EU starts 3-month consultation before possible regulation to put more women on boards

The European Commission has launched a three-month consultation before it decides on possible regulatory action to increase the number of women on corporate boards. EU Justice Commissioner, Viviane Reding, said a call for voluntary action by companies in March 2011 had only led to a 1.9% increase in female board members, meaning that just one in seven board members at Europe’s top firms is a woman (13.7%). She said that at that rate it would take 40 years to reach a significant gender balance of at least 40% of both sexes. As a result, the EU has been advancing the threat of regulation to force companies to take action. Last year, Reding said that if “significant progress” had not happened by March 2012, companies could expect “regulatory creativity”.
Following the consultation, which runs until May 28, the Commission will take a decision on further action later this year. The EU said reports on board gender balance show that having women in top positions can significantly increase business performance, improve competitiveness and lead to economic gains. It said an Ernst & Young report found that the earnings from the290 largest publicly listed companies where at least one woman on the board were significantly higher than in those that had no female board member.
The threat of potential quotas for women board members laid down by Brussels is meeting resistance from some investors. Helena Morrissey, Chief Executive Officer of London-based Newton Investment Management and Founder of the 30% Club, a group of chairmen and investors pushing for a voluntary 30% of women on UK PLC boards by 2015, said: “Quotas actually undermine the principle of equality and are patronising to women. Even those countries with quotas are still struggling with genuine equality and there’s evidence that shareholder value can be destroyed if quotas are imposed. Directors need to be there on merit. We encourage business leaders to take affirmative action in moving voluntarily towards a better gender balance at all levels in their organisations. Progress is already being made through self-regulation here in the UK and we expect this to accelerate. Investors don’t want quotas, Boards don’t want quotas and women don’t want quotas.”
Link to EU consultation