The EU has agreed to launch a directive requiring larger companies to ensure corporate boards are 40% female.
The Council of the EU and European Parliament agreed that from 30 June 2026, listed companies with more than 250 employees operating in the EU will have to ensure a share of 40% of the “underrepresented sex” – usually women – among non-executive directors.
If member states wish to apply the new rules to both executive and non-executive directors, the target is 33% of all director positions by 2026.
The “provisional political deal” was reached yesterday on passing the new directive, which won’t apply to UK-headquartered companies but could influence progress on gender parity here if companies follow this example.
If companies cannot reach the targets, they must show that they have in place transparent procedures for the selection and appointment of board members to redress the balance.
On a national level, a country that has “achieved progress coming close to the objectives” or has put in place “equally effective legislation” can suspend the requirements of the directive related to the appointment or selection process.
The EU has been in discussions for 10 years over proposals to mandate gender quotas. In January this year, head of the European Commission Ursula von der Leyen urged the bloc to press ahead with imposing targets, saying “it’s time to move forward with this file”.
At a Council meeting in March, employment and social affairs ministers from member states agreed on a general approach, which was then negotiated with the European Parliament. There have been three rounds of negotiations since and the agreement will now be submitted to the ‘COREPER’ – the committee of permanent representatives – prior to formal adoption.
In October 2021, 30.6% of board members and 8.5% of board chairs were women across the EU, up from 10.3% and 3% respectively in 2011. But the EU said progress had been “uneven”, leading to what it described as a landmark agreement to introduce quotas.
The EU will not set out sanctions, indicating in a policy paper that these should be set by member states and be “effective, proportionate and dissuasive”.
Companies from the UK, Norway, France and Sweden are closest to having gender-balanced governance, according to the European Women on Boards gender diversity index.
Last month, Denise Wilson, chief executive of the FTSE Women Leaders Review, said many UK companies were “doing the bare minimum” to ensure gender parity at executive and board level, despite the fact that women held more than 39% of board positions at FTSE-listed companies in 2021.