MORE than £80bn could be wiped from the market capitalisation of UK listed firms if quotas for women on corporate boards were introduced by the European Union, a new report claims.
The European Parliament approved legislation in November which would require listed companies to ensure their boards are composed of at least 40 per cent women in non-executive positions by 2020.
To become law, the legislation still needs the approval of EU member states.
The measures, which exclude companies with less than 250 employees, intend to improve the gender balance among non-executive directors of listed companies.
About 17 per cent of non-executive board members in the EU’s largest companies are women.
But a report by Conservative think tank, the Bow Group, claimed that the imposition of quotas could erase anything from between £60.58bn and £81.55bn from the market capitalisation of UK listed firms.
The think tank claims that, given the international nature of the FTSE 100, the introduction of quotas could prompt such companies to list elsewhere.
The paper looks at the introduction of similar quotas in Norway, claiming that 100 companies de-listed following the legislation.
Norway, which is not an EU member, imposed a 40 per cent quota in 2003, a target reached in 2009, although critics say this has been achieved in part thanks to a small number of women holding non-executive positions in multiple companies.
Norwegian companies can be liquidated if they fail to reach the target.
Mariana Yannakoudaki, a London MEP and the author of the paper, said: “The EU proposals are based on the supposed success of Norway in improving gender diversity.
“However, the lessons learned from Norway’s quota experiment clearly show that quotas are little more than a ‘quick fix’ which does not address the underlying issue of encouraging and supporting women at all levels of business, including the executive level.
“It is only by encouraging the development of the pipeline at all levels that women can truly engage on a level playing field, not by imposition of top-down quotas.”
Women are now said to make up 20.4 per cent of FTSE 100 directors.
“The (European) Parliament has made the first cracks in the glass ceiling that continues to bar female talent from the top jobs,” EU justice commissioner Viviane Reding, who launched the proposal, said in November.
Also in November, Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) agreed to introduce legislation requiring German companies to allot 30 per cent of their non-executive board seats to women from 2016.