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The Case for and against Mandatory Gender Quota Legislation for Company Boards



to a Special Edition of the Deakin Law Review
This special issue of the Deakin Law Review contains articles based on papers
delivered at the forum ‘Mandatory Gender Quota Legislation: Will Australia
follow Europe?’ — held in Melbourne on 20 October 2014.1 It was the second
forum sponsored by the Deakin Law School as well as the German Alexander
von Humboldt Foundation2 and the German Federal Ministry of Education and
Research through the Anneliese Maier Research Award.3
The Inaugural International Corporate Governance and Law (ICGL) Forum
was held in Münster on 4–5 November 2013.4 Its theme was intentionally very
broad, namely ‘Key Corporate Governance Themes and Issues in a Globalised
and Internationalised World’, in order to identify as many core international
corporate governance and corporate law themes and issues as possible. The
Professor of Law, Deakin University (Australia).
1 ‘Mandatory Gender Quota Legislation: Will Australia Follow Europe?’ International Corporate
Governance and Law <>.
2 Alexander von Humboldt Foundation <>.
3 See <>. This award of
€250 000 over a five year period (20132017), was awarded to Professor Jean du Plessis based
on a nomination by Professor Ingo Saenger, University of Münster. It was one of seven
Anneliese Maier Research Awards made by the Alexander von Humboldt Foundation in 2013.
The award winners were selected from the 54 people (from 26 different countries) nominated
for the Award in 2012. Nominations were invited from all disciplines of the humanities and
social sciences, but not natural sciences. The nominations were all aimed at the further
internationalisation of the humanities and social sciences in Germany. The Award is dedicated
to the further internationalisation of German corporate governance and corporate law.
4 See International Corporate Governance and Law Forum <>.
papers delivered at the 2013 Forum were published in a special issue of the
European Business Law Review.5
The theme for the 2014 Forum was, on the other hand, very narrow and very
focused: ‘Mandatory Gender Quota Legislation: Will Australia Follow
Europe?’. This theme was selected because gender equality is emerging as a
significant debate in Australian corporate governance, and because of
significant developments in the European Union, and especially in Germany at
the end of 2013 and early in 2014. It was also selected because it is one of the
areas identified as part of the 5-year Anneliese Maier Research Project6 and
because it is predicted that the topic of gender quota legislation will become
more significant in the future.
It took a long time for ‘gender diversity’ to be seen not only as a social justice,
equity or political issue, but also as a core corporate governance issue. In the
past it was hardly mentioned in corporate governance books. However if board
diversityis an important issue, promoted through almost every single modern
corporate governance code, and gender diversityis the dominant board
diversity’ issue, one must concede that ‘board gender diversityis nowadays an
important corporate governance issue.
Gender quota legislation is an area that will also become more and more
prominent for the purposes of comparative academic research. Such
comparative research should focus, on the one hand, on the particular legal
instruments used in different countries to enforce gender quotas. The
differences in sanctions and how they have impacted on the achievement of the
required quotas should also be compared over time. On the other hand, the
vexed issue of board diversity, and gender diversity as part of the broader theme
of board diversity, will become even more prominent as more countries adopt
mandatory gender quota legislation. An area of particular interest in future will
remain what the impact of board diversity generally is on fulfilling ‘the purpose
of the corporation’. In studies of that broader area, the focus will also be on
what impact a much larger percentage of women on boards will have on ‘the
purpose of the corporation’ and on fulfilling this purpose.
5 (2015) 26 EBLR 1–243.
6 See <>.
The question that has so far been asked is whether there is a ‘business case’ to
be made for having more women on boards. That question was dominated for
several years by what was seen as the primary, and even exclusive, purpose of
for-profit corporations, namely ‘profit maximisation’. Profit maximisation for
whom? For the company, but ‘the company’ defined as ‘current and future
shareholders’. This resulted in the ‘shareholder primacy’ theory of company
law. However, several other theories, such as the ‘enlightened shareholder
theory’ and the ‘stakeholder theory’ have become more and more prominent in
recent times. There are also more and more voices challenging the proposition
that the primary or exclusive purpose of a company is ‘profit maximisation’.7
It is almost indisputable that we have moved away from the view that the
primary aim of corporations is ‘to make profit’ or ‘to make money’.8 The
current reality is that there is a very widely held view that companies should do
business in a responsible way and aim at sustainable value creation.
Corporations cannot any longer hide behind the ‘profit maximisation purpose
of the corporation’ to deny that they also have a prominent responsibility to act
for the public good.9 This means that the boards of directors should also focus
on environmental matters, social and employee-related matters, human rights,
and anti-corruption and bribery issues, among others.
There is a very strong drive internationally for corporations to demonstrate that
they are not only focused on profit-maximisation, but also on these other
matters and issues. This drive is clearly noticeable in the different forms of
reporting expected Corporate Social Responsibility Reporting; Corporate
Responsibility Reporting; Integrated Reporting; and Sustainability Reporting10
although not yet reflected in legislation. Thus, to ask the question whether
there is a business case for having more women on boards is no longer the only
relevant question. The question nowadays and for the foreseeable future will
be: ‘Is there a case for having more women on boards to ensure that companies
fulfil their wider responsibilities?’ In her article Professor Beate Sjåfjell
7 See in particular <>;
<>; and <
cs>. In 2013 The Corporate Governance Institute of Australia started with a project focusing
on the ‘shareholder primacy theory. See Governance Institute of Australia, Shareholder
Primacy: Is There a Need for Change?, Discussion Paper (2014) <http://www.
8 See Jean J du Plessis and Andreas Rühmkorf, ‘New Trends Regarding Sustainability and
Integrated Reporting for Companies: What Protection Do Directors Have?’ (2015) 36 The
Company Lawyer 49, 52.
9 Ibid.
10 Ibid 524.
addresses this issue by asking the question: ‘Does gender diversity contribute
to sustainability?’.
