The European Parliament’s Committees on Legal Affairs (JURI) and Women’s Rights & Gender Equality (FEMM) have today voted (40 for, 9 against and 2 abstentions) to support a proposal by the European Commission to address the gender imbalance on company boards in Europe. With this vote, the European Parliament (which decides with the Council of Ministers on an equal footing on this proposal), paves the way for further progress of the draft law in the EU legislative process.
The vote coincides with a new report on women in decision-making, released by the European Commission today, including figures on women on boards at major publicly listed companies in the EU. The latest figures (from April 2013) show that the share of women on boards has increased to 16.6% (from 15.8% in October 2012). The figures also show the different levels of representation amongst non-executive directors (17.6% women up from 16.7% in October 2012) and senior executives (11% up from 10.2%).
“Regulatory pressure works. The cracks are starting to show on the glass ceiling. More and more companies are competing to attract the best female talent. They know that if they want to remain competitive in a globalised economy they cannot afford to ignore the skills and talent of women,” said Vice-President Viviane Reding, the EU’s Justice Commissioner. “The example has been set by countries such as France and Italy, who have adopted legislation and are starting to record significant progress. I would also like to thank the rapporteurs Rodi Kratsa-Tsagaropoulou and Evelyn Regner for their tireless efforts and support on the Commission’s proposal. We have got the ball rolling. I will continue working with the Parliament and the Council to make swift progress on the draft law which places qualification and merit centre stage.”
These are main points from the report voted today by the JURI and FEMM Committees:
- It confirms the Commission’s approach to focus on a transparent and fair selection procedure (so-called “procedural quota”) rather than introducing a fixed quantitative quota.
- Small and medium-sized enterprises remain excluded from the scope of the directive but Member States are invited to support and incentivise them to significantly improve the gender balance at all levels of management and on boards.
- There will be no possibility for Member States to exempt companies from the Directive where members of the underrepresented sex make up less than 10% of the workforce.
- It strengthens the provision on sanctions by adding a number of sanctions that should be obligatory, rather than indicative, as the Commission has proposed. Sanctions for failure to respect the provisions concerning selection procedures for board members should include the exclusion from public procurement and the partial exclusion from the award of funding from the European structural funds, the two Committees say.
Next Steps: In order to become law, the Commission’s proposal needs to be adopted jointly by the European Parliament and by the EU Member States in the Council (which votes by qualified majority). Todays’ decisive vote follows positive opinions on the initiative from three other Parliament committees: the Employment (EMPL), Internal Market (IMCO) and Economic Affairs (ECON) Committees (MEMO/13/672). The JURI and FEMM committees, which are jointly responsible for piloting the proposal through the Parliament, have now adopted their report. This will pass to the European Parliament’s plenary session for a vote expected in November.
The Council, which on this proposal decides on an equal footing with the European Parliament, took stock of progress achieved under the Irish Presidency at the meeting of Employment and Social Affairs ministers (EPSCO Council) on 20 June 2013 (MEMO/13/584). The Lithuanian Presidency is now pursuing the discussions further.
New Report on Women in decision-making released today:
In the six months covered by today’s report on women and men in leadership positions (October 2012-April 2013), an increase in the share of women on company boards has been recorded in 20 Member States. The largest increases occurred in Slovakia, Hungary and Bulgaria. The share of women on boards declined in Romania, Lithuania, Poland, Malta, Greece, Portugal and the UK (see Annex 2).
The latest EU-wide figure of 16.6% represents a 0.9 percentage point (pp) increase in the six months from October 2012 or an annual equivalent rate of 1.7 pp, down from the rate of 2.2 pp between 2011 and 2012.
In fact, since 2010, when the European Commission published its Strategy for Equality between Women and Men (2010-2015) and first raised the prospect of targeted initiatives to address the under-representation of women in decision-making positions, the share of women on boards has risen by 4.8 pp at an average rate of 1.9 pp/year, almost four times the rate of progress from 2003 to 2010 (0.5 pp/year). This acceleration (see Annex 3) has been further fuelled by the women on boards proposal adopted by the European Commission on 14 November 2012 (IP/12/1205 and MEMO/12/860), which outlined a 40% objective for women on boards based on qualification. Recent developments also reflect the impact of EU-wide discussions about the need for a targeted intervention to raise the number of women on boards.
It is important to note that the most significant developments since 2010 have largely occurred in countries where binding legislation has already been adopted, such as France (+ 14.4 pp to reach 26.8%), the Netherlands (+8.7 pp to reach 23.6%) and Italy (+8.4 pp to reach 12.9%). This further emphasises the importance of regulatory pressure for results.
Today’s report also presents an overview of the current situation and trends for the representation of women and men in politics, in public administrations and in the judiciary (see MEMO/13/882). Although the representation of women and men in decision-making positions in these fields is more balanced than in the business and finance sectors, there are still substantial opportunities for progress in a number of Member States.
Today’s mid-term figures on women on boards were collected in April 2013 and are compared to the data set from October 2012. The full data are accessible online.
Gender equality mid-term review
The Commission has also released a mid-term review of its broader gender equality strategy for equality between Women and Men (2010-2015) which set out 24 key actions under five headings: equal economic independence for women and men; equal pay for work of equal value; equality in decision-making; dignity, integrity and ending gender violence; and promoting gender equality beyond the EU (see MEMO/13/882).
The report finds that, half-way through the period covered by the strategy, the Commission is delivering on its commitments. It has taken action in the majority of areas covered, in particular in improving the gender balance in economic decision-making, tackling female genital mutilation, promoting equal pay and promoting equality within the EU’s overall economic strategy.
On 14 November 2012, the 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 (see IP/12/1205 and MEMO/12/860).
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.
FOR MORE INFORMATION:
“Women and men in leadership positions in the European Union, 2013, a review of the situation and recent progress”: http://ec.europa.eu/justice/gender-equality/gender-decision-making/index_en.htm
European Commission database on women and men in decision-making: http://ec.europa.eu/justice/gender-equality/gender-decision-making/database/index_en.htm
Press pack – Women on boards: http://ec.europa.eu/justice/newsroom/gender-equality/news/121114_en.htm