The Latest Twist in the EU Saga

Rather than providing clarity, the latest twist in the EU saga has done little except create confusion and rehash an already well-argued debate.

To be clear, this latest EU push is thankfully not an attempt at new legislation. It is the same draft EU Directive (requiring EU-listed companies to ensure, by 2020, that at least 40% of their non-executive board members are women) that the EC published on 14 November 2012, and that is slowly making its way through the EU parliamentary process. Following pressure from the UK government and The 30% Club last year, the revised legislation, while still in draft form, did not end up with specified sanctions for non-compliance. This remains the case: it seems that it will be for Member States to lay down rules on sanctions to be applied in the event of breach of the national implementing measures.

What has now changed is that the EU Committees on Women’s Rights and Gender Equality and Legal Affairs have voted in favour of a new joint report on this draft EU Directive, modifying and proposing certain amendments. These include imposing penalties, such as fines, on companies that fail to follow transparent and open appointment procedures, rather than for failing to achieve the targets.

Until these amendments are actually debated at the European Parliament level, we will not know the final position or content of the Directive. Despite the vote, there is still a chance that the Directive may not get sufficient support at the EU Parliament level to come into force. The Committee negotiators will now start negotiations with EU ministers, so we will wait and see.

Legislative EU quotas, sanctions and penalties are not and will never be the right solution to getting more women on boards. Endless debate about quotas is frustrating, and is not the same as taking actual steps to change companies and create more opportunities for women. It is a waste of time and energy that should be devoted to real voluntary action at board level and below. It has never been more important to focus on building the executive pipeline of women, thereby making regulation redundant.

We hope that any eventual EU legislation would merely prove academic for the UK given the fast pace of voluntary business-led change already evident here. This is change that will in turn lead to a more sustainable impact on businesses and more women at senior levels throughout companies, not just boards. The EU continues to miss the point.

With thanks to Jemima Coleman, Professional Support Lawyer at Herbert Smith Freehills, for her input on the legal developments.