New Law Requires Women Hold One-Third of Board Seats
The Wall Street Journal Europe, 6 giugno 2012
By Giada Zampano
Italy, where fewer women work compared with most other industrialized countries, is trying to turn a page – starting in the boardroom.
A new law rewires Italian listed and state-owned companies to ensure that one-third of their board members are women by 2015. Currently, only around 6% of the total number of corporate board members in Italy are women-one of the lowest levels in Europe and a number that reflects how few women work here.
“We needed a shock to the system”, said Alessia Mosca, a member of the parliament for the center-left Democratic Party who co-authored the new “pink quotas” law. “The hope is that this will set off cultural change.”
The Italian measure-which was approved by parliament last year and takes effect in August-is part of Europe-wide efforts to usher more women into the continent’s corporate landscape.
In the northern European countries of Finland, Sweden and Norway, women play a large role in corporate suites. But the rest of Europe lags behind the U.S. in terms of women’s participation in corporate life.
Sixteen percent of all board members in the U.S. are women, according to European Union figures, compared with an average of 13.7% in the 27-nation EU block. The EU figures are, however, pushed up significantly by Scandinavian countries. This year, the European Commission is looking into whether to introduce quotas across the continent that would be similar to the Italian law.
The Italian legislation is already starting to encourage change. Earlier this year, Fiat Sp>, Italy’s largest car maker by sales, opened the doors of its boardroom to two women for the first time in its 113 year history. Its sister company, Fiat Industrial SpA, and several other Italian blue chips, including luxury eyewear firm Luxottica SpA and tire maker Pirelli & C. SpA, made similar moves as they renovated their boards this spring.
“I have always been convinced of the need for affirmative action,” said Joyce Bigio, managing partner at International Accounting Solutions, who joined Fiat’s board of directors as an independent board member in April. “It is the only way to break into certain areas and correct and imbalance.”
Italy has the second-lowest level of women’s workforce participation in Europe, after malta: 46.5% of women between 15 and 64 years work, compared with a European average of 58.5%. That is partly for cultural reason, but also because rigid labour laws make it hard for women to work part-time, so many leave the job market after having children.
Elisabetta Magistretti, who recently retired after a 40-year career in internal auditing, said the law can serve as a stimulus for working women, who will start seeing themselves reflected in top roles more than in the past.
“It’s been a disappointment for me as a woman to need a pitchfork to join a board”, said Ms. Magistretti, who has been on the board of Pirelli since 2011 and joined the board of investment bank Mediobanca SpA and Luxottica this year. “But without this new law, companies would have never thought about us. Now, it’s up to women to demonstrate they’re well prepared for the job.”
According to the Italian law, companies that don’t comply will face progressive sanctions, including fines of up to €1 million ($1.25 million).
Efforts to impose changes via legislation haven’t been without controversy. Although many countries in Europe-inlcuding Spain, France, the Netherlands and Belgium-are forcing companies by law to increase the number of women on their boards, governments in Sweden and the U.K. have opted for voluntary target.
Critics in those two countries argued-as many in the U.S. have for years-that affirmative-actions policies aimed at gender equality could undermine attempts to choose people solely on merit. Others say legislating change often fails to tackle the root causes of underrepresentations-such as culturel barriers that make it hard for women to climb the corporate ladder.
European business lobby group BusinessEurope, shish represents about 20 million companies across Europe, is lobbying for the European Commission to decide against making mandatory board requirements conttinentwide. “One-size-fits-all quotas interfere disproportionately with freedom of companies and shareholders to organize their own affairs,” said Pedro Oliveira, legal adviser at BusinessEurope.
Another risk of mandatory boardroom quotas, said Fianna Jurdant, senior policy analyst of the Organization for Economic Cooperation and Development, is that companies will be burdened with new rules while they’re already struggling amid the continuing financial crisis.
“Given the difficult economic situation in many European countries, you don’t want to overregulate or impose unnecessary burdens on companies. We must keep in mind the ultimate objective is growth,” she said.
In Italy, however, many feel that legislation was the only way to force companies to make the change. Indeed, politicians from Italy’s main center-right and center-left parties both rallied around the new law to get it approved in parliament.
Italian conglomerate CIR SpA, whose business include energy and publishing, last year increased the number of women on its board to 25%, or three out of 12, in a move aimed at anticipating the new law. It was one of the few exception in the Italian corporate landscape, where about 48% of listed companies had all-male boards at the end of 2011, according to market regulator Consob.
“Our county had a long way to go. I am in favor of this law because it’s an opportunity to trigger a virtuous cycle,” said CIR’s Chief Executive Rodolfo De Benedetti.