By Melissa J. Anderson (New York City)

Last Year, EU Justice Commissioner Viviane Reding encouraged companies to pledge to increase the representation on their corporate boards significantly. She said it was companies’ “last chance” at self-regulation – and she meant it. The deadline for companies to commit to raising the percentage of women board directors was yesterday, and based on the unsatisfactory turnout (only 24 companies), Reding said, it may now be time for quotas.

The New York Times reported:

“France and other countries with legally binding quotas have made the most progress in placing women in top business positions, Ms. Reding said during an interview Friday in advance of her announcement. E.U.-wide rules were now needed, she said.

“‘Personally, I don’t like quotas,’ Ms. Reding said. ‘But I like what the quotas do. Quotas open the way to equality and they break through the glass ceiling.’ Countries that have quotas ‘bring the results,’ she said.”

Reding will begin meeting with governments, unions, companies, and other groups through the spring, and plan the details of the law enacting boardroom gender quotas across the EU. She told the Times, “Let all those who are concerned come in and say how we should proceed.”

Will Business Take the Lead?

Reding said corporate executives told her they wanted to take the lead on implementing gender targets to avoid government intervention. She told the Guardian, “I met a year ago with the CEOs of the large publicly listed companies. They told me they were capable of solving the problem by themselves.”

But data shows they haven’t moved quickly enough.

According to new research by EIRIS, a non-profit organization providing environmental, social, and governance (ESG) performance to investors, female representation on boards is low around the world. Writing in the Guardian, Mark Robertson, head of communications for EIRIS, explains:

“Looking beyond the FTSE 100, there is little evidence of significant progress in closing the gender gap. EIRIS data shows that 46% of UK companies listed on the FTSE All Share Index have no women on the board, whereas 15% of North American companies in the FTSE All World Developed Index have no women on the board, and in the Asia Pacific region the figure is 73%.

“Gender representation forms part of a wider focus on board effectiveness and diversity, which encompasses other features including age, ethnicity, background, education and experience. Increased diversity (including gender balance) not only better represents the staff in a company but also its clients, customer base, supply chain and potentially the different regions across which it operates.”

Robertson points out that increasing the percentage of female board directors generally increases performance. “Globally, a value-weighted portfolio of those companies with more than 33% women on boards of directors is found to generate significant positive excess financial returns,” he said.

Based on data like this, it’s a wonder that companies don’t jump at the chance to put more women on their boards. If they are truly working in the best interests of their shareholders, shouldn’t they consider diversifying leadership in order to maximize returns?

Solutions for Europe

Last month consulting firm Mercer released the results of its study on women in executive and management roles across Europe and found a shortage of women at the top. According to the study, on average, women comprised only 29% of senior executives and managers.

Sophie Black, Principal in Mercer’s Executive Remuneration team, commented:

“For a gender comprising over half the global population, women’s representation in senior corporate roles is woeful. The cause is complicated. It’s cultural, social, in some cases it is intentional discrimination but it can also be unconscious – the desire to recruit people like you. This unconscious bias is hard to eradicate. The end result of all these issues is a creation of a ‘pyramid of invisibility’ for women in corporate life.”

Black suggested that women are also disproportionately affected by work/life challenges and that an inflexible corporate culture can push women out.

“A woman’s career also receives a ‘maternity penalty’ in the eyes of employers for prioritising childcare duties over work. Corporate culture plays a huge part in causing women to deselect themselves from corporate life. If the culture of a company is such that those holding senior roles are expected to act in a certain way or place work above family commitments, then women will often turn their backs on the corporate ladder.”

Mercer’s research also pointed out that government intervention in corporate gender diversity can have a powerful effect. The report showed that that former Soviet Bloc countries had the highest levels of women in leadership, with Lithuania and Bulgaria boasting the highest percentage female senior executives (44% and 43%). Mercer says top the nine countries for female representation in senior roles are all former Communist states.

Black added, “Equality is a legacy from Soviet times with cultural and political life encouraging women to perform an equal role in society and the economy, so women were well represented.”

Perhaps it’s time for countries and companies to really take stock of the value of women – and once and for all, settle on how they can better work together to achieve the benefits of gender diverse leadership.