3.4.3 Gender concerns in board composition

Considering the above mentioned Principles and provisions concerning the management and supervisory board, it seems that the gender representation issue only concerns the supervisory board composition. However, reflecting on the above cited response of the Monitoring Committee, and referring to the content of provision III.5.14, one could extend the gender issue in board composition to the management board. Vide provision III.5.14:

Moreover, since equal representation is certainly an important CSR theme, and pointing to the instruction that the management board adopt a CSR strategy, one could take the position that the strategy should provide for this. However, the author considers it a missed opportunity that the Frijns Code does not provide more clarity on this point.

It is interesting to note that gender has entered the corporate governance discussions on board composition. A fair representation of women in company boards would help abolish discrimination based on sex, which in many places in the world is still more of a rule than an exception in work and income situations.1 In the Netherlands, listed companies' boards comprise, on average, seven per cent female board members whereas the European average stagnates at 11 per cent.2 Together with Belgium, Italy and Spain, the Netherlands sits in the lowest European echelon. Higher management also constitutes fewer females than males. The same 'gender gap' can be observed with university professors and high-level public officials. Even in politics, although generally in modern states it is attempted to achieve a fair male/female representation among MPs and cabinet ministers, there are still few female prime ministers or presidents. Confirming the existence of the gender gap - most notably in the composition of corporate management bodies - a 2007 McKinsey study offers fact-based insights into the importance for companies of fostering the development of women in the business arena, so that a greater number attain positions of high responsibility.3 The study suggests that the companies where women are most strongly represented at board or top-management level are also the companies that perform best. The same outcome can be detected from a 2007 Finnish study demonstrating a 48 per cent higher profitability of companies with women 'on board'.4 The reasons are that without females on board, a board lacks half of the talents, misses the voice that brings into the decision-making process the concerns and interest of women with regard to the products and services offered by the company, and it appears that decisions are taken better, quicker, more nuanced, and generally with a stronger long-term perspective.

In order to avoid gender discrimination, it is a good thing to pay attention to this problem in corporate governance codes and company codes. In the discussion on the effective enforcement of CSR standards at the HiiL 2009 Annual Conference, the question was inevitably raised whether we need more sanctions in respect of non-compliance with CSR standards. Villiers expressed the view that sanctions are increasingly necessary. She exemplified this statement by her case study 'Boardroom Composition and Gender Parity'.5 The study concluded that there is a lack of gender diversity in boardrooms of many large companies across the world. The weak enforcement of the right to equal treatment, proclaimed in numerous human rights instruments, shows the parallel with the enforcement problem of CSR standards. In her research, she compared the approaches chosen by different European states to address the problem of gender equality on the boards of the companies. For instance, the UK has chosen a voluntary approach that proved unsuccessful. Norway, on the other hand, imposed sanctions on companies, i.e. a company will be dissolved unless it complies with the gender quotas for company boardrooms laid down in the Law on Public Companies.6 This measure turned out to be effective: in 2009, Norwegian company boards had 44 per cent females. In the UK, this figure is lagging: 15 per cent. This study illustrates that imposing an obligation in respect of compliance with CSR standards, including the promotion of equal treatment, or the threat of sanctions can be very effective.

Gender is not a criterion that, as yet, can be found in Dutch law or case law regarding the composition of the supervisory board. In that light, Principle III.3 of the Frijns Code is welcomed. Interestingly, a Labour Party MP, Paul Kalma, has proposed a bill to fight the gender gap with quotas which are to be incorporated in the DCC.7 It reads that a board of a large company (>250 employees) should be composed of at least 30 per cent female and 30 per cent male members, in so far as it comprises natural persons. Non-compliance should be explained in the annual report. The Bill intends to force a change in traditional role models and to encourage companies to actively scout for and coach female talents. It is expected that quotas will not be necessary once females have entered the old boys' network' or have established their own old girls' network'. This pattern revealed itself in Norway where female board representation currently exceeds the quota of 40 per cent. By 2007, over 90 per cent of the 460 listed Norwegian companies complied with the new norm.8 The Dutch Bill states that the quota obligation will disappear by way of law by 2016. It was adopted by the Lower House in December 2009 and has subsequently been submitted to the Upper House.

With a same view, a bill submitted to the French Parliament in January 2010 requires of all companies listed on the Paris stock exchange that they ensure that female employees make up 50 per cent of their board members by 2015. If passed, a gradual implementation of the law would see businesses obliged to have women in 20 per cent of board seats within 18 months, and 40 per cent within four years. The proposals, which would also apply to state-owned companies and non-listed firms with supervisory boards, are scheduled to be debated in the spring of 2010 and would need the approval of both houses of parliament to become law.9