Women on Boards : the inside story on Norway’s 40% target
Our network in Norway, AIPBW (Association of Profesional and Business Women), recently hosted an event with Hege B. E. Nordstrand, from the Department of Child Welfare and Equality, to discuss the hot topic of women’s representation on the boards of companies listed on Norway’s stock exchange. The International press has made much of Norway ’s “40% women on the board or dissolve” sanction, but what is really the story behind the law?
First, a little history.
Norway has enforced a 40% quota in all public committees since 1985 – yes, twenty years ago!. This target was met by 1997, and today, women hold 44% of seats in such organisations. All political parties (except the inaptly named “progressive” party) have internal rules requiring between 40 and 50% of each gender on electoral lists.
In 1999, a public hearing was launched to debate the issue of gender equality in the private sector, followed by a second hearing in 2001. But the real catalyst was when the then Conservative Minister of Economics took a strong public stance on the issue on the basis that it was just good for business and the economy (see article here). A law was passed in November 2003, giving companies until end 2005 to conform before sanctions were set in place.
So what does the law say?
Who is concerned?: the law covers state owned companies and privately owned public limited companies (there are around 500 on the Norwegian stock exchange). It does NOT apply to privately owned non-listed companies, which are the vast majority of Norwegian companies (over 160 000).
What does the law say?
Companies are required to have at least 33% to 50% of each gender depending on the size of the board (see details in the document attached).
The 40% requirement applies to boards of over 10 members. These percentages are for the shareholder representatives. And for those who wonder, yes, one company did have to search for a male board member to reach the target!
For employee representatives, there should be at least one of each gender, unless there is less than 20% of either sex in the workforce.
Where is the law in the statute books?
The requirement is written into the Public limited companies act, and not the Gender Equality Act. It is simply an additional requirement to the existing control mechanisms for corporate governance.
What are the sanctions?
As of January 1 st 2006 , every new listed company must satisfy this requirement in order to register. Existing companies must conform by end 2007. Much has been made of the “excessive” sanction, company dissolution, in case on non-compliance. In fact, this dissolution sanction exists since 1976 for any company not satisfying statutory requirements such as accounts reporting etc. Ms Nordstrand expected therefore that every company would comply – or go private!
What are the results?
Despite our rosy picture of equality in Norway , only 13% of the target companies had achieved the requirements of the law by July 2005 and only 16% of the board members were women (this is lower than the EuropeanPWN BoardWomen Monitor figure of 22% since the latter covers only the biggest companies). Six months later, these numbers had progressed to 18% and 18% as the deadline for compliance drew closer, but are still well below the requirement.
What are companies doing?
1. The Confederation of Nowegian Business and Industry (NHO) started a programme called “Female Future”, which ran from 2002 to 2005. CEOs of volunteer companies selected up to three executive women to benefit from boardroom competence training and networking. Over the period, women’s presence on the boards climbed from 6% to 21%. Full details are available in “Women on Boards: Moving Beyond Tokenism”.
2. Several lists of “board ready” women have been put in place:
Professional and executive candidate database for women set up by the National Employment office with over 3500 names
www.nyttstyremedlem.not , a list set up by Innovation Norway with 1000 names of men and women who have been through the organisation’s board training programme “
www.kvinneristyret.no set up by the Norwegian association of lawyers