EC tackles boardroom recruitment inequality

The European Commission is to instigate measures to break up the traditional recruitment practices that ensure the boardrooms of major listed companies are filled predominantly by men.

The big companies were asked to change their culture of appointing almost exclusively men as directors over the past year, but female representation has risen by less than half a percentage point. At this pace, it would take half a century to reach 40%.

Now the EC says it will bring in legislation to force companies to distribute power more equitably, giving women at least 40% of seats around the boardroom table.

The plan was welcomed by Labour MEP Nessa Childers, who pointed out that the nation’s banks had a derisory number of female directors.

Ms Childers pointed out that just 9% of directors of the largest listed companies in the country are women, making Ireland one of the worst offenders in ignoring female talent.

“This legislation will help clean out the rot in Irish corporate culture which contributed to our economic collapse,” said Ms Childers. “The old boys club corporate culture, which has strangled the Irish banks and driven Ireland into the arms of the IMF, should be brought to an end with better and fairer representation of women on the boards of publicly quoted companies.”

At the height of the property bubble in 2006, there was only one female director of the toxic Anglo Irish bank. Just two of AIB’s 18 directors were women, and just two of Bank of Ireland’s 14 directors were female.

European Commissioner Vivian Reding is expected to introduce legislation over the coming weeks to force listed companies to have 40% of their boards made up of women by 2020.

The Department of Justice and Equality said there is a business case to be made for more women on boards, but the Government has not yet adopted a firm position on gender quotas.

Ibec, the business organisation that contributed to the commission’s public consultation, opposes quotas, saying they do not address the underlying problems of inequality.

The legislation would apply only to major companies quoted on the stock exchange. Smaller companies would be excluded. Overall in the EU, 12% of directors are women, while just 3% of board chairpersons are female.

Norway introduced binding targets a few years ago and now women make up at least 40% of directors of its public company boards. Research suggests that companies that have above-average numbers of female directors have up to a third higher profits.

Ireland is one of several EU countries with a quota for women on the boards of state-owned enterprises. While the target is 40%, the Government has not set a deadline for that to be reached. Three years ago it was 34%.