Germany to order large companies to include women on executive boards

Germany to order large companies to include women on executive boards
Belen Garijo, set to take over as Merck's CEO in May. Photo: DPA
German listed companies must include women on their executive boards as part of a landmark bill agreed by the country's coalition government Wednesday after voluntary efforts failed to close a gender gap.

Listed companies with four executives or more must appoint at least one woman to their boards, according to a draft law to be voted on by parliament.

The law sends “a very strong signal”, Justice Minister Christine Lambrecht said, urging corporations to “take advantage of the opportunity presented by highly qualified women”.

The law sends “a very strong signal”, Justice Minister Christine Lambrecht told reporters, urging corporations to “take advantage of the opportunity presented by highly qualified women”.

READ ALSO: How much do women in Germany earn compared to men?

“We can show that Germany is on the way to becoming a modern society fit for the future,” Family Affairs Minister Franziska Giffey said.

One step closer

With the new legislation, Germany is “one step closer” to the goal of equal opportunities and equal rights, Finance Minister Olaf Scholz said.

The women's quota is “overdue” and the time for voluntary measures is
“finally over”, he added.

Europe's largest economy fares relatively poorly in terms of representation of women in senior positions, particularly striking in a country led by the world's longest-serving elected female leader.

Chancellor Angela Merkel, in power since 2005, has spoken out at
foot-dragging by business leaders, against the resistance of some in her own conservative bloc.

The boss of her CDU party's economic council, Astrid Hamker, last year
called the idea of a quota system “completely counterproductive”, and said diversity should be “not according to gender, but rather competence”.

Yet evidence suggests companies with women at the top outperform the
average of Germany's blue-chip DAX companies by more than two percent, according to a report by the management firm Boston Consulting Group (BCG).

Included in the new legislation, companies in which the government holds a majority stake — such as the rail group Deutsche Bahn — will have stricter rules, with at least one woman on management boards with more than two members, and a 30-percent quota to come in the future.

'Snail's pace'

German research institute DIW said it welcomed the women's quota but noted that female participation in management boards continues to move at a “snail's pace”.

The new regulations cover around 70 companies, of which about 30 have no women on their boards.

They would raise Germany to 18th from 24th place by 2022 in representation on company boards among EU nations, the BCG said.

Just 12.8 percent of management board members at Germany's 30 largest listed companies are women, according to the AllBright Foundation, which works to promote boardroom diversity.

By comparison, women account for 28.6 percent of top roles in the United States, 24.5 percent in Britain and 22.2 percent in France, AllBright said.

Female representation has fallen in Germany during the coronavirus
pandemic, with 11 DAX companies still led by all-male board executives,
AllBright said in October.

Women also earn an average 20 percent less than men in Germany, compared with 14 percent less across the European Union.

No DAX company is currently led by a woman, although pharmaceutical firm Merck is set to break the glass ceiling when Belen Garijo takes over in May.


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