The answer to that is not an easy one. Not only is it complex to determine how
sustainability should be measured, but the complexities increase exponentially
if the question is asked to what extent gender diversity, or an increase in the
number of women on boards, has contributed to such sustainability. Another
problem is, of course, that of comparing data. Even if the proper means of
measuring sustainability could be determined with greater precision, such
means are not available for use because they were not used in the past when
men dominated boards. Older data can, therefore, not be compared with data
from the present when women make up, say, 30–40 per cent of boards of all
listed companies. At least for the moment, one will have to generalise and say
that it is highly likely that more women on boards will have an impact on
sustainability. One thing is certain, however. Because of the current wider view
of the purpose of the corporation, the argument that there is no conclusive
‘business case’ for having more women on boards no longer holds water. It is
no longer persuasive as an argument for why more women should not be
appointed to boards or, more specifically, as an argument against gender quota
To get back to the Forum theme, the word ‘mandatory’ was added because of
an important distinction between different types of gender quota legislation.
Under a model of ‘mandatory gender quotas’ the legislation dictates the quota
(30–40 per cent) for each gender, with serious consequences (in Norway
dissolution of the company) if the quota is not reached and maintained. As is
explained in the article by Professor Beate Sjåfjell, Norway was the first
country to adopt such legislation (‘hard law’).
In the Netherlands there is also legislation that stipulates targets or quotas (30
per cent) for each gender, but there are no sanctions if these quotas are not
reached or maintained, as explained in the article by Professor Mijntje
ckerath-Rovers. Thus, in the case of the Netherlands, it is appropriate to refer
only to ‘gender target legislation’ as the targets are set in legislation, but they
are only targets and not mandatory quotas the ‘soft law’ approach. As
Professor Lückerath-Rovers argues, the ‘comply or explain’ principle applies
and a company not having reached the target must explain several things.
In several other jurisdictions there is no legislation dealing with gender quotas.
Quotas or targets are simply mentioned generally as an option, or they are set
or mentioned in voluntary corporate governance codes. In that case companies
will, under the principle of ‘comply or explain’ that is adopted in most
voluntary corporate governance codes, simply have to explain if the quotas are
not met — again the ‘soft law’ approach.
The articles in this special issue of the Deakin Law Review deal with almost all
the arguments for and against legislation for mandatory gender quotas. The
issue deals in detail with legislation already in place in Norway, the Netherlands
and Germany (where, however, quotas of 30 per cent of each gender do not
need to be reached until 2016).
The various methods of achieving board gender diversity are touched upon by
most of the articles. In the past, it was simply argued that board composition
was a matter for the company to decide and that there should not be any form
of interference with that process. However, with the rise of the important role
of non-executive directors, in particular independent non-executive directors,
corporate governance codes started to require listed companies to explain,
under the comply or explain principle, certain aspects of their board
composition if it did not meet the expectations of the relevant code. These
aspects included, for instance, whether the CEO was also the Chair of the
Board, why there were not a majority of independent non-executives serving
on the board, and whether some board committees were not chaired by, or
composed of, a minimum number of independent non-executive directors.
Thus, the approach was a soft-law approach.
The importance of board diversity generally was only emphasised in corporate
governance codes at a later stage. As an aspect of board diversity, the issue of
gender diversity on boards started to creep in. There is no doubt that the debate
about board gender diversity received considerably more attention after
Norway introduced mandatory board gender quotas, but only a few countries
followed the method of quota legislation. However, the debate on board gender
diversity escalated and those responsible for corporate governance codes could
not avoid bringing the issue of board gender diversity into the codes. How it
was introduced varies from country to country. Three interesting examples are
found in the 2014 UK Corporate Governance Code, the 2014 ASX Corporate
Governance Principles and Recommendations and the 2014 German Corporate
Governance Code, none of which sets targets or quotas, but each of which
requires disclosure of diversity policy, including board gender diversity.
Principle B.2.4 of the 2014 UK Corporate Governance Code provides as
A separate section of the annual report should describe the work of the
nomination committee, including the process it has used in relation to board
appointments. This section should include a description of the board’s policy
on diversity, including gender, any measurable objectives that it has set for
implementing the policy, and progress on achieving the objectives.11
Recommendation 3.2: of the 2014 ASX Corporate Governance Principles and
Recommendations provides as follows:
Companies should establish a policy concerning diversity and disclose the
policy or a summary of that policy. The policy should include requirements
for the board to establish measurable objectives for achieving gender
diversity and for the board to assess annually both the objectives and progress
in achieving them.12
Recommendation 3.4 of the 2014 ASX Corporate Governance Principles and
Recommendations provides as follows:
Companies should disclose in each annual report the proportion of women
employees in the whole organisation, women in senior executive positions
and women on the board.13
Clause 4.1.5 of the German Corporate Governance Code (GCGC) provides as
When filling managerial positions in the enterprise the Management Board
shall take diversity into consideration and, in particular, aim for an
appropriate consideration of women.14
Clause 5.1.2 of the 2014 German Corporate Governance Code (GCGC)
provides as follows:
11 Financial Reporting Council, UK Corporate Governance Code, <
12 Australian Securities Exchange Corporate Governance Council, ‘Corporate Governance
Principles and Recommendations 3rd edition’ (Report, ASX Corporate Governance Council,
March 2014).
13 Ibid.
14 Regierungskommission Deutscher Corporate Governance Kodex, German Corporate
Governance Code (5 May 2015) <>.
The Supervisory Board appoints and dismisses the members of the
Management Board. When appointing the Management Board, the
Supervisory Board shall also respect diversity and, in particular, aim for an
appropriate consideration of women.15
It should be noted that because of the recently adopted legislation (in March
2015) on gender quotas in Germany16 the GCGC will probably be amended
soon to reflect the new statutory approach to gender diversity. However, if one
looks at all the approaches in the above quoted corporate governance codes, it
is clear that they use a ‘soft law’ approach to gender diversity, with no quotas
or targets dictated, although explanations will have to be provided if there is a
deviation from the required Code standard. For instance, companies falling
under the 2014 UK Code will have to explain (‘comply or explain’ principle) if
they do not have, as a separate section of the annual report, a section dealing
with ‘a description of the board’s policy on diversity, including gender, any
measurable objectives that it has set for implementing the policy, and progress
on achieving the objectives’.17 Similarly, companies falling under the 2014
ASX Code will have to explain if they do not have ‘a policy concerning
diversity’ or have not disclosed ‘the policy or a summary of that policy’.18 In
addition, they will have to explain if, in that policy, there is not a part dealing
with ‘measurable objectives for achieving gender diversity and for the board to
assess annually both the objectives and progress in achieving them’.19 What the
policy is, and what the measurable objectives are and how they are assessed
annually, are all up to the company no gender targets or quotas are directed.
