European-listed firms could face fines if fewer than 40% of their non-executive board seats are taken by women

The European Union executive is reviving plans for mandatory quotas of women on company boards, amid slowing progress towards gender equality among top management.

The EU commissioner for equality, Helena Dalli, told journalists that quotas “can be a very ugly word” but were also “a necessary evil, in the sense we have to use quotas because otherwise we will wait another 100 years for things to change by themselves”.

Under a 2012 draft directive, European-listed companies would face fines if they failed to ensure that at least 40% of their non-executive board seats were taken by women.

But the proposals ran into opposition from central and northern European member states, including the UK.

The commission announced on Thursday that it was dusting down the 2012 draft law, as it launched a five-year gender equality strategy. The wide-ranging plan proposes to harmonise European law on violence against women, as well as measures to combat sexual harassment and female genital mutilation.

The commission argues that gender parity is most worrying in the sphere of power, with women underrepresented in politics and business. The European parliament has a record number of female MEPs, but men still account for 61% of deputies.

Across the EU, women make up around a quarter of non-executive directors (26.4%) but the rate of increase has 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.

In Malta, Greece and Estonia, women account for fewer than one in 10 non-executive directors.

EU officials point to the experience of countries that have introduced binding quotas, such as France, Germany, Italy and Belgium, which has led to a rapid increase of women in the boardroom.

France was the only member state with more than a 40% share of women on boards, according to the 2019 study. Italy was in second place with 36%, followed closely by Sweden and Finland.

When the commission made its first attempt to set an EU-wide quota for women on boards, the plan was opposed by the then coalition Conservative-Liberal Democrat government, which preferred a voluntary approach led by Lord Mervyn Davies. That helped the UK become one of the best performers in the EU, with 30% of women on boards by 2018, although fewer women hold powerful executive roles, such as CEO.

But even the UK’s departure does not guarantee that the law will pass. European commission vice-president Věra Jourová said “nothing” had changed among member states’ views since the EU first attempted to pass the law, but added it was important not to give up “trying to convince” them. “There are some member states, which didn’t wait for Europe and they introduced the quota and they see the results.”

At the end of the year, Brussels will also propose legislation on salary transparency, a promise from the European commission president, Ursula von der Leyen, the first woman to lead the EU executive.

Dalli said the law would be the first step in closing the gender pay gap across the EU, which has hardly budged over the last decade. “It is evident that you cannot compare salaries, unless there is pay transparency.”

Across the EU, women earn 16% less than men per hour, with the largest gaps in the Czech Republic, Estonia, Germany and ex-member state, the UK.