Forty Per Centum Venus, Lx Per Centum Mars? The Commission’S Proposal On Sex Quotas Inwards Corporate Boards

Juan Carlos Benito Sánchez, LL.M. Candidate at KU Leuven — Twitter @jcbensan

Economic decision-making inwards the European Union suffers at the highest corporate echelons from a lack of diversity, especially inwards the expanse of gender diversity: over one-half of the graduates from European universities today are female, yet men outnumber women inwards corporate boards past times a ratio of nearly 4 to one. What is more, differences betwixt Member States are vast: woman individual representation amidst directors ranges from less than v percent inwards some countries to to a greater extent than than xxx percent inwards others. The latest statistics tin flame hold upward found at the site of the European Commission’s database on women together with men inwards decision-making.

Acknowledging this reality together with inside the framework of the Women’s Charter together with the Strategy for Equality betwixt Women together with Men 2010-2015, the European Commission launched inwards Nov 2012 its Proposal for a Directive  of the European Parliament together with of the Council on improving the gender residue amidst non-executive directors of companies listed on stock exchanges together with related measures.

The Economic together with Social Committee together with the Committee of the Regions having both issued opinions, the proposal was adopted past times the European Parliament at get-go reading inwards Nov 2013. In Dec 2014, however, the Council (Employment, Social Policy, Health together with Consumer Affairs configuration) rejected  the proposal because of a failure to arrive at an agreement, inviting the preparatory bodies ‘to proceed their piece of occupation on the file.’ The latest evolution came inwards the shape of a progress report  issued on eleven June 2015, in conclusion that

[t]here is a broad consensus amidst the Member States inwards favour of taking measures to amend the gender residue on society boards. While a large number of Member States back upward EU- broad legislation, others proceed to prefer national measures (or non-binding measures at the European Union level). Thus farther piece of occupation together with political reflection volition hold upward required earlier a compromise tin flame hold upward reached.

Main contents of the proposal

The Proposal for a Directive (as considered past times the Council), which ‘seeks to arrive at a to a greater extent than balanced representation of men together with women amidst the directors of listed companies past times establishing measures aimed at accelerated progress,’ only targets publicly listed companies having their registered business office inwards a Member State together with excludes SMEs from its compass of application. It is expected that a trickle-down effect volition ensue, thereby leading companies non affected past times these measures towards to a greater extent than balanced corporate boards.

Targeted companies should attain past times the predetermined deadline (31 Dec 2020) either (a) xl percent of members of the under-represented sexual activity amidst non-executive directors or (b) 33 percent of members of the under-represented sexual activity amidst all directors, both executive together with non-executive. The selection of choice is inwards regulation opened upward to the implementing Member State, which may too exempt those companies where women correspond less than 10 percent of the employees from compliance amongst the numerical aims. An additional obligation is envisaged for targeted companies to laid private quantitative gender residue objectives when the overall thresholds do non straight apply.

Influenza A virus subtype H5N1 reporting duty to the national equality bodies has been introduced, next the ‘comply-or-explain’ principle. Influenza A virus subtype H5N1 document must hold upward compiled detailing the ‘gender representation on [companies’] boards, distinguishing betwixt non-executive together with executive directors’ as good as ‘the measures taken amongst a see to attaining the applicable objectives.’ The same information shall hold upward published inwards an appropriate together with accessible trend on the companies’ websites.

The core of the proposal lies on the serial of procedural requirements imposed on companies which autumn brusque of the planned numerical objectives. These companies must, when selecting candidates for manager positions, undertake a comparative analysis of the qualifications of each candidate past times applying clear, neutrally formulated together with unambiguous criteria established inwards advance. They shall, next this analysis, give priority to the candidate of the under-represented sex, unless an objective assessment of all criteria specific to the individuals tilts the residue inwards favour of the other candidate(s). The wording of these requirements is straight drawn from the case-law of the CJEU regarding gender quotas (see, inter alia, Judgments inwards Kalanke, inwards Marschall v Land Nordrhein Westfalen together with inwards Abrahamsson together with Anderson v Fogelqvist.)

Upon asking from whatever candidate, all parameters considered when deciding over selection (the qualification criteria, the objective comparative assessment and, where relevant, the considerations tilting the balance) need hold upward disclosed to her or him inwards a transparent manner. Moreover, if the candidate of the under-represented sexual activity establishes a prima facie illustration of discrimination, the burden volition shift onto the respondent society to disprove those allegations—as occurs amongst other discrimination claims nether European Union law.

Sanctions are to hold upward imposed past times the Member States alone for the infringement of the procedural requirements, the reporting obligations or the mandate to laid private quantitative objectives. In other words, non-compliance amongst the numerical quota objectives past times the destination of the established deadline is not per se penalised beyond requiring companies to state ‘the reasons for non attaining the objectives together with a description of the measures which the society has already taken and/or intends to remove hold inwards monastic tell to run across them.’

