The problem of male-dominated boardrooms is by no means new. However, it has lately assumed heightened prominence due partly to ongoing government-backed reviews and partly to policy development at a European level.
The Coalition Agreement set out the Coalition’s equality programme, including a commitment to “look to promote gender equality on the boards of listed companies”. The government expanded on this in its Equality Strategy, pledging to “work with business to develop business-led measures to promote more women on to the boards of listed companies”. Following this, Lord Davies of Abersoch was invited to lead a review, to assess what could be done to allow more women to reach board level positions.
The Davies reports
Lord Davies published his first report in February 2011. At that time, women made up 12.5% of the members of FTSE 100 corporate boards. The report’s headline recommendation is that “FTSE 100 boards should aim for a minimum of 25% female representation by 2015”; it is against this that progress towards Lord Davies’ objectives is most often measured.
Lord Davies’ second annual progress report, published during April 2013, identified a number of positive steps towards board gender balance. These included an amended UK Corporate Governance Code, requiring companies to report on their diversity policies, and a voluntary code of conduct for executive search firms, which aims to see more female candidates recommended for board positions. At the time of the April 2013 report FTSE 100 boards were 17.3% female.
The current picture
The Professional Boards Forum’s BoardWatch tracks UK female board appointments against Lord Davies’ targets. BoardWatch’s latest data, from October 2013, indicate that 19.0% of FTSE 100 directors are women, compared to 12.5% at the time of Lord Davies’ first report. The corresponding figure for the FTSE 250 is 14.9%, up from 7.8% in 2010. In response to the BoardWatch data, the Business Secretary, Vince Cable, said he was confident Lord Davies’ target would be met.
A more recent assessment by the Cranfield School of Management reports largely identical figures; the highest level of female board representation since it began monitoring the situation in 1999.
On 14 November 2012 the European Commission adopted a law which would, if enacted, oblige publicly listed companies to maintain at least 40% female boards. Companies failing to meet this would be required to prioritise qualified female candidates. The law would apply only to supervisory boards of public companies with small and medium enterprises exempt.
Almost one year later, on 14 October 2013, the European Parliament’s Committees on Legal Affairs, and Women’s Rights and Gender Equality, voted to support the Commission’s proposal. In order to become law, the proposal needs to be adopted jointly by the European Parliament and the Council of the European Union. A European Parliament debate on the proposed law is due to take place in Strasbourg at the end of November.
On the same day as the Committees’ votes on the proposed law, the Commission published a report on “women in decision-making”. The report found that, in the UK, women account for 18.5% of board members in the largest publicly listed companies, compared to the EU average of 16.6%. Finland topped the list with 29.1%. Thus, not one EU Member State is close to the Commission’s 40% objective.
The Commission report compared this to the picture in Iceland and Norway, with female board representation put at 48.9% and 41.9% respectively, noting both “have adopted legislative quotas”; a reminder that the UK’s current business-led approach is conducted in the shadow of potential legislative intervention.
This article has been written to coincide with Parliament Week 2013 which has the theme Women and Democracy.
Author: Doug Pyper