EU gender balance directive for corporate boards comes into effect

The Gender Balance on Corporate Boards Directive officially came into force, marking a significant step towards achieving a more balanced gender representation on the boards of listed companies across all EU Member States.

Under this Directive, large listed companies in the EU are required to ensure that 40 per cent of non-executive director positions and 33 per cent of all board roles are occupied by individuals of the underrepresented gender.

The deadline for Member States to transpose these new regulations into national law was 28th December 2024, while companies must meet the stipulated targets by 30th June 2026.

Progress and challenges in gender representation

Currently, women hold an average of 34 per cent of corporate board positions across the EU. While progress has been made since 2010, the pace of change varies significantly between Member States. In countries with legally binding gender quotas, women accounted for 39.6 per cent of board members in major listed companies in 2024. This contrasts with 33.8 per cent in nations that have adopted softer measures and just 17 per cent in countries that have not implemented any specific policies to address gender disparity.

Measures to improve gender balance in board appointments

Member States were required to integrate the Directive’s provisions into their legal frameworks, ensuring the following key measures are in place:

• Transparent and gender-neutral criteria for selecting board directors.
• A preference rule granting priority to equally qualified candidates from the underrepresented gender.
• The right for unsuccessful candidates to request the qualification criteria used in selection decisions.
• Commitments from listed companies to improve gender balance among executive directors.
• Regular reporting on board composition, challenges in meeting the Directive’s targets, and steps taken to address these issues.
• Effective, proportionate, and dissuasive penalties for companies failing to comply with transparency and reporting obligations. These may include fines or the annulment of improperly made appointments.
• Publication of a list of companies that have successfully met the gender balance targets.
• Designation of national bodies responsible for promoting, monitoring, and supporting gender balance in corporate leadership.

Next steps and implementation oversight

The European Commission will assess whether Member States have correctly transposed the Directive into their national legislation.

Should any country fail to comply or implement the provisions adequately, the Commission has the authority to initiate infringement proceedings. Throughout the transposition process, the Commission has provided support, including workshops and bilateral consultations, to facilitate effective implementation.

The importance of gender equality in leadership

Findings from the 2024 Special Eurobarometer on Gender Stereotypes indicate strong public support for gender equality within the EU. Notably, three-quarters of respondents believe that gender equality benefits both men and women, while 55 per cent are in favour of introducing measures to address the underrepresentation of women in decision-making roles.

Women currently hold 34 per cent of board positions in the largest publicly listed companies across the EU. The 2024 European Institute for Gender Equality (EIGE) Index rated women’s empowerment in economic decision-making at 57.6 points out of 100 – an improvement of 2.9 points compared to 2023. Legislative action has been a driving force behind these advancements, with evidence showing that gender disparities are significantly more pronounced in countries that have not implemented any substantial measures.

The European Commission first proposed the Directive on gender balance in corporate boards in November 2012. After a decade of negotiations, the European Parliament and the Council reached a political agreement in June 2022. The deadline for transposing the Directive fell two years later, on 28th December 2024.

To build on the progress achieved under the EU’s Gender Equality Strategy 2020-2025, the Commission will introduce a new Roadmap for Women’s Rights in the coming year. This initiative aims to further promote gender equality in the workplace and enhance women’s representation in leadership positions.

Commenting on the Directive’s implementation, Hadja Lahbib, Commissioner for Equality, Preparedness and Crisis Management, stated: “Gender balance is about fairness for all, and equal opportunity must be provided in all aspects of life. This Directive is a significant milestone – the rules adopted by the EU in 2022 now have to be applied by Member States. These rules will release the amazing potential of women to drive our growth and innovation. I will follow up to ensure this important legislation is properly transposed by Member States and applied diligently. Together, we can break the glass ceiling.”