British Panel Opposes Quotas to Place Women on Boards

LONDON — As the debate in Europe widens over the merits of female quotas on company boards, a parliamentary committee in Britain plans to stake out its position: not so fast.

A report to be released Friday by a House of Lords committee concludes that such quotas would “generate negative perceptions amongst women and business leaders” while failing to address the “root causes” of inequality. Quotas, and penalties to enforce them, should be considered only as a last resort, the report says.

The findings come as little surprise. The British government has led opposition to a push by the European Commission to legislate on the issue.

The study comes ahead of discussions scheduled for next week in Brussels on whether the European Commission, the executive arm of the European Union, should propose a binding, Union-wide gender quota on supervisory boards — enforceable by sanctions.

Women make up only 13.7 percent of the seats on boards of publicly listed companies in the 27-nation European Union, according to the commission.

The effort to increase female representation in boardrooms has proved hugely divisive. The architect of the plan, Viviane Reding, a vice president of the European Commission, is under acute pressure to water down her original idea: a 40 percent quota with mandatory penalties for companies that fall short of the target.

Last month the commission postponed a decision over concerns about its legality and opposition from nine nations, led by Britain, which signed a letter criticizing the plans.

The commission plans to complete its re-worked proposal next week.

The report due Friday from the House of Lord’s Sub-Committee on the Internal Market, Infrastructure and Employment, endorses the objective of increasing female representation on company boards. A “more balanced board,” it says, “will be able to tap into the wealth of available talent in the labor market, provide a broader spectrum of ideas, better reflect a company’s customer base and improve corporate governance.”

But it argues that the case for quotas enforced by binding sanctions is not convincing, and that such an idea should adopted only if nothing else works.

“We consider that quotas should not be resorted to until all other options have been exhausted,” the report says. “They generate negative perceptions amongst women and business leaders and do not address the root causes of inequality.”

The study also rejects an argument made by Ms. Reding that better female representation on boards would automatically strengthen the financial performances of companies.

The report cites evidence from a professor — Susan Vinnicombe, Director of the International Center for Women Leaders at the Cranfield University School of Management — saying: “We agree with Professor Susan Vinnicombe: ‘you cannot correlate two or three women on a massive corporate board with a return on investment, return on equity, turnover or profits.”’

Ms. Reding said last month that she wanted to legislate on the issue because she had already tried persuading companies without effect. “Voluntary measures have not achieved any progress,” she said, “and if we continue at that pace we will need 40 or 50 years.”

Mina Andreeva, spokeswoman for Ms. Reding, said Thursday that the commissioner was discussing a revised proposal with her colleagues.

Constanze Krehl, spokeswoman on women’s issues for Germany’s center-left Social Democratic Party in the European Parliament, appealed on Thursday to the other members of the European Commission to support Ms. Reding.

“The European Commission has for years buried its head in the sand on this,” Ms. Krehl said. “Now, Ms. Reding dares finally to move forward. We appeal to the other 26 commissioners, her colleagues, not to hang her out to dry.”

Article source: http://www.nytimes.com/2012/11/09/business/global/british-panel-opposes-quotas-to-place-women-on-boards.html?partner=rss&emc=rss