The European Commission has proposed that companies whose non-executive directors comprise of more than 60 per cent men to prioritize the hiring of women when choosing between candidates of equal merit.
The proposal aims to have a minimum of 40 per cent of non-executive members on company boards to be women. The goal is to have this achieved by 2018 in public-sector companies and 2020 in the private sector. Annual reports on the composition of these boards will be required and sanctions could be imposed if the evaluation is negative. Those companies would then have to explain the measurements they intent to use to achieve the quota.
The quota will apply to companies listed on the stock exchange as of November 2012.
“Company boards in the EU are characterized by persistent gender imbalances, as evidenced by the fact that only 13.7% of corporate seats in the largest listed companies are currently held by women (15% among non-executive directors),” the proposal reads. “progress in increasing the presence of women on company boards has been very slow, with an average annual increase in the past years of just 0.6 percentage points.”
This proposal has been on the table for years, with previous attempts to pass it blocked by certain European countries. According to the file, it is the issue of state independence is intertwined.
“Although there is a broad consensus across the EU in favour of taking measures to improve the gender balance on company boards, some Member States consider that binding measures at the EU level are not the best way to pursue the objective and would prefer either national measures or non-binding measures at EU level. They take the view that the proposal does not comply with the principle of subsidiarity,” the file reads.
The interesting part of this proposal is that it only applies to “non-executive” roles rather than direct managerial positions. In fact, the proposal actually goes on to say that the reason for this is to minimize interference with “day-to-day management of a company.” While I understand that most companies prefer to hire on a merit system, especially for positions of power and management; the proposal already indicates the priority of hiring a female candidate should be taken when two candidates have the same qualifications. This focus on “non-executive roles” may actually encourage companies to hire more women, but it also reinforces the idea that top positions are reserved for men.
Why not say boards must be comprised of at least 40 per cent of both sexes. That way, it encompasses all roles and positions within the board? This proposal will be discussed over the next few days; which means there is a possibility for amendments and further specifications.
If the EU is really concerned about gender parity on boards or in positions of powers within big companies, it would step up with a stronger proposal that calls for real equality rather than a piece of paper that placates to the feminist cause without actually creating change.
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