ABSTRACT
The desire to increase the share of women on corporate boards in Europe has led to the incorporation of voluntary targets into corporate governance codes of best practice in some European countries and the introduction of board gender quota laws in others. Taking affirmative action by imposing a quota can create a critical mass of women on boards that is sufficient to sustain greater numerical equality once the quota is removed. A quota law for company boards, set at 40% for each gender, was first proposed in Norway in 2002, to the surprise of many. At the time women held only 9% of board seats. In this chapter the advantages and disadvantages of the enforcement approach proposed by the European Commission are evaluated. The review draws on evidence about the mandatory quota system in Norway. It explores the circumstances in which this kind of approach can have either positive or negative outcomes, as well as the unintended consequences that could follow. It also analyzes the different factors that affect the success of quotas, such as the nature of the sanctions against non-compliant companies, and their enforcement. The UK has adopted a voluntary approach to improving board gender diversity, seeking to increase boardroom gender diversity using voluntary targets for listed companies included in the FTSE 100 and 250 indices. The review reveals the success of this approach, and related initiatives in other European countries. These contrasting approaches (hard versus soft law) raise a crucial question for board diversity: which approach, compulsory quotas or a voluntary approach, is the most effective way of improving the representation of women in senior roles?
