EU Lawmakers outline new board diversity regulations
June 10, 2022
EU-listed companies to have at least 40% of their non-executive director positions held by women by 2026
New board diversity requirements have been outlined by the European Council and European Parliament, with lawmakers reaching an agreement on the legislation.
These regulations would require EU-listed companies to have at least 40% of their non-executive director positions held by women by 2026.
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If Member States choose to apply the new rules to both executive and non-executive directors, this would require 33% of all director positions to be held by women by 2026.
This could create a foundation to improve gender diversity and inclusion within the EU workplace creating a basis in which to promote equality within businesses.
As outlined within the European Commission’s 2021 report on gender equality in the EU, the presence of women on the boards of the largest publicly listed companies had increased where measures had been adopted.
In October 2020, women accounted for 37.6% of the board members of the largest listed companies in the six Member States with binding quotas. In comparison, 24.3% of board members were women in countries that had taken either soft measures or no action at all.
By establishing EU-wide targets for gender equality and inclusion within the workplace, it is hoped the figure will grow on a yearly basis across Member States.
Running alongside this target, an initiative has been introduced requiring companies that haven’t reached the objectives to report reasons why. Penalties for failure to comply could include fines or annulment of directors’ appointments.
The new agreement is subject to formal approval by co-legislators and once it enters into force, Member States will need to transpose its elements into national law within two years.
Ursula von der Leyen, president of the European Commission, said: “Diversity is not only a matter of fairness. It also drives growth and innovation. The business case for having more women in leadership is clear.
“After ten years, since the European Commission proposed this directive, it is high time we break the glass ceiling. There are plenty of women qualified for top jobs: they should be able to get them.”
Last Updated: 10 June 2022