yesterday’s proposed directive from the
European Commission (EC) implementing a watered-down version of
the controversial women on boards quota
put forward earlier this year.
But there are hesitations over how effective the plan will
be in boosting female representation where it is needed most
– executive roles.
Yesterday’s proposed legislation imposes a
non-binding target on larger listed companies to have women in
40% of their non-executive director roles by 2020. European
justice commissioner Viviane Reding had initially pushed for a
mandatory 40% target with tough EU-level sanctions.
"The original proposal was too inflexible. This will be
easier for companies to work with," said Linklaters partner
The softer, objective-style quota was needed to gain the
political support necessary to become law.
Reding’s original plan was widely criticised for
encouraging tokenism, including by the
only two FTSE 100 female CEOs.
Under the EC’s plans, European listed companies
with at least 250 employees or $50 million annual turnover must
apply non-discriminatory objective criteria when appointing
It means that when two equally-qualified candidates of
different gender are being considered for the role, the
under-represented – or female – candidate
should be hired.
This tie-break system is similar to that seen in the UK
Equality Act. The difference is that the EC directive
necessitates the tie-break, whereas the UK statute provides it
as an option.
Considering the most ardent opposition to
Reding’s enforced quota came from the UK, use of
an English law concept goes someway in making the directive
"You can see how Reding tweaked that accepted principle, by
making it mandatory rather than an option (as it currently is
in the UK)," said Fraser Younson, partner at Berwin Leighton
Paisner in London
"It’s more difficult for the UK to object now
because the new Reding proposals now allow the best qualified
person to be appointed to the role," he added.
There are, however, questions over how effective the
directive will be in breaking the so-called glass ceiling.
First, the changes are focused on supervisory or
non-executive positions. Increasing the number of women in
senior decision-making roles requires a stronger emphasis on
"Getting the executive balance is going to be trickier than
with non-executive roles," said Hayes.
Here, the directive improves on Reding’s
original plan. It includes a so-called flexi quota, which is a
voluntary obligation to set executive director targets.
This is similar to the Australian model which has produced
impressive results in a relatively short period of time,
according to a note prepared by Paul Hastings partners Tara
Giunta and Suzanne Horne.
Second, the 40% goal by 2020 is still ambitious, and
it’s not clear there is a pipeline of female
candidates wanting to fill these roles.
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