Although the 2014 GCGC is much vaguer, companies falling under it will have
to explain if they have not taken gender into consideration in their
appointments. However, it is highly unlikely that any board will admit to not
having complied with this expectation.
Since the adoption of mandatory gender quota legislation by Norway, several
other countries, including Belgium, France, Italy and Spain, have adopted
15 Ibid.
16 See Raphael Koch, ‘Board Gender Quotas in Germany and the EU: An Appropriate Way of
Equalising the Participation of Women and Men?’ (2015) 20(1) Deakin Law Review 53, 59
17 Financial Reporting Council, above n 11.
18 ASX, above n 12.
19 Ibid.
comparable legislation. There are variations in the mandated percentage of
women board members among these countries and also significant variations
regarding the sanctions imposed if those quotas are not met.
On 20 November 2013 the European Parliament voted, by a large majority, in
favour of a directive aimed at getting at least 40 per cent females and 40 per
cent males appointed to the boards of larger companies. However, the directive
was road-blocked when the European Council announced that it could not reach
agreement on its final adoption. As there is still slight hope that progress will
be made in future it is worth quoting the summary of the outcome on the issue
of ‘women on boards’, specifically noting the comments about what is in the
best interests of EU economies:
The Council discussed the women on company boards directive. It was not
able to reach a general approach. Minister Poletti said: Enhancing womens
participation in economic decision-making is essential to promote equality
between women and men in our societies and would be beneficial to our
economies. We have been working hard during these six months to unlock
negotiations on the proposed directive for improving the gender balance on
company boards and we are now closer to an agreement. Building on our
progress I am confident that the Council will be able to move forward with
this important dossier.20
It is noteworthy that, if the Directive had been adopted in the form approved by
the European Parliament and considered by the European Council, EU member
states would have been expected to implement measures to achieve the aim of
getting at least 40 per cent females and 40 per cent males appointed to the
boards of larger companies. It is important, however, that there is flexibility
regarding the legal instruments that EU members could use to implement
directives. Some countries, such as Germany, have already opted for mandatory
gender quota legislation the ‘hard law’ approach. Other countries would
probably use voluntary corporate governance codes to reach these quotas the
‘soft law’ approach. Some countries will probably continue only to expect of
companies that they explain if these quotas are not reached. It will then be left
to the market to respond to companies which have not reached the quotas and
have not explained why not. The response of the market basically means the
investors’ (primarily shareholders) response to the lower-than-expected
20 Press release from the 3357th European Council meeting, Employment, Social Policy, Health
and Consumer Affairs, Brussels, 11 December 2014, 9–10, available at <http://www.>.
percentage of women on a particular company’s board and to the explanations
provided by that company: Will investors put pressure on boards to reach the
quotas? Will there be expectations in the market that large institutional
investors should only invest in companies where 40 per cent of the board
members are women? All of this is now speculation only because of the fact
that the European Council could not agree on a general approach.
The importance of board diversity was generally accepted by all the presenters
at the Forum. Professor Michael Adams’s article emphasises most clearly that
the issue of board diversity is much wider than just gender diversity, observing
that race, with cultural heritage (expressed as ‘ethnicity’), education,
professional background and age are also important for the purposes of board
diversity. The reasons why diversity is considered important vary. Some argue
that one important reason is that it prevents ‘group-think’. Implied in this is the
assumption that a diverse board would make more balanced decisions and that
a diverse board improves decision making processes as has been shown by
‘behavioral economics’.21 Professor Adams quotes from a 2013 Report by the
Korn Ferry Institute to illustrate the point:
By ensuring sufficient diversity, high-performing boards can be assured that
board decisions will be vigorously debated by individuals with different
perspectives leading to improved board monitoring, better board meeting
attendance rates, and causes boards [sic] to be more stakeholder focused
boosting shareholder value and representing customers, employees, and
business partners… A diverse group of directors is more likely to raise
questions, challenge the status quo, or spot new opportunities. Appointing
directors from different ethnic, age and educational backgrounds can
immediately add multiple perspectives to the oversight lens.22
However, he also points out that there is a deep divide as to what method should
be used to achieve board diversity generally and gender diversity in particular.
21 See generally Kent Greenfield, ‘Sticking the Landing: Making the Most of the “Stakeholder
Moment” ’ (2015) 26 EBLR 147, 154–5.
22 Michael Adams, ‘Board Diversity: More Than a Gender Issue?’ (2015) 20(1) Deakin Law
Review 123.
A Norway: First Country out of the Blocks with
Mandatory Gender Quota Legislation
Professor Beate Sjåfjell, focusing on Norway, approaches the topic of board
diversity and gender diversity from a corporate governance perspective rather
than a gender equality one. Her overview of how the Norwegian legislation
came about is interesting as it illustrates that if companies, through internal
initiatives or with the encouragement of director-orientated organisations, had
increased the percentage of women more significantly from 2003 to 2005, the
legislation forcing companies to appoint at least 40 per cent women to their
boards would not have become law. The legislation, with its drastic sanction of
dissolution of companies not having reached the quotas,23 had a significant
impact and, by 7 January 2008, 90 per cent of the public companies required to
comply with the legislation had reached the 40 per cent gender quota. It was
only a few months later that all companies complied. Professor Sjåfjell points
out that the legislation had considerable impact not only in Norway, but also
internationally. An interesting trend was observed in Norway: at the same time
as the legislation was passed and the date (1 January 2008) approached, several
Norwegian public companies converted to private companies. Some
commentators made the claim that this trend was directly related to the
mandatory gender quota legislation. However, Professor Sjåfjell refers to
studies that have shown that only a very small number of these conversions
could be directly attributed to the mandatory gender quota legislation.
