European leaders are eyeing mandatory quotas in their push to get more women on corporate boards, frustrated by projections that show it will take 40 more years to fix the imbalance at the current pace.
The European Commission is studying the measure amid fresh evidence that women remain dramatically underrepresented in boardrooms across the developed world.
The EC’s warning Monday turns up the heat on companies to diversify their boards, and escalates the debate over whether such moves should be forced or voluntary.
While Canada ranks ahead of many European countries, such as Germany or Ireland, studies show little progress at home, as well, with women representing 14 per cent.
A study by the Organization for Economic Co-operation and Development shows women in just one of 10 board seats at listed companies as of 2009.
The EC’s announcement follows voluntary measures that failed to make any discernible headway. One year after self-regulatory measures were introduced in Europe, the commission said Monday there has been just limited progress.
“Overall, change remains stubbornly slow,” it said in a scathing statement.
Indeed, the number of women chairing major boards is actually falling, to 3.2 per cent in January from 3.4 per cent in 2010.
Only one in seven board members at the region’s top firms is female, or 13.7 per cent. While this is a small improvement from 11.8 per cent in 2010, it would still take more than 40 years at this rate to reach gender balance, the EC said.
The commission launched a public consultation that will examine whether to legislate quotas, a controversial approach that many business leaders oppose but one already in place in Belgium, France, Italy, the Netherlands and Spain.
Motivation goes beyond a social desire for equality. Gender balance “has been shown to contribute to better business performance, improved competitiveness and economic gains,” it said, citing a McKinsey study showing that more balanced companies have a 56-per-cent higher operating profit than male-dominated companies, and an Ernst & Young analysis finding earnings at companies with at least one woman on the board are “significantly higher” than among those with none.
Most Canadian policy makers have been loathe to talk about quotas, partly because it can spark a backlash against women who do get appointed, said Carol Stephenson, dean of the Richard Ivey School of Business at the University of Western Ontario, who is not in favour of quotas.
The European announcement does “heighten attention on getting more women on shortlists for board members,” she said.
She believes the pace of change is accelerating in Canada, and cites a Spencer Stuart study showing a record 29 per cent of new directors last year were women. More boards will have openings in the coming years as directors retire, she noted, and more executives understand the economic benefits of a diverse board.
Not everyone’s so sure. Kathy Lahey, a law professor at Queen’s University in Kingston, Ont., who specializes in the status of women, said several measures in Canada are getting worse, not better. She cited as the earnings gap between men and women, which has widened compared with several decades ago, and the level of gender discrimination in the workplace.
“It’s very clear that Canada could benefit from that [mandatory quota]initiative,” she said, as part of a broader national strategy to improve gender equality.
A Conference Board of Canada study last August found that women made virtually no progress in the past two decades in reaching senior management levels. Even in middle management – a key pipeline for future executives – the portion of women has grown only 4 per cent since 1987. At that rate, it would take 151 years before gender equality is reached at the management level, it said.
The OECD release and the European Commission’s announcement come ahead of International Women’s Day on Thursday.