Women-owned businesses are growing, but women’s progress on corporate boards is extremely low. This is not because women chose not to be there; on the contrary, they apply to jobs in management, though most of them show lack of confidence and are unable to overcome “structural” obstacles. Women need to get used to remove the perception of barriers and need to see themselves as capable of succeeding in any job. The truth is that most women don’t think they can get top jobs.
Boards of Directors exist to help management develop business strategies and to set policy objectives. In Western countries, women purchase around 80 % of all products and services, so female members can contribute to more effective corporate decisions. For women, board membership provides an opportunity to test ideas, but also to get better wages and schedule flexibility. It may seem not that obvious, but for companies quotas can be an added value, bearing in mind that in the light of current international crisis and corporate scandals, companies face growing pressure for more accountability and responsibility. In that context, board assignments have become ethically vital. In a certain way, board performance is rated by society.
Nevertheless, glass ceilings have often been used as a metaphor to explain the limited participation of women on boards, not to mention the pay gap between men and women. Furthermore, a growing number of studies suggest gender balanced boards have the potential to improve the financial performance of companies.
The EU's competence to legislate in gender equality matters dates back to 1957. The European Parliament has called many times for legislation on equality in business leadership.
Today the Commission is proposing EU legislation to accelerate progress towards a better gender balance on the corporate boards of European companies. The proposal was presented jointly by Commissioners Reding, Tajani, Almunia, Rehn, Barnier and Andor.
The Directive proposed today sets an objective of a 40% presence of women among non-executive directors of companies listed on stock exchanges by 2020. These companies will have to appoint women to those positions according to their qualifications and applying gender-neutral criteria.
This means that given equal qualification, priority shall be given to the women, currently the under-represented sex. The proposal also includes a "flexi quota", an obligation for listed companies to set themselves individual, self-regulatory targets.
The proposal is expected to apply to around 5,000 listed companies in the European Union, but it does not apply to SMEs (companies with less than 250 employees and an annual worldwide turnover not exceeding 50 million EUR).
Though 11 Member States (Belgium, France, Italy, the Netherlands, Spain, Portugal, Denmark, Finland, Greece, Austria and Slovenia) have introduced legal instruments to promote gender quality on company boards, currently just 1 in 7 board members (13.7%) at Europe’s top companies is a woman.
There are big differences between countries, with women making up 27% of board members in the largest Finnish companies and 26% in Latvia, but only 3% in Malta and 4% in Cyprus.
The problem with this is that, in fact, there is a legal fragmentation approach that risks the proper functioning of the Single Market, as different company law rules and sanctions for not complying with gender balance laws can lead to complications for businesses or cross-border investments.
It’s remarkable that qualification and merit will remain the key criteria for a job on the board, but the Directive establishes a minimum harmonisation of corporate governance requirements, so today's proposal seeks to create an EU-wide framework for such positive action rules.
In this sense, the Commission considers this action is temporary, and will not be necessary once the progress has been achieved. So the EU law will act as an incentive for companies and for women, contributing to a raise in their employment rate across the European Union. So this Directive goes far beyond the role models, it offers greater opportunities for talent.