One part of Professor Sjåfjell’s article is dedicated to the positive effects of
having more women on boards. They include the different perspectives and
attitudes that women bring to the board and the breaking of ‘group-think’.
However, she is realistic in her approach, pointing out that in order to establish
a proper business case for appointing more women to boards, it is necessary to
distinguish between studies of the effect of gender diversity: first, on the value
creation in the company; second, on the profits as measured by the accounts;
and third, on dividends to shareholders.
Professor Sjåfjell defends the drastic sanction of dissolution if the required
quotas are not met or maintained. She explains that the sanction of ‘dissolution’
23 Professor Sjåfjell points out that the dissolution will not be of immediate effect if the quota is
not reached or maintained. It will be proceeded with after several warnings and opportunities
for the company to put together a legal board, consisting of the required 40 per cent for each
gender: Beate Sjåfjell, ‘Gender Diversity in the Boardroom and Its Impacts: Is the Example of
Norway a Way Forward?’ (2015) 20(1) Deakin Law Review 25, 32.
was considered by some to be ‘disproportionate’, but disagrees with this
[T]he preparatory works emphasise that dissolution is the most effective
sanction, and thus also the most appropriate. The sanction is, from a
Norwegian company law perspective, completely in line with that which
applies when other fundamental requirements are breached, including the
requirements of sending in accounts according to the Accounting Act and of
having an auditor. As opposed to much CSR (Corporate Social
Responsibility) regulation, which either does not have teeth to start with or is
not enforced, the Norwegian mandatory gender quota rule is dealt with as
core company law should be seriously. This in itself is also indicative of
the aim: better corporate governance, as opposed to reporting requirements
on gender diversity as CSR regulation.24
She draws the following general conclusions:
Based on the general indications that female directors take broader and
longer-term perspectives discussed in this section, as well as the general
positive impact of breaking up group-think indicated in this article, we may
envisage that gender diversity on corporate boards is a small but positive
contribution to the necessary transition away from business as usual and onto
a sustainable path.25
Her concluding sentences clearly reminds us of the bigger picture:
Lest we end up fiddling while the world burns, we need to keep our eyes on
the overarching goal of long-term sustainability, financial and social, within
the planetary boundaries. At the end of the day, that and nothing else is the
benchmark against which we should be measured.26
B Germany: Adopted Mandatory Gender Board
Legislation, but Opposition and Challenges to Be
Professor Raphael Koch’s article deals with recent developments regarding
board diversity and gender diversity in Germany and in the EU. He is not
convinced that mandatory gender quotas are the right way to go. Although they
seem to be a fait accompli, Professor Koch discusses possible opposition to
gender quotas and the challenges the legislation may encounter in Germany as
24 Ibid 33.
25 Ibid 49.
26 Ibid 51.
well as in the EU if it is adopted. He explains that there are very convincing
constitutional objections that could be raised against mandatory gender quota
legislation. He also points out that ‘[i]t remains to be seen whether quotas on
women can fulfil the expectations held of them’.27 He points to the fact that
mandatory gender quota legislation will increase the proportion of women on
supervisory boards in Germany. He also takes it as a given that, with more
women serving on supervisory boards in Germany, a new, independent
professional profile will be established in the future, which would promote the
professionalisation of supervisory boards. However, he is sceptical whether
quotas on women will improve the professional promotion of women at levels
other than at supervisory board level. He uses Norway as an example:
A recent study there found that, despite the introduction of a quota on women
in 2003, the proportion of women in middle management positions has
remained unchanged, and has only increased on the highest management
level. The wage gap between men and women has not changed significantly
either; in other words, the quota on women has not yet led to an integral
change in working conditions for women.28
Based on this, he argues that female advancement must be approached from
many sides. Limiting this solely to an increase in the proportion of women on
supervisory boards is not sufficient. Changes must be made on other levels as
well. He explains:
Today, the question of whether women pursue a professional career
increasingly depends on the compatibility between family and a career. This
can be seen in Sweden and Denmark, where as previously discussed
there are still no statutory quotas. In spite of this, the proportion of women on
supervisory boards is well over 20 per cent there. It is true that female
advancement is on the political agenda. However, it is questionable whether
company law should be used as an important vehicle to achieve it.29
He concludes by providing some final perspectives:
On the one hand, quotas on women are a foreign body in company law; on
the other hand, they are insufficient. For professional advancement, there
must be, if nothing else, comprehensive family-related political reforms and
improvements regardless of gender!30
27 Koch, above n 16, 73.
28 Ibid 73.
29 Ibid 734.
30 Ibid 74.
C The Netherlands: An Experiment with Targets in
Legislation, but not Mandatory Quotas
Professor Mijntje Lückerath-Rovers commences her article by giving an
overview of the history of the current Dutch system. In the Netherlands, as in
Germany, all public companies must have two boards, namely the supervisory
board and the management board. From 1 January 2013 companies were also
given the opportunity to adopt a unitary board system. In January 2013 it also
became law that Dutch companies falling under the legislation must explain
three things if at least 30 per cent of either their supervisory board or
management board are not of the same gender. This 30 per cent target is to be
met by 1 January 2016, and that is also the day on which the legislation will
automatically be repealed. In other words the legislation contains a sunset
clause. Professor Lückerath-Rovers illustrates that it had already become
apparent in September 2014 that the targets would not be met and this again
intensified the debate on mandatory gender quota legislation in the Netherlands.
Research on a selected sample of 800 Dutch companies falling under the target
law reveals the dilemma:
[T]he percentage of female executive directors was 8.9 per cent, and of
female non-executive directors 11.2 per cent. Furthermore, this study
concluded that the majority of the annual reports did not provide the
‘explanation’ required by the ‘comply or explain’ principle, which is part of
the target law. Sixty-two per cent of the companies that did not comply with
the 30 per cent executive board target did not explain their non-compliance,
while 57 per cent of the companies that did not comply with the non-
executive board target did not provide an explanation.31
The underlying idea of the Dutch legislation is to ensure a balanced gender
distribution on boards of public companies. Thus, companies not meeting this
expectation must explain three things in their annual reports:
1) Why the seats are not evenly distributed;
2) How the company has tried to achieve a balanced distribution of the
seats; and
31 Mijntje Lückerath-Rovers, ‘Gender Quota in the Boardroom: The Dutch Approach’ (2015)
20(1) Deakin Law Review 75, 92.
