European Union approves 40% board diversity threshold
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European issuers may soon be required to attain a minimum of 40% female representation on boards as legislation proposing increased gender diversity thresholds won the support of the European Union.
In a Monday meeting, the European Union’s employment, social policy, health, and consumer affairs council voted in favor of legislation that would require European issuers to feature a minimum of 40% female representation in non-executive director positions on boards by 2027.
Alternatively, boards will be expected to feature at least 33% gender diversity across all board members. Member states, not companies, will be given the choice of which target they wish to work towards.
Companies that fail to reach these targets would have to apply “clear, unambiguous, and neutrally formulated criteria when appointing or electing directors,” the EU council said.
“I wish to see negotiations with the European Parliament commence rapidly to achieve the definitive adoption of this directive, which make it possible to take action on the glass ceiling with which women still too often face in the world of work,” said Élisabeth Borne, French minister for labour, employment, and economic inclusion, in a press release.
Support for the draft legislation has now paved the way for negotiations with the European Parliament to reach a final agreement on the text. Parliament supported a previous iteration of the policy in 2021.