It has been reported that new legislative proposals are to be introduced shortly at EU level which would require Europe’s listed companies to ensure that by 2020 at least 40% of non-executive board positions are filled by women.
Commentators have indicated that the proposals, which would then require to be passed by a vote, are likely to be introduced by Viviane Reding, Vice-President of the European Commission and EU Justice Commissioner, at some point in the next two months.
The proposals currently appear to apply to listed companies with more than 250 employees or with annual revenues exceeding €50 million. The penalties for companies which do not comply with the mandatory quota are likely to be monetary fines and other sanctions which, some press reports suggest, could include, quite significantly, being barred from availing of state aid or partaking in state contracts.
Many companies, political representatives and other stakeholders are not in favour of mandatory quotas and the proposals could potentially prove to be quite controversial. For example, it has been reported that the UK government are strongly opposed to any introduction of mandatory quotas and favour a more flexible voluntary approach.
However some European countries have already introduced their own quotas in this area and therefore the proposal will not be regarded as so significant a culture shock in certain quarters.
This most recent development follows a number of initiatives in this area in recent years, including for example:
- a number of voluntary initiatives at EU and other levels such as the March 2011 "Women on the Board Pledge for Europe" whereby EU listed companies were invited to commit to increasing women's board participation;
- the European Commission report "Women in Economic Decision-making in the EU" in March 2012, also by Ms Reding;
- the EU consultation on gender imbalance on boards which closed on 28 May 2012; and in the UK:
- the Lord Davies report “Women on Boards” in February 2011 which recommended voluntary rather than mandatory targets;
- the House of Lords Call for Evidence in this area which closed on 10 July 2012; and
- most recently, on 4 September, the launching of an inquiry by the UK government’s Business, Innovation and Skills Committee into women in the workplace.
We will continue to monitor and report on developments in relation to the possible introduction of the new mandatory quota.