Germany Legislates for More Women on Company Boards

Germany has pledged to improve the representation of women on corporate boards, by passing a law that requires some of Europe’s biggest companies to give more seats to women from 2016.

Around 100 of Germany’s biggest companies must give 30% of their supervisory board seats to women from next year, while a further 3,500 companies have a deadline of September 30 to submit plans to increase the share of women in board positions.

Currently less than 20% of the seats on corporate boards in Germany are held by women and supporters of the legislation said that it has the potential to substantially alter the landscape of corporate governance in Europe’s largest economy, with repercussions extending beyond Germany’s borders.

A 2014 study by the German Institute for Economic Research – Deutsches Institut für Wirtschaftsforschung, or DIW Berlin – found that women were 18.6% of supervisory board members or directors at the 100 biggest German companies, while in the top 30 companies listed in the DAX index in Frankfurt, the percentage was nearer 25%. However, fewer than 200 women in a country of 82m people will be immediately affected by the new measure, said a leader of the Green Party, Katrin Gring-Eckardt.

Germany is the latest European country to legislate a much greater role for women in boardrooms. Norway led the way in introducing boardroom quotas, joined by Spain, France and Iceland, which all set their minimums at 40%. Italy has a quota of one-third, Belgium of 30% and the Netherlands a 30% nonbinding target.

While the UK has held back from imposing boardroom quotas, a voluntary effort, known as the 30% Club, has helped to substantially increase women’s representation. The group, founded by Helena Morrissey, a money manager, has used persuasion to help double the percentage of women on the boards of major British companies since 2010, to 23%.

The European Union (EU) has considered measures to mandate that up to 40% of corporate supervisory boards be made up of women. Although it has stopped short of enacting them, the debate brought further attention to boardroom equity.

The US has also seen women’s representation improve without legislative mandates, although growth to the present figure of 17% has been extremely slow.

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