In 2012, The European Commission proposed legislation to achieve 40% representation of the underrepresented sex on boards to achieve gender balance in the boardroom by 2020. At the time, men made up 85% of non-executive roles and 91% of executive roles in the boardroom.

With a 0.6% annual increase in the decade preceding. The proposal was to apply to 5.000 listed companies in the European Union with 250 employees or more and an annual turnover exceeding €50M.

This bid for a unanimous law to be implemented across the EU was unsuccessful, and as a consequence, 11 member states[1] instituted legal instruments to promote gender equality, as the rate of progress threatened to take at least 40 years to achieve 40% of either under-represented sex in the board room. This was in the absence of a pandemic which has resulted in an unprecedented number of women having their careers and economic wellbeing adversely affected.

In 2020 across the EU, women made up around a quarter of non-executive directors (26.4%,) but the rate of increase slowed since 2015, according to a 2019 study from the commission. Women at the very top are even rarer: only 7.5% of board chairs and 7.7% of chief executives are female.

Following a 10-year process, in November 2022, the European Parliament formally adopted the new EU law on gender balance on corporate boards. By 2026, companies will need to have 40% of the underrepresented sex among non-executive directors or 33% among all directors. Member States have two years to transpose its provisions into national law.

In keeping with the theory that what gets measured gets done, the UK has hit the above target three years early. Clearly, the work to get to this result started a while ago. The annual FTSE Women Leaders Review found 40.2% of directors at the UK’s largest listed companies were women last year. Nearly a fifth of FTSE 350 boards have a woman chair, an increase from 9.5% in 2011 – and only 10 of the FTSE 350 companies still have all-male executive teams, but there are just 21 female chief executives across the main listed markets.

The annual report also highlights that leadership opportunities for women below board levels were not growing at the same rate; work still needs to be done to get more female decision-makers as CEO and CFOs. Conscious action to build and maintain the pipeline required.

The social element of ESG requirements and associated reporting is forging a path for similar metrics to tackle the issue of race representation for the populations that businesses serve to be reflected in the leadership make. Eagerly anticipate transparency on that issue too.

Christina Renner Thomas MBA, European Council – Co-Chair Impact Committee at Healthcare Businesswomen’s Association.

[1] Belgium, France, Italy, the Netherlands, Spain, Portugal, Denmark, Finland, Greece, Austria and Slovenia