European Union states have agreed to a ‘landmark’ plan to set a 40% quota for women on corporate boards. The negotiation process required years of lobbying by equality groups, who argued that the existing rules governing how many women could sit on company boards were unfair and an obstacle to gender equality.
The European Commission introduced a proposal for a 40% quota on women on boards in 2012, but the plan was blocked by large member states including Germany and the United Kingdom.
Ten years after, the EU agreed to a 40% domestic quota for women on corporate boards.
After 30 June 2026, companies operating in all 27 nations of the EU will be required to have 40 percent of the “underrepresented sex” – usually women – on their board of non-executive directors. Also, the EU has set a 33% target for women serving in senior roles, including non-executive directorships and board positions, such as chief executive and chief operating officer.
Companies that fail to recruit enough women to their non-executive boards could also be fined and have board appointments canceled under the law.
To enforce the directive, the national authorities are able to impose fines. A company that violates the law can have its boardroom selection annulled by a national court. Companies with fewer than 250 employees will not be subject to the measures. Every year, listed companies will be required to report on the gender representation on their boards and how they plan to reach the objectives.
Currently, 9 out of 27 nations have national legislation regarding gender equality on boards.
Women held 30.6% of boardroom positions in the EU in 2021, but this varied widely between the 27 member countries. Women make up 45.3% of seats in boardrooms in France, the only EU country which exceeds the 40% quota for women on boards.
Researchers believe that this new development will lead to increased diversity in corporate boards and workplaces. This means that there will be better opportunities for women and men to develop their careers within organizations, and organizations themselves will benefit from the more inclusive environment such implementation of this law can bring.
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