Women on company boards: equality meets subsidiarity

In 2012, the European Commission presented a proposal of the Directive on improving the gender balance among non-executive directors of companies listed on stock exchanges and related measures. The Directive is novel, interesting and controversial for several reasons.  Firstly, although not prescribing hard quota, the directive arguably adopts a results-oriented approach to equality, which opens the question of what understanding of substantive equality can be said to inform it. Secondly, it moves beyond the field of employment which – considering its legal basis (Art. 157 TFEU) – raises constitutional questions of competence and subsidiarity. Thirdly, it enters into a complex field of corporate governance which challenges the harmonisation project due to the very varied national structures.

The Directive has met with considerable opposition. By the deadline in January 2013, nine domestic chambers sent reasoned opinions and further five sent comments. This falls short of the requirement of a third of national parliaments, necessary for triggering the ‘yellow card’ mechanism under the subsidiarity protocol, but it shows a reasonable amount of push-back against the proposal. The Directive has also lacked persuasive support in the Council.

This paper, after briefly introducing the proposal (part 1), explores the objections contained in the reasoned opinions (part 2). The objections seem to fall into three groups: those targeting constitutional issues (such as competence or subsidiarity), the more technical aspects of the directive (its understanding of corporate governance and the potential for its effectiveness), and its substantive approach to equality (as equality of opportunity or even results rather than mere equal treatment). This illustrates a broader use of the Subsidiarity Protocol’s procedure, for a political dialogue on competence and substance of legislative proposals, not merely subsidiarity between the NPs and the EU’s institutions. This might be welcome (explain). Noteworthy, however, are the diverse emphases coming from different MSs. In particular, the fact that those coming from the new post-communist Member States, appear to object to the EU’s move towards ‘substantive equality’, and a clear disagreement with some of the fundamental premises of EU anti-discrimination law, as far as the view of the underlying social reality is concerned. As such, these could be read as challenges to an avowed aim of the EU, unambiguously contained in the Treaty, and in that sense perhaps stretch the Subsidiarity Protocol’s role too far. 

I then look more closely at subsidiarity itself, in relation to non-internal market measures (part 3). I observe that the internal-market logic of Art 5 (3) TEU makes it difficult to justify non-market, non-cross-border measures, such as those promoting gender equality and tentatively suggest ways of what to do about it.