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EU's Women On Boards Legislative Proposal

Women and girls make up half of the global workforce (if we consider also unrecognized and unpaid work), yet less than a third of leadership positions (leadership, managing roles) are held by women: 27.1%.


In the G7 countries, since 2010 a rising number of women holds leadership roles in companies and firms. France and Italy are the two countries in which the higher number of women have lately become corporate Board members (female corporate Board members increased in France from 12% in 2010 to 37% in 2016, and in Italy from 5% in 2010 to 30%in 2016). This extremely positive result stems from the legislative introduction of the so-called gender quota.


The topic of gender quotas strongly resurfaced over the last couple of months:



Indeed, after a decade-long deadlock in the Council, EU employment and social affairs Ministers have adopted a general approach to the directive to boost gender equality on corporate boards, ending a 10-year stalemate and paving the way for final negotiations between the European Parliament and the 27 member states in the Council.


At the EU level, the proposal was originally presented by European Commissioner for Justice, Fundamental Rights, and Citizenship Viviane Reding, in 2012, with the aim of increasing the share of female-corporate Boards members in the EU. It took EU Ministers sitting at the EPSCO Council 10 years to find an agreement on the proposal: the EU agrees to impose gender quotas to ensure women have at least 40% of seats on the boards of large companies.



After a decade of deadlock on the topic, the proposal got new momentum this year with fresh backing from Germany and France, and a political agreement was finally reached between the European Parliament and the Council of the EU.


The legislation requires listed companies in all 27 EU member states to have women take up at least 40 percent of non-executive board seats or 33 percent of all board director roles by mid-2026. Companies could be fined for failing to hire enough women on their boards and see director appointments canceled for non-compliance with the law.


Gender quota is a divisive topic at both the political and the social level. Those who are against such quotas argue that “women are not considered for their true talents and skills, but merely for their gender”, defining such measure as “offensive”. On the other hand, those who are in favor of gender-quotas states that they are an urgent and necessary measure to strongly promote gender equality and break the glass ceiling.


“With our Women On Boards proposal, we want to break the glass ceiling preventing talented women from acceding to boards,” European Commission President Ursula von der Leyen said.

"Diversity is not only a matter of fairness. It also drives growth and innovation. The business case for having more women in leadership is clear," European Commission President Ursula von der Leyen said in a statement. "There are plenty of women qualified for top jobs: they should be able to get them”.


“The coronavirus pandemic may be the largest test of political leadership the world has ever witnessed. Every leader on the planet is facing the same potential threat. Every leader is reacting differently, in his or her own style.” Uri Friedman wrote, in an article for The Atlantic. In a chaotic and highly worrying context such as the pandemic, each leader reacted differently, exposing the most subjective and personal traits in the exercise of power. Generally speaking, it is possible to state that women’s leadership has been more effective than men’s in terms of pandemic containment and socio-economic effects experienced by individual countries.


According to a medical-scientific study conducted in July 2020, countries led by women in government have recorded a Covid-19 death rate six times lower than states ruled by men. The first element taken into consideration is risk management: women’s leaders, authors say, have proved to be more risk-averse than their male counterparts during the pandemic, preferring the protection of citizens' lives to the economic implications. Secondly, the authors of the study analyze the style of leadership: such as the propensity to empathy, which appears to have fostered the respect of measures of social distancing and isolation by citizens.




Women leadership’s style was successful, although different in its expressions: German Chancellor Angela Merkel showed absolute confidence in science and empirical data, acting accordingly; New Zealand Premier Jacinda Arden, on the other hand, reacted promptly to the spread of the virus, reaching very high peaks of domestic and international popularity, thanks to an empathetic approach; the leaders of Denmark, Norway and Finland have given more effective responses to the virus containment than their male counterparts in the Swedish government.




These are just examples of successful leadership styles, and proof that women leaders can indeed be excellent leaders!


There are many obstacles that prevent women from being chosen as leaders, some of them were discussed in a previous blog post (https://www.femmeleadpodcast.com/post/why-are-there-so-few-women-in-leadership-and-managing-positions), we can name another one: the glass cliff concept. Glass cliff is the phenomenon of women in leadership roles, such as executives in the corporate world and female political election candidates, being likelier than men to achieve leadership roles during periods of crisis or downturn, when the risk of failure is highest.


