LEGISLATIVE TRAIN 08.2021 19 WOMEN'S RIGHTS AND GENDER EQUALITY - FEMM GENDER BALANCE ON BOARDS [ ON HOLD ] CONTENT To address the considerable imbalance between women and men in economic decision-making at the highest level, the European Commission submitted a proposal for a directive on gender balance among non-executive directors of companies listed on stock exchanges in November 2012. The directive would be based on Article 157(3) TFEU, which ensures the application of the principle of gender equality in employment and occupation. Article 157(4) TFEU and Article 23 of the Charter of Fundamental Rights of the EU recognise positive action as a method of achieving gender equality. The proposal set the aim of a minimum of 40% of non-executive members of the under- represented sex on company boards, to be achieved by 2020 in the private sector and by 2018 in public-sector companies. Companies would have to make appointments on the basis of pre-established, clear and neutral criteria. If candidates were equally qualified, advantage would be given to the under-represented sex. Member States would require companies to issue annual reports on the composition of their boards and impose sanctions in the event of negative evaluations. The directive would not apply to SMEs. Companies that had not reached the 40 % target would be required to continue to apply the procedural rules, as well as to explain what measures they intended to take reach it. For Member States that chose to apply the objective to both executive and non- executive directors, a lower target (33 %) would apply. The file was included in the list of unfinished business carried over to the current Commission (2020-2024). The Commission President, Ursula von der Leyen, stated in her Political Guidelines that she will seek to build a majority to unblock the Directive. It is one of the priorities in the European Commission's new EU Gender Equality Strategy 2020-2025 (see the related legislative train carriage). The European Parliament adopted its position, by a substantial majority, on 20 November 2013 (rapporteurs: Rodi KRATSA- TSAGAROPOULOU (EPP, Greece) for the Committee on Women’s Rights and Gender Equality (FEMM) and Evelyn REGNER (S&D, Austria) for the Committee on Legal Affairs (JURI)). The Parliament strongly supported legislative action in this area and, notably: • backed the key objective for listed companies in the EU to aim to reach a target of at least 40 % of non-executive directors of the under-represented sex by 1 January 2020 at the latest (and by 2018 for public companies); • went beyond the Commission’s proposal, by calling for additional measures. These included: stronger penalties, such as exclusion from public tenders, for companies which failed to introduce transparent appointment procedures; the removal of 1/4 exemptions for companies employing less than 10 % of the under-represented sex; the extension of reporting to the EU’s own institutions and agencies; and an examination of whether the scope of the directive should be extended to cover non-listed public companies; • pointed out that, although the directive would not apply to SMEs or micro-enterprises, Member States should support these companies and give them incentives to improve gender balance at all levels of management and on their boards; • stressed that, to achieve gender equality in the workplace, companies should develop a gender-balanced model of decision- making at all levels, whilst taking steps to eliminate the gender pay gap and introducing flexible working conditions for all employees. Since adopting its original position, Parliament has continued to push for progress. It sees swift adoption of the women on boards directive as an important first step towards equal representation in the public and private sectors and has also noted that progress has been most tangible in Member States in which binding legislation on quotas for boards has been adopted. During its current term, Parliament's resolution of 21 January 2021 on the new EU Gender Equality Strategy called on the Commission to continue working with the Member States and EU presidencies to urgently break the deadlock in the Council and adopt the proposed Directive. Parliament's JURI and FEMM committees held a joint hearing on women on boards on 21 September 2020 and a debate on the state of play was held during the plenary session in October 2020. Despite broad consensus across the EU in favour of taking measures to improve the gender balance on company boards, not all Member States support EU-wide legislation and some Member States consider that binding measures at the EU level are not the best way to pursue the objective. The national parliaments of Denmark, the Netherlands, Poland, Sweden, the United Kingdom, and one of the two chambers of the Parliament of the Czech Republic (Chamber of Deputies) submitted reasoned opinions within eight weeks from the submission of the Commission’s