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Europaudvalget 2011-12
EUU Alm.del Bilag 423
Offentligt

European Commission

DG Justice / D1

LX 46 - 1/101

'Consultation gender balance'

B-1049 Brussels

BELGIUM

[email protected]

Consultation document:

Gender imbalance in corporate boards in the EU

The Danish Government welcomes the opportunity to respond to the Europe-

an Commissions consultation on Gender Diversity.

The Danish Government is convinced that more women in top management

positions and on corporate boards are needed for the benefit of society and

the individual – all managerial talent, qualifications, and skills should be

brought into play.

Within the last ten years, the number of female top executives in the private

sector in Denmark has risen from four percent to seven percent, and the same

trend prevails regarding women on corporate boards. Today, women make

up twelve percent of all board members in private companies listed on the

Danish Stock Exchange.

Women continue to attain higher levels of education and qualifications.

However, the process of achieving a more equal gender balance in manage-

ment positions and on boards is progressing slowly. Therefore the Danish

Government agrees with the European Commission that actions to improve

the gender balance in corporate boards are needed.

However, the gender imbalance on corporate boards cannot be solved only

by focusing on board representation. The Danish government is convinced

that efforts should also be devoted to increase the recruitment base of candi-

dates. Hence, it must be ensured that potential candidates develop relevant

qualifications.

The following answers reflect the Danish Government’s view on how to im-

prove gender balance in corporate boards.

Frederiksholms Kanal 21

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1015 København K

www.lige.dk

www.km.dk

Telefon 3392 3390

Telefax 3392 3913

e-post [email protected]

The Danish Government

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(1)

How effective is self-regulation by businesses to address the issue

of gender imbalance in corporate boards in the EU?

Side 2

Corporate Governance recommendations

In August 2011 the Committee on Corporate Governance in Denmark re-

vised their recommendations on Corporate Governance. In the new recom-

mendation the Committee recommends that the supreme governing body an-

nually discuss the company's activities to ensure diversity at management

levels, including equal opportunities for both genders. The Committee also

recommends that the supreme governing body must set

measurable objec-

tives

in the management commentary in the annual report and/or on the com-

pany's website give an account of both the objectives and the progress made

in achieving the objective.

The Committee’s recommendations are aimed at the approximately 200 Dan-

ish companies whose shares are admitted to trading on a regulated market.

The recommendations are so-called soft law. Soft law reflects best practice in

corporate governance and is characterised by voluntary participation, which

ensures adequate flexibility in the recommendations.

As part of the “comply or explain”-approach, the individual company de-

cides whether and to what extent it wishes to comply with the recommenda-

tions. If a company fails to comply with a recommendation, it must explain

why and specify different approach.

It is still too early to say how the companies have worked with the revised

recommendations from August 2011. The new recommendations will be

evaluated in the summer of 2012. The preliminary evaluation shows that a

number of companies actually have set objectives for 20-40 % female board

members by 2015.

Voluntary initiatives

In Denmark, several initiatives have been implemented based on a close co-

operation with the private sector, including a Charter on more women in

management and the so called “Operation Chain Reaction” – which aims at

promoting more female board members.

“Operation Chain Reaction”

“Operation Chain Reaction - Recommendation for more women on supervi-

sory board” was launched in 2010 by the Danish minister for gender equality

in close cooperation with representatives of Danish trade and industry and

the Confederation of Danish Industry. As co-signatories of “Recommenda-

tion for more women on supervisory boards”, the companies undertake, over

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the coming years, to work consistently to develop and recruit more female

managers to the supervisory boards of Danish limited liability companies.

In less than six months 56 major companies have signed the recommenda-

tions. The companies represent a large number of stakeholders within the

business community.

The preliminary evaluation of Operation Chain Reaction shows, that there

has only been a slight increase in the number of female board members.

Since board members are often elected for a 4-year period it is still too early

to say if more changes will occur when the boards have to appoint new

members. On the other hand, the preliminary evaluation also shows that the

companies have launched internal initiatives to increase the pool of female

candidates.

“Charter for more women in management”

“The Charter for more women in management” was introduced in 2008. The

charter has been drawn up jointly with public and private sector companies

as part of the Government’s efforts to encourage companies to inspire more

women to take up management positions.

In endorsing this charter companies undertake to make concrete efforts to

bring more women into management positions. Efforts will be adapted to the

particular company’s circumstances – for example sector conditions – and

the current share of women managers.

Each company is required to submit a baseline report to the Ministry for

Gender Equality, which describes concrete efforts. Every second year the

companies have to evaluate their initiatives.

