New law set to improve gender equality at top levels of Dutch businesses

A change in the law in the Netherlands is set to improve gender equality at the top levels of businesses. The new bill aims to make the ratio between the number of men and women at top levels of large private companies more balanced. Since it went into effect on 1 January 2022, it has become mandatory for such companies to hire more women leaders.

The new law, proposed by Ministers Dekker (Legal Protection) and Van Engelshoven (Emancipation), contains two measures to promote diversity. Firstly, a ‘growth quota’ stipulates that at least one third of the supervisory boards of listed companies must consist of men and at least one third of women. This also applies to newly-appointed supervisory directors. In addition, the 5000 largest companies are required to set ‘appropriate and ambitious targets’ to ensure an even ratio of male and female leaders at the top and sub-top levels of their companies. They must report on their progress annually. In fact, out of 89 publicly listed companies, 61 already comply with the quota, as shown by the Female Board Index 2021 – ten more than in 2020.

No half measures
According to the Social and Economic Council SER, which advised on the law in the report ‘Diversity in the boardroom: Time for acceleration’, there are still too few women at the top levels of businesses, and, although the number has been growing, the development has been too slow. Now, the SER has called for a more integrated approach and for more robust measures. An inclusive labour market, SER says, enables talent to be better utilized and stimulates innovation, creativity and social cohesion. Minister Dekker says: “Organisations and companies cannot afford to focus just on half of all Dutch talent. This law should therefore not actually be necessary, but it is necessary as a push for the business community to really work on diversity.” Van Engelshoven referred to the new law as “good news for equality of opportunity and for the companies themselves, because a diverse management ensures better business operations”.

Accumulation of little things
Meanwhile, there are a range of other factors that still need to be addressed. Van Engelshoven mentions, for example, that more childcare facilities should be made available around the country, and that fathers should be encouraged to take more parental leave. Mariëtte Turkenburg, chair of the foundation Talent to the Top, which promotes increased diversity at top levels of organisations, says that implementing the new law “won’t come naturally to most companies”. Turkenburg explained that in her experience, a shortage of women at the top level of a business is not always caused by ‘ill will’, but is often due to what she called ‘unconscious incompetence’ in the field of gender equality. She says that such incompetence consists of a ‘whole accumulation of little things’, and used the example of the job interview question ‘how will you take care of the children?’ Employers wouldn’t ask a male applicant such a question, making the children the women’s problem. Moreover, in her answer, a female applicant might show more hesitancy than a man, but the employer has the choice to value their honesty instead of considering it something negative, Turkenburg explained.

The ‘Balanced Male-Female Ratio Act at the top of the business community’ was passed in the Dutch Senate on 28 September 2021 and will be evaluated after five years; it will be scrapped after eight years. The changes (of Book 2 of the Civil Code), were based, among other things, on the SER advice in Van Engelshoven has called the changes a ‘historical step,’ but whether the law will be a success and make a big difference remains to be seen. The effects of a similar quota in Norway introduced in 2013 have been disappointing: the intended effect of more women in top-levels business positions, more female CEOs, more top executives and more equality in pay, has been disappointing so far. Some critics may also call the new measures ‘positive discrimination’, although Turkenburg argues: “We have only really won the battle if mediocre women are appointed instead of those large numbers of mediocre men.”

Written by Femke van Iperen