The EU Gender Balance on Corporate Boards Directive which entered into application at the end of 2024, strives to achieve greater gender representation on the boards of listed companies across EU Member States. It requires large EU-listed companies to achieve a minimum of 40% representation of the underrepresented gender among non-executive directors and 33% among all directors by 30 June 2026. Member States were required to transpose the Directive’s rules into national legislation by 28 December 2024.
Key measures include transparent, gender-neutral selection criteria, preferential consideration for equally qualified candidates of the underrepresented gender, mandatory reporting on board composition, and penalties for non-compliance. These penalties may include fines or nullification of non-compliant appointments.
Currently, women make up 34% of board members across the EU, with significant variation among Member States. Countries with binding quotas report higher representation (39.6%) compared to those with softer measures (33.8%) or no action (17%). Legislative efforts have shown clear progress, with countries enforcing quotas achieving the highest gender balance on boards.
Listed companies are required to make concrete commitments to achieve gender balance among their executive directors. This involves setting clear targets and implementing measures to ensure fair representation of the underrepresented gender at leadership levels.
Companies must report on the composition of their boards, highlight any obstacles preventing compliance with the Directive’s targets, and detail the actions taken to address these challenges.
To ensure compliance, Member States are mandated to impose effective, proportionate, and dissuasive penalties. These may include fines or the annulment of board appointments that do not meet the prescribed standards.
Additionally, Member States are required to publish a list of companies that have successfully met the gender balance targets. They must also designate one or more bodies to promote, monitor, and support gender balance on corporate boards.
The European Commission will monitor the implementation of the Directive and may take action against Member States failing to comply. The Commission also plans to adopt a Roadmap for Women’s Rights in 2025 to further its commitment to gender equality, building on the Gender Equality Strategy 2020-2025.
Public opinion largely supports gender equality measures, with 55% of EU citizens favouring initiatives to address underrepresentation. The 2024 European Institute for Gender Equality (EIGE) Index recorded a 2.9-point increase in women’s empowerment in economic decision-making, reaching 57.6 out of 100.
