Democracy//

Fair representation for women on company boards

Written by: Mary Honeyball on 26 November, 2012
Filed under Democracy, Economy

As a member of the European Parliament’s Gender Equality and Women’s Rights Committee I have worked for a number of years to increase women’s participation in decision-making.

Gender equality is a core value of the EU, from the bloc’s founding treaty in 1957 which included the principle of equal pay for equal work, to the Charter of Fundamental Rights which recognises the right to equality between women and men in all areas, and the need for positive action.

The latest idea to promote women’s participation in economic decision-making is a proposal from the European Commission about women on boards. It comes after years of the Commission encouraging Member States to take action, with mixed results.

Currently only 14% of company board positions in the largest listed companies in the EU are held by women, compared to 16% in the UK. The Commission’s proposal, which will apply only to companies with a turnover in excess of 50 million euros a year, is that the proportion should be at least 40% by 2020. Member States that take measures “of equivalent efficacy” for more balanced boards would be exempt from the new rules. Sanction for non-compliance will be the responsibility of member states.

Having more women on boards is a basic question of fairness. Women make up half the population and 60% of graduates. More than 70% of purchasing decisions are made by women. Yet too often non-executive directors are recruited through an “old boys’ network” from among business and personal contacts of current board members. The European Commission proposal sets out to have these male-dominated opaque recruitment practices replaced by transparent selection procedures and objective qualification criteria. This is what is required to smash the glass ceiling.

Qualification and merit will still be the key criteria for a job on the board – and there are over 7,000 highly qualified women with professional experience ready to take over a board position1.

The aim of the EU legislation is to speed up the varying rate of progress in Member States. Across the EU women’s representation on corporate boards has increased by just 0.6% per year since 2003. However in France which introduced binding quota legislation in 2010 the number of women on boards has doubled to 22.3%. In the UK self-regulatory measures have put us on course to reach 27% by 2015, and 37% by 20202, more than likely putting the UK in the category excluded by Brussels from the new provisions.

1 European Business Schools Women on Board Initiative

2 Cranfield School of Management Female FTSE Report