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PES Women President’s blog

Despite a step in the right direction, we need a stronger directive on women on boards!

This is what I recalled on 4 December at the lunch debate organized by the Parliament magazine together with Aviva entitled “Women on boards: What is the right approach for Europe?”

First of all, I thanked Commissioner Reding, also present at the debate, who has managed to finally introduce legislation at European level, despite the lack of support of some of her colleagues and the strong opposition of about ten Member States.

PES Women has long been calling for binding legislation on this issue as a necessary tool to advance women’s representation in economic decision-making. For the record, before presenting binding legislation, Vice-President Reding asked publically listed companies to voluntarily increase the number of women in company boards by signing a pledge on her website. Only 24 companies did so! This clearly shows that self regulation fails especially when it comes to gender equality. Consequently, with this proposed Directive, Commissioner Reding has made a breakthrough for women’s rights, putting the equal representation of women and men in decision-making on top of the EU agenda, which is a very positive first step.

Nevertheless, the proposed Directive adopted on 14 November by the Commission is very weak. As President of PES Women, but also in my capacity as a Member of the European Parliament, I together with my colleagues will now do my best to ensure that major amendments are included in the text through the EU co-decision procedure.

The current text emphasizes the need for a subsidiarity approach, which shows that the European Commission is not convinced that European approach is the most efficient one. Moreover, the Directive does not impose common sanctions, only putting forward a non-exhaustive list, and leaves it up to the Member States to decide on their own measures. The only requirement for the Member States is to provide “effective, proportionate and dissuasive sanctions”. This is a first good step but we need to go further and to have common European sanctions in order to make sure that this Directive promotes the participation of women in high level positions to an equal degree in each Member State.

Moreover, the European Commission only recommends the introduction of quotas for non-executive boards, which is the lesser body when it comes to decision-making. Executive boards of directors are only encouraged to apply “flexi-quota”, i.e. self-regulation. Therefore, the Directive is not innovative compared to the current state of play. I disagree with the argument invoking freedom of conducting a business and property rights, as there is an equal right of women, which is 50% of the population and 60% of university graduates, to be equally and fairly represented in decision-making. Freedom of running a business should not be synonymous with the exclusion of half of the population. It is then the responsibility of the legislator to reduce this unbalance, something that this singularly Directive fails to do.

I recalled that all Small and Medium Enterprises (SMEs) are excluded from the current text, even if listed on stock exchanges. So, this Directive will only apply to 5000 companies in the EU, which is an insignificant number compared to the amount of existing companies. I thus called on my colleagues in the European Parliament to amend the text by including smaller companies (more than 50 employees) in the scope of the Directive as well.

Furthermore, I also strongly disapprove of the time limit imposed on the directive by the European Commission. It will stop being in force as of 31 December 2028, but I know from political experience that gender equality can never be taken for granted. This time limit could most likely lead to a backlash and a decrease of women in decision-making positions, as we have sadly witnessed in the political field.

Finally, I do not think that quotas are a magic tool, which will alone solve the problem of gender imbalance in decision-making. But I am convinced that using quotas in addition to other measures and incentives, such as including a gender balance target in corporate governance codes and companies’ annual reports, favouring companies with a gender balanced board in public procurement procedures, facilitating the organisation of trainings, capacity-building and exchange of best practices, setting up databases of interested and competent women, networks and mentoring systems, make the rules of recruitment in boardrooms more transparent and democratic as well as addressing the deeper roots of gender inequalities in decision-making will help to change the mentalities and create women-friendly workplaces, that contribute towards long-term positive effects of investing in social progress.

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