Women on boards – code or law?

The debate has been going on for a long time, but if you listen to it carefully, you'll hear a crescendo. Women will play a bigger role in boards of directors very soon. It may come in statute in some countries, as it has in Norway and a few other places. It may come by "directive", the European Union's language for legislation that member states can implement in their own ways. Or it may arrive through the side door of a code of conduct, backed by something like the "comply-or-explain" principle in UK corporate governance. But come it will. Lord Davies wrote a report for government published in February, which prompted a review at the Financial Reporting Council, custodians of the UK Corporate Governance Code. Listen to this voice, from the Institute of Chartered Secretaries and Administrators. In its submission to the FRC consultation, ICSA said:
We think it is important that the Code is amended to achieve more diversity and more effective boards. Although many companies will wish to implement the recommendations of the Davies Report voluntarily, we think the inclusion of new provisions in the Code would be the best way to achieve compliance by all companies. It would also provide for a standard method of reporting as all companies would report on progress towards achieving their internal targets for the percentage of women on their boards in their Annual Reports.
The background includes the European Commission's "Strategy for Equality between Women and Men 2010-2015". Further action by the EU may well follow a review of progress in March 2012, when legislation, not codes, could be on the table. "We believe it is important for the UK to be seen to be taking action on this matter ahead of the EU review of progress and think that inclusion of a Code provision (and thereby a requirement for UK companies to report on progress) would demonstrate that the UK is taking the matter seriously and making progress towards the aspirations of the EU," ICSA said.

Source document: The ICSA response is a two-page pdf file.