This week, the European Parliament and Council reached a provisional political agreement on a new EU directive for improving equality in corporate boards for companies listed in EU.  

The directive is part of the EU Gender Equality Strategy 2025 and aims to create a more equal representation of women and men on corporate boards for large, listed companies.

The main elements of the directive:

• 40 % of non-executive directors must be of the underrepresented gender. If the member state chooses to apply the new rules for both non-executive and executive directors, 33 % must be of the underrepresented gender.
• Clear and transparent procedures when appointing new board members, and member states shall implement penalties for companies that fails to comply with selection and reporting obligations.
• The directive includes listed companies with more than 250 employees. 

Today, the average percentage for large publicly listed companies in the EU is 30 %, with women being the underrepresented gender. This means that more women need to be represented on corporate boards in the EU. Companies also need to ensure that board appointment procedures are based on merits and disclose qualification criteria. 

The political agreement is subject to formal approval. Once the formal approval procedures are finalized, member states need to decide on how to meet the directive and implement it into their national law within two years. In the provisional agreement, member states must meet the target by latest June 2026. 

Ieva Kustova, Head of ESG & Sustainability, KPMG in Latvia