official who spoke anonymously to The New York Times said that companies would still have the freedom to chose among the best qualified executive directors to help run the business.

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