New EU quota for women puts German companies under pressure

Dusseldorf Ursula von der Leyen already campaigned for equality between women and men when she was Federal Minister for Family Affairs and introduced, for example, parental leave and parental allowance. Now she is on the verge of her next coup as EU Commission President. On Monday, the Council of Ministers is to clear the way for a 40 percent quota for women on the supervisory boards of listed companies.

This would also affect German corporations. In Germany, there has been a quota of 30 percent for supervisory boards since 2015. In addition, since last year there has been a minimum composition for members of the Management Board. However, these requirements only apply to listed corporations with equal co-determination. Dax companies such as Porsche SE, Siemens Healthineers, Linde and Qiagen have not been affected so far.

With an EU quota, the pressure to act increases massively for two of these companies. At the VW parent company Porsche SE, communication strategist Marianne Heiss is one of ten inspectors who is female. At the medical technology group Siemens Healthineers, there are only two out of ten supervisory board members with the ex-boss of the Siemens Foundation, Nathalie von Siemens, and the multi-supervisory board member Marion Helmes.

“Some German companies that do not have equal co-determination and that have not yet come under the German quota and are still under it will have to move,” explains Jens-Thomas Pietralla, partner at Russell Reynolds. “The 40 percent EU target value is then the new benchmark.”

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Companies that would still be well below this in the future would not only have a reputation problem, which can have negative effects, especially when recruiting sought-after talent. “They don’t exhaust the potential of a diverse company either,” says Pietralla.

Porsche SE and Siemens Healthineers are therefore faced with the challenge of having to more than double the proportion of women on the supervisory bodies in the near future. So far, five MDax companies have no women on the supervisory board: Sixt, Nemetschek, Hypoport, Rational and Varta.

For experts like Pietralla, the inertia of some German companies is difficult to understand. “It’s unfortunate that some companies only react under the pressure of a legal quota, while others have been doing exemplary work on diversity for years,” he says. “It has been sufficiently proven that diversity can be a success factor, especially in transformation situations.”

After all, there are good reasons not only from a social but also from a business point of view to increasingly rely on women. Companies with a high proportion of women have more chances of being successful above average, as the strategy consultants Boston Consulting Group and McKinsey have shown in studies on several occasions. In addition, the pressure from investors like Blackstone, who only want to invest in diversified companies, is increasing.

Management floors are on the move

Natalie Daghles, who is a partner at Noerr and is involved in the women’s network IWiL, sees it this way: “The German economy is at risk of falling behind in international comparison.” Influential investors on the capital market would pay very close attention to diversity and a broad mindset in management and make their decisions accordingly.

Accordingly, there are signs of movement: at the software company Nemetschek, the supervisory board is to be expanded at the general meeting on April 12 and strengthened by women. The Handelsblatt found out about this from the company. At the tech group Teamviewer, the previously all-male supervisory board was recently strengthened with the Hong Kong Chinese Hera Kitwan Siu. And Siemens Healthineers refers to the upcoming elections for the Supervisory Board in February 2023.

>> Read also: The only technology board member in the MDax on her recipe for success

Developments in recent years have shown that statutory quotas work. The proportion of women on the German supervisory boards of listed companies has been increasing continuously since 2015. According to an analysis by Russell Reynolds, a good one in three supervisory board members in the Dax 40 companies is currently 35.9 percent female.

The previously applicable 30 percent quota is met by 36 of the 40 members. Corporations such as Deutsche Bank, Eon, Continental and BMW, which achieve exactly 30 percent, would have to strengthen themselves with the new EU quota of 40 percent with female power.

Ursula von der Leyen

Parliament together with Commission President von der Leyen on International Women’s Day.

(Photo: dpa)

For the time being, companies that do not comply with the new EU quota do not have to fear sanctions. However, they must explain to themselves why they are unable to meet the requirement. In addition, member states could decide on penalties at national level. Should there be a majority among the ministers on Monday, the European Parliament still has to agree.

The groups that have already moved and have even exceeded the German statutory quota can observe the political debate in a relaxed manner. These include a total of twelve groups in the Dax, including Deutsche Telekom, Zalando, Covestro, Infineon, SAP, Henkel, Heidelberg Cement and Munich Re. In the MDax, which includes 50 stocks, ten companies achieve the 40 percent quota.

The recent case of the Cologne-based company Deutz showed the distortions that the statutory women’s quota can lead to if the advancement of women was not tackled in the long term and out of conviction, but only through quota pressure. The dispute at the engine manufacturer about the legally required appointment of a woman to a board position escalated and had serious personnel consequences. CEO Frank Hiller had to leave the company, and the chairman of the supervisory board, Bernd Bohr, also gave up his position as chairman.

More: 100 women who move Germany

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