European Boardroom Quotas

Proposals have yet to be drawn up, but already conservative forces are rallying against the imposition of European-wide quotas for women on the boards of publicly listed companies.

A group of business ministers from nine countries (enough to block the measure) have written to Viviane Reding, EU justice and human rights commissioner, invoking the subsidiarity principle to argue that the issue should be dealt with at national level.

It’s instructive to note that the argument being made is jurisdictional rather than substantive, but even if the issue is kicked into the long grass at European level, efforts should be made to make and win the argument for quotas on a state by state basis.

Quotas are accused of being unworkable, unfair, and even economically dangerous. In fact, all the evidence shows they are the only policy that can ensure equality of opportunity and drive business performance.

Here’s why:

  • We all want a meritocratic system, but with men making up 87% of board members in Europe, doing nothing is not delivering one.
  • This means we already have a system of quotas which is hugely unfair to professional women, as well as a terrible waste of female talent.
  • We have to decide how to best correct this injustice, and a 40% quota is actually pretty conservative, given that women make up half of the population.
  • Research suggests that diverse teams are more effective, and that companies with diverse boards perform better. With this in mind, even if women were inferior candidates on an individual level (they’re not), this would be a policy in the interest of companies and their shareholders.

In fact, this argument, that more women on boards increases meritocracy and improves economic performance, has largely been won. Opponents of quotas tend to argue that the same effects could be achieved with voluntary targets.

Is this true?

Well, Spain introduced a voluntary system in 2007 for all large companies (those with over 250 workers). The target was for 40% female representation by 2015, but results have fallen far short of this, and, after initial progress, the figure has stalled at around 19%.

In contrast, 40% quotas with the threat of sanctions (including company dissolution) have been introduced to great success in Norway. The natural pace of change before the introduction of quotas would have meant waiting 100 years for the same level of representation!

Europe is in the midst of a crippling economic crisis and correcting the underrepresentation of women at the top levels of business is a concrete step that we can take to boost economic performance. It makes no sense to sit on our hands and wait for a century and hope this problem will solve itself. The time for action is now.

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