Women on boards ‘won’t be decided by quotas’

Instead, it is proposing a target for large plc boards to be made up of at least 40 per cent women by 2020 but it would be up to individual EU countries whether there would be penalties for failing to achieve it.

Under the proposed directive, companies would also only face sanctions if they failed to have procedures in place to increase female representation rather than just missing the target.

Commission vice-president Viviane Reding, who proposed the directive, said the fact that women make up only 15 per cent of the board memberships of Europe’s largest companies was a “waste of talent”.

The plans need approval from the European Parliament and Council of Ministers to be confirmed.

A number of business and women’s groups had campaigned against legal quotas arguing that appointments should be on merit.

The CBI said businesses would be relieved that the commission had listened to their concerns.

Katja Hall, its chief policy director, said companies were already taking action to increase the flow of women to the top, such as targeting mentoring schemes at women and offering flexible working.

“Increasing the number of women in boardrooms is important for businesses, who know that gender diversity brings greater creativity, higher performance and better customer insight,” said Hall.

“These new proposals rightly focus on the need to improve boardroom diversity, while allowing firms to recruit the best candidates from the widest possible talent pool.”

Liz Murrall of the Investment Management Association also said stopping short of quotas was sensible.

“Diversity goes further than gender in that boards need a mix of skills and experience and at times nationalities,” she pointed out.

Helena Morrissey, founder of 30% Club, which is a group of corporate chairman committed to bringing more women on to boards, also said progress made in the UK recently showed that legislation was not needed.

“Over the past six months, 30 out of 62 FTSE 100 non-executive directorships have gone to women, a pace of change that surely cannot be bettered if you also believe, as we do, in appointment on merit.”

The UK has been an outspoken critic of EU-imposed quotas, with Business Secretary Vince Cable arguing that a voluntary approach was effective.

The House of Lords concluded last week that the original European Commission proposal for a legal quota would not “address the root causes of inequality”.

“The UK welcomes the  commission’s decision not to impose mandatory quotas for women on boards,” a UK government spokeswoman said yesterday. “We have consistently argued that measures are best considered at national level.”