UK response to the EC consultation on gender imbalance on corporate boards in the EU

Following a request from a supporter, Dorothea, to read the government’s response in late May 2012 to the EC consultation exercise, I’ve informed her it can be accessed through the following link:

The link leads to the following material relating to the government’s response:

28 May 2012: Government response to the EU consultation on Gender Imbalance in Corporate Boards in the EU.

In March this year, European Union Justice Commissioner Viviane Reding launched a consultation seeking views on action at an EU-level to address the issue, including legislative measures such as introducing quotas.

The Government has today written to the Commission making clear it does not support EU action in this area, backed by evidence that the number of women in senior positions can be increased without resorting to burdensome regulation.

The Business Secretary, Vince Cable said: ‘Increasing the number of women on boards is not just an aspiration for greater equality; it is also an important issue for economic growth. Research shows that diverse boards make better decisions and are more effective. Since Lord Davies published his recommendations, there has been strong momentum for change and real engagement from business and investors in addressing diversity issues. The UK’s voluntary, business-led approach, backed up by commitment from Government, is achieving a culture change in a way that burdensome regulations never can, and where women take a board position based on merit rather than making up the numbers.’

The formal response is downloadable from the link, and it’s here too:

121108 UK response to the EC consultation on gender imbalance on corporate boards in the EU

It’s full of the usual guff, but I’d like to draw your attention to one piece in particular:

3. In your view, would an increased presence of women on company boards bring economic benefits, and which ones?

Yes, we believe that more women on company boards brings many benefits including economic ones.

Importantly, a growing body of empirical research is beginning to show that diverse boards are more effective. One such report conducted by Catalyst (1) suggests that companies with more women on their boards out-perform their rivals, with a 42% higher return in sales, 66% higher return on invested capital and 53% higher return on equity.

We also know that women make around 70% of consumer purchasing decisions. Connecting better with the female workforce and customer base offers more opportunity to understand what drives decision-making and better enables businesses to understand their customers.

Continually recruiting individuals who share the same backgrounds and experiences creates a ‘group-think’ mentality within the board, which runs the risk of making flawed decisions because there are no fresh or different perspectives. Ultimately of course such businesses will be unable to stay ahead of the game.

Finally, good role models of both genders provide a clear link to aspiration within the workforce and society in general.

(1)   ‘The Bottom Line: Corporate Performance and Women’s Representation on Boards’, Lois Joy, Nancy M Carter, Harvey M Wagener, Sriram Narayanan, Catalyst, 2007.

‘Importantly, a growing body of empirical research is beginning to show that diverse boards are more effective.’ Oh dear, there appears to have been a typing error there, because the sentence would be correct if the word ‘more’ were replaced with the word ‘less’.

The inclusion of the Catalyst data is little short of scandalous, given that Catalyst itself ceased making claims of causal links in September 2011 –eight months before this document was written. Still, what else would we expect from Vince Cable and his team at the DBIS? I’m still awaiting a date for a meeting with Vince Cable and Helen Whitehead (the most senior civil servant at the DBIS involved with this matter).

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