[2025 Gender Equality Index] Female Executive Quota a Hot Issue... EU to Mandate 33% from Next Year

How Are Other Countries Responding?
EU Imposes Fines and Sanctions for Failing to Meet Female Executive Quotas
Japan Sets Goal of 30% Female Executives by 2030

The female executive quota system is a hot-button issue worldwide. While the United States has slowed its efforts due to a rollback of diversity, equity, and inclusion (DEI) policies following the inauguration of President Donald Trump, other advanced nations such as those in Europe