European Union May Propose Law to Require More Women on Company Boards (10/2)     Print Email

European Union Justice Commissioner Viviane Reding is proposing draft legislation that would require state owned companies to name women to 40 percent of seats on boards by 2018. According to the European Commission women hold only14 percent of board member positions and 3 percent of board president positions in Europe’s biggest companies, despite the fact that around 60% of all European university graduates are female.  “I do not accept the argument that there aren’t enough qualified women to fill supervisory boards,” Reding said. “The pool of talent is there. Companies should make use of it.”

Despite a year-long effort to prod companies to act independently, attempts at self-regulation to ease the gender imbalance have failed and further action is required to ensure gender equality, the EU Vice President argued.  Pending approval by the full Commission, which could come this month, the final legislation would have to be ratified by all 27 EU member states and the European Parliament before going into effect.

However, some companies that might be affected have expressed concerns about the proposals, arguing that there is a lack of qualified women in certain fields, particularly technology and manufacturing. “Big divergences among sectors and national traditions means any measures must remain voluntary,” Kimberley Lansford, a senior policy advisor at the European Roundtable of Industrialists told The New York Times.  There has also been opposition from some political leaders, most notably the former President of Latvia,  Ms. Vaira Vike-Freiberga,  who called the quota proposal “demeaning.”  “What does it actually mean to have quotas? It’s to say we don’t have enough competent women to do a certain job,” she told the EU Observer.

Nevertheless, there is strong public support in Europe for greater gender equality in corporate governance, according to the European Commission, with 75 percent of Europeans supporting legislation to enforce greater equality. In response, DG Justice recently initiated a program to improve gender equality in the work place. The new program is called Equality Pays Off.   The goal is to support companies in finding female candidates for all types of jobs, assist companies in evaluations of gender equality status, provide manuals with ideas on how to find female candidates and offer country specific statistics on gender equality or lack of the same.

Across the Atlantic, corporate board rooms closely resemble their European counterparts. In the U.S.,  2020 Women on Boards claims that only 14.6 percent of the Fortune 100 companies’ corporate directors in the U.S. are women and has initiated a campaign to encourage companies to boost that percentage to 20 percent by the year 2020. By then, Vice President Reding hopes to have doubled that in Europe.

By Erik Peterson, “European Affairs” Editorial Assistant