Dusseldorf The EU’s new so-called gender quota, which the negotiators in Brussels agreed on late Tuesday evening and which is to apply from 2026, will hit the German economy hard. At 40 percent, it is ten percentage points above the statutory quota for women in Germany that has existed since 2015. In addition, it is used for all listed companies and not only for those with equal co-determination.
“The Dax 40 starts at a high level and most Dax companies will certainly make it by 2026 on the path they have already taken. On the other hand, it will be more challenging for the many listed companies that have not previously been subject to the legal regulation,” said Thomas Tomkos, Head of the German Board Practice of the international HR consultancy Russell Reynolds. “You must act now.”
In the German economy, a lot has happened in recent years in terms of women in management positions. However, the need to catch up was very high compared to other European countries – and it only happened as a result of legal pressure.
Only the introduction of the women’s quota for the supervisory boards of listed and co-determined companies as part of the First Management Positions Act 2015 brought about change. The proportion of women in the supervisory bodies of the Dax companies has since risen from less than ten percent to currently almost 33 percent.
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A similar development can be seen in the quota for women on the board of directors, which was only introduced last year. Since then, more female Dax board members have been appointed than ever before. The proportion of women on the Dax boards was around 14 percent on March 1 of this year.
Germany is thus providing something like the blueprint for the necessity and effectiveness of such a quota. The agreement reached by the negotiators of the member states and the EU Parliament after years of deadlock came as a surprise.
States can choose between two models until 2026
Specifically, states should be able to choose between two models. Either at least 40 percent of the non-executive members of the supervisory board should be women, as Vice-President of the European Parliament Evelyn Regner announced. Another possibility is to achieve an average proportion of women of 33 percent for supervisory boards and executive boards.
Those who do not follow the rules have to pay fines. The project is gender neutral. In other words, if there were more women than men on a relevant committee, men would also benefit from the regulation.
Such a requirement is long overdue, said Regner: “According to estimates by the European Institute for Gender Equality, currently only 30.6 percent of the members of the supervisory board are female and only 8.5 percent of the executive boards in the EU are women,” said the chief negotiator at the Social democrat involved in negotiations.
Both the new women’s quota and the previous women’s quota are met with a very mixed response in the German economy. In general, a quota system is rejected. Many entrepreneurs and board members perceive them as an interference in their business conduct.
At the same time, however, the insight that diverse teams are more successful also increases. Finally, studies show that diverse companies are more competitive. The Boston Consulting Group’s “Gender Diversity Index” shows that various companies achieve nine percent higher profit margins on average and are more innovative. They generate 19 percentage points higher innovation revenues. In addition, the shortage of skilled workers is increasing the pressure on corporations to position themselves as attractive employers for all sections of the population.
Prominent women had campaigned for the quota
Diversity has therefore now been declared a matter for the board of directors of some DAX companies: HR manager Renate Wagner is responsible for it at Allianz and CEO Björn Gulden at Puma. In both cases, the bonuses of the board members are linked to diversity goals. As an analysis by the Beyond Gender Agenda initiative recently showed, diversity is already anchored in top management at other companies: Bayer, Adidas, Merck, Siemens and Continental.
>> Read also: Diversity ranking: Allianz, SAP and Deutsche Telekom are the winners
The proportion of women is considered a driver of diversity – also because of the success it has shown. Accordingly, the voices that actively demanded such a gender quota increased. At the weekend, German managers and businesswomen drummed for the EU women’s quota on the social networks LinkedIn and Twitter. They demanded this “now and without compromise”.
The circle of activists included the economics Monika Schnitzer or Bahn board member Sigrid Nikutta, the long-standing Lanxess HR manager Stephanie Cossmann, the entrepreneurs Victoria Wagner and Tijen Onaran, the sociologist Jutta Allmendinger, the FDP politician Silvana Koch-mehrin and Philip’s head of Germany Morris, Claudia Oeking.
Schnitzer, who has been a member of the German Council of Economic Experts since 2020, was pleased with the agreement on Tuesday evening and wrote on Twitter of “very good news”.
Allmendinger, who heads the Berlin Science Center for Social Research, added in the same channel. “High five. After ten years, the quota system that was decided in 2012 is finally here and must be implemented by 2026.”
The change of government in Germany was also decisive for the agreement that has now been reached. Under ex-Chancellor Angela Merkel (CDU), Germany still stood in the way of an agreement. The EU Commission tried to introduce binding rules around ten years ago. Under the then Justice Commissioner Viviane Reding, there was a corresponding initiative, which was also rejected by the federal government under Merkel. At that time, only 15.6 percent of supervisory board members in Germany were women.
The turnaround came at the beginning of the year when the German EU Commission President Ursula von der Leyen (CDU) and the French President Emmanuel Macron were surprisingly clear and unequivocal in favor of passing a quota for women in the EU of 40 percent for the supervisory boards of all companies had used. On March 14, the EU ministers also spoke out in favor of the directive.
The proposal for a directive has now been negotiated in the so-called trialogue between Parliament, the Commission and the Council. The regulation that has now been found still has to be confirmed by the EU states and the European Parliament, but this is considered a formality.
More: Outcry: “Women’s quota now and without compromise”