Gender balance on boards

In “A New Push for European Democracy”

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Equal treatment and opportunities for women and men is a principle enshrined in the EU Treaties and the European Pillar of Social Rights. However, in 2022, women make up only 34.1% of non-executive board members in the EU-27's largest listed companies. Only one Member State, France, is nearing equality (48.7%). Other Member States are above or close to 40%: Italy, the Netherlands, Spain, Belgium, Sweden, Ireland, Denmark and Portugal. Of the diverse national regulatory approaches taken, those that have secured the fastest progress are the most stringent (Belgium, Italy and France).

In November 2012, to address the considerable imbalance between women and men in economic decision-making at the highest level, the European Commission submitted a proposal for a directive on gender balance among non-executive directors of companies listed on stock exchanges. The proposal, based on Article 157(3) and Article 157(4) TFEU and Article 23 of the Charter of Fundamental Rights, set the aim of a minimum of 40% of non-executive members of the under-represented sex on company boards, to be achieved by 2020 in the private sector and by 2018 in public-sector companies. SMEs were not covered by the proposal.

The European Parliament adopted its position, by a substantial majority, on 20 November 2013 (rapporteurs: Rodi KRATSA-TSAGAROPOULOU (EPP,  Greece)  for the Committee on Women’s  Rights and  Gender  Equality (FEMM) and  Evelyn REGNER  (S&D, Austria) for the Committee on Legal Affairs (JURI)). The Parliament strongly supported legislative action in this area and, notably:

  • backed the key objective for listed companies in the EU to aim to reach a target of at least 40 % of non-executive directors of the under-represented sex by 1 January 2020 at the latest (and by 2018 for public companies);
  • went beyond the Commission’s proposal, by calling for additional measures. These included: stronger penalties, such as exclusion from public tenders, for companies which failed to introduce transparent appointment procedures; the removal of exemptions for companies employing less than 10 % of the under-represented sex; the extension of reporting to the EU’s own institutions and agencies; and an examination of whether the scope of the directive should be extended to cover non-listed public companies;
  • pointed out that, although the directive would not apply to SMEs or micro-enterprises, Member States should support these companies and give them incentives to improve gender balance at all levels of management and on their boards;
  • stressed that, to achieve gender equality in the workplace, companies should develop a gender-balanced model of decision-making at all levels, whilst taking steps to eliminate the gender pay gap and introducing flexible working conditions for all employees.

After adopting its original position, Parliament continued to push for progress, stressing that advances have been most tangible in Member States in which binding legislation on quotas for boards has been adopted. The European Economic and Social Committee also asked the Council to continue the discussion on the Directive.

The directive remained blocked in the Council for 10 years due to the lack of a favourable qualified majority. The Commission, supported by Parliament, maintained a strong commitment to the file, including it among the priorities of the 2020-2025 gender equality strategy. In January 2022, the Commission President and the French Presidency expressed a determination to move the file forward. At the Council meeting of 14 March 2022, the ministers of employment and social affairs finally reached a general approach, opening the way to trilogue negotiations.

Through trilogue discussions with the Council, Parliament notably succeeded in including examples of specific penalties if companies breached the national provisions adopted pursuant to the directive, and a deadline of 30 June 2026 for meeting the target.

The Council and Parliament reached a provisional agreement on 7 June 2022. 

Member States will have to ensure that, by 2026, 40% of non-executive director positions in listed companies are held by the under-represented sex. Member states will be able to choose to apply the rules to both executive and non-executive directors, in which case the target would be for members of the underrepresented sex to hold 33% of all director positions. Listed companies which do not achieve the objectives will have to put fair, transparent, merit-based selection and appointment procedures in place to rectify the situation. Where candidates are equally qualified for a post, priority should go to the candidate of the under-represented sex. Member States which have already come close to achieving the objectives or have introduced equally effective legislation before the directive enters into force, may suspend the requirements relating to the appointment or selection process.  With regard to reporting, companies will have to provide annual information about the gender representation on their boards and the measures they are taking to achieve the targets, while Member States will be required to publish a list of the companies that have achieved the directive's objectives. Penalties such as fines will apply for companies that fail to comply with open and transparent appointment procedures. Small and medium-sized enterprises with fewer than 250 employees are excluded from the scope of the directive.

The political agreement was subject to formal approval by the co-legislators.

The Council adopted its first-reading position on 17 October 2022.

Parliament voted on the recommendation for second reading on 22 November during its November II plenary session and formally adopted the new legislation. 

The Directive will enter into force 20 days after it its publication in the EU’s Official Journal of 7 December 2022. Member states will need to implement the directive two years after it has been adopted.

References:

Further reading:

For a more extensive list of Parliament positions, references and further reading, please see the earlier versions.

Related legislative train carriages

  • EU Gender Equality Strategy 2020-2025

Author: Rosamund Shreeves, Members' Research Service, legislative-train@europarl.europa.eu

Read more on the Parliaments' fight for gender equality in the EU

As of 15/12/2022.