Dr Joy A. Debski, Lecturer in Law, School of Law and Social Sciences, Robert Gordon University
Photo credit: André Corboz, via Wikimedia
Commons
Synoptic Data Inquiry and
Understanding the Directive
Although women
constitute about 51% of overall population in the EU, statistics
show a rather concerning reality that despite accounting for about 60% of
recent university graduates, women only account for 32.2% of board members and
8% of board chairs. Conversely, women hold
more part-time and lower-paid jobs, with 27.8%
employed part-time compared to only 7% for men, indicating limited
engagement in key economic roles. These
results point to a considerably low engagement of the women workforce in
critical economic roles.
The conversations and efforts to
mitigate the gender gap of women on boards within the European Union (EU) led
to the Union’s Gender
Balance on Corporate Boards Directive (directive) 2022. Member
States had until December 28, 2024, to
implement the directive, and companies (listed companies) must meet the
targets set out in the Directive by June 30, 2026. The directive sets the target
that at least 40% of non-executive director positions or 33% of all director
positions be held by the underrepresented sex (women). The directive, however,
accommodates some limitations, such as the provision that the priority of
women, when they are equally qualified with men, should not have automatic
application. Hence, the provision can be displaced by a candidate’s lack of
predetermined qualifications and the operation of other diversity goals that
the company seeks to attain (which must be objectively set and not be of
retrospective application) – paragraph 40 to the
preamble of the directive. The compulsory quota targets, even though
influential, may not ensure continued inclusion after the quota is met.
The Directive aligns itself with
existing frameworks such as Article
157 of the Treaty on the Functioning of the European Union (on equal pay)
and paragraphs 49 and 58 to the preamble of the Corporate
Sustainability Reporting Directive 2022/2464, which seek to minimize the
gender gap of women in professional roles.
Through its legislation, the EU is
attempting to bridge the gender gap. However, women now have their roles in
ensuring that the goals of the directive for a fairer and more diverse
corporate environment in the EU are realized. Women need to be informed of the
inherent limitations, and they can harness the benefits of diversity in advancing
their careers.
Steering Out of the Limitations and
Leveraging Opportunities
Enhance Qualifications and Skills: Despite the boldness of
the directive, especially regarding the priority rule, equal qualifications of
candidates must first be met before the consideration of applying priority to
women candidates. (all things being equal). This makes it imperative that women
must “accelerate action”
and decisively engage in preparations that align with corporate board roles, in
order to increase competitiveness. Hence, thoughtful investment in professional
development, such as undertaking chartered secretary and governance
professional qualifying exams organised by specialist and accredited institutions,
may be a crucial step to take in preparation for management roles.
Additionally, board-relevant skill acquisition (such as professional experience
in managerial tasks, international experience, leadership financial literacy,
strategic planning, governance, etc) are strongly advised. Paragraph 39 to the
preamble of the directive points to this clearly.
Pursue Board Positions: The directive as
transposed by Member States must be followed by decisive career actions by the female
population, boldly disregarding assumptions about (fear of) traditional
discrimination. With the directive promoting a minimum quota representation of women
in directorship positions to address inequalities, women should actively pursue
roles in corporate boards beyond listed companies after acquiring board-level qualifications
and experience. Despite the odds (non-automatic application), the priority rule
for equally qualified candidates crafts a more favourable environment for women
to be considered for these positions.
Monitoring Company Compliance: women should themselves,
be the first defenders of the provisions of the directive by being diligent
with the recruitment process and proactive in their inquiries about set
recruitment standards. Knowledge of how exactly the directive is transposed by
the country that pertains the candidate is important. This will aid in checkmating companies against
absolute non-compliance and unjustified application of exceptions to choose
against female candidates for board roles – see the requirement of the
directive in paragraphs
42 – 44 of the directive’s preamble.
Explore litigious avenues: The directive empowers
members of the underrepresented sex to demand the company to provide their
criteria for selection into the board. Hence, upon any detection of
discrimination or non-compliance with the directive, or the non-disclosure of
full criteria or misleading disclosure; a valid recourse to court is
possible. The application of positive
action measures (as an instance) in the protection of underrepresented sex in
recruitment, has obtained judicial interpretive attention that makes it
permissible in some instances. For instance, in the case of Marschall
v Land Nordrhein- Westfalen (2000), upon the positive action measure being
challenged, the court ruled that the positive action measure which favoured
women is permissible (as long as the
recruitment and assessment criteria were objectively met) and its application does not amount to
automatic preference over men. The
earlier case of Kalanke v
Freie Hansestadt Bremen further strengthens a stance against absolute
application of the positive action measure. While the possibility of
approaching the court upon non-justified misapplication of the priority rule is
noted, these two cases are of guidance to any litigious move in determining the
permissiveness and appropriate application of the positive action measure or
otherwise.
Other strategies include ensuring professional visibility, participating in specialized training programs designed for prospective corporate board members, and strategically networking with women advocacy groups, for awareness and support for rights enforcement. Also, women who are current board members and CEOs must endeavour to mentor and support ideas of inclusiveness in their different capacities.
Conclusion
On a wider economic justification of
gender equality, the European
Institute for Gender Equality (EIGE) forecasts that by the year 2050,
increased EU (GDP) per capita of 6.1 - 9.6% (EUR1.95 to EUR3.15 trillion), will
be on account of improving gender equality. This further envisages the creation
of about 10.5 million jobs in 2050. To achieve this positive reality within the
context of EU Directive 2022/2381, listed (and other) companies within the EU
must be poised to bridge the employment gap between women and their
counterparts in their Boards. While the efforts of the directive hinges on
quota targets and deadlines, long-term cultural changes toward inclusivity in
corporate governance are recommended, and women have critical roles to play in
the directive’s broader success. The laws are in your favour; what are you
doing better to take benefit?
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