3) How the company intends to realise a balanced distribution of the
Professor Lückerath-Rovers also points to the advantages of more diversity on
boards, including better gender diversity. She distinguishes between what she
calls ‘a business perspective’, which translates to ‘a business case’, and ‘a moral
perspective’, and summarises the business and moral arguments as to why
women should not be excluded from or under-represented on boards.
Professor Lückerath-Rovers concludes by referring to an article by Nancy
McKinstry, one of the two female CEOs in the Netherlands, that appeared in
the Dutch Financial Times (7 October 2014) under the title,Getting Women
to the Top Requires Effort from the Company Itself’:
[L]et us not forget why diversity of gender, but also nationality,
experience, age, skills is important for companies. To be able to choose
the best man or woman for the job, you need access to the entire talent pool.
Diversity also creates more perspectives in discussions, leading to better
decision-making which has direct influence on a company’s results.32
D Australia
1 Current State of Play and Potential to be Influenced by
International Developments
Under the Workplace Gender Equality Act 2012 (Cth), departments,
organisations and most larger companies must report annually on the number
of their male and female employees and board members. In addition, since 2010
the Australian corporate governance code (the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations) requires
listed entities to report the proportion of women employees in the whole
organisation, in senior executive positions and on the board. These provisions
are currently in the process of being refined. However, no specific percentage
of women on boards is mentioned.
In June 2010, the Australian Sex Discrimination Commissioner, Elizabeth
Broderick, made the following recommendation:
[A] target of 40% representation of each gender on all publically [sic] listed
Boards in Australia, to be achieved over five years, should be promoted. If
32 Nancy McKinstry, Editorial: CEO Nancy McKinstry Addresses Diversity at Wolters Kluwer
(7 October 2014), quoted in Lückerath-Rovers, ibid 93.
progress is not made, the Australian Government should consider legislating
to require publicly listed companies and other large employers to achieve a
mandatory gender diversity quota of a minimum of 40% of both genders
within a specified timeframe, failing which penalties will be imposed.33
This target was not met by June 2015; it was reported that as of 31 July 2015
only 20.1 per cent of the seats in ASX200 listed companies were filled by
women.34 The papers by Professor Michael Adams and Professor Peta Spender
analyse the position in Australia and also provide international perspectives on
the topic of gender and board diversity.
The reality in Australia and recent international developments in the EU
regarding mandatory gender quotas, enforced through legislation, raise many
questions. Perhaps the writing is on the wall and more and more countries will
adopt legislation making it mandatory, at least for listed companies, to achieve
a gender diversity quota of a minimum of 30–40 per cent of both genders on
their boards within a specified timeframe.
Three of the presenters at the Forum held on 20 October 2014 in Melbourne did
not prepare written academic papers as they dealt with the topic of mandatory
gender quota legislation from a practical point of view, drawing on their
considerable business experience over many years.
Judith Fox (National Director, Policy & Publishing, Governance Institute of
Australia) presented a paper entitled ‘Key Themes and Issues Regarding Board
Diversity and Mandatory Gender Quota Legislation’. She pointed out that the
increased focus in Australia on improving the representation of women at
senior executive and board levels is based on research supporting the economic
and business case for increased participation by women in senior roles. The
perceived need for gender equality has seen reporting obligations introduced
both through the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations and legislation, with the aim of improving
long-term performance and optimising the human capital available to an
33 Elizabeth Broderick, Gender Equality Blueprint 2010 (23 June 2010) Australian Human Rights
Commission 8 <
34 See Australian Institute of Company Directors, Statistics <
Fox also made the point that, without greater progress within organisations on
adopting gender balance initiatives as measurable objectives, and without
organisations being accountable to stakeholders for progress toward achieving
those measurable objectives, the participation of women in senior roles is
viewed as unlikely to increase. Disclosure obligations are intended to address
this. Reporting is intended to assist entities to gather information so that they
have a clearer understanding of gender balance within their organisations and
what objectives they need to put in place to improve gender equality.
Fox explained that concerns had been expressed that reporting to date is
inconsistent and speaks to intention more than action. The lack of comparable
data also makes it difficult, both internally and externally, to assess progress.
Entities seeking to improve participation and reporting can struggle to find
guidance on strategies to increase gender balance at senior levels and to
enhance the transparency of their disclosures.
Fox concluded that, unless measurable progress towards board gender diversity
can be reported year-on-year in Australia, quotas set by the government and
regulators may be viewed as a necessary next step. Yet there are strongly held
views that the cultural shift that can take place within entities as they set their
own targets and work toward achieving them can lead to more optimal
outcomes than a compliance-based approach to meeting quotas.
The presentation by John Stanhope (Chair, Australia Post) had the to-the-point
title of ‘Mandatory Gender Quota Legislation Is Not the Way To Go’. He
argued that diversity on boards starts with a diversity of views. He also argued
that the danger of group-think is best dealt with by such diversity. The
achievement of diversity on boards must be driven from the top, in particular
by the chair of the board. In fact, he argued, legislation to mandate gender
quotas may be considered offensive by those who are currently not well
represented on company boards.
Peter Lamell (an experienced non-executive director who was drawing on a
history of proven success as a CEO and member of over 25 Boards in the
energy, power, resources, services and related sectors) presented under the
following title: ‘A Balancing Act: Issues and Concerns Regarding Board
Diversity and Mandatory Gender Quota Legislation’. He discussed the
importance of considering all forms of diversity, not just gender. This is
particularly relevant in Australia where other diversity issues such as race,
country of origin and religion are important, with over 50 per cent of the
population either born overseas or with a parent born overseas. In Norway, by
contrast, over 95 per cent of the population comes from the same ethnic
background. Lamell proposed that the main focus on boards should be
‘diversity of thinking’. However, while it is important to have a holistic view
of diversity in Australia, it is evident that any diversity is better than no diversity
so it does make sense to have a strong, initial focus on gender diversity.
