House of Commons debate on Draft Directive on Gender Balance on Corporate Boards

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Blog by Rachael Saunders- Head of Communications

On Monday 7 January the House of Commons debated the Draft Directive on Gender Balance on Corporate Boards, which Viviane Reding announced had been accepted by the European Commission on 14 November 2012. 

The motion was brought forward by Matthew Hancock MP for West Suffolk, which saw the House of Commons debate whether to ask the EU to consider their directive on women on boards, on the basis that it does not comply with the principle of subsidiary. The question was put forward, agreed and resolved:

That this House considers that the draft Directive of the European Parliament and of the Council on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures (European Union Document No. 16433/12 and Addenda 1 to 3) does not comply with the principle of subsidiarity for the reasons set out in Chapter 1 of the Twenty-third Report of the European Scrutiny Committee (HC 86-xxiii); and, in accordance with Article 6 of Protocol No. 2 of the Treaty on the Functioning of the European Union on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.

From yesterday’s debate it is clear that the Government is keen to continue with the Lord Davies approach of voluntary setting of targets and the necessity of “long-term sustainable” change that comes from and influences the “heart of business”. 

We at Opportunity Now believe that the “comply or explain” approach set out by Lord Davies on women on boards has been successful, and that tackling the issue of women on boards is best done through UK corporate governance mechanisms and voluntary setting of targets.   

During the debate, Hancock cited some of the challenges for women progressing to board level, including unconscious bias and lack of transparency over selection criteria, as well as some of the initiatives that are proving effective in changing the make-up of UK’s FTSE 100 boards, such as informal networks and mentoring. He also referenced the success of the 30% Club in its achievements.

Points also raised by members included:  

  • Need for greater transparency over pay
  • Need for greater reporting on gender balance and how it is being achieved 
  • Need for the Government to broaden the scope of ‘diversity’ on boards to also include ethnic minorities
  • Importance of continuing the UK’s approach of focusing on the talent pipeline
  • Need to extend this debate beyond just non-executive director positions
  • Need to extend this debate beyond just the FTSE 100 (An example was cited of how the Financial Reporting Council has introduced requirements, including a focus on the top 350 companies setting out their aims for the number of women on boards by 2013-15

Mondays debate demonstrates a growing consensus in the UK on the challenges to and best practice for achieving more women on boards.  MPs spoke about unconscious bias, unequal pay and reward, and an absolute need to focus on the talent pipeline at every level of an organisation.

We believe that through sustainable organisation-wide cultural change will women and men succeed on an equal basis at every level at work, not through an artificial fix of a quota at the top.

Working through existing corporate governance mechanisms on a ‘comply or explain’ model, as outlined by Lord Davies, with listed companies expected to set aspirational goals and report against them, gives the best chance of achieving long-term organisational change, whilst increasing the number of women on boards.  

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