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Germany to set quota for women in top companies' boardrooms as progress stalls

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The curve of the German stock index DAX is seen at the stock market in Frankfurt, Germany, March 17, 2020,
The curve of the German stock index DAX is seen at the stock market in Frankfurt, Germany, March 17, 2020,   -   Copyright  AP Photo/Michael Probst
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Germany plans to impose gender mandatory quotas at its largest listed companies as progress on the issue stalls.

Under the draft law introduced on Wednesday, the boards of German listed companies with more than three members will be obliged to have at least one woman. Companies in which the federal government has a majority stake will also have a mandatory quota of 30 per cent of female board members.

It builds on a 30 per cent voluntary quota for supervisory boards introduced in 2015 but targets the country’s biggest 70 companies of which about 30 have no women on their management boards at all.

The government described the proposed law as a "milestone" moment for women in management positions. It still needs to be approved by lawmakers in the Bundestag.

France leads the way

Just over a quarter -- 28 per cent -- of board members at Europe’s largest publicly listed companies are female. Eight years ago, that figure stood at 15 per cent.

The European Commission has been trying to impose a 40 per cent quota since 2012 but has been rebuffed by member states which argue that it is a national matter.

But progress has largely been due to legislation and has been more rapid in member states that have set legally binding quotas.

France, which introduced a 40 per cent quota in 2011, leads the way with just over 45 per cent of board members at the country’s largest publicly listed companies being female. It is followed by Sweden (38%), Belgium, Germany and Italy (all 36%)

At the bottom of the table stand Estonia and Cyprus where just nine per cent of board members are female as well as Greece and Malta (both at 10 per cent).

Germany falls back

But although women are now much more represented on supervisory boards, they remain largely shut out of executive boards. The former comprises people working outside the company who are appointed by shareholders to approve large business decisions while the latter is made up of the company’s most senior employees who oversee the day-to-day running of the business.

Women account for just 18 per cent of senior executives at Europe’s largest publicly traded companies.

Romania, Estonia, and Lithuania had the highest share of female senior executives in 2019 — all above 30 per cent. France was just above the EU’s average at 19.6 per cent while Germany was under with 14 per cent.

And evidence suggests the previous year has been detrimental to female participation at the highest echelons of business decision-making in Germany

According to research released in October by the Swedish-German Allbright Foundation, the share of female senior executives at Germany’s largest companies dropped 1.9 percentage points last year to 12.8 per cent. In contrast, the five other countries surveyed — France, UK, Poland, Sweden, and the US — all registered an increase.

Additionally, Germany’s blue-chip stock market index, the DAX, was the only one not to have a single company with at least 30 per cent of women on the executive board.