Can EU ‘women on boards’ directive bring unified progress to a patchwork area?

After a decade of stalled progress, the European Parliament and the EU Council have reached a political agreement to improve gender diversity on corporate boards across publicly listed companies. After approval, under the ‘Women on Boards’ Directive, at least 40 percent of non-executive directors or 33 percent of overall board positions must be filled by the under-represented gender.

The directive will impact jurisdictions differently, based on their existing legislation and governance models. Eight member states have already adopted national gender quotas, including the union’s largest economies, Germany, France and Italy. However, no quotas have been set by the new EU Directive for executive director roles (CEO, CFO and COO), with the sole recommendation to “undertake individual commitments to reach gender balance among their executive directors.”

Even so, some member states are already seeking to address the issue at the national level. This includes Germany, with its two-tier board structure, where the current gender quota for seats on the supervisory board is 30 percent, and since 2021 at least one management board member is required to be female, which goes beyond the current EU Directive mandate.

“The increase to a 40 percent quota, as proposed by the EU Directive, will certainly be a challenge in some sectors, with companies having to adjust their succession planning," says Andrea Bischoff, Morrow Sodali’s Managing Director, in her interview with SustainableViews, the Financial Times’ publication on ESG. “Companies should be mindful that their investors may apply the new 40 percent quota to all supervisory board members, regardless of the gender split among employee representatives.”

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