‘We cannot sit back and hope’: German govt to introduce law forcing companies to appoint more women to boards

Listed companies with three or more executives will have to appoint at least one woman to their boards, Germany’s government has announced, in a move designed to close the gender gap in the country.

Germany’s Minister for Family Affairs, Senior Citizens, Women and Youth, Franziska Giffey, announced on Wednesday that the government will introduce the Second Executive Positions Act in a bid to increase the number of women in management positions. 

“We cannot sit back and hope for a number of years that companies will set higher targets,” Giffey said of the proposed regulations.

Nothing happens voluntarily. It is time to create legal rules for more diversity and equality in the executive suite.

If companies do not comply with the new measures, they could face a €43,000 fine ($53,000) – a significant drop on the previously proposed €248,000 ($306,000) penalty. 

The legislation has been debated within the country’s governing coalition for several years, with the Social Democrats (SDP) calling for it, while Chancellor Angela Merkel’s Christian Democrats (CDU) pushed back. However, Germany’s leader has recently warmed to the proposal, believing that companies have moved too slowly on the issue and now require pressure from the government.

Just 7.6 percent of the executive boards of companies that will be impacted by the new legislation are women, according to German government figures. Some 70 percent of the companies that will have to adopt the quota currently have no targets in place for the board membership of women.

In the US, women hold 28.6 percent of top management roles, while the figure is 24.5 percent in the UK and 22.2 percent in France, according to the AllBright Foundation, which promotes gender diversity in senior management. 

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