The Two-Pronged Approach of the (Semi-)Legal Norms on Gender Diversity: Exploratory Empirical Research on Corporate Boards of Dutch Listed Companies

Abstract

In this article, two different perspectives on diversity and gender equality in boards of listed companies in The Netherlands are discussed: first, the diversity perspective which focuses on better decision-making capabilities of gender-diverse teams (i.e. the economic perspective), and second, the gender equality perspective which aims to realise gender equality in all levels of society pursuant to international human rights treaties and national law (i.e. the rights-based perspective). This two-pronged approach is presented as follows: on the basis of a literature study and desk research, the authors first set out the views discussed in the extant literature on the economic perspective and, next, the legal context applicable to the rights-based perspective. Subsequently, the application in practice of these two perspectives are tested by analysing unique empirical data collected by the authors from listed companies in The Netherlands. The empirical data are collected in two studies assigned by the Dutch Corporate Governance Code Monitoring Committee (the Committee) to the authors in 2014 and 2015. This Committee annually reports on the compliance by listed companies with the Dutch Corporate Governance Code (the Code). One of the areas of concern is diversity in corporate boards as, since 2008, the Code requires that companies have a policy to realise a diverse board composition, gender being one of the indicators. The Code applies on a comply or explain basis. The empirical study revealed that Dutch companies, in their annual reporting on their board diversity policies, often referred to the Dutch corporate law provision concerning the gender quota. This provision requires of large companies that their corporate boards (both the board of directors and the supervisory board) comprise at least 30 per cent women and at least 30 per cent men. Like the Code, this legal provision also applies on a comply or explain basis. This law had been enacted for a limited period of time, i.e. from 2013 until 2016, but a legislative proposal is pending to extend the application of this quota provision until 2020. The authors discovered that the two perspectives (i.e. the economic and the rights-based perspectives) are often mixed up by companies, government representatives and institutions, and other parties (together: stakeholders) who deal with the theme of (gender) diversity in corporate boards. In this article, the authors elaborate on these two perspectives, raise questions in regard to the application of the (semi-)legal norms in this area, and share innovative findings regarding the measures taken by progressive Dutch listed companies in order to realise a diverse board composition, and in particular to comply with the statutory quota on female board representation.