Target for women on boards

The European Commission has agreed to put forward legislation setting a target for at least 40% of board members in quoted companies to be women by 2020 (2018 in state-owned companies).

The proposals concern only non-executive directors, and the principle in appointments is for preference to be given to a candidate from the under-represented sex (in theory it could be men), unless an objective assessment of the candidates means that a candidate from the over-represented sex should be preferred.

The proposed directive will not set penalties for companies who fail to reach the target. This will be left to member states. However, it will require that penalties are “appropriate and dissuasive”.

The Commission says the measure is necessary as progress towards equality in boardrooms has been slow — since 2003 the proportion has only increased by 0.6 percentage points and currently stands at 13.7%. However, a number of countries have recently adopted legislation on the issue, and, as Viviane Reding, the justice commissioner who has pushed the proposal points out, this “demonstrates that time limited regulatory intervention can make all the difference”.

But several states, including the UK (where 15.6% of board members are women), are opposed to the plan, and it is uncertain when and if it will become law.