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Hong Kong mulls quota for female directors

PUBLISHED : Monday, 10 December, 2012, 12:00am
UPDATED : Monday, 10 December, 2012, 3:32am

Is quota the right answer to gender imbalance in corporate boards? That's the big debate not just here in Hong Kong but in Europe as well.

In Hong Kong, many listed companies, including Hong Kong Exchanges and Clearing, do not agree a quota system is the solution. In the latest HKEx proposal in September, the bourse said it did not want a system along the lines of the one Norway had implemented.

In 2005, the European country made it mandatory for listed companies to have women on at least 40 per cent of the board seats. Some European countries, such as France and Italy, are to introduce similar quotas in the coming years.

Elin Hurvenes, founder and chairwoman of Professional Boards Forum of UK - a lobby group for the inclusion of more women and people of diverse backgrounds on boards - says the system proved effective in Norway.

According to Hurvenes, only 6 per cent of directors were female before 2002, when the country started to discuss such a quota. Norway now has about 40 per cent women on board on average as a result of the system.

She said Norway first contemplated a quota in 2002, but it was delayed as some parties wanted time to see if companies would voluntarily appoint more women to their boards.

But since nothing changed until 2005, Norway finally enacted the quota law that stipulated companies must ensure 40 per cent of directors are women by January 1, 2008.

In the debates preceding the law, some companies voiced concerns that they would not be able to find sufficient female talent. "But now it has been proved there are enough women capable of becoming directors," Hurvenes said.

Sian Westerman, a steering committee member of British-based 30 Percent Club, an organisation that encourages companies to take a business-led voluntary approach to having at least 30 per cent of directors (higher than the Davies Report target) as women, is opposed to quotas.

"We want to establish a culture for companies to voluntarily appoint more women on their boards. If there are quotas, people might say some female directors got the posts because of their gender rather than their ability. This would put a question mark on their voice in the board," she said.

Duncan Abate, firm practice leader of employment and benefits at legal firm Mayer Brown, said Malaysia had already introduced quotas and aimed to have 30 per cent women on boards by 2016. Several countries in Europe are contemplating similar systems.

"Quotas in all or certain sectors could be lobbied for under the so-called 'temporary special measures' provisions of the United Nations Convention for the Elimination of All Forms of Discrimination Against Women to which Hong Kong has been a signatory since 1996 and which can permit measures to be introduced - including quotas - to fix an inequity that is not improving or where the pace of change to improve gender equality is too slow," Abate said.

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