Implementation of the Gender Balance on Corporate Boards Directive
Directive (EU) 2022/2381 on Gender Balance on Corporate Boards, hereinafter referred to as "the Directive," entered into application on 28 December 2024. The said Directive pursues the goal of improving gender balance in the boards of large listed companies in the European Union and lays down clear and binding objectives to ensure balanced representation of both sexes.
The following targets should be obtained under the Directive by EU Member States for listed companies: non-executive directors shall comprise at least 40% of the underrepresented sex, and all directors shall have a minimum of 33% representation of the underrepresented sex.
Member States had to implement the substantive provisions of the Directive into their national law by 28 December 2024, and the deadline for companies to attain the set targets is 30 June 2026.
Current Representation Trends
By 2024, women represented an average of 34% of corporate board members in the EU. Since 2010, considerable advancement has been seen but at different levels in Member States. For example:
The national situation concerning non-listed companies varied: in Member States applying binding gender quotas, the percentage of women on the boards was 39.6%.
In the Member States applying non-binding measures, the figure was 33.8%.
In the Member States that had no such measures, women made up only 17% of board members.
Obligations of Member States
The Directive requires Member States to introduce the following measures in their national law to implement the Directive:
Transparent Selection Procedures: Establishment of transparent, clear and gender-neutral criteria for the selection of non-executive board members, such as introduction of a preference rule, according to which candidates of both sexes who are equally qualified have the underrepresented sex taking precedence.
Disclosure Requirements: Companies shall disclose the qualifications of selected candidates upon request by unsuccessful candidates. Listed companies are required to commit to achieving gender balance among executive directors and report on board composition, obstacles encountered in meeting the targets, and the measures undertaken to overcome such obstacles.
Enforcement Mechanisms: There have to be established by Member States effective, proportionate, and dissuasive sanctions for violations of the obligations regarding transparency and reporting. Sanctions might include fines and also nullity or annulment of the non-compliant appointments.
Promotion and Monitoring: Member States shall designate one or more competent authorities to promote, analyze, monitor, and support gender balance on boards. The list should be made public of companies that fulfill the gender balance targets of the Directive.
Role of the European Commission
The transposition measures taken by Member States will be reviewed by the European Commission to ensure that the Directive is being followed accordingly. Where transposition is incomplete or incorrect, the Commission may start infringement proceedings. During the period of transposition, the Commission supported the Member States in accurate implementation of the Directive through workshops and bilateral consultations.
Background and Rationale
The 2024 Special Eurobarometer on Gender Stereotypes shows that the public are very supportive of gender equality, with 55% of EU citizens supporting the adoption of measures that will ensure women are adequately represented in decision-making positions. The European Institute for Gender Equality says the index on women's empowerment in economic decision-making has risen to 57.6 points in 2024, showing steady progress.
Empirical evidence underlines that legislative action is indeed an effective method of dealing with gender imbalance, as countries that have enforced binding quotas on the issue have reached the highest representation of women on boards, while countries without such measures still lag significantly behind.
Future Actions
By 2025, the Roadmap for Women's Rights shall be adopted by the European Commission as a successor of the Gender Equality Strategy 2020-2025. It will go even further in reinforcing the Union's commitment to gender equality, also regarding top positions and labor market participation of women.
Key Dates & Deadlines
- 28 December 2024: Deadline for the Member States to transpose the Directive into national law.
- 30 June 2026: Deadline for companies to attain the gender balance targets under the Directive.