women empowerment

‘S- Social’ Aspect Of ESG

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The positive impact of quotas promoting women’s representation across regions and countries is well documented. For instance, in April 1993, the United Nations dubbed the 33% quota for women in village council’s leadership as “one of the best innovations in grassroots democracy in the world”. Subsequent studies on the impact of the quotas showed that (a) the service delivery model improved, (b) political and civic participation of women increased, (c) attitude, specifically subconscious bias towards women changed and (d) aspirations of rural parents increased.

Though the quota for women’s representation created a cadre of village-level leaders, it is a shame that the debate for women’s representation at regional and national levels endures even today. The Women’s Reservation Bill or The Constitution (108th Amendment) Bill was introduced on 9th March 2010 and proposed a reservation of 1/3rd seats for women in the lower house of Parliament of India, the Lok Sabha, and in all state legislative assemblies. However, till today, it is a pending bill in the Parliament of India. The Rajya Sabha (Upper House) passed the bill on 9 March 2010. However, the Lok Sabha (Lower House) never voted on the bill. It is now time to dust it back to life.

There are several other instances where the provision of such quotas faces barriers in their implementation. To illustrate, on 17th Oct 2022, the “Women on Boards” directive was agreed to by the European Union Council of Ministers. This directed companies to have 33% of Directors or 40% of non-Directors as women. It aimed to promote a more balanced gender representation on the boards of listed companies. While the compliance is set to be enforced starting June 2026, it must be noted that this bill was first drafted in 2012 and was finally accepted by the EU commission in 2022. Though the first draft was widely supported in the EU, it was stuck down at the country level. Countries such as Germany and The Netherlands who earlier preferred a national solution agreed to pass it. But several countries such as Hungary and Slovakia among many others, are still not on board. The way the bill has meandered for more than a decade shows that gender diversity as a topic in organizations still needs focused effort for its realization. 

Interestingly, the bill came back to life under a woman’s leadership – Ursula von der Leyen. President von der Leyen’s European Commission is ambitious. The commission itself is a fully balanced collegium with 13 women commissioners among a total of 27. It demonstrates the need for more women at the helm to push through the agenda of gender equity.

Generally, it is agreed that customer experience wins business. Diversity means diverse life experiences, contacts with a variety of human networks, and a different perspective in solving problems which help add to the intellectual capital of a firm. The European Institute of Gender Equity found that board diversity was at 37% in countries (Belgium, France, Portugal) that had enforced the quota versus 24% in ones that did not. More consequentially, the trickledown effect of women in the position of Chair or CEO of a Board is both tangible (leading to increased revenues for instance) and intangible (as in the case of role models in Indian villages for young women).

The aim of this legislation goes beyond just seeking an increase in the minimum requirement of women’s representation. It seeks to demand authenticity in diversity by mindful inclusion of backgrounds, ethnicities, and even nationalities in the selection of boards. 

However, the implementation of it is not going to be smooth. Compliance with the bill requires recruiting differently and not just handpicking women within inner circles of families & friends as it is done sometimes today. It goes as far as stating that given a comparative assessment of two candidates with equal footing, a choice should be made on the grounds of how underrepresented they are on grounds of diversity. However, the definition of ‘equal footing’ in a comparative assessment of two candidates is open to interpretation. Further, there are choices that firms must make such as choosing 40% non-Executive Directors or 33% of Executives as women. More importantly, the board is selected by a voting process and voters will apply subjective assessments. 

Whatever the course of implementation, this measure will make a difference. The progress towards inclusivity is closer as we close the diversity gap.

“Diversity is being invited to the party; inclusion is being asked to dance,” – Verna Myers 

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