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The EU will soon require 40% gender representation on corporate boards, but where does the US stand on gender equality on corporate boards?

The European Union has reached a historic agreement requiring companies to ensure that at least 40% of their seats on corporate boards go to the “underrepresented sex”, which is usually women. This decision comes after 10 years of deadlock over the proposals.

The legislation is a legally binding quota, and it also states that companies can be fined for not recruiting enough women to their non-executive boards. Board appointments can even be revoked if the law is not followed. The EU has also set an overall target of 33% women in all management positions, including non-executive directors and directors such as CEOs and COOs.

The new law comes into force for the 27 member countries on June 30, 2026 and only applies to listed companies with more than 250 employees. The four-year delay in implementation is due to a peculiarity within the EU legal system that essentially gives member countries extra time to meet the quotas.

That said, a four-year delay is an improvement over policies in the United States, where there is no national quota for women on boards or in leadership positions. Some states have tried to implement their own policies, with different effects: A California law requiring state-based public corporations to have at least one female-identifying board member was recently ruled unconstitutional by a Los Angeles Superior Court judge. (The legal challenge claimed the law violated the Equal Protection Clause of the state constitution by imposing a gender-based quota.) In 2020, Washington State passed a Senate bill requiring that state-owned companies have a minimum of 25% female directors. by the end of the year. And in Illinois, state guidelines require public companies calling state headquarters to report diversity information to the office of the secretary of state, although there is no quota. gender imposed.

We’ve seen that quotas work, and frankly not enough progress has been made without smart policies pushing things in the right direction.

Lara Wolters, Member of the European Parliament

Two of the country’s largest financial institutions, Nasdaq and Goldman Sachs, have taken gender quotas into their own hands. The Nasdaq in August 2021 began requiring that most of its listed boards of directors, other than exempt entities and companies with a board of five or fewer members, have at least one female board member. of Directors and a member of any sex of underrepresented race, ethnicity or sexual orientation. Goldman Sachs announced in 2020 that it would refuse to take companies public unless they have more than two “diverse” board members.

“Quotas accelerate the achievement of gender equality and overall diversity on the board,” says Megan Wang, COO of The Boardlist, an online talent marketplace that connects CEOs with women endorsed by their peers for positions on the board of directors of private or public companies. “Beyond the quotas, we are currently seeing a convergence of certain things. There is a social movement putting pressure on companies to retain talent and customers, while activist investors and the demands of Nasdaq and Goldman Sachs to go public are also setting expectations for organizations,” Wang said.

These initiatives are reflected in the numbers: women held 23.9% of leadership positions in all U.S. companies in 2021, according to data from Deloitte. The percentage of women on the boards of Nasdaq companies was 30.4%, well above the proportion of women on the boards of Fortune 500, Russell 3000 and private companies (which represent 26.5% respectively). %, 26.7% and a paltry 14%). .

Globally, women hold 19.7% of board seats, an increase of 2.8 percentage points since Deloitte’s last report in 2019. At this rate, Deloitte estimates that the world n ‘will not achieve gender parity on corporate boards until at least 2045. those of the other major G-20 countries.

France is one of those nations that is ahead of its peers: the country implemented its own 40% quota in 2011, when women made up just 10% of board positions in national scale. “Understandably, some voices just don’t believe in quotas and targets to make a difference, preferring to wait for this kind of change to happen naturally. Yet we have seen quotas work, and frankly not enough progress has been made without smart policies pushing things in the right direction,” said Lara Wolters, a member of the European Parliament who has worked to push the agreement between legislators and Member States. Forbes in an emailed statement.

Belgium, Italy, Germany, Austria, Portugal, Greece and the Netherlands all had active national quotas before this week’s deal, ranging from a minimum of one woman to two minimum fifths of diversity on the boards of directors. The UK also recently imposed a minimum of 40% gender diversity in listed companies. Experts say that despite the existence of gender quotas for boards in these countries, the new EU ruling is needed for the whole region.

“If you consider that some European countries, like Estonia and Cyprus, have less than 10% women on company boards,” says Wolters, “that will be a huge change for the better.”