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Tuesday, 06 March 2012 10:37

EU Quota on female board members

Written by  Jonathan Lord
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Business leaders have been urged to take "affirmative action" to improve female representation at board level voluntarily to prove to the European Union that compulsory targets are not necessary, according to Helena Morrisey, founder of the 30pc Club, which promotes gender equality.

She said: "Quotas actually undermine the principle of equality and are patronising to women. Even those countries with quotas are still struggling with genuine equality and there's evidence that shareholder value can be destroyed if quotas are imposed. Directors need to be there on merit.

"We encourage business leaders to take affirmative action in moving voluntarily towards a better gender balance at all levels in their organisations. Progress is already being made through self-regulation here in the UK and we expect this to accelerate. Investors don't want quotas, Boards don't want quotas and women don't want quotas."

Ms Morrisey warned against mandatory quotas after the EU announced a consultation on how to increase women's presence on corporate boards, warning that progress towards equality was too slow.

Mandatory quotas are a threat from the EU if member states fail to make sufficient gender progress at board level.

The EU's Justice Commissioner, Viviane Reding, said on Monday that at the current rate of change, it would take more than 40 years for women to hold 40pc of board positions in Europe's publicly traded companies.

Over the past 12 months, only 24 companies had signed a pledge to ensure that 30pc of their board positions are held by women by 2015. By 2020, the EU wants that figure to increase to 40 pc.

In the UK, companies are working towards a voluntary target, introduced by Lord Davies last year, to increase the percentage of women on FTSE 100 boards to 25pc, up from 12.5pc last year.

Figures released next week are expected to show that female board representation has risen to 15pc among Britain's top 100 companies - leading some to argue progress has been too slow.

But experts said mandatory quotas were not the answer, as although they appeared to "fix" the problem, they did not address the real issue of why more women did not take up the roles in the first place.

Norway has had binding quotas for a number of years, but there are few women below board level across the country's top companies. More recently Iceland, France, Spain, Italy and Belgium have introduced quota laws, and the Netherlands is expected to do so in July this year.

Audrey Williams, head of discrimination law at Eversheds said: "Inevitably any attempt to legislate at EU level will face stiff opposition. Years of argument and debate are inevitable as any draft Directive wends its way through the EU's legislative process. Despite the fact that any EU-scale change is some distance away, business leaders cannot afford to be complacent and demonstrating real progress through voluntary means and identifying what measure short of quotas have worked are key to resisting new laws to address the issue. "

However, not everyone is against quotas. Jean Stephens, chief executive of RSM International accountancy firm, said: "Proposals for European-level legislation to set binding targets for Women on Boards is both welcome and essential. Equality within the boardroom is drastically lagging and realistic quotas are a necessary evil to kick-start the changes needed to create a correct level of diversity."

Jonathan Lord

Jonathan Lord

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