World

Germany Sets ‘Milestone’ Gender Quota for Company Boards

Germany on Friday moved to ensure that women are represented in the upper echelons of some of Europe’s largest publicly traded companies, advancing a measure in Parliament that sets a quota for women on management boards.

Under the proposal approved by the Parliament, public companies in Germany with four or more board members will be required to have one female board member, and government-controlled firms with boards of three or more members will also be required to have one woman.

The measure is expected to receive final passage by Germany’s upper house later this summer. Companies will face financial penalties for failing to meet the new law.

“Highly qualified women still come up against glass ceilings far too often,” said the minister for justice and family affairs, Christine Lambrecht. “This is a milestone for women in Germany and at the same time offers a great opportunity for both society and companies.”

The government said 66 private-sector companies, 21 of which still have no women on their management boards, will be affected by the new rules. Included in the law is time off for executive board members who choose to take leave, whether maternity or parental, or because of illness or to care for family members.

In adopting the proposal, Germany is building on a 2015 law requiring some of Europe’s largest companies to give 30 percent of supervisory seats to women.

“We already saw with the quota for supervisory boards introduced in 2015, quota regulations have an effect,” said Ms. Lambrecht. “The new regulations will have an impact on the entire economy.”

In anticipation of Parliament passing new legislation, six German companies, including the sportswear manufacturer Adidas and the pharmaceutical firm Bayer, appointed women to their management boards before the law was passed, according to a recent study by FidAR, an initiative advocating more women on advisory boards. More than half the country’s large listed corporations, the report said, still have no women on their boards.

“Women have a lot of potential that neither German companies nor our society can do without,” a former family minister, Franziska Giffey, said in November, before the proposed law reached Parliament.

According to a 2020 survey by the AllBright Foundation, women occupy only 12.8 percent of the seats on management boards of the 30 largest firms in Germany’s blue-chip DAX index.

“It’s surprising that Germany is such a superpower when you look at those numbers,” said Janina Kugel, who served as chief human resources officer and managing board member at Siemens for five years. “The question is, will it remain a superpower if things don’t change in many aspects, but also when it comes to diversity? I would doubt that.”

For Ms. Kugel, the new law is an important signal, but not enough. Equality, she said, is 50 percent.

For as long as Simone Menne can remember, the number of women in top management positions has more or less been the same, she said in an interview in January.

The proposal approved by the German parliament is “sort of a wake-up call for companies and male top managers to really consider to change their behavior,” said Ms. Menne, a former chief financial officer on Lufthansa’s management board and current board member of directors of BMW and Deutsche Post.

“It’s a myth that there’s not enough qualified women,” she said. “We are not pushing men to the side; it’s the contrary, we have to work together.”

Melissa Eddy contributed from Berlin.

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