On Tuesday, 7 June 2022, the EU legislators reached agreement in the negotiations on the Women on Boards Directive. From 2026, listed companies must fill at least 40% of their board positions with women or alternatively must have an average share of women of 33% for both executive boards, i. e. supervisory board and corporate board.
After the European Council had adopted a general approach in mid-March 2022, the negotiators of EU Parliament, Council and EU Commission were able to agree on a – long overdue – Women on Boards Directive last week. Ursula von der Leyen is pleased about the successful deal, as “it is high time we break the glass ceiling”. Evelyn Regner, Vice-President of the European Parliament and herself one of the two chief negotiators, who campaigned for the Directive, which the Council had placed on halt for a whole decade: “Since I first worked on the proposal in 2012, we have progressed and now we have a directive for equal chances, fair selection processes and finally more women in the decision-making of companies!“
However, the compromise is not totally without loophole, as the Directive does not comprise any clear sanctions. It is up to Member States to provide for “effective, proportionate and dissuasive” sanctions to impose on companies that do not adhere to the Directive. The list of sanctions, however, only includes possible penalties. “For example, we have suggested that these companies will be excluded from tenders or will have to pay a fine”, remarked the second chief negotiator of the European Parliament, Lara Wolters. In addition, the final compromise will include an exception clause, according to which those Member States are exempt, which have already implemented similar effective measures.
The main element of the new Directive is a transparent selection procedure regarding the appointment of top-level positions in listed companies. The aim is, where two candidates are equally qualified, preference shall be given to the candidate of the underrepresented sex: “The selection procedure must be so objective that women are not continuously overlooked by old boys’ networks”, says Regner. Current figures provided by the European Institute for Gender Equality (EIGE) show: The targeted objective of 40 % women on supervisory boards is currently only fulfilled by five countries - France, Belgium, Italy, Portugal, and Sweden. Hence, the Chamber of Labour welcomes the agreement regarding mandatory targets. According to AK Expert Christina Wieser, the “principle of voluntariness has long failed. Genuine progress requires the introduction of quotas”. This has been confirmed by the current Women.Management.Report from January 2022: since the implementation of the gender quota in Austria in 2018, the share of women on supervisory boards of listed companies has increased from 22.4 % to currently 35.1 %. However, a need to catch up is particularly evident in respect of corporate management, criticises AK-President Renate Anderl: “Compared to supervisory boards, when it comes to management, women are still few and far between.”
That women are more frequently represented in controlling bodies than in decision-making bodies is not purely an Austrian phenomenon: As of June 2022, the EU average is 20,6 %. Thus, the need to catch up is huge. In 2021, France set a good example by implementing a management quota, i.e. for executive directors and senior managers in companies with more than 1,000 employees. A target rate of 30 % for board positions to be filled by women has been set to be achieved by 2027 and of 40 % by 2030.
From the Chamber of Labour‘s point of view – following the example of France – in addition to a supervisory board quota of 40 %, an additional separate gender quota of at least 33 % for corporate boards of listed companies should also be introduced at European level. To give these urgently needed gender-political measures the necessary teeth, the Directive itself should include sanctions in respect of non-compliance, whose application must be mandatory. The Chamber of Labour demands that Austria advances the necessary further development of the legal framework beyond the scope of the Directive; for example, further improvements such as the legal claim to a suspension period in case of maternity and parental leave or care period are needed to enable women’s careers up to the executive board.