27 September 2023

‘Truly historic’: EU passes gender equality law

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Madeline Hislop* says the European Union has just passed a law for gender equality on company boards.

Large publicly listed companies in the EU will need to increase the presence of women on their boards by July 2026, after the EU parliament passed legislation to introduce transparent recruitment procedures.

At least 40 per cent of non-executive director positions or 33 per cent of all director positions will need to be occupied by women by the end of June 2026.

The legislation was passed on Tuesday, a decade after the initial proposal was presented to the EU parliament.

The new rules, known as the Women on Boards Directive, will require companies listed on the stock exchange to provide annual reports on gender representation on their boards.

If the objectives have not been achieved, they must outline how they intend to achieve them.

Member States of the EU will be required to enforce sanctions on companies that fail to comply with open and transparent appointment procedures.

Evelyn Regner, from the Social Democratic Party of Austria, said the EU’s adoption of the Women on Boards Directive is a step forward for gender equality.

“We are finally giving women a fair chance to occupy top corporate positions and improving corporate governance,” Regner said.

“Women are innovative, smart, strong and capable of many things.

“We are removing one of the main obstacles to women getting ‘top jobs’: men’s informal networks.

“Competence will count more than ever in a selection process, as will transparency.”

Lara Wolters, a politician from the Netherlands, said it will help make gender equality the norm in companies across the EU.

“In the ten years this directive has been on the shelf, meeting rooms have continued to be predominantly the domain of men.

“But in countries where binding quotas have been introduced, they have been named considerably more women,” Wolters said.

“With this law, these countries will no longer be the exception, and gender balance in boardrooms of listed companies will become the norm across the EU.”

According to the new rules, small and medium-sized enterprises with less than 250 employees will be excluded from the scope of the directive.

In 2021, 30.6 per cent of board members at the largest listed companies in the EU were women, and there are big differences between Member States of the EU when it comes to women’s representation on boards (from 45.3 per cent in France to 8.5 per cent in Cyprus).

France is the only Member State to achieve over 40 per cent of women on its company boards.

Data shows that in 2022 efforts to achieve gender balance have lost momentum, with less than 1 in 10 of the largest listed companies in the EU have a female Chair or CEO.

EU Commission President Ursula von der Leyen called it a “truly historic and moving moment”.

“The glass ceiling preventing women from accessing top positions in companies has been shattered,” she said.

*Madeline Hislop is a journalist & editor of The Sporty Wrap, a weekly newsletter published by Women’s Agenda.

This article first appeared at womensagenda.com.au.

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