Side 3

(2)

What additional action (self-regulatory/regulatory) should be

taken to address the issue of gender imbalance in corporate

boards in the EU?

From a Danish perspective, it is important that companies individually en-

sure a balanced share of women at management levels, including equal op-

portunities for both genders. It is important that each company commits itself

to work with the underrepresentation of women on boards. At the same time

it is important to respect the managerial prerogatives of the companies and to

leave the companies with some flexibility.

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The Danish Government will in fall 2012 propose legislation with the fol-

lowing elements to address the issue of gender imbalance in corporate

boards:

1) The 1.100 largest companies (both private and public) will be obliged

to individually set up realistic and ambitious targets for the un-

derrepresented gender on corporate boards and give an account of

both the objectives and the progress made in achieving the objective.

2) The 1.100 largest companies will furthermore be obliged to promote

policies for increasing qualified candidates of the underrepresented

gender in the company’s management levels in general to sustain an

acceptable balance and to increase the recruitment base of candidates

to company boards.

3) Companies must give an account in the companies’ annual report of

the objectives and the progress made in achieving the objectives and

give an account of the policy for increasing the number of the un-

derrepresented gender in the company’s management levels in gen-

eral, how the policy is implemented and what progress is made. If the

companies fail to do so, they may be fined.

4) State owned companies are obliged – regardless of size – to set up

objective targets and policies for the underrepresented gender.

The Danish Government will advise both private and public companies to set

objectives as ambitious as possible.

The Danish government believes that this model contains appropriate and

sufficient measures to address gender imbalances.

Side 4

(3)

In your view, would an increased presence of women on company

boards bring economic benefits, and which ones?

The Danish Government is convinced that Danish companies as well as the

society in general will prosper if we manage to activate the country’s most

talented, competent and able individuals. Some international studies indicate

that there is a positive link between diversity in the boardroom and

the financial performance of a company. However, the advantage of having

a larger talent pool and thus more women on boards of directors is the main

reason why it remains important that we help the process along.

(4)

Which objectives (e.g. 20%, 30%, 40%, 60%) should be defined

for the share of the underrepresented sex on company boards and

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for which timeframe? Should these objectives be binding or a re-

commendation? Why?

As described in the answer to question 2, the Danish Government proposes a

model where each company sets up objectives for the underrepresented gen-

der on the corporate boards. These objectives and the concrete timeframe

should be developed by the company in due respect of their individual gen-

der balance situation. The Danish Government will advise both private and

public companies to set objectives as ambitious as possible.

This will ensure flexibility for each company – regardless of industry – to set

up objectives, while the companies’ right to self-management is respected.

Side 5

(5)

Which companies (e.g. publicly listed / from a certain size) should

be covered by such an initiative?

A way of increasing the number of women on company boards would be to

extend the field of application further than just listed companies. It should al-

so be considered to include other large companies of substantial economic

importance to society. Likewise. it should be considered not only to include

representation at board level, but also to promote policies for increasing qual-

ified candidates of both genders in management positions to sustain an ac-

ceptable balance.

This solution will prevent that additional requirements are imposed on com-

panies caused only by the fact that they are listed. By including a lager group

of companies, this solution will also increase the recruitment field of quali-

fied candidates more than a solution that only focuses on listed companies.

(6)

Which boards/board members (executive / non-executive) should

be covered by such an initiative?

This issue is strongly interlinked with national company law and practice.

Some jurisdictions traditionally apply the two-tier system while others have a

tradition to apply the one-tier system or sometimes a mixture of the two sys-

tems. The Danish company law allows for all three possibilities.

As described in the answer to question 2 the Danish Government suggests a

model where each company sets up objectives for the underrepresented gen-

der on corporate boards.

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At the same time companies will be obliged to promote policies for increas-

ing the number of the underrepresented gender in the company’s manage-

ment levels in general to sustain an acceptable balance and to increase the re-

cruitment base of candidates to company boards.

It is the opinion of the Danish Government that it is not enough to focus on

the top level, i.e. on the board of directors. It is important to secure the “sup-

ply chain” of qualified candidates and therefore focus also has to be on in-

creasing the number of the underrepresented gender in the company’s man-

agement levels in general.

Side 6

(7)

Should there be any sanctions applied to companies which do not

meet the objectives? Should there be any exception for not reach-

ing the objectives?

The Danish Government does not recommend or support sanctions for not

reaching the objectives since sanctions will not encourage companies to set

ambitious targets.