Companies listed on stock exchanges in the EU would have to bring in transparent recruitment procedures so that by 2020, at least 40% of their non-executive directors are women or face penalties, under a draft EU directive announced yesterday.
The resolution was passed by a majority of 459 in favour to 148 against. It calls for member states to ensure that listed companies take effective and binding measures to guarantee equal access for both women and men to non-executive positions on boards so as to ensure that by 2020, at least 40% of non-executive directors' positions are held by women. Public companies would have to reach the target by 2018.
While qualifications and merit should remain the key criteria, MEPs said that where candidates are equally well qualified, priority should go to the candidate of under-represented sex. Currently only 17.6% of non-executive board members of the EU's largest companies are women.
Companies that fail to abide by the new rules will be required to explain why and notify competent national authorities on the measures taken and planned to achieve the target in future. In a change from earlier proposals, the new requirements would apply even in companies where less than 10% of the workforce is female. However, they do not apply to small and medium-sized enterprises (SMEs), although MEPs want to see member states encourage improvements in gender balance on their boards as well.
MEPs said they wanted to see penalties, including fines, imposed for failing to follow transparent appointment procedures, rather than for failing to achieve the target. Possible sanctions, which MEPs say should be mandatory, could include exclusion from public calls for tenders.
Viviane Reding, the EU's Justice Commissioner, said: 'Europe needs strong rules to tackle the gender imbalance in company boardrooms. The Parliament has made the first cracks in the glass ceiling that continues to bar female talent from the top jobs. The Council of Ministers, the EU's second Chamber, should now rise to the challenge and make swift progress on this draft law, which places qualification and merit centre stage.'
