Proposals to impose mandatory quotas to get more women into executive boardroom positions have been dropped by the European Commission (EC) following concerns from business groups.
The EC has however set objectives to see women represent 40 per cent of boardroom positions of the FTSE 100 companies by 2020.
Currently, 85 per cent of non-executive board members and 91.1 per cent of executive board members are men, while women make up 15 per cent and 8.9 per cent respectively.
Business secretary Vince Cable and various business groups welcomed the decision for a more business led approach to getting more women into executive positions.
Vince Cable said the Government was ‘fully committed’ to increasing women’s representation in UK boardrooms but argued measures were ‘best considered at national level.’
“We believe that the UK’s business-led, self-regulatory model, as set out in the Davies Review, is the best approach for us. We will now consider the Commission’s proposal carefully and work with other Member States to ensure the final Directive supports our efforts to ensure we have diverse and effective boards,” he said.
Mervyn Davies’ review into low female boardroom representation found businesses with larger gender diversity in executive positions benefited from improved performance, access to a wider talent pool, were more responsive to the market and achieved better corporate governance.
Ann Francke, chief executive of the Chartered Management Institute (CMI) agreed that a quota law was not the right move.
“Women managers do not want to sneak into the boardroom after forcing the door with a legal crow-bar. The door should be thrown open to welcome them, because the evidence shows that more gender-diverse boards perform better,” she said.
“Too many women are leaking out of the talent pipeline, which means that companies are missing out on the full range of management potential at a time when we need to be doing everything we can to boost economic growth,” she added.
“Recent Government proposals for companies to report on the number of women in senior management roles could actually be a more effective way of driving change than quotas.”