The EU Parliament has recently backed proposals that would give preference to women for non-executive directorships at companies. Under the new proposals, companies would be required to give non-executive directorships to women where there is no male candidate that is better qualified until they reach a target of four in 10 female non-executive directors. Previous proposals for setting quotas have been scrapped in favour of fines for companies that ignore the proposed selection rules. Member states are now required to sign off on the proposed law and if endorsed, the new law will come into force within seven years. These proposals have been passed by the EU Parliament against the background of new changes that have been agreed by the coalition parties in Germany.
During coalition negotiations between Angela Merkel’s conservatives and the Social Democrats earlier this week, an agreement was reached to have a mandatory quota for women on supervisory boards. Under the agreement, there will be a quota of 30 per cent of women to be represented on supervisory boards of listed companies and companies with a co-determined supervisory board. This quota will come into effect in 2016. In addition, listed companies and companies with a co-determined supervisory board would need to define and publish their own binding targets for increasing the proportion of women on supervisory boards, executive boards and at top management posts with effect from 2015. However, the current agreement does not set out any monetary penalties for non-compliance and it remains to be seen what sanctions, if any, will be introduced for failure to meet the quota.
The issue of quotas is not a new topic in Germany – it has been discussed for more than 10 years. Mainly due to opposition from business associations, binding quotas has never been adopted. In 2001, large companies voluntarily committed to increase the proportion of women in senior positions. But critics claim that this approach was unsuccessful and the debate on quotas has subsequently continued. Only a few months ago, a legislative proposal was defeated in the German Bundestag. Similarly, the EU Commission’s proposal to introduce a European wide quota for women on supervisory boards failed due to opposition of several member states, which included Germany.
In contrast with Germany, the UK remains a long way off any proposals for quotas for women on boards. The UK Government has so far favoured a voluntary approach, encouraging businesses to increase the number of senior women through a ‘comply and explain’ approach. In his influential report on Women on Boards in 2011, Lord Davies recommended that women should make up 25% of the boards of FTSE 100 companies by 2015. Since March 2012, 44 % of newly appointed FTSE 100 board directors and 40% of new directors in FTSE 250 were women. Mandatory quotas for the UK would mark a significant shift in approach. Anti-discrimination legislation in the UK focuses on preventing less favourable treatment by imposing sanctions for unwanted behaviour, rather than encouraging more favourable treatment. If quotas were to become mandatory in the UK, there would have to be a change in the existing legislation to prevent quotas from being a measure that constitutes unlawful positive discrimination. Mandatory quotas, whether in Germany or the UK, would undoubtedly create challenges for employers, including potential legal issues around meeting the quotas and dealing with unsuccessful male candidates.
Above article by Purvis Ghani, Senior Associate (London), Vanessa Klesy, Associate (Frankfurt), Mayer Brown International LLP
BUPA supports biggest ever survey on gender equality
Women from across Bupa are taking part in the ground-breaking study, called ‘Project 28-40’, run by Opportunity Now – the gender equality campaign from Business in the Community (BITC).
Bupa, which sits on the board of Opportunity Now, supports the project’s aim of addressing longstanding issues such as barriers to progression women face at work and the pay gap between men and women – topics which continue to be relevant despite an abundance of talented, ambitious women. It is believed to be the biggest poll of its type ever conducted, with a target of 100,000 women aged between 28 and 40 to be surveyed across the UK and Republic of Ireland by mid December.
Evelyn Bourke, Bupa’s chief financial officer and part of Opportunity Now’s leadership team, said: “I am personally supporting Project 28-40 as I think it will be of huge value to all to understand what can get in the way of women’s career progression. Hearing from women about their ambitions, and the opportunities and challenges they face at work, will help us tackle any issues and ensure we all have access to the opportunities that allow us to thrive in our chosen careers.”
Helena Morrissey CBE, Chair of Opportunity Now, said: “28-40 is a critical age for career development where at the moment women fail to be promoted at the same rate as men – a problem both for women and companies. This survey, the largest ever undertaken globally, will help us all really understand the reasons behind the current imbalance. We’re asking women to share their experiences candidly and to provide their own perspectives about harder-to-measure aspects such as culture and attitudes, so better initiatives can be developed for everyone’s benefit.”
The survey is available at http://www.project2840.com and will run until Sunday 15 December.