There has been much debate lately about the pending introduction of legally binding quotas for the representation of the underrepresented sex on the boards of publicly listed companies (regulated markets) in the EU, through the “Women on Boards Directive” (EU Dir. 2022/2381 – which entered into force on 27 December 2022). Despite the fact that the Directive has not yet been transposed in Romania, we have already observed growing awareness on the market towards initiating the process for determining new, legally aligned, succession plans for board membership and senior management. The Women on Boards Directive introduces the requirement for member states to pursue either of the following objectives, which must be reached by 30 June 2026: (i) members of the underrepresented sex must hold at least 40% of non-executive director positions; (ii) members of the underrepresented sex must hold at least 33% of all director positions, including both executive and non-executive directors. The rules will likely have a major impact in increasing female representation, in view of recent statistics issued by the European Institute for Gender Equality (EIGE), an autonomous body of the EU. According to the EIGE, towards the end of 2022 the gender split in terms of presidents, board members and employee representatives in the EU’s largest listed companies was men 67%, women 33% (for Romania, the corresponding split was 82,3% / 17,7%). In relation to CEOs, executives and non-executives, the split was 77,9% / 22,1% at EU level, and 76,3% / 23,8% in Romania.
In our view, beyond the mathematical approach to equalising representation, the ongoing dialogue could benefit from a more nuanced approach, whereby men and women on boards are not thrust into an adversarial encounter in terms of board decision-making and succession plans. Accordingly, we endorse a collaborative approach, as suggested by initiatives such as the UK-based 30% Club, which in March 2023 released a compelling report to this effect. A collaborative approach would set as a primary objective the gaining of substantively valuable contributions from women participating as active business leaders in the decision-making process. In turn, the mathematical equalisation rules and quotas could be seen as complementary measures or (ideally, in the medium term) a natural by-product of increased awareness among all board members – irrespective of gender – as to the value to be gained by having a diverse set of opinions and decision-making approaches. We believe that, in shifting the debate towards improving the decision-making process through diversity of thought, more durable progress towards gender representation can be achieved. The genuine buy-in and support of both men and women in terms of the underlying vision of gender balance will make the difference between an artificial “box-ticking” exercise and a truly value-added outcome for EU businesses and stakeholders. Accordingly, working together, men and women can take the EU business community to the next level, hence making the EU more “future-proof” for the coming decades, and better able to face future geopolitical and economic challenges.