Setting criteria for selecting board members has now become a well-established
process promoted by the AICD (Australian Institute of Company Directors).
Lamell believes that these criteria should be extended to include elements of
diversity and that this diversity should be used to demonstrate not just corporate
strategy but key linkages to the stakeholders. It is critical, therefore, that boards
have a structured approach to selection, which must incorporate diversity, and
that they be vigilant to identify any elements of unconscious bias. Equally the
chair and the nominations committee should themselves have a diverse
membership and be fully committed to a robust process.
Whilst all organisations need to implement diversity and recognise its benefits,
it is nevertheless important to focus on where the principle focus of action
should be the ASX 200 or wider. Lamell believes that there should be a
strong focus on the ASX200 because these companies have the highest
exposure and provide an excellent base for example setting. However, with
the increased reporting requirements imposed by the ASX and the Workplace
Gender Equality Act, he argued that it is important that we take it on ourselves
to measure, monitor, report on and challenge the performance of all listed and
public unlisted companies. The performance of some government and
government-linked boards has been encouraging. However, both they and we
should be taking action to ensure that their outcomes are exemplary. Lamell
also pointed out that not-for-profit boards provide an excellent opportunity for
all the diverse elements of our population to gain board positions and the
experience of being on boards.
Lamell also pointed out that resolving the challenge of diversity is a major issue
for the Australia of today. We cannot afford to delay addressing this issue until
people are already working in organisations, as their preconceptions about
diversity have already become entrenched by this stage. Lamell believes that
we must take a holistic approach to diversity and have education and activism
at all stages in life in the home, at school, in tertiary institutions,
organisations, the workplace and, of course, on boards. Lamell also believes
that the issue with board membership is strongly linked to the limited progress
that women have made through organisations to the senior executive level. He
concluded that there should be diversity at all levels in organisations so that we
can create the board and executive pools of the future whilst recognising the
importance and value of mentoring and leading by example.
The article by Professor Peta Spender argues convincingly in favour of
mandatory gender quota legislation. It commences by giving a thorough
overview of the background to the gender quota debate in Australia. It then puts
the topic of quota legislation in context by examining the existing institutional
arrangements in Australia that predict, or militate against, the introduction of
board gender quotas. Following this, the article deals in detail with some
contraindications for quotas in Australia: first, the perceived unfairness of
affirmative action and the stigmatisation of beneficiaries and, second, the fact
that quotas raise questions about the proportional regulation of the private
The next part of her article deals with the justifications for mandatory gender
quota legislation. After dealing with some ‘functionalist justifications’,
including the assertion that ‘women make a difference somehow’,35 she
encourages ‘a healthy scepticism’ regarding a business case for more women
on boards. She argues as follows:
Most academics and commentators who write about corporate gender quotas
seem to feel compelled to address the business case. However, some of the
claims made under the business case are outlandish, implausible, essentialist
or based on very small samples. Examples of some of the claims are that
women are less likely to tolerate corporate crime, women on boards are more
caring and women on boards are less likely to engage in tax avoidance.36
In addition, academics and commentators commonly reject the methodology of
the business case:
The methodology of the business case remains problematic because of the
challenges it poses to logical assessment, including the difficulty in finding a
counterfactual scenario, or applying the difference-in-difference method, or
deciding whether a correlation proves causality, or whether a reverse
causality is in operation. The classic reverse causality problem is
demonstrated by the … ASX comment [quoted in her article] that
corporations with women on their boards are stronger financial performers.
The problem of determining causation lies in the fact that strong financial
performers may encourage women to join their boards for all sorts of reasons,
35 Peta Spender, ‘Gender Quotas on Boards Is It Time for Australia to Lean In?’ (2015) 20(1)
Deakin Law Review 95, 105.
36 Ibid 106.
so the causative factors may actually operate in reverse: rather than board
diversity driving profitability, the latter encourages the former.37
Professor Spender notes that the importance of the business case is emphasised
by some commentators, but that these commentators then remind women what
huge responsibilities will come with more women serving on company boards
in future. She points out that it can be ‘dangerous’ for women to be singled out
because of their gender when the performance of a company is clearly
multifaceted. Some statements referring to what will be expected of women in
future as far as the business case is concerned typify, according to her, the
problem with the business case:
[T]here is no certainty that women make a difference to business
performance, yet it is on the basis of this justification that they are obliged to
live up to our [men’s] expectations and ‘earn their stripes’. That is not a value
that should be applied in this case. It is necessary therefore to examine more
enduring justifications.38
Professor Spender then discusses the three justifications that are, in her view,
‘enduring’. These are ‘normative and include equality, parity and democratic
legitimacy’. In her conclusion she again emphasises that change should be
justified by enduring values such as parity, equality and democracy rather than
misconceived functionalist arguments based upon the business case.
After discussing the ‘enduring justifications’, Professor Spender asks: ‘Should
we expect the introduction of a quota in Australia any time soon?’. She is
clearly sceptical that this will happen soon. She points out that the introduction
of a quota in Australia may to some extent depend on the progress of voluntary
initiatives. However, a more fundamental question, she maintains, is whether
Australia’s political/policy bodies are amenable to diffusion, so that gender
quota policy can flourish in Australia through importation from other
jurisdictions. At the heart of her article is the concept of ‘a critical juncture’.
She points out that, generally, changes are more likely to occur at a critical
juncture. This increased possibility of change, she explains, differentiates a
critical juncture from a normal period of historical change. She then focuses on
what can be expected at a critical juncture:
A critical juncture can bring about abrupt institutional change, as it presents
leaders with an opportunity to enact new plans and realise new ideas by
embedding them in established institutions. It is argued … that we are at such
a critical juncture now, first, because of the intense public interest in and
37 Ibid.
38 Ibid 107.
commentary about this issue; and, second, because of the current salience of
gender as a political issue.39
Professor Spender argues, with reference to the famous misogyny speech
delivered by Julia Gillard and directed at the then Leader of the Opposition,
Tony Abbott, in the House of Representatives on 10 October 2012, that ‘[t]he
reception of the speech transformed it from a political exchange into the
makings of a critical juncture’.40 In addition, ‘the intense public interest in
gender as a political issue’41 is another reason why this critical juncture has
been reached in Australia.
