Council and European Parliament agree to improve gender balance on company boards

(Source: Council of the EU and European Council)

The Council and European Parliament today reached a provisional political deal on a new EU law promoting a more balanced gender representation on the boards of listed companies.

Over the past 10 years, some progress towards equality in boardrooms has been made across the EU. Yet progress has been uneven and in October 2021, on average, only 30.6% of board members and a mere 8.5% of board chairs were women (up from 10.3% and 3% in 2011).

The Council and European Parliament therefore agreed that listed companies should aim to have at least 40% of their non-executive director positions held by members of the under-represented sex by 2026. If member states choose to apply the new rules to both executive and non-executive directors, the target would be 33% of all director positions by 2026.

In the case of member states that do not reach these targets, listed companies will have to put in place transparent procedures for the selection and appointment of board members designed to rectify the situation – such as a comparative assessment of the different candidates on the basis of clear and neutrally formulated criteria.

Possible national adjustments

A country which, before the entry into force of the directive, has either achieved progress coming close to the objectives or put in place equally effective legislation, can suspend the directive’s requirements related to the appointment or selection process.

Business benefits

Evidence has shown that more balanced boards make better decisions. Having more women in economic decision-making positions is also expected to boost gender equality within companies and society more generally. Allowing both women and men to fulfil their potential is crucial for economic growth and competitiveness in Europe.

Background and next steps

At the Council meeting of 14 March 2022, ministers of employment and social affairs reached a general approach, which cleared the way for negotiations with the European Parliament to start. Since then, three rounds of negotiations (trilogues) with the Parliament have taken place.

Within the Council, the agreement will first be submitted to Coreper for approval before going through the formal adoption procedure.

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