New EU directive: more women on boards by 2026
Current situation in Europe
According to the European Institute for Gender Equality (EIGE), the average proportion of women on the boards of listed companies in Europe is 32 per cent, with results varying significantly between countries. The leader in this respect is France, where women hold 45 per cent of board positions. In Poland, the share is only 24 per cent, which places the country below the EU average. The situation at the highest levels of management requires special attention - according to a report by 30% Club Poland, only 4.3 per cent of CEOs of companies listed on the WIG140 index are women.
In order to address this disparity, the directive requires listed companies to achieve one of two objectives:
- Ensure at least 40 per cent female representation among non-executive directors, or
- 33 per cent female representation in all director positions, both executive and non-executive.
These targets are to be met by 30 June 2026.
Benefits of diversity on boards
Increasing the proportion of women on boards brings tangible business benefits. Diverse teams make more innovative decisions, manage risks better and react faster to market changes. This translates into improved financial performance, a deeper understanding of customer needs and greater customer loyalty. Gender-diverse companies are also perceived as more socially responsible, which increases their attractiveness to investors. Diversity in decision-making structures also supports openness to innovation and adaptability in a dynamic business environment.
Read also: The most important ESG regulations – a guide for business
Transparency and equality in recruitment
The directive requires companies to apply transparent rules for the selection of candidates for director positions. The recruitment process must be based on an objective assessment of the candidates' competence and experience and, in the case of persons with equivalent qualifications, preference is to be given to the underrepresented gender. Exceptions to this rule are only possible in justified cases, such as a company's specific diversity policies. The aim of these changes is to ensure fairer access to directorships, promoting gender equality in decision-making bodies.
See also: New EU Directive – salary transparency or more?
Sanctions for non-compliance
Companies that fail to meet the objectives of the directive can face financial penalties of up to 10 per cent of their annual revenue, determined on the basis of their most recent financial statements. Member states are required to set up monitoring and enforcement mechanisms. Companies will be obliged to report annually on data regarding the gender composition of their boards of directors and actions taken to comply with the requirements. If these requirements are not met, companies will have to provide justifications and detailed remediation plans.
The Women on Boards Directive represents a significant step towards greater diversity and inclusivity in governance. Introducing gender balance on boards not only responds to the demands of the modern world, but also lays the foundation for long-term changes that can contribute to a more innovative and competitive economy.
Authors:
Milena Kowalik-Szeruga, ESG Manager, Crowe Poland
Maria Kazubska, ESG Consultant, Crowe Poland
