New rules intended to improve gender representation on EU boards

The Gender Balance on Corporate Boards Directive aims to promote opportunities for women to enter board positions. The largest listed EU companies are required to meet targets by 30 June 2026.

A new directive, intended to improve gender diversity on corporate boards, now applies to certain EU listed companies.

The Gender Balance on Corporate Boards Directive entered into application at the end of 2024 after being adopted by the European Parliament in 2022.

New rules to help companies achieve those targets were recently established, a news release from the European Commission said, and the deadline for member states to transpose those rules into their national legislation was 28 December 2024. The targets set by the directive must be met by 30 June 2026.

The rules include the implementation of the preference rule for the candidate of the underrepresented sex in the case of qualified candidates of both sexes, the release said, and specific binding measures for the selection procedure of board directors, with transparent and gender-neutral criteria.

Currently, the average share of women on corporate boards is 34% in the EU, the release said. The directive has set a target for large, listed companies of 40% of the underrepresented sex amongst nonexecutive directors and 33% amongst all directors.

Overall, representation has improved since 2010, but progress continues to vary considerably. “For example, in 2024, women accounted for 39.6% of the board members of the largest listed companies in countries with binding gender quotas,” the release said, “compared to 33.8% in countries with soft measures and just 17% in countries that have taken no action at all.”

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.

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