What is the gender balance on company boards?

October 17, 2022 The Council of the EU adopted the final version of the directive on gender balance on company boards. The new EU rules, which need to be transposed into national law, promote a better gender balance on the boards of listed companies across the EU.

„The new rules will help remove the career obstacles that women often face. Companies, I believe, would also benefit greatly if women had the opportunity to realise their potential in decision-making positions. The positive impact of the new regulations will certainly be felt at all levels of national economies – Marian Jurečka, Czech Deputy Prime Minister and Minister of Labour and Social Affairs.

The new directive, which will have to be transposed into national law, stipulates that by 2026 at least 40% of non-executive directors in listed companies should be held by members of the under-represented sex. If Member States wish to apply these new rules to both executive and non-executive directors, the target for 2026 will be 33% of all directorships.

The Directive stipulates that listed companies that fail to achieve their objectives will have to adjust their selection process. They will have to put in place fair and transparent selection and appointment procedures, based on a comparative assessment of individual candidates on the basis of clear and neutral criteria. Where it is necessary to choose from among candidates with equivalent qualifications, companies should give priority to the under-represented sex.

A Country which comes close to achieving the objectives of the Directive or introduces equally effective provisions before the entry into force of the Directive may suspend the application of its requirements concerning the appointment or selection process.

Once a year, companies will have to report on gender representation on their boards and the measures they take to reach a percentage of 33% or 40%. Also once a year, Member States will publish a list of companies that have achieved the objectives set out in the Directive.

Equal treatment and equal opportunities for women and men are enshrined in the EU Treaties, as well as in the European Pillar of Social Rights proclaimed by the Council, the European Parliament and the European Commission in 2017.

On 14 March 2022, the Employment and Social Affairs Council finally reached its position on the new rules. On 7th June the representatives of the Council and the European Parliament concluded the negotiations on the compromise text, which has just been formally adopted by the co-legislators.

Member States have two years from the entry into force of the Directive to adopt the required national measures. The Directive will enter into force on the 20th day following its publication in the Official Journal of the European Union. It has yet to be adopted by the European Parliament.

Among GRADUATES of EU universities, about 60% are women, but in the process of economic decision-making, especially at the highest levels, there are disproportionately few of them: 31.5% of women on company boards, 8% of women as CEOs on company boards (source: The largest listed companies in the EU, EIGE survey, June 2022).

The EU believes that the increasing participation of women in the labour market is essential in order to:

  • boost economic growth in Europe;
  • increase the competitiveness of European companies;
  • address the demographic challenges in Europe.

It is estimated that a greater presence of women on company boards and therefore their participation in the economic decision-making process will have a positive impact on the employment of women in companies and on the economy as a whole.

Moreover, only a measure adopted at EU level can ensure equal competition across the Union and prevent practical problems in business activities.

Despite evidence that gender balance has a positive impact, and despite EU legislation that prohibits discrimination on grounds of sex, there are still far fewer women than men on company boards in the EU. This imbalance is particularly striking in the private sector, especially in listed companies.

The EU is working to ensure a more balanced representation of women and men on the boards of listed companies. While efforts towards greater equality are ongoing, they are still slow and vary from one Member State to another.

Listed companies that fail to meet these objectives will have to modify the process of selecting candidates for company boards.

They will have to put in place fair and transparent selection and appointment procedures, based on a comparative assessment of individual candidates on the basis of clear and neutral criteria. Qualifications and substantive achievements will remain the key criteria.

The new directive provides:

  • a minimum level of harmonisation of corporate governance requirements, as appointments will have to be based on objective criteria
  • safeguards to ensure that there is no unconditional, automatic promotion of the under-represented sex
  • giving priority to candidates with the same qualifications belonging to the under-represented sex, unless an objective assessment tilts the balance in favour of the candidate of the opposite sex.

Source: www.consilium.europa.eu

Source: https://odpowiedzialnybiznes.pl/aktualno%C5%9Bci/rownowaga-plci-w-organach-spolek-ue-przyjela-nowe-przepisy/

Region Gdański NSZZ „Solidarność”

Projekt otrzymał dofinansowanie z Norwegii poprzez Fundusze Norweskie 2014-2021, w ramach programu „Dialog społeczny – godna praca”.

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