by Beatrice Moretti
Foreword: gender disparities at the top of the corporate ladder
Over the past few decades, women’s participation in the labour market has increased throughout the European Union. However, significant gender differences are still persistent, especially in terms of employment conditions and career progression. Regardless the presence of a large pool of highly qualified women, the gender gap emerges clearly and particularly within companies: in all EU member states, not only women are underrepresented on company boards but also, as showed by statistics, gender imbalances increase at more senior levels.
Gender inequalities in labour market, while being contrary to the principles of equal opportunities and equal treatment of men and women in employment and work (Art. 157, §3, TFEU) lead to women’s social exclusion, as well as to the impoverishment of society as a whole, by representing a waste of talent and a loss of economic growth potential. According to 157, §4, TFEU, the European Parliament and the Council are empowered to adopt measures to ensure the application of the principle of equal opportunities and equal treatment of men and women vis-à-vis employment and occupation: to this end, concrete actions were proposed to address gender gaps and support women’s empowerment, as for the EU Strategy for Gender Equality 2020-2025. Despite this, progress has been rather slow with an average annual increase of just 0.6 percentage points during the past years. In this contest, it is clear that achieving gender equality requires stronger structural changes that can guarantee women an equal place at the decision-making tables.
Different national approaches and results
The debate on gender imbalance has gained increasing attention and several European states have envisaged several initiatives to promote gender equality in economic decision-making, in particular to increase the presence of women on company boards.
In 2003 Norway was the first country in Europe and in the world to introduce a binding gender quota for all listed and state-owned companies. Since then, several European Member States have introduced instruments to face the gender inequality issue in the employment sector. In 2007 Spain became the first EU Member State to introduce, through the Gender Equality Act, a gender quota for company boards: in particular, the law recommends that all large public and private appoint at least 40 per cent of each sex on company boards of directors by 2015. Nowadays, France is the European and world leader in terms of female representation on boards of directors. With the adoption of the Federal Equality Act and the Second Leadership Positions Act,the German government has already taken measures to promote gender balance in management positions in listed companies, such as the law requiring listed companies to have 30 per cent of supervisory positions occupied by women as of 2016. The Italian Golfo-Mosca Law requires the presence of at least 33% women on the boards of directors of listed companies, but the set of rules in Italy is applicable only to listed or publicly controlled companies, representing a minority among Italian companies. In the meantime, other countries (such as Netherlands and Belgium) have adopted measures that introduce gender quotas, therefore leading to a significant increase in female representation on boards of directors. Despite the most significant progress was noted in those States where binding measures had been introduced, the absence of quota regulation on boards in other states – such as the Czech Republic and Croatia – has slowed down the process towards gender equality.
The EU Women on Boards Directive
Despite the shared need to promote gender equality and support women’s participation in decision-making processes, the path leading to the Women on Boards Directive (Directive EU 2022/2381) was by no means straightforward. While, usually, the average time between a proposal by the European Commission and the formal adoption of a directive is around 18 months, in this case EU Parliament formally adopted the new EU law after 10 years from its first proposal. The reason behind such a lengthy implementation process can be found in the highly diverging opinions of some European Member States. Specifically, the draft directive had been blocked by those states that doubted that the introduction of binding measures at European level was the best way to achieve gender equality within listed companies. In particular, a group of States leaded by Germany supported the idea that this issue should have been dealt with at national level. After years of negotiation and debate, the need to adopt a comprehensive approach towards gender equality in the workplace eventually prevailed and the EU Parliament adopted the Directive on 22 November 2022. The directive was published on 7 December 2022 in the Official Journal of the EU and entered into force on 27 December 2022. All EU Member States shall transpose its provisions into their national legislation by December 28, 2024.
The aim of Women on Boards Directive is to achieve a more balanced representation of women and men among the directors of listed companies by establishing effective measures that can accelerate the progress towards gender balance. To this end, transparent recruitment procedures in larger listed companies – i.e. companies registered in EU Member States employing more than 250 (Art. 2 of the Directive) – were introduced. In these companies at least 40% of non-executive director positions or 33% of all director positions shall be occupied by the under-represented sex (Art. 5). The directive states that among candidates who are equally qualified in terms of suitability, competence and professional performance, priority should be given to women (Art.6, §3,). Furthermore, listed companies must annually provide information on gender representation on their boards of directors – published on their websites – and must indicate the measures devoted to the targets (Art.7). In case of violations by listed companies, Member States must lay down rules on applicable sanctions, which may include fines or the possibility for a judicial body to repeal a decision on directors’ selection (Art.8). In the meantime, Member States that have already introduced and enforced binding measures through their national legislation can maintain these provisions, in compliance with principle of subsidiarity (Art.12).
The directive on women on boards of directors is an important instrument to promote gender equality and support women’s participation in decision-making within companies. Nonetheless, it will be interesting to monitor whether, as many studies claim, the presence of women can really have a positive influence within companies. However, and in conclusion, it seems relevant to point out that the introduction of quotas within companies is only one tool – among many other strategies and policies – able to empower women in the employment market. One can suggest that quotas will be really effective only when coupled with other measures – such as programs fostering women inclusion in traditionally male-dominated fields and leadership positions, or policies ensuring equal pay or equal access to paid parental leave.
*L.L.B., University of Pisa