In the concluding parts of her article, she deals with the elements that must be
considered when deciding a gender quota, and proposes a phased process of
introducing mandatory gender quotas in Australia:
Phase 1 a five-year period where voluntary initiatives and incentives are
adopted to achieve a target of 40 per cent of each gender on ASX 200
Phase 2 the imposition of a quota at the conclusion of a further five-year
period enforced by sanctions for non-compliance.42
She reaches the following conclusions:
The time is ripe for Australia to legislate for mandatory gender quotas for
corporate boards. Although Australian policy makers have favoured the use
of voluntary initiatives to increase the participation of women on boards,
progress is still too slow to satisfy the strong public appetite for change.
Australian policy makers may be amenable to allowing the diffusion of
gender quota policy from other jurisdictions that have successfully made the
transition. In fact, they may welcome the change because the social debate
has reached a critical juncture where gender has re-emerged as a salient
political issue and there is a strong appetite for change which may influence
political leaders. Legislation for board gender quotas for ASX 200 companies
could be phased in, with clear timeframes which are contingent upon the
failure of voluntary initiatives.43
39 Ibid 113.
40 Ibid 115.
41 Ibid 96.
42 Ibid 118.
43 Ibid 121.
Finally she points out that the participation of women on boards is a measure
of women’s economic participation and democratic leadership:
The leadership that they provide is symbolic but has the potential to generate
new and vital conceptions of citizenship and democracy.44
In South Africa, the radical Women Empowerment and Gender Equality Bill
was tabled in Parliament in November 2013. Under this Bill all organisations,
corporations and government departments would have been required to have 50
per cent women on their decision-making bodies. The Bill was criticised
widely, but irrespective of that it was passed by the National Assembly in
March 2014. However, as will be seen from the article by Janine Hills, the
legislation has been referred back to the Parliament for further consultation.
Nevertheless, the message is clear, namely that it is likely that gender quotas
will become law in South Africa in future.
Hills’s paper deals with women’s empowerment and gender equality
legislation, as well as the Black Economic Empowerment (BEE) Program, in
South Africa. Hills points out that the South African BEE Scorecard Policies
and Empowerment Strategies are unique. They affect quota decisions and
behaviour, and also provide a unique statutory way of encouraging race
diversity at all levels of organisations in South Africa. She provides several
arguments why gender diversity matters at board level. She also explains the
central role of boards in the corporate decision making process, continuing as
Good corporate decision-making thus requires the ability to hear and consider
different points of view, which come from people who have different
backgrounds, cultures, experiences, and perspectives. Companies that have
women directors and executives lead by example. They send a clear message
that they value diversity of thought and experience. While the advantages and
disadvantages of each approach are open to debate, the general consensus is
that appointing more women to positions of leadership and boards is smart
business, is good for business, and is a proactive image and reputation
44 Ibid.
builder. Whether or not to appoint women to board level is a business issue,
and not a women’s issue.45
Hills’s article also deals with the history of womens participation in South
Africa. An interesting aspect of her discussion focuses on the factors that are
holding South African women back in general. They include, inter alia, lack of
education, harmful domestic and cultural practices, the high unemployment
rate, the disparity between types of employment for men and women and the
limited pool of women that possess the required skills. Hills makes out a strong
case for why women are integral to corporate and government leadership, and
then deals in detail with South Africa’s National Policy Framework for
women’s empowerment and gender equality and the Broad-Based Black
Economic Empowerment (B-BBEE) and general gender transformation
initiatives in South Africa.
Hills also deals with the factors preventing women in business in South Africa
from advancing to board level. Although she argues that it is likely that gender
quotas will become law in South Africa in the foreseeable future, she has some
reservations about whether the proposed legislation contained in the Women
Empowerment and Gender Equality Bill adopts a realistic approach. She asks
what guarantees there are that the Bill will be effectively monitored. One of the
final parts of her article focuses on the current quota statistics in South Africa.
She points out that South Africa fares quite well in the light of international
statistics. South Africa is one of the top 20 countries as measured by the World
Economic Forum’s Global Gender Gap Report that demonstrates increasing
equality between men and women. South Africa was ranked 12th in the world
by the said report in 2010 and 6th in 2009.
Hills’s argument of a business case for women is not limited to financial
performance. She also argues that appointing more women has a positive
impact on reputational transformation, and can lead to increased productivity
and a higher retention rate of employees. She also mentions a trend in recent
times that a more diverse board, having a good gender balance, is seen in a
positive light by investors and thus draw investors. The final part of her article
deals with several means by which South Africa could eventually reach a 50
per cent gender quota at board level. She concludes on a positive note, but is
realistic in pointing out that there is still a lot to be done before it would be
possible to say unreservedly that there is gender equality in South Africa:
45 Janine Hills, ‘Addressing Gender Quotas in South Africa: Women Empowerment and Gender
Equality Legislation’ (2015) 20(1) Deakin Law Review 153, 156.
What has been evident is that South Africa has made progress in terms of
women’s empowerment and the reduction of discrimination towards women
in the workplace. However, this has only been the beginning of a far longer
journey, particularly with regard to the progress that is still to be made in the
private sector.46
There is no doubt that the mandatory gender quota legislation in Norway
sparked a lot of interest in similar legislation in the rest of the world. Several
countries have followed Norway’s example, but the percentage of women
directors required, and also the sanctions if the quotas are not met, vary from
country to country. Germany is the country that has most recently adopted
mandatory board gender legislation, requiring 30 per cent of supervisory boards
to consist of women. This development is significant, because the intention to
ensure that up to 40 per cent of the boards of larger companies in the EU should
consist of women was road-blocked (at least for the time being) when the
European Council could not reach agreement on a directive promoting this goal.
