International Significance of Forum Theme

Gender diversity on boards is a hotly debated topic. However, since 2003 it has become even more prominent: in that year Norway became the first country in the world to adopt legislation (with effect from January 2006) mandating that certain Norwegian companies must have at least 40% females and 40% males on their boards. Serious sanctions, including the possibility of a company being deregistered if these quotas are not reached and maintained, are part of the Norwegian legislation. Since then several other countries – including Belgium, France, Italy and Spain – have adopted similar legislation. There are variations in the mandated percentage of women board members among these countries and also significant variations regarding the sanctions imposed if those quotas are not met.

On 20 November 2013 the European Parliament voted, by a large majority, in favour of intended legislation to mandate companies to appoint at least 40% females and 40% males to the boards of larger companies. Once the European Council adopts the legislation, member states will have to implement these mandatory gender quotas through their own domestic legislation.

There have also been significant developments in Germany. On 18 November 2013 Angela Merkel’s Christian Democratic Union (CDU) and the German Social Democratic Party (SDP) agreed that legislation should be drafted to force listed German companies to have at least 30% of their supervisory board positions filled by persons of the same gender (ie at least 30% female and 30% male) by 2016. In practice the challenge in Germany, as in many other countries, will be to find more females to serve on the supervisory board as females are currently under-represented on supervisory boards. Legislation to support this agreement is currently being developed.

In The Netherlands, new legislation that came into force on 1 January 2013 requires all large corporations to keep records of gender numbers, and to strive to have at least 30% males and 30% females on their boards. The sanctions are not severe. However, The Netherlands operates under ‘comply or explain’ principles, so these companies must explain if the 30% quota is not reached; what measures were taken to reach the 30% quota; and indicate what they plan to do in future to meet the 30% quota.

In South Africa a radical Bill, the Women Empowerment and Gender Equality Bill, was tabled in Parliament in November 2013. Under this Bill all organisations, corporations and government departments would have been not required to have 50% women on their decision-making bodies. The Bill was criticised widely, but irrespective of that it was passed by the National Assembly in March 2014. It is probably the most radical example of gender quota legislation in the world.

Australia still has no mandatory gender quotas dictated by legislation. However, under the Equal Gender Equality Act 2012 (Cth), departments, organisations and most larger companies must report annually on their number of male and female employees and board members. In addition, since 2010 the Australian Corporate Governance Code (the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations) requires listed entities to report the proportion of women employees in the whole organisation, in senior executive positions and on the board – these provisions are in the process of being refined. However, no specific percentage of women on boards is mentioned.

In June 2010, the Australian Sex Discrimination Commissioner, Elizabeth Broderick, made the following recommendation:

[A] target of 40% representation of each gender on all publicly listed Boards in Australia, to be achieved over five years, should be promoted. If progress is not made, the Australian Government should consider legislating to require publicly listed companies and other large employers to achieve a mandatory gender diversity quota of a minimum of 40% of both genders within a specified timeframe, failing which penalties will be imposed (Gender Equality Blueprint).

It seems unlikely that that target will be met by June 2015, as it was reported that as of 28 May 2014 only 18.2% of the seats of ASX200 listed companies were filled by women (Australian Institute of Company Directors).

The reality in Australia and recent international developments in the EU regarding mandatory gender quotas, enforced through legislation, raise questions. Perhaps the writing is on the wall and more and more countries will adopt legislation making it mandatory, at least for listed companies, to achieve a gender diversity quota of a minimum of 30–40% of both genders on their boards within a specified timeframe.