A new EU directive has increased the quota of women who are to be appointed to the executive and supervisory boards of listed companies


Mag. Nadine Leitner


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Lililana Niederhauser


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In 2018, the Austrian Act on the Equality of Women and Men on Supervisory Boards (Gleichstellungsgesetz von Frauen und Männern im Aufsichtsrat) introduced a new mandatory gender quota of 30% for the supervisory boards of all listed companies and for companies with more than 1,000 employees in Austria. As a result of this legal requirement, the representation of women on supervisory boards has increased significantly in recent years. Whereas only 22.4% of the supervisory board members of listed companies were women in 2018, it was 35% at the beginning of 2023, as can be seen from the annual surveys conducted by the Vienna Chamber of Labour.

However, executive boards remain dominated by men. The underrepresentation of women in executive positions is clearly evident. Only 19 out of 212 executive board positions in Austria's listed companies are held by women. While the percentage of women appointed to the boards of the 20 companies that make up the Austrian ATX is only 8.3%, 21.8% of members on the boards of German DAX companies are female. Almost one in seven listed companies in Austria has an "all male board", both with respect to the executive and supervisory boards (c.f. Frauen.Management.Report.2023, Vienna Chamber of Labour).

" Diversity is not only a matter of fairness. It also drives growth and innovation. The business case for having more women in leadership is clear." In line with these guiding principles, the European "Directive on improving the gender balance among directors of listed companies and related measures" was adopted and entered into force at the end of 2022. Although a draft directive had been proposed by the European Commission back in 2012 (after the members of the European Parliament quickly reached consensus on the issue), it took the Council of the European Union almost ten years to finally reach agreement on a way forward. It is a compromise, which was driven, among other things, by the change in government in Germany in 2021.The provisions of the political agreement reached by the European Parliament and the Council of the European Union will now have to be implemented by the EU Member States within two years. The key points of the new directive are as follows:

Even though the directive is primarily intended to strengthen the representation of women, women are not the direct addressees of the directive; rather, the positions affected by the quota system must be given to the "underrepresented sex".

The 27 EU Member States have to choose between two alternative quota models, which should ensure there is a better gender balance on the boards of listed companies by June 2026. Either at least 40% of supervisory board positions or 33% of executive board and supervisory board positions must be held by members of the underrepresented sex. In addition, Member States will have to ensure that companies implement measures to actually achieve either of the abovementioned alternatives.

Further, companies will have to put in place fair and transparent selection and appointment procedures, which are based on a comparative assessment of the different candidates by applying clear and neutrally formulated and unambiguous criteria. Such a procedure will also include an obligation to give priority to the underrepresented sex in case two candidates of different sexes are equally qualified. Unsuccessful applicants will have the right to request disclosure of the qualification criteria upon which the selection was based.

According to the directive, listed companies will in future also have to provide information to the competent authority, once a year, about the gender representation on their boards, and make this information easily accessible to the public on their websites. The information to be provided will include the measures implemented and, if applicable, the reasons for not achieving the selected objective as well as appropriate countermeasures taken.

However, only violations of the guarantee of fair and transparent selection and appointment procedures, as well as violations of reporting obligations, will be sanctioned. Failure to achieve the objective of the selected quota will not per se result in penalties being imposed.

The directive clearly shows that a diverse composition of supervisory and executive boards is seen as an essential driving force for growth and innovation in Europe. Without a fixed quota, it will not be possible to improve the gender composition of boards.

What’s more, in the long term it will be particularly important that women are not only represented on executive and supervisory boards, but also in large numbers at the upper management levels. Otherwise, it will be a difficult task to actually meet the quota at the board level.