Viviane Reding, vp of the European Commission, is spearheading a push to require that women make up at least 40 percent of board seats in large EU public companies.
“Quotas are never a goal, quotas are an instrument — the hammer you need to break the glass ceiling.”
That’s Viviane Reding, vice president of the European Commission, who is leading an effort to institute quotas on the gender membership of boards of European companies.
Women currently hold 13.7 percent of seats on boards of the largest listed public companies in the 27 nations of the European Union, according to the commission. Norway has the highest share, at 42 percent. In all but eight EU countries, women hold fewer than 16 percent. (In the U.S., women hold 16.1 percent of seats, according to Catalyst.)
In “European Commission Official Fights for Women in the Boardroom” in the New York Times, Reding explained that her fight for a mandate follows years of encouraging companies to seek out more female board members on their own.
“I tried first with persuasion,” she told reporter Stephen Castle. “Voluntary measures have not achieved any progress, and if we continue at that pace we will need 40 or 50 years.”
France is one of the few countries that have adopted its own national quota. There, the number of women on boards increased from 12 percent to 22 percent in one year, Reding said.
So what’s being proposed? The Times says that “drafts under negotiation call for women to hold at least 40 percent of nonexecutive director positions in listed companies by Jan. 1, 2020. The measure would apply two years earlier to publicly owned companies, and not at all to smaller companies employing fewer than 250 people and with a revenue of less than €50 million, or about $65 million.” Punishment for not complying would range from fines to exclusion from public contracts, the story says.
Reding said that quotas would only be mandatory if there were qualified women available. “Capable women are out there, she said, citing a list drawn up by European business schools and other organizations of 3,500 ‘board-ready’ women, many of them in Europe,” reports the Times. The list started with 3,500 names in March 2012 and now has more than 7,000 names — “women who can be put on boards at once. There is no more argument that the talent is not available; the talent is there,” said Reding.
Reding cited reports from Credit Suisse Research Institute, McKinsey, Deutsche Bank Research and Ernst & Young which suggest that companies performed better when they had women in a significant number of senior positions. (At the same time, boards can minimize the friction that diversity can introduce: see MIT Sloan Management Review’s “Why Diversity Can Backfire On Company Boards” from 2010.)
The effort is not a done deal. The Times notes that some opposition is philosophical, that board seats should be chosen strictly on merit. Other opposition is procedural, with arguments that countries should decide individually. The Times says that France is partially on board with the initiative and that Britain is leading nine countries so far in opposing the effort. German Chancellor Angela Merkel, a key player in all things European, has not yet come out for or against the plan.