E.U. Considers Quotas for Women in Boardrooms
New York Times 04 March 2012
By JAMES KANTER
BRUSSELS — Frustrated that her previous efforts to get more women into the top echelons of European business have not yielded stronger results, Viviane Reding, the senior justice official in the European Union, was to announce a new effort Monday that could result in legislation requiring that women occupy up to 60 percent of the seats on corporate boards.
France and other countries with legally binding quotas have made the most progress in placing women in top business positions, Ms. Reding said during an interview Friday in advance of her announcement. E.U.-wide rules were now needed, she said.
“Personally, I don’t like quotas,” Ms. Reding said. “But I like what the quotas do. Quotas open the way to equality and they break through the glass ceiling.” Countries that have quotas “bring the results,” she said.
Ms. Reding has long campaigned for major changes in European boardrooms and had given industry “a last chance” to improve its record on placing women in top management.
Having now concluded that self-regulation has failed, Ms. Reding has set her sights on legislation that could, if enacted, drastically speed up a revolution in the position of women in the workplace that began many decades ago but has so far failed to deliver genuine equality in many areas of business.
In the announcement to be made Monday, Ms. Reding will call for a new round of consultations with governments, trade unions, companies and civil groups. The move comes a year after she called on companies to take voluntary steps to increase the representation of women on boards to 30 percent by 2015 and to 40 percent by 2020, by replacing departing male directors.
In the end, only 24 companies signed up to that voluntary measure — “a disappointment,” she said.
Yet that poor showing has handed Ms. Reding — who has gained stature by successfully lowering the cost of cellphone calls and confronting government leaders over the mistreatment of minority groups — an opportunity to prepare the ground for more sweeping proposals.
Ms. Reding said that the severe economic downturn in Europe that has pressured companies to focus on their bottom lines was not responsible for the failure of her voluntary initiative. “It is really a question of society,” she said.
As of January, only 3.2 percent of the presidents and chairmen of large companies in the European Union were women, and women occupied only 13.7 percent of the seats on the boards of large companies, according to a report by her department of the European Commission to be issued on Monday.
Ms. Reding said she had the support of many members of the European Parliament, which had already backed the need for legislation if companies failed to make sufficient progress through self-regulation. And on Monday she will claim popular support from citizens, with a new poll showing that 75 percent of respondents favored legislation to balance gender representation on company boards.
TNS Opinion & Social conducted the poll for the commission from Sept. 3 to Sept. 11, 2011, through phone and face-to-face interviews with 26,856 people.
Ms. Reding said France, which at the beginning of last year adopted quotas requiring that women hold 20 percent of board positions by 2014, and 40 percent by 2017, had been responsible for almost half of the 1.9-percentage-point increase in women on boards in Europe from October 2010 to January 2012. That growth far outpaced a rise of 0.6 percentage point over the past decade.
Under the French law, elections of board members among noncompliant companies in the country are nullified. Similar legislative initiatives are under way in Belgium and other E.U. countries. In Italy, one-third of a company’s board must be women by 2015 or the business will face fines of up to €1 million, or $1.3 million, and the nullification of board elections. The Netherlands and Spain have legal recommendations, but no sanctions for laggards.
Ms. Reding said that the consultations, beginning Monday and ending on May 28, would determine the proportion of women that should be on boards under any E.U.-wide legislation; whether quotas should apply to state-owned companies as well as publicly listed ones; whether both executive and nonexecutive boards should be covered by the rules; and what sanctions should apply to companies that do not meet the objectives, and if there are circumstances where exceptions are necessary.
“Which objectives (e.g. 20%, 30%, 40%, 60%) should be defined for the share of the underrepresented sex on company boards and for which timeframe?” the commission will ask, according to a draft copy of the consultation document seen by the International Herald Tribune. Any resulting proposal would need to be approved by governments and by the European Parliament.
The consultations seem certain to yield widely varying responses.
Cécile Gréboval, the secretary general of the European Women’s Lobby, an organization of women’s associations, has said that Ms. Reding should aim for “radical change” with French-style binding measures that deliver “parity in boardrooms.”
But the European Round Table of Industrialists, a forum for the chairmen and chief executives of major multinational companies, has warned that big divergences among sectors and national traditions meant any measures should remain voluntary.
“Societal changes take time,” said Carlo Bozotti, the chief executive of STMicroelectronics, a semiconductor company, and the head of a group at the Round Table looking at the issue. “There is no one-size-fits-all solution for industrial companies from multiple sectors, of various structures, and from diverse cultural backgrounds,” he said.
Mr. Bozotti’s company says 9.8 percent of the people in leadership positions worldwide are women, one of the lowest figures in a group of more than 20 companies including Siemens, of Germany, and Total, of France, that are involved in a voluntary effort by the Round Table to publicize targets. STMicroelectronics, which is based in Geneva but has manufacturing and design centers across the European Union, wants to increase that figure to 15 percent by the beginning of 2015.
Ms. Reding acknowledged that there was “a fierce debate in Germany” in particular over the wisdom of mandatory measures. “Let all those who are concerned come in and say how we should proceed,” she said.
Women make up about 15.6 percent of boards of large listed companies in Germany, according to the commission. The figure is about one-quarter in Finland, Latvia and Sweden, and just over one-fifth in France. Malta, with 3 percent, and Cyprus, with 4 percent, were at the other end of the spectrum. The numbers are also low in Greece, Estonia, Italy, Portugal and Hungary.
While the European average compares favorably with most of the rest of the world — only the United States has more women on company boards, about 16 percent — the commission said that bridging the gap was an economic necessity for Europe to compete effectively in the 21st century.
Women comprised 60 percent of university graduates yet they occupied a paucity of top business positions, it said. Correcting the imbalance and using that pool of talent would bring significant economic benefits as the population ages, birthrates fall, and the availability of skilled labor declines, it said.
“Women enter the labor market better equipped than men, but their level of representation declines in senior positions,” the report said.
E.U. legislation also would diminish the chances that companies encounter conflicting rules in different countries, the report said. “Companies need legal certainty,” it said.
There is plentiful evidence from business consulting firms including McKinsey & Co., and from Catalyst, a nonprofit research group, that companies with gender-diverse management teams experience higher growth in their share prices, better-than-average operating profits, and outperform their rivals in terms of sales, return on investment capital and return on equity, according to the report. That research showed that women asked more questions and made fewer reckless decisions, proving that “women are not a cost, women are a benefit,” Ms. Reding said.