The Union’s intervention inwards the patch has an essentially temporary character; the ultimate objective of the proposal beingness to foster gender multifariousness inside corporate boards to the extent that weather inwards club are such as to non guarantee that residue on their own. This interim approach is reflected past times the sunset clause contained inwards the proposal: the directive shall expire inwards Dec 2029. As a in conclusion point, it is notable that the directive would only effect minimum harmonisation, hence allowing Member States to instruct beyond these measures ‘provided those provisions do non do unjustified discrimination or hinder the proper performance of the internal market.’

The flexibility clause: a point de discorde

Article 4b of the revised proposal features the nearly controversial provision together with the argue why progress is only rattling slow beingness made: namely, the so-called equivalent efficacy or flexibility clause. Following this clause, Member States which remove hold enacted measures to ensure a to a greater extent than balanced representation of men together with women on corporate boards would hold upward authorised to suspend application of the procedural requirements, given that those measures are as effective or remove hold attained progress coming unopen to the aims laid out inwards the directive.

‘With a see to combining flexibility amongst maximum legal certainty,’ Article 4b exemplifies 3 scenarios deemed past times police force to guarantee equal effectiveness, leaving the door opened upward at the same fourth dimension to analogous situations existing inwards the Member States. In this respect, the in conclusion version of the proposal allows disconnection as shortly as ‘members of the under-represented sexual activity grip at to the lowest degree 25% of the full number of all non-executive manager positions or 20% of the full number of all manager positions together with the grade of representation has increased past times at to the lowest degree 7.5 per centum points over a recent five-year period.’ Beyond 2020, to a greater extent than stringent weather volition remove hold to hold upward complied amongst if the Member State wishes to hold the suspension.

Considering the documents issued past times the Working Parties of the Council, the flexibility clause has created a major betoken of contestation betwixt delegations. While understanding broadly exists on the principal lines of the proposal, Member States are divided betwixt those pushing for the flexibility clause to hold upward enhanced together with those alarm against whatever farther softening of the text. The recent progress study consequently acknowledges that ‘[s]ome farther fine-tuning of the flexibility clause is probable to hold upward required earlier an understanding tin flame hold upward reached on the Directive.’

Comments

The proposal should hold upward welcomed as a important pace towards tackling gender imbalance inside corporate governance inwards the European Union. Substantive measures inwards this observe remove hold been long overdue together with much awaited; the enquiry hence remaining is if together with when consensus inside the Council volition hold upward reached. The Grand Duchy of Luxembourg Presidency inwards its outlook overview of priority dossiers  refers to the proposal on gender balance, recognising that it ‘[has] been blocked inwards the Council for a considerable time.’

From the standpoint of Discrimination law, it is regrettable that the rationale of the directive appears to hold upward predominantly economically driven, at the expense of considerations of parity, diversity, legitimacy together with democracy. Instead of upholding the claim that gender residue inwards corporate boards volition yield microeconomic growth—an assertion which, on the other hand, risks perpetuating gender stereotypes, as it is based on the supposition that women together with men deed differently inwards line concern contexts—, the proposal should rather construct upon dependency amongst a see to eradicating together with correcting structural manly individual authorisation inwards decision-making.

De lege ferenda, it would peradventure hold upward advisable to abandon the understanding of quotas purely on the footing of sex together with transitioning to a gender terminology that accommodates at the same fourth dimension additional genders or gender identities. Following this suggestion, measures could hold upward envisaged that give a soft preference inwards a similar trend non only to woman individual candidates but to candidates of genders or gender identities which differ from that of over-represented manly individual candidates.

As regards the sanctioning regime, to a greater extent than meaningful enforcement measures could hold upward conceived of inside the limits of proportionality that do non move out failure to comply amongst the numerical targets unpunished, e.g. inwards the shape of financial incentives or of penalties inside the expanse of world procurement.

One of the hitting points of the proposal is undoubtedly that of the flexibility clause. Despite its stated purpose of allowing to a greater extent than proactive Member States to railroad train their ain equality programmes without conflicting amongst the heart together with soul of the proposal; this possibility permits, inwards practice, a large derogation past times agency of national tailor-made gender multifariousness strategies. Whereas due regard must hold upward had to subsidiarity, it should hold upward noted that the envisaged thresholds for equivalent efficacy are deceptively depression as a trial of the watering downward of the proposal during the Council deliberations.

To conclude on a pragmatic note, it tin flame hold upward said that the electrical flow prospects of to a greater extent than robust European Union legislation tackling gender imbalance inside corporate governance are bleak: the soundless ongoing difficulties inside the Council to arrive at an understanding foreshadow, if anything, an fifty-fifty to a greater extent than compromised version of the text. For the fourth dimension being, inwards the European Union it is to a greater extent than unopen to xx percent Venus, 80 percent Mars. Surely an imbalance of planetary dimensions.

Barnard & Peers: chapter 20

Photo credit: www.livemint.com

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