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Changing the Law to Put Women on The Board

In a drive for greater diversity and wider representation of women at director level, the Coalition Government has set targets for more women on the boards of the UK's publicly listed companies, giving them until 2015 to increase female board representation to 25%.

So far, the UK has resisted any move to impose a mandatory quota for the number of women serving on FTSE100 company boards. But despite that opposition, legislative change may be on the way, because the European Commission is bringing forward a proposal that listed companies within the European Union should reserve at least 40% of their non-executive director positions for women.

Forcing through reform

The *European Commission* (link 1) wants to redress through legislation, the gender imbalance that shows only 13.7% of non-exec directors in Europe's biggest companies are women. The UK favours a voluntary code - in 2011, the Department for Business, Innovation and Skills called for listed companies voluntarily to increase the female representation on their boards; a move which saw the number of UK female directors in the FTSE100 rise from 12.5% to 16.7% in 2012.

The draft proposal from EU Justice Commissioner Viviane Reding has met fierce resistance from nine member nations, including the UK, with support coming from France, which is to introduce its own compulsory quota, and from Belgium and Austria. If the proposal becomes law, companies that don't meet the mandatory quota would be subject to fines, and could also be barred from receiving state aid or bidding for state contracts.

Why the Status Quo is No Longer an Option

Opponents of mandatory quotas argue that forcing companies to have a specific percentage of females at the top is unworkable, and removes the flexibility of businesses to decide which management structure and personnel works best for them.

Those who favour a change in the law to redress gender imbalance, point to the fact that business has only reacted positively to the cause of women in the workplace through legislation, such as the Equal Pay Act and the Sex Discrimination Act in the 1970s. Without the threat of legal action, they argue, businesses have traditionally been slow to implement gender equality and gender-neutral policies.

Norway Leading By Example

Norway provides a positive example of how mandatory quotas can change not only the gender diversity of the corporate world, but also lower the age profile of board members. Norway, which is not a full member of the EU but is part of the European Economic Area, introduced a law in 2006 to increase the number of women at the top table of business. Today the *Nordic nation* (link 2) has the largest percentage of female non-executive directors in the world, and four times the average of its European neighbours.

Link 1 - http://euobserver.com/economic/117715

Link 2 - http://www.20-first.com/1030-0-norways-gender-quota-for-boards-is-a-tentative-success.html
 


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