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Companies must promote more women into senior management to avoid EU quotas, expert warns


The author of an influential report into women on corporate boards has welcomed the "culture change" that has resulted in the largest-ever annual increase in female appointments.

The author of an influential report into women on corporate boards has welcomed the "culture change" that has resulted in the largest-ever annual increase in female appointments.

A year after the publication of his original study, former trade minister Lord Davies of Abersoch reported (20-page / 1.8MB PDF) that women accounted for 15.6% of all directorships within the top 100 UK companies by share capital as of the end of last month, as a result of 47 appointments over the past year. He added that 11 all-male boards remained within the FTSE 100, down from 21 last year.

However corporate law expert Martin Webster with Pinsent Masons, the law firm behind Out-Law.com, said that UK companies had to do more to promote women into senior management roles to avoid the introduction of proposed EU gender quotas.

"While the increase in the appointment of women non-executive directors is welcome, the appointment of female executives has barely moved. That is why the European Commission continues to see quotas as the solution. If legislation is to be avoided, corporate Britain not only needs to maintain this momentum but also has to encourage the promotion of women into senior management," he said.

Lord Davies led a review into gender diversity on company boards in the UK last year and recommended that the FTSE 100 leading companies by share capital should aim to have at least 25% female representation by 2015. He also suggested that the top 350 companies set out the percentage of women that they aimed to have on their boards in 2013 and 2015.

Between 2008 and 2010 the number of female directors had "effectively plateaued", with less than a single percentage point rise year-on-year, Davies said. However, the figures over the twelve months since his original report was published showed the largest-ever annual increase in the percentage of women on boards, up from 12.5% last year to the current 15.6%, he said. To date, 17 companies in the FTSE 100 have reached the 25% target with a further 17 currently between 20% and 25%.

This year all-male boards are in the minority within the FTSE 250 at 44.8%, down from 52.4% last year. Women now account for 9.6% of all directorships in the 250 largest companies, up from 7.8%. 21 of the FTSE 250 companies have reached the 25% target, with a further 28 companies between 20% and 25%.

The review panel would prioritise work towards reaching the 25% target in FTSE 350 companies over the next year, and also work on building a "sustainable, credible supply of board-ready women" through training and development initiatives, Davies said.

"I must emphasise that efforts need to be ramped up and the speed of change accelerated if we're to avoid Government interference," he said.

An additional report published by Cranfield School of Management, which advises Lord Davies' review panel and has been tracking the progress of female appointments on boards since 1999, noted that if the current rate of progress continued a record 26.7% female board representation would be achieved in FTSE 100 companies by 2015.

Earlier this month EU Justice Minister Viviane Reding announced a consultation on the possible introduction of mandatory quotas for female participation on the boards of large European companies after only 24 publicly-listed companies signed a voluntary pledge to reach a target of 30% female representation by 2015 and 40% by 2020. Several EU member states including Belgium, France, Italy, the Netherlands and Spain have already introduced rules on gender quotas for company boards, while other countries have insisted on gender balance on the boards of state-owned companies.

Business Secretary Vince Cable said that the new figures were "real evidence" that UK businesses were taking board diversity seriously.

"It demonstrates why we don't think quotas are necessary at the moment as the UK is making the voluntary approach work. Increasing female board representation is a win-win proposition for business - well-balanced boards with broader experience introduce fresh perspectives and new ideas, which help improve performance and boost productivity," he said.

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