The threat of quotas to improve board diversity moved a step closer last week with EU Fundamental Rights Commissioner Viviane Reding telling the European parliament: “Equality in decision-making is not yet a fact … I do not rule out the possibility of putting forward legislation in this area.”
Speaking to the Guardian newspaper her spokesman , Matthew Newman, said that the Luxembourgeois commissioner is “giving companies a year to sort out imbalances. If they do not act, Brussels will consider legislation and other measures committing them to the sort of quotas that have recently been introduced in Spain and some German states”.
The Commissioner, who was previously Europe’s telecoms chief before taking up her equality and rights role at the start of the year, is prepared to impose quotas using new powers contained in the Treaty of Lisbon. It wouldn’t be the first time that Reding resorted to legislation to force a shift in corporate thinking. When telecoms companies resisted the Commissioner’s requests to address roaming mobile and data charges mandatory tariff caps were introduced and came into force earlier this year.
It’s not clear how quotas could work in the UK, however. According to Audrey Williams, head of discrimination law at law firm Eversheds companies, British companies have limited scope to blaze a trail in tackling under-representation because “In contrast to the position in countries such as Spain and Germany, UK equality laws do not allow the use of fixed quotas.”
Further UK legislation to encourage greater diversity could be in the pipeline though. In response to a question by Baroness Gould of Potternewton in the House of Lords, Baroness Verma speaking for the Coalition government said: “we have pledged to take action to promote gender equality on the boards of listed companies. However, we have more to do on the detail and in due course will be making an announcement setting out our future direction … it is all about engaging with business and business organisations. We will engage with all relevant partners in developing our programme to fulfil the commitment in the coalition agreement. Head-hunters and recruitment companies will be aware of the stronger provision in the revised UK Corporate Governance Code, published on 28 May this year, on the importance of boardroom diversity … we are working very hard to encourage people to work with us, rather than enforce an extra regulatory burden”.
Last Updated: 18 July 2010