Lords call to reject EU quotas for women on boards

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The House of Lords will recommend that the Government should oppose European Union proposals to introduce quotas for women on company boards. In its Women on Boards report released today, the Lords EU Committee concludes that quotas would risk setting back any voluntary efforts already in place.

The committee believes that mandatory quotas would “generate negative perceptions among women and business leaders and would not address the root causes of inequality”, and has instead called for measures to monitor the number of women in senior positions to be brought forward. It wants member states to be able to highlight good and bad performers in terms of gender equality, and indicates that the Lords would only support the introduction of quotas as a last resort.

One of the key barriers to introducing quotas, according to the committee, is that any correlation between a higher proportion of women on the board and better financial performance is yet to be proven. However, the committee recognised that there are many other strong business reasons for having more women on boards, such as an organisation being more reflective of its customers, challenging established thinking and demonstrating to staff that talent will be developed regardless of gender.

It also acknowledged that while UK employers are embracing steps to increase boardroom diversity, progress has been slow. The chairman of the EU Committee, Baroness O’Cathain, said: “Although the committee welcomes the positive steps already taken by many member states to ensure more gender-balanced boards and senior management teams – particularly in the UK – the number of women at the top remains far too low.

“More balanced boards are to everybody’s benefit. We found that they will be more able to tap into the wealth of available talent in the labour market, provide a broader spectrum of ideas and improve corporate governance. However, we are not persuaded that the only way to stimulate change is through the introduction of EU quotas.”

The committee pointed to the work already done by Lord Davies in introducing a target of 25% female board representation on FTSE 100 companies by 2015 and the original consultation behind the suggested quotas by EU Justice Commissioner Viviane Reding, which suggested that EU employers increase the proportion of women on boards to 30% by 2015 and 40% by 2020.

While it considers Davies’ target to be too low, it suggests that 40% representation by 2020 may be overambitious and that a target of 30% women on boards by 2017 would be worth working towards.

The committee recommended that corporate governance regimes in member states should be reformed so that companies are obliged to report at national level how many women they employ at board level. It also proposed that the voluntary code of conduct on gender equality used by executive search companies in the UK should be implemented across the rest of the EU.

Baroness O’Cathain added: “More than one-third of people appointed to FTSE 100 boards last year were women, and FTSE 100 companies are expecting to see a quarter of their board positions taken by women by 2015. Across the EU as a whole, the proportion of women on boards has risen by 16% since 2010. Business leaders and national governments need to be given a chance to build upon these efforts before we consider quotas.”

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