It means that all eyes will probably be on Germany, especially because of the
size of its economy, to see how this new approach is received there. It was,
however, pointed out that a constitutional challenge against the German
legislation is possible.
The following things stand out from the discussions at the Forum and the
articles contained in this special issue of the Deakin Law Review:
1. There is no consensus regarding whether appointing 30–40 per cent of
women to boards makes, or will make, a difference in board
performance. Further, what was meant by ‘performance’ was not
defined narrowly by any of the papers. However, there was consensus
that having women on boards is important, and several arguments,
some more convincing than others, were presented as to why it is
important to have more women on boards: It breaks the ‘old boys club’;
it prevents ‘group-think’; it improves board decision-making
processes; female directors are more benevolent; female directors are
more universally concerned; female directors are less power-orientated
than men; having more women on boards increases board effectiveness
through reducing the level of conflict and ensuring a high quality of
board development activities, and so forth.
46 Ibid 1834.
2. There is no consensus that mandatory gender quota legislation is the
right way to go;
3. There was, however, agreement by several of the participants at the
Forum and several of the presenters that if more women are not
appointed to boards in countries currently without mandatory board
gender legislation, such legislation will be considered seriously by
governments and policy makers;
4. Professor Spender’s article defends the case for mandatory gender
quota legislation more strongly than any of the other articles or
presentations at the Forum. Her underlying logic and justifications for
mandatory gender quota legislation are most convincing. Her
prediction that Australia has reached a ‘critical juncture’ as far as the
issue of mandatory gender quota legislation is concerned is based on
strong indicators.
5. There is general consensus that board diversity is important and that
there are many advantages associated with board diversity. Again a
wide variety of arguments were provided as to why this is the case and,
again, some were more convincing than others. An answer to the
question, ‘What measures should be applied to ensure a board with the
right diversity”?’ remains elusive, however.
6. The ‘business case’ for appointing more women to boards has as many
supporters as sceptics and it is perhaps sensible, for the moment, to
move on by simply saying that the ‘business case’ is no longer the
central justification for either appointing more women to boards or
justifying mandatory gender quota legislation. There are enough other
very good arguments for appointing more women to boards, including
women’s potential contributions to ‘the purpose of the corporation’.
Nowadays it is accepted that corporations should not only strive for
profit maximisation’, but that part of their ‘purpose’ is to ensure long-
term sustainable growth for the corporations themselves and also to act
in the public good.47
47 See Jean J du Plessis and Andreas Rühmkorf, above n 8, 54.
Kap. 3 behandelt ausgewählte, aktuell viel diskutierte Aspekte der Board- bzw. Aufsichtsratsarbeit, die zunehmend an Bedeutung gewinnen bzw. gewonnen haben. Zunächst wird die Frage nach der Zusammensetzung des BoD bzw. des Aufsichtsrats oder auch allg. der Top Management Teams diskutiert, Stichwort: Diversity. Nach einer kurzen Einführung und der Frage nach dem Sinn einer diversen Zusammensetzung spielen folgende Aspekte eine bedeutende Rolle: zunächst wird die Perspektive Gender betrachtet, hier vor allem bezogen auf die in vielen Ländern immer noch (deutlich) unterrepräsentierten weiblichen BoD-/Aufsichtsratsmitglieder. In diesem Abschnitt kommt die Präsidentin von FidAR e.V. zu Wort, eine Fürsprecherin für die Beteiligung von Frauen in Aufsichtsgremien und somit für die Quote. Danach werden Aspekte wie die (mangelnde) Internationalität, die Sicht auf die Ausbildung und soziale Herkunft der TMT und die Frage nach dem Alter angesprochen. Abschließend werden Einblicke in die Umsetzung von Diversity in Unternehmen gegeben. Dazu wurden Interviews mit einer Personalberaterin und der Leiterin der Diversity-Abteilung eines großen Konzerns geführt, die aus erster Hand über die „diverse“ Rekrutierung, Beförderung und Personalarbeit sprechen. Weitere, nicht minder wichtige Punkte sind zum einen die rechtskonforme und -sichere Unternehmenskontrolle und zum anderen die zunehmende Relevanz nicht-finanzieller Berichterstattung. Beide Aspekte werden (an-)diskutiert und geben den geneigten Lesern einen Überblick über diese Themen.
Kap. 2 diskutiert die – eher normative – Frage nach den „wichtigsten“ Anspruchsgruppen eines Unternehmens und den Unterschied zwischen einer Orientierung an den Eigentümern des Unternehmens (Shareholder) und der Orientierung an den verschiedenen Anspruchsgruppen des Unternehmens (Stakeholder). Zu Beginn des Kapitels wird mit dem Control Gap von Kapitalgesellschaften die relative Ferne zwischen Eigentümern (Prinzipalen) und Management resp. Aufsichtsgremien der Aktiengesellschaft bzw. Corp. besprochen. Anschließend wird das sog. Primat der Shareholder diskutiert – orientiert sich das Unternehmen sich (ausschließlich) an den Zielen der Eigentümer; wie setzt sich der sog. Shareholder Value zusammen, etc. Abschließend wird der sog. Stakeholder-Ansatz diskutiert. Die Idee dahinter ist, dass nicht nur die Eigentümer wichtige Anspruchsgruppen des Unternehmens sind, die eine Mitsprache in den grundlegenden Unternehmensentscheidungen haben (sollten/könnten/müssten) – andere Anspruchsgruppen werden von den Unternehmenshandlungen ebenfalls beeinflusst und beeinflussen durch ihre Handlungen wiederum das Unternehmen. Abschließend werden einige Stakeholder vorgestellt.
Good corporate governance is a top priority in business worldwide. We have witnessed scandalous corporate collapses like Enron, WorldCom, Global Crossing, and Tyco (all USA), Parmalat (Italy), Livedoor (Japan), SK Group (South Korea), Satyam (India) and others in many countries. When financing companies in global markets, the temptations of corporate corruption have to be viewed from an international perspective. In the aftermath of the ‘Enron’-era we saw a powerful global tide towards higher standards in corporate governance.
ResearchGate has not been able to resolve any references for this publication.