4.6 Concluding remarks

Annually, the ‘Dutch Female Board Index’ provides an overview of the female representation in boards of Dutch listed companies.1 This Index is based on an annual assessment of the Dutch Trade Register, thereby examining how many female directors in Dutch listed companies’ boards are registered. Since the first release in 2008, referring to the situation in the year 2007, only very little improvement has been reported. In 2007, only 2.1 percent (7 out of 333) of management board directors were women and only 6.9 percent (41 out of 595) of supervisory board members.2 The most recent Dutch Female Board Index was published in 2016. It reports that in 2015, 7.1 percent (15 out of 212) of management board directors and 23.1 percent (102 out of 441) of supervisory board members were women.3 These numbers show that in 2015, Dutch listed companies - on average - did not comply with the statutory 30 percent-30 percent target figure. It is apparent that, although female representation in Dutch boards increased somewhat since 2007, substantive increases in the level of female representation in Dutch boards do not occur overnight, and cannot be expected in the current legal context. The Index speculated that it will probably take many decades for companies to grow towards a situation in which board positions will be more equally divided between men and women, and hence will reflect a situation of equal opportunities.

Consequently, from a human rights perspective, the temporary Dutch target figure legislation has not achieved its goal in the three years in which it has been applicable to large companies (2013-2015). This law was adopted as a measure to correct a situation of unequal opportunities for women in the Netherlands. As we argued in Section 4.3, one of the reasons for taking action was that the CEDAW Commission had urged the Dutch government, in several successive reports, to take effective measures in order to break the glass ceiling still existing for women in regard to top positions in large companies, universities and the government. Another reason can be found in pressure by the European Commission on EU Member States to adopt a legal target figure in order to realize equal opportunities.

The Dutch target figure legislation instructed companies to comply with the target figure. However, it also permitted companies, if they did not comply, to explain why they did not do so. There were no incentives offered for compliance, nor any penalties imposed in case of non-compliance. As explained above, a legislative proposal is ready for adoption by the Parliament, and will extend the period of the applicability of the statutory provision to 2020. Nonetheless, in view of the results achieved so far, the question emerges whether the set-up of this provision is effective. Incentives for compliance seem to be necessary, e.g., by enforcing them through real sanctions. Another option could be to put more emphasis on structural gender programs (as this was reported by companies to be the most effective type of measure), e.g., by requiring companies to develop and implement such programs, and to report on their effectiveness in their annual report (compare the EU Directive 2014/95 which imposes similar obligations on large companies).

The Code constitutes another (semi-)legal instrument in this field. We explained in Section 4.3 that it obliges Dutch listed companies to have a diversity policy concerning the composition of the supervisory board, taking into consideration various factors including gender. The pertinent provision applies on a ‘comply or explain’ basis. The explanatory text points out that diverse supervisory boards succeed better in ensuring independence. Hence, the motivation of this rule lies in the economic domain. The rights-based perspective is not referred to in the Code, nor is it mentioned in said explanatory text.

In Section 4.2, we have elaborated on the claims in academic studies as well as in the business press that companies with increasingly gender-diverse boards and top management teams are capable of achieving increased financial, business and CSR performance, including developing innovation strategies.

In our studies for the Committee, we examined the compliance of Dutch listed companies with the Code provision that obliges them to create diverse supervisory boards. We used unique empirical data, which we collected in two consecutive years from the Dutch listed companies. In Section 4.4, we elaborated on the methodology of our studies, and in Section 4.5, we presented our analysis of the data. Many of the companies which participated in the studies mentioned expertise, experience and independence as the most important indicators to include in the supervisory board profile in terms of diversity. Gender, age and nationality came second. However, respondents often referred to the Dutch 30 percent-30 percent target figure legislation when explaining why they had not succeeded in complying with the Code. Clearly, companies have the understanding that they need to comply with both the target figure legislation as well as the Code provisions on board diversity. The Committee, however, in their last two reports, mainly emphasized the importance of interpreting the term diversity in a broad sense, i.e., not limited to gender diversity (Section 4.5), thus arguing from an economic perspective rather than a rights-based perspective.

Still, also according to the Committee, in the assessed years, board diversity is not impressive. The Committee emphasized that the focus of many companies lies primarily on expertise, experience and independence concerning their supervisory board profile; furthermore, they fail to clarify whether and how they have succeeded in realizing a diverse board composition.

Part of our studies focused on the measures implemented by companies aimed at realizing their diversity board profile. This part of the study generated valuable insights. Companies indicated that structural corporate programs to support equal opportunities worked best in achieving results. Moreover, they pointed out that measures such as instructing recruiters to look specifically for female candidates were very effective in improving the gender balance of boards. Moreover, we note that companies indicated that they created new board positions and appointed women in those positions. Other measures mentioned were tone at the top, putting the diversity issue on the management board agenda and highlighting female role models.

In conclusion, in this chapter, we have analyzed gender diversity and gender equality in boards of Dutch listed companies. We distinguished an economic decision-making perspective and a legal and human rights perspective (a rights-based perspective). In this vein, we pointed out that the public call for increased gender diversity in top management teams is often motivated by economic arguments, e.g., that gender-diverse teams achieve better economic results. Our research results revealed that Dutch listed companies often referred to applicable rights-based legal requirements when they set out their board diversity policies.

It appeared that the two perspectives are confusing for companies, regulators, and other stakeholders. In fact, both perspectives should be applied at the same time: (i) pursuant to the rights-based perspective, equal opportunities imply that boards and top management teams are to be composed of an equal number of men and women (otherwise it is unclear if there are indeed equal opportunities); (ii) at the same time, corporate boards that are composed on such a basis should also strive for diversity in broader terms because of the economic perspective.

We suggest that this complexity could be better taken up again by the Dutch government and the Committee. Ideas to deal with these issues have been developed in the series of corporate governance roundtables organized by Frank Bold in New York and several European countries, including the Netherlands.4

On 8 December 2016 the Committee will publish a revised Code. On the basis of the Proposal for Consultation, and the more than 100 responses to this Proposal,5 it is anticipated that the topic of gender equality and diversity in corporate boards still will be addressed therein. Moreover, the EU Directive 2014/95 will become effective as of 2017 requiring that large companies pay considerable attention to the theme of diversity and report on their strategies in their annual reports. We see ample room for future research in this field, in the Netherlands and elsewhere. The topics of gender and board diversity are at the center of attention of large companies, human resource departments, legislators, regulators, academics, and civil society.