Viviane Reding: Why Europe must put women on corporate boards

In the top levels of companies, many women continue to face a glass ceiling
In the top levels of companies, many women continue to face a glass ceiling
Image: Getty Images / Moodbaord
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The European Union has a long history of promoting equality between women and men, and Europe can be proud of the progress it has made over the last few decades. Under EU laws, women no longer have to face discrimination because of their sex. EU rules also guarantee common minimum rights to family leave. Sixty percent of new university graduates across the European Union today are female. And in spite of the economic crisis, the employment rate for women is today at 62%, up from 55% in 1997.

However, in the top levels of companies, many women continue to face a glass ceiling hindering their progression up the career ladder. Currently, company boards are dominated by one gender: 86.3% of board members and 96.8% of the boardroom chairs are men, while women make up 13.7% and 3.2%, respectively. Women occupy 16% of board positions in the United States, which is only slightly above the EU average of 13.7%.

Despite an intense public debate and a few voluntary initiatives at the national and European level, the situation has not yet changed. In March of this year, the European Commission presented a report on the situation for women in Europe’s boardrooms, which showed only moderate progress over recent months: a 1.9 percentage point increase from October 2010 to January 2012. This compares with a long-term average rise over the last decade of just 0.6 percentage points per year. In addition, France alone accounts for around half the increase in the entire EU over the past year, after having introduced quota legislation in 2011. Overall, change remains very stubborn. Tangible progress is the exception and not the rule. Progress is only visible in countries where quota laws were introduced. At this rate, it would take around 40 more years to even get close to gender balance in boardrooms—that is to say, at least 40% of both genders.

It is time now to finish what we started and culminate 50 years of EU action to promote gender equality by tackling this issue head on. This is why I, together with the European Commissioners responsible for Justice, Industry, Competition, Economic  Affairs, Internal Market and Employment, am proposing legislation to accelerate progress towards a better gender balance on the corporate boards of European companies.

Our motivation is clear: in these difficult economic times, when we are facing the challenges of an aging population and skills shortages, in addition to the financial crisis, it is more important than ever to take advantage of everyone’s skills: both female and male.

Eleven EU Member States (Belgium, France, Italy, the Netherlands, Spain, Portugal, Denmark, Finland, Greece, Austria and Slovenia) have recognized this and have already started to act by introducing different types of rules to advance gender equality on company boards. However, a piecemeal approach on such an important social and economic issue can hamper our single market. Companies need a coherent, reliable legal framework, especially when they want to do business in the EU. Our proposal therefore aims to create a EU-wide framework for positive action rules that gives direction to national policy makers and legal certainty to businesses.

But this is not only about businesses. It is also about citizens who agree that today’s situation should be changed: 88% of Europeans believe that, given equal competences, women should be equally represented in the top jobs in business, according to a recent Eurobarometer survey. There is thus a solid public backing in Europe for performance-based quota rules.

The key word here is “competences.” We have taken great care when drafting our proposal because, on the one hand, we want to promote gender equality in boardrooms by specific measures in favor of the under-represented gender. Yet on the other hand, we must not and will not discriminate against individual candidates competing for a particular position in a company. Under our rules, qualification and merit will remain the key criteria for a job on the board. And of course, EU legislation promoting gender equality on the boards of companies has to be limited in time: measures in favor of the underrepresented gender can only be possible if there is underrepresentation, otherwise this would lead to further inequality.

The new rules we are proposing strike the right balance. The new European 40%-rule will only apply to publicly listed companies, due to their economic importance and high visibility, while excluding small and medium enterprises with less than 250 employees. It focuses on the non-executive director posts in order to send the right signal to the highest levels of companies. And it will have at its heart a transparent selection process aiming to reach a 40% representation of the under-represented sex by 2020 based on clear criteria and a comparison of the candidates’ skills and qualifications.

The time has come to break the glass ceiling that continues to bar female talent from getting to the top. The European Commission has been promoting gender equality since 1957. Continuing along this path is not a revolution but a natural evolution, after 50 years of EU action to promote gender equality. It started 50 years ago with guaranteeing equal pay for equal work and it continues today by guaranteeing equal opportunities in decision-making positions for women and men.