Conference of the European Commission about Equality between women and men – session on equality in decision-making

With regard to this issue, it is important to point out that, despite their growing presence in the labour force in the EU, women are still seriously underrepresented in economic decision making positions, especially in senior management functions and on corporate boards. The growth rate of women in the board seats of Europe’s largest listed companies is half a percentage point per year- this means that it will take another 50 years before a reasonable gender balance on board will be achieved. Moreover, women are almost completely absent in the leadership positions, as CEO’s and Chairpersons. Finally, there are significant variations in the current representation and the rate of change of women on boards across Europe: Norway is leading the way with almost 40% women on boards as a result of the quota legislation that came into force in 2008.

With all this data as a boost for action, it has been the Commission’s intention to stimulate the corporate sector to voluntarily take action to achieve more gender-balanced boards: after some crucial meetings, Vice-President Mrs. Viviane Reding called in her “Women on the Board Pledge for Europe” upon CEOs and/or Chairs of listed companies to commit to having at least 30% female board members by 2015 and 40% by 2020. FES Consulting Empresarial - a Spanish business consultancy which is co-owned by AFAEMME’s President – has been one of the first two companies which signed up to the voluntary Pledge. In March 2012 the European Commission will evaluate the impact of this Pledge and the measures taken by companies. If the progress is insufficient the Commission will consider implementing other measures at EU-level.

Gender equality in economic decision-making is not a “women’s issue” but a business imperative. The prevailing arguments are:

1. There is a positive correlation between a higher share of women at top levels and a company’s organizational and financial performance
2. Diversity may improve the quality of decision-making
3. There is a positive correlation between relatively high shares of women on boards with the quality of corporate governance and ethical behaviour
4. With more than half of the students (nearly 60%) graduating from Europe’s higher educational institutes being women, there would be a better utilization of the talent pool
5. Companies that can relate to customers’ needs with a balanced leadership team stand to gain market share and create better products and services for female consumers needs
6. A company’s diverse workforce and innovation strategy differentiates it from its competitors and enables to access new customer groups

The major categories of instruments and initiatives which have been developed across Europe to address the underrepresentation of women in senior management positions are:

• Individual company’s programs, such as developing the business case, setting targets and developing tools like mentoring and training programs;
• Cross-company or sector initiatives, like Prizes, Awards and Charters;
• Industry self-regulation instruments, like corporate governance codes:This tool relies on peer pressure within organizations in combination with outside pressures from stakeholders and the media instead of introducing and enforcing concrete or legal penalties. When the codes apply the principle of “comply or explain” a company is obliged to explain non-adherence to any part of the code in its annual report, first of all to its stakeholders and in general to society- this creates transparency and puts further pressure on companies to comply.
• Government legislative and policy initiatives, like quota laws:The introduction of quota legislation for the minimum representation of each gender on corporate boards in Norway has sparked wide-spread debate on action across the EU.In Spain the “Law on Effective Equality between women and men” (2007) recommended that companies with more than 250 employees and listed companies (IBEX 35) have to gradually appoint women on their boards until a proportion of between 40% and 60% of each gender has been reached by 2015. When companies apply for the equality label, public subsidies or state administration contracts, (non-)compliance with the law might be taken into account in the awarding process.In France listed companies and companies with at least 500 employees and revenues over € 50 million are obliged to appoint at least 20% women on their boards within 3 years (2015) and 40% within 6 years. The appointment of a board member who does not meet the gender criteria will be invalid and he/she will not receive the (financial) benefits attached to the position.The Netherlands adopted a legal target to achieve a minimum representation of 30% of each gender on boards (executive and supervisory) for large companies (over 250 employees, both listed and not listed) per January 2016. (Non-) compliance and action plans to achieve the target must be included in the annual report. The law is a temporary measure and relevant articles will be automatically deleted in 2016.Italy introduced quotas of one third of each gender by 2015 for boards of directors and statutory auditors’ boards of listed companies and state-owned companies. Sanctions are progressively a warning, followed by fines and ultimately forfeiture of the offices of all members of the board.Belgium adopted a law imposing one third of each gender in management boards of state and publicly listed companies. State companies will be granted one year to comply, listed companies five years and small to medium-sized (listed) firms eight years. Sanction for non-compliance is the loss of benefits by board members until the quota law has been complied with.

Outside the EU, the Norwegian Gender Equality Act (1981) required that 40% of each gender should be represented on publicly appointed boards, councils and committees. In 2004 the requirements were extended to boards of publicly owned enterprises and in 2006 (in effect as from 2008) to large joint stock companies in the private sector. It led to a dramatic and fast increase from 6% women on boards of public limited companies in 2002 to 36% in 2008.

CONCLUSIONS:

• A. The many initiatives taken to date have created AWARENESS and increased PRESSURE on companies and governments to improve women’s access to the decision-making power in the corporate world. However, progress has been glacially slow and more action is needed to reach gender balance in economic decision-making positions.
• B. By far the most effective instrument has been the Norwegian QUOTA LAW, but other relatively effective strategies can be found in Finland and Sweden.
• C. The major challenge in most countries is how to overcome RESISTANCE from the public and the corporate sector against quantified voluntary targets and legal quotas for board positions.
• D. Successful EU Member State strategies to achieve gender balanced boards may include these elements:
  • An ACTIVE ROLE OF THE GOVERNMENT in leading the change
  • Implementation of POLICIES ADRESSING THE CURRENT OBSTACLES for women to reach top positions (reconcile work, family and private life for both women and men; fight against gender stereotypes in education and the labour market; engage men)
  • A MONITORING & MEASURING SYSTEM at country level (data collection, reporting, publication of results)
  • The introduction of an adequate SYSTEM OF POSITIVE ENCOURAGEMENT and the use of CORPORATE GOVERNANCE CODES including a requirement to “comply or explain”, could further enhance accountability and put pressure.
  • ACTIVE PARTICIPATION OF ALL STAKEHOLDERS to develop and implement measures and initiatives, and exchange of GOOD PRACTICES between all actors involved.

SOME COMMENTS:

Mrs. Monika Queisser, Head of the Social Policy Division of the Organisation for Economic Co-operation and Development, made some very interesting recommendations:

• Generally involve men in the gender equality debate
• Establish financial incentives to stimulate fathers to take the parental leave
• Greater flexibility in the use of the parental leave
• Make the leave payments conditional on the return to work
• Provide financial support to childcare and out school hours
• Support the careers of those who take care of old people or children (training and psychological support)
• Prefer flexible full-time in stead of part-time because the latter is part of the wage-gap

Mrs. Queisser also highlighted that she would not recommend using at the same time the maternal and the parental leaves because this could lead to abuses.

Mr. Jonathan Rees, Director General of the Equality Office of the UK Government, pointed out that we have to be careful with imposing quotas because it is a problem if equality is not well constructed in the society; he thinks that the country has to be prepared and that it is necessary to first give a time to voluntarily achieve the requirements.

At the contrary, Mrs. Arni Hole, Director General of the Norwegian Ministry of Children, Equality and Social Inclusion, says clearly YES to the quota instrument. She thinks that it is not necessary to wait until a society or a country is prepared and that the best example is Norway -which was not prepared and where there has been a lot of criticism-: a country with very positive results in terms of gender equality.

A final interesting comment made during the Conference has been that the SMEs and the cooperation between employers’ federations, trade unions and Governments are the clue of the economic and financial crisis.