Women on Boards - European Union Committee Contents


Company scrutiny

74.  To encourage the sustainable change that we wish to see, we need to make sure robust data are in place to allow progress to be monitored. Witnesses stressed that transparency of this kind strengthened accountability and facilitated realistic target-setting. The National Employment Savings Trust (NEST), an institutional investor, quoted management guru Peter Drucker when noting that, "what gets measured gets done".[145] Despite this, the Government said that many companies did not compile statistics on gender diversity in their organisation, despite having the raw data available.[146] The European Women's Lobby agreed: " … most companies … do not have the necessary statistics and do not really know exactly what their situation is at every level of corporate governance".[147] This is not an acceptable state of affairs.

75.  The best means of performance monitoring divided witnesses. Some agreed with the drive for European-level mechanisms.[148] For the Austrian Federal Chancellery and the ELA, this meant national-level monitoring with reporting at EU level. Others wanted a more devolved approach. For the 30% Club, progress was best measured voluntarily at local levels, using resources such as BoardWatch[149] and the Cranfield Female FTSE report.[150] This was also the stance of the Government: the Minister said that the "very different circumstances" of Member States counted against EU monitoring.[151] IDDAS, a leadership development consultancy, and GC100, the association of general counsel and secretaries of FTSE 100 companies, agreed with local monitoring, but wanted reporting to be obligatory.[152]

76.  We support strongly the development of a European mechanism for monitoring gender diversity levels across the EU. Without firm information, it is difficult to gauge the extent of problems across and within companies, or to monitor the effectiveness of measures to address them. A co-ordinated data collection framework would allow progress to be compared between Member States, and support investors in scrutinising the progress of individual companies.[153] As the Commission noted, this need not be a burdensome requirement given the current availability of much of what would be required.[154] Furthermore, varying national circumstances merely indicate the need for careful interpretation of statistics that emerge, rather than entirely ruling out the collection of valuable data. We therefore reject the Government's contention in this respect.

77.  We are convinced that a legislative reporting duty is the most appropriate way to establish such a framework. To ask for such data on a voluntary basis could lead to lower compliance rates and an unacceptable time lag before robust data were in place. Legislating to establish a firm evidence base, at a time when the question of the effectiveness of Member State-led efforts is the central issue of the debate, would demonstrate the EU's leadership and commitment to evidence-led policymaking.

78.  It is crucial for the data to look beyond the boardroom.[155] PWC considered the proportion of women on the board, in senior executive positions and in the organisation as a whole to be a "baseline level of disclosure".[156] We agree. We note the possibility of definitional issues as the scope is widened, as highlighted by the Institute of Leadership and Management (ILM),[157] but this only demonstrates the importance of setting clear criteria at European level as to the data being sought. Aligning definitions is not an insurmountable task, and should not be considered a barrier to progression. We are glad to see that provisions to this end are being consulted on in the United Kingdom.[158] If the Government oppose legislative intervention from the EU, we urge them to take this idea forward and to demonstrate the effectiveness of these efforts.

79.  The responsibility for deciding who should collect the data, whether a public or private sector body, should be left to Member States. Similarly, the approach to non-compliance—for example the issuing of fines, or the adoption of a "comply or explain" approach—should be a national matter. This approach respects national systems, but realises the benefits of looking at the issue Europe-wide. In so doing, it would respect the principle of subsidiarity.

80.  The data should not be used simply as a means to berate companies who are not making progress. Encouraging companies to engage with the agenda requires policymakers and the media to celebrate the undoubted good work going on, as well as to highlight those who are under-performing.

81.  Robust EU-wide information is essential to assessing progress made by companies in addressing issues of gender inequality in the labour market; it must be collected more comprehensively and rigorously than it is today. The Commission should, in any legislation it introduces, require companies to report on the proportion of women at every level of their workforce. Data should be collected at a national level by each Member State.

82.  At a minimum, companies should be required to report on the number of women on the board, in executive positions and in the organisation as a whole. In the United Kingdom, we support the Government's proposals to introduce such reporting standards in October 2013 for large and medium-sized companies, to ensure that as much of this information is available as soon as possible.

83.  These figures should be monitored on an annual basis by the Commission, to determine whether sustained progress is being made and to inform possible policy responses. The information should be used by policymakers and the media to identify and promote examples of best practice, as well as to draw attention to poor performers.

Member State policy monitoring

84.  We do not wish to restrict the focus of monitoring simply to the actions of companies. The actions taken by Member States to foster their engagement are just as important. The data collection we advocate above provides one way to do this, but we must also be clear how, in policy terms, governments are responding to the challenge.

85.  The Confederation of British Industry (CBI) proposed action in a style similar to that of the European Semester, a surveillance programme operated by the EU. In that programme, Member States make submissions on their economic policy progress and the Commission reports on their activities, with the report then scrutinised by national parliaments. Neil Carberry, Director of Employment and Skills at the CBI, posited that Member States could submit their work on gender diversity for similar evaluation.[159]

86.  We support this as a template for action. We appreciate, though, the level of rigour involved in the European Semester, so would urge the Commission to use as a base for this work its existing progress reports on women's participation in economic decision-making'.[160] By expanding this system to involve more detailed reporting from Member States, and bringing it within the formal parliamentary scrutiny process, national parliaments and the public could hold governments to account more effectively for their policies in this area. Furthermore, as the approach is similar to the progress reports that the Government already commission from the Cranfield School of Management, it would be especially easy for the United Kingdom to participate without undue administrative burden.

87.  Governments should be scrutinised for their actions to improve gender diversity in the labour market, to keep up the pressure for change. Comparing the actions taken in different Member States enhances this scrutiny and offers the possibility of exchanging best practice. The Commission should therefore expand its reporting work on women's involvement in economic decision-making in a style similar to the reporting process in the European Semester economic programme. In short, Member States should provide more detailed policy information and statistics on progress made in improving gender diversity, and the Commission in turn should provide individual national and comparative European analysis on the work being done. Such assessments should then be brought within formal national parliament scrutiny processes and form part of the evidence base when considering the future case for any legislative action in this sphere. This would establish a rigorous and accountable assessment framework at all levels.

145   See also PWC, EWL, An Inspirational Journey, ILM, Q188 (Michael Reyner, MWM Consulting; Kate Grussing, Sapphire Partners) Back

146   Q24 (Jonathan Rees, GEO) Back

147   Q278 (Sonja Lokar). See also Q188 (Kate Grussing, Sapphire Partners) Back

148   Aviva, ABI, Arlene McCarthy MEP, TUC, NHO, Q97 (Dr Karen Jochelson, EHRC), Q188 (Kate Grussing, Sapphire Partners) Back

149   Professional Boards Forum, BoardWatch, The rate of new appointments to FTSE 100 and 250 companies, op. citBack

150   See also Mentoring Foundation, Aberdeen Asset Management, Marina Yannakoudakis MEP Back

151   Q290 Back

152   IDDAS, GC100 Back

153   This was acknowledged at Q130 (Otto Thoresen, ABI) Back

154   European Commission Back

155   ILM, TUC Back

156   PWC. See also GC100, ELA Back

157   ILM Back

158   Department for Business, Innovation and Skills, The future of narrative reporting: A new structure for Narrative Reporting in the UK, October 2012 Back

159   Q155  Back

160   See European Commission, Women in economic decision-making in the EU: progress report, op. cit. Back

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