Equality: EC Policies on Women on Corporate Boards

Baroness Stowell of Beeston Excerpts

Wednesday 17th October 2012 Lords Chamber

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what is their assessment of European Commission policies on women on corporate boards.

[Baroness Stowell of Beeston]

My Lords, the European Commission has yet to announce its proposed policy for women on boards. The Government agree with the Commission that increasing the representation of women on the boards of UK-listed companies is important. However, we are not in favour of EU legislation or regulation, including quotas. National-level solutions are best, and evidence shows that, following the Davies review that the Government commissioned in 2010, the UK’s voluntary, business-led approach is working.

[Baroness Falkner of Margravine]

I agree with my noble friend that the EU is probably not the body best placed to deal with this problem, particularly as corporate governance varies from country to country. However, does she agree that the real problem is the lack of progress on getting women executive directors on to FTSE 100 company boards? We have had good progress with non-executive directors; we have something like 22% against the Davies targets, which is progress. However, our flagship companies are not nurturing and developing talent to get people promoted from within. What are the Government proposing to do about that?

[Baroness Stowell of Beeston]

My Lords, my first point is to reinforce what progress has been made since the Davies review on the recruitment of women to boards. Notwithstanding the point that my noble friend made, it is worth saying that the percentage of women on FTSE 100 boards is now 17.3%; that is up from 10.5%. However, my noble friend is right to say that progress in executive ranks is not as fast. More effort is needed in that area, particularly around what is called strengthening the pipeline, so that women are recruited from a wider pool of backgrounds to these executive posts and that we do not rely just on the kind of criteria that are normally placed on men who are recruited to those jobs.

[Baroness Nye]

My Lords, I, too, welcome the increase in the number of women on boards, but does the Minister agree that the voluntary code needs to be reviewed, as the evidence suggests that while the 30% target for female applicants on the long list is being met, these women do not make it on to the shortlist? Surely the code should be extended to include targets for the shortlist as well.

[Baroness Stowell of Beeston]

As I said about the shortlist, the executive search companies are putting forward 30% of women to companies; clearly that is working in getting women into non-executive positions. However, more work is needed to target the executive ranks. As I explained, this will take longer. It is worth noting that in countries such as Norway where there are quotas, the quotas in force for non-executives have not led to a greater improvement among the executive ranks at the same rate. This is a difficult problem that goes much wider than the narrow point we are discussing.

[Lord Watson of Richmond]

My Lords, does the noble Baroness not agree that public opinion plays a very important role in this and that the battle has to be won with public opinion? After all, what is the chance of recovery from recession unless women play a more important leadership role in our top companies?

[Baroness Stowell of Beeston]

My noble friend is absolutely right. The case for women in senior positions, whether they are executive or non-executive, is clear. Women account for nearly half the workforce and women outperform men educationally at every level. We are also responsible for about 70% of household purchasing decisions so it makes sense to have women in positions of authority in the corporate world.

[Baroness Howe of Idlicote]

My Lords, does the noble Baroness agree that a great deal of credit should be given to all sides of the House for encouraging more women in executive positions? Would she also agree that encouraging more boards to make flexible arrangements for men to work will increase the numbers of women who also have family responsibilities and are likely to come through to top executive positions?

[Baroness Stowell of Beeston]

The noble Baroness makes an interesting point. The sooner employers think about the flexible arrangements to which she refers in the context of men as well as women, the more quickly women will be seen not as a special case but as what they rightly are—equal in terms of ability, and the type of people that we want in those positions.

[Baroness O'Cathain]

My Lords, does my noble friend agree that the work commissioned by this Government and continued by the noble Lord, Lord Davies of Abersoch, still continues and that he is very concerned about the issue raised by my noble friend on the pipeline leading to executive directors? I am convinced that progress has been made since 2010 whereby 13.3% of FTSE 100 companies had women on boards at that stage and now 34% of non-executive directors are women. At that stage, there were 21 male-only boards and now there are only eight. However, the work will continue and we do not need an EU directive on quotas because they are patronising.

[Baroness Stowell of Beeston]

There are lots of statistics to show that progress is being made. As far as I am concerned, business needs to show that it wants women and not just that it is willing to put up with them

[Baroness Thornton]

My Lords, notwithstanding the party opposite’s visceral hostility to all things European, I think the Minister concedes that the fact that the European Commission has initiated this discussion will have focused the minds of many FTSE 350 companies on the need to address this problem. What are the Government doing to address the presence of women on public bodies, for example on health boards and clinical commissioning groups? Are the Government monitoring the number of women who are coming forward and are being appointed to those bodies as well?

[Baroness Stowell of Beeston]

Just to be absolutely clear, while we do not support the quotas or the European legislation, we feel very strongly about this issue. I think that I am right in saying that we have a target of 50% for appointments to public bodies by 2020. If I am wrong I will write to the noble Baroness, but we are definitely ensuring that as much effort is made in that area as it is in the corporate world.

[Lord Forsyth of Drumlean]

My Lords, as two-thirds of the European Commission membership are themselves men, would not the Commission do better to put its own house in order before deciding on other people?

[Baroness Stowell of Beeston]

My Lords, I shall not say anything.