Madame Lagarde, who was appointed President of the ECB back in 2019, in a complex context that quickly became critical due to the pandemic crisis, has specific advice for female leaders. She says she has noticed time and time again that women are called on to rescue situations when they turn bad. But she also thinks those are the moments when women can have an impact:

“When the situation is difficult, when it’s really challenging, when the financial situation is really poor, when budgets have been blown: Then there are opportunities for women. I’ve always encouraged women to say yes in these situations,” she says. “You can only move it up.”

EU Equality Commissioner Helena Dalli also welcomed the agreement reached by member states, arguing that this showed that the EU has “progressed in the area of equality.”

“We are moving away from merely addressing individual cases of discrimination towards legislative tools intended to deliver equality in practice,” she said.

"If we improve gender equality by 2050, we can boost EU GDP by between €1.95 trillion and €3.15 trillion. Having women on company boards is a crucial element in achieving this. Women should be at every table, in business, in politics, in media, and in science and research. It has been 10 years since Commissioner Viviane Reding first put forward this proposal, and in this period we have seen minimal advancement of women on company boards. We need this Directive now to ensure that women can be well represented at the executive decision-making level in business", explained Maria Graça Carvalho MEP, EPP Group's negotiator of the proposed Directive on gender balance.


It is a golden moment for this proposal to see the light, considering the “richness of diversity concept and the post-pandemic recovery we are actually experiencing: different people, by gender and previous experience, see and analyze opportunities and problems in different ways, thus proposing different solutions. The more the solutions proposed, and the greater their degree of diversity, the greater the chances that one of the solutions identified will be suitable and successful to the problem or opportunity faced. Experts, economists, politicians, and members of civil society from all over the world strongly state that in order to get out of the pandemic crisis we need the points of view, talents, abilities, and proposals of everyone, women, and men.



Considering that the pandemic crisis has been defined she-cession – i.e., the pandemic has led to an economic downturn, which triggered different consequences for women and men in the labor market. Women workers were so severely affected by the economic fallout caused by the pandemic, that worldwide the pandemic is known to have caused a she-cession –, women’s and girls’ viewpoints and ideas are crucial to overcoming the social, economic, and health crisis, and building fairer, more sustainable societies. 


How do you feel about gender quotas? Do you want to share any examples of successful women leaders that come to your mind?




From Femme Lead,

Giulia Gardin




SOURCES


· Organisation for Economic Co-operation and Development – OECD Statistics, Female share of seats on boards of the largest publicly listed companies, 2018, retrieved from: https://stats.oecd.org/index.aspx?queryid=54753;

· Euractive, Member states end 10-year deadlock on EU’s plan for women’s quota on corporate boards, retrieved from: https://www.euractiv.com/section/economy-jobs/news/member-states-end-10-year-deadlock-on-eus-plan-for-womens-quota-on-corporate-boards/;

· EPP Group, Crucial week ahead in advancing women on company boards in Europe, retrieved from: https://www.eppgroup.eu/newsroom/news/crucial-week-ahead-in-advancing-women-on-company-boards;

· Coscieme L., Fioramonti L., Mortensen L. F., Pickett K. E., Kubiszewski I., Lovins H., Mcglade J., Ragnarsdóttir K. V., Roberts D., Costanza R., De Vogli R., Wilkinson R., Women in power: female leadership and public health outcomes during the COVID-19 pandemic, MedRxiv 2020, retrieved from: https://www.medrxiv.org/content/10.1101/2020.07.13.20152397v2;

· Uri Friedman, New Zealand’s Prime Minister May Be the Most Effective Leader on the Planet, The Atlantic, April 19 2020, retrieved from: https://www.theatlantic.com/politics/archive/2020/04/jacinda-ardern-new-zealand-leadership-coronavirus/610237/;

· Werber C., Christine Lagarde says women should use the “glass cliff” to their advantage, Quartz, 4th July 2019, retrieved from: https://qz.com/1653717/imfs-christine-lagarde-bad-situations-are-opportunities-for-women/



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