proposal, alleging that it did not comply with the principle of subsidiarity. Some delegations continue to prefer national measures or non-binding measures at EU level. As well as revising the proposed target dates and reporting deadlines, successive Presidencies of the Council of the European Union have drafted compromise texts with a view to breaking the deadlock on the directive, but agreement has not yet emerged. The Commission Vice-President, Věra Jourová, reported on the state of play in the Council at a meeting of Parliament's JURI committee on 25 May 2020, noting that 18 Member States then supported the proposal and that support from Germany would be enough to allow Council to reach a qualified majority vote to secure a common approach. It was also reported that 8 EU Member States (Denmark, Greece, Croatia, Hungary, the Netherlands, Poland, Sweden and Slovakia) continue to oppose the proposal, some because they already have legislation in place. In October 2020, EU ministers of employment and social affairs held a debate on gender equality in the labour market, at which some participants called on the presidency and member states to finally move forward with the directive. The German, Portuguese and Slovenian presidencies together called for decisive progress in the negotiations on the proposal. The European Economic and Social Committee has also asked the Council to continue the discussion on the Women on Boards Directive. References: LEGISLATIVE TRAIN 08.2021 19 WOMEN'S RIGHTS AND GENDER EQUALITY - FEMM 2/4 • European Commission, Proposal for a Directive on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures, COM/2012/0614 final - 2012/0299(COD) • Eur-Lex, Discussions in Council and other bodies • European Parliament, Legislative resolution of 20 November 2013 on improving the gender balance among non-executive directors of companies listed on stock exchanges, 2012/0299(COD) • European Parliament, Resolution of 21 January 2021 on the EU Strategy for Gender Equality, (2019/2169(INI)) • European Parliament, Joint JURI-FEMM hearing “Women on Boards”, 21 September 2020 • European Parliament, Council and Commission, Debate on gender balance on company boards, plenary session, October 2020 • Council, Trio presidency declaration on gender equality, July 2020 • European Economic and Social Committee, Opinion of 15 May 2019 on gender equality, SOC/610 Further reading: • Evelyn Regner, Gender Balance on Boards: High time for gender equality, The Parliament magazine, 16 June 2021 • European Institute for Gender Equality, Statistical brief: gender balance in corporate boards 2020, 17 May 2021 • Thodoris Chondrogiannos, Nikolas Leontopoulos, Paulo Pena and Harald Schumann, Greece has been blocking an EU law promoting gender balance – is this about to change?, Investigate Europe, 21 April 2021 • European Parliament, EPRS, Gender balance on company boards, At a glance, November 2015 For a more extensive list of Parliament positions, references and further reading, please see the earlier versions. Related legislative train carriages • EU Gender Equality Strategy 2020-2025 Author: Rosamund Shreeves, Ülla Jurviste, Members' Research Service, [email protected] Read more on the Parliaments' fight for gender equality in the EU As of 15 August 2021. RAPPORTEUR RAPPORTEUR Rodi KRATSA-TSAGAROPOULOU Evelyn REGNER ECON - FEMM ECON - FEMM LEGISLATIVE TRAIN 08.2021 19 WOMEN'S RIGHTS AND GENDER EQUALITY - FEMM 3/4 RAPPORTEUR RAPPORTEUR Dubravka ŠUICA Ernest URTASUN AFET ECON - FEMM HYPERLINK REFERENCES • http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52012PC0614 • http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=CELEX:52012PC0614&qid=1516284060247 • http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2013-0488 • https://www.europarl.europa.eu/doceo/document/TA-9-2021-0025_EN.html • https://www.europarl.europa.eu/committees/en/joint-juri-femm-hearing-women-on-boards-/product- details/20200915CHE07481 • https://www.europarl.europa.eu/news/en/agenda/briefing/2020-10-05/11/stop-stalling-the-women-on-boards-directive- meps-tell-eu-countries • https://www.bmfsfj.de/blob/158154/252af172d6d4b456d05743156db36a36/20200706-trio-declaration-data.pdf • https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/gender-equality-issues-own-initiative- opinion • https://www.theparliamentmagazine.eu/news/article/high-time-for-gender-quality • https://eige.europa.eu/publications/statistical-brief-gender-balance-corporate-boards-2020 • https://www.investigate-europe.eu/en/2021/greece-has-been-blocking-an-eu-law-promoting-gender-balance-is-this-about-to- change/ • http://www.europarl.europa.eu/RegData/etudes/ATAG/2015/572801/EPRS_ATA(2015)572801_EN.pdf • mailto:[email protected] • https://www.europarl.europa.eu/news/en/headlines/priorities/social/20190712STO56961/the-parliament-s-fight-for-gender- equality-in-the-eu LEGISLATIVE TRAIN 08.2021 19 WOMEN'S RIGHTS AND GENDER EQUALITY - FEMM 4/4.