Regulation for company boards: Cabinet approves quota for women

Wednesday, January 06, 2021

Rules for company boards
Cabinet approves quota for women

After a long struggle between the SPD and the Union, the cabinet is introducing a quota system for corporate boardrooms. The regulations for companies that are mainly owned by the federal government are even stricter. The DIW expects little effect, however.

The federal government has initiated the quota of women for company boards agreed after a long coalition dispute. Family Minister Franziska Giffey and Justice Minister Christine Lambrecht spoke of a milestone for equality. The Union made a similar statement. Criticism came from the opposition and trade unions, the German Institute for Economic Research (DIW) spoke of the limited effect of the legislative plans, which still have to be approved by parliament.

The long controversial draft law stipulates that at least one woman must sit on the executive boards of listed companies with equal co-determination and with more than three members. For companies with a majority stake by the federal government, there are even stricter rules: In general, if there are more than two members of the management team, there should be at least one woman.

In addition, companies will in future have to give special reasons if they plan for the executive board, the two top management levels below the executive board and the supervisory board without women. The sanctions for breaches of reporting obligations are to be tightened.

Voluntary commitments by the companies are inconclusive

Giffey emphasized that it was not easy to find an agreement in the black-red coalition. Lambrecht spoke of a good day for all the highly qualified women in Germany. The Union also praised the compromise. For years, attempts have been made to increase the proportion of women in management positions on a voluntary basis, said group vice-president Nadine Schön. "There were always promises to make this happen. Unfortunately, the reality is different. Now we are acting."

From the point of view of the Green politicians Ulle Schauws and Claudia Müller, the government draft is weak and only a minimal consensus. The draft law does not go far enough for Doris Achelwilm from the Left parliamentary group either. "This minimum participation is not a quota and it is feared that it will then remain in the implementation of the individual board, no matter how big the board is," she said. The DGB also spoke out in favor of stricter regulations.

According to a study, almost half of the listed companies (44 percent) for whose board members the quota for women is to apply in the future do not currently have a manager on the executive committee. According to the evaluation of the organization Fidar (women on the supervisory boards), 73 corporations would be affected, 32 of them do not have a female manager on the top floor. There is already a quota for women on supervisory boards.