In November 2013, the European Parliament adopted by 459 votes to 148, with 81 abstentions, a proposed Directive on improving the gender balance among non-executive directors of listed companies by requiring that such boards are composed of at least 40% women in non-exec director positions.
Worryingly, drawing on the Norwegian experience, it is a conservative assumption that the imposition of quotas could erase anything between £60.58 billion and £81.55 billion from the market capitalisation of UK listed firms. Furthermore, 100 companies in Norway de-listed following the legislation. Given the international nature of the FTSE 100, this could well prompt such companies to list elsewhere and see the UK’s status as an international hub diminished in the process.
Perhaps the most controversial amendment extended sanctions to include exclusion from public calls for tenders, partial exclusion from the award of funding from European structural funds and, by far the most draconian, the option of actually winding-up companies. Amendment 39, which was adopted by MEPs 441-226, states that “It should be possible for Member States to go beyond the non-exhaustive list of sanctions provided for in this Directive and to add, inter alia, the forced dissolution of the company concerned.”
The Bow Group's report opposing quotas makes the following findings and recommendations:
1) Drawing on the Norwegian experience, it is a conservative assumption that the imposition of quotas could erase anything between £60.58 billion and £81.55 billion from the market capitalisation of UK listed firms where companies could no longer have a free hand in the selection of their directors.
2)Women have also previously spoken out against quotas. Tara Kengla, head of Financial Accounting Advisory Services for EY (Formerly Ernst & Young) warned that “introducing fixed quotas could reduce diversity to a numbers game,” whilst Helena Morrissey, founder of the Thirty Per Cent Club stated her view that "as more women join boards without the imposition of quotas, the more they can demonstrate the value they can add.”
3) Women deserve support including a supportive culture on the part of companies when it comes to childcare, backed up by accommodating infrastructure to enable their female workers to return to work as promptly as they may reasonably desire. To this end, Universities and further education institutions have a responsibility to coach both men and women in equal measure in the competitive reality of progressing up corporate management structures.
4) The UK must take all steps possible at the European Council, with the help of allies, to block any attempt to make the composition of privately run businesses boardrooms a European Union competence. The Prime Minister should issue a strong statement with immediate effect that leaves the UK’s allies on the European Council in absolutely no doubt about the UK’s resolve in resisting further European intervention in the governance of British companies.