Women on boards: UK targets achieved three years early
Women on boards has been a thorny issue for years as campaigners seek greater diversity at the governance level, but the UK is now seeing big progress.
The UK reached another gender-balance milestone this week, with news that a major target was reached three years ahead of schedule.
Now, more board seats in Britain’s top companies are held by women than ever before.
But here’s the thing: this change is happening in a country without an impending legal quota. Meanwhile, the EU – which does have a legal quota – isn’t seeing such universal progress.
Here’s what’s going on:
The FTSE 350 (which comprises 350 large and mid-size companies by capitalisation in the UK) has reached a state where 40.2% of its board seats are filled by women.
That’s according to the FTSE Women Leaders Review – an annual publication documenting the role of women in British corporate leadership positions.
Until now, the stated target was to have 40% of board roles filled by women by the end of 2025, meaning this milestone comes just under three years ahead of schedule.
Why is this important?
In the UK – as in other western nations – there has been a drive for more women on boards for some time.
Investors, consumers and politicians increasingly recognise the moral values associated with it and the broadened leadership perspectives that come from varied representation.
In quantifying this goal, other countries are aiming for targets similar to the UK, both in terms of percentage and timeframe. The UK has already succeeded in both, and others – notably all EU countries – are still working on it.
This is the main news we should draw from this week’s announcement.
UK vs EU
Despite similar goals, the EU has a more hands-on approach.
While the drive for more women board members in Britain is driven by a voluntary campaign, the EU’s target will now come straight from a “women on boards” directive.
This directive, approved by the Commission and Parliament in 2022, says that by 2026, 40% of non-executive director (NED) positions and 33% of all director positions should be held by women.
Despite notable successes in this area already – for example, in the financial services sector – more work remains.
Voluntary vs quotas
The EU method is based more on a ‘comply or explain’ model with appropriate penalties in place for companies that still fall short by the deadline.
In the UK, it’s the opposite: companies are merely encouraged to join in reaching the gender targets – something that the report has spoken about directly.
“The UK voluntary business-led approach is not only working but has created a career track for senior women that a decade ago rarely existed,” it said.
It begs the question of whether the EU’s directive-led approach was ever necessary. In other words, why make laws to force change when campaigns will do it for you?
While in no way dismissing the EU approach, the FTSE Women Leaders have said the UK tactic is “equally effective” at promoting diversity at the board level.
While the EU as a whole has more work to do in reaching gender targets, we should acknowledge that it is a collection of 27 states.
Some of them are at the same progress level as the UK. One – France – is actually doing better (44%), with Norway – not an EU member but a member of the EEA – (39.1%) and Belgium (38%) following close behind.
What’s next for the UK?
One word: optimism.
“The pipeline of capable, experienced women has never been stronger, nor the appetite from business for change more healthy,” the report said.
There is no mention of a movement towards legally mandated gender quotas in the near future. Instead, the report calls for more of the same to bring certain companies above the threshold, have more female CEOs, and encourage “slow” or “by-standing” companies to play an active role in the campaign.