Quotas for Women on Corporate Boards: The Call for Change in Europe

“Bringing more women on boards is not just the right thing to do. More women on boards is the bright thing to do!”, argues Viviane Reding, the Vice-President of the European Commission and Commissioner for Justice, Fundamental Rights and Citizenship in 2009-2014 when promoting European Union quota law. And then she adds: “…I do not like them (quotas) either. But I like the results they bring.” The debate for higher female representation on corporate boards has become particularly intensive during the recent financial crisis. Scholars advocate that women are more risk-averse, more engaged with longer-term issues and tend to draw more attention to governance and ethics. Thus, it is suggested that due to the behavioural differences between men and women, more gender – balanced boards would have prevented a number of financial collapses. This assertion has triggered more detailed analyses of current statistics for women on boards in the European Union. The numbers that are found follow the global pattern. Women are well underrepresented on boards and even less visible as CEOs or chairpersons of companies. In particular, at the end of 2013 women held 17.8% of the seats on boards in Europe, 16.6% in the US, 12.3% in Canada, 12.3% in Australia and 17.1% in South Africa. Women serve as chairpersons on 3.2% of the biggest companies in Europe, 3.1% in the US, 4.2% in Canada, 3% in Australia and 5.5% in South Africa. The country in the world that excels with the highest number of female directors on boards is Norway, which has achieved 42% women on boards by 2013. These strikingly low ratios and the general finding in the empirical literature that women bring positive change to firms’ performance have generated a phenomenal drive for promoting initiatives that strive to increase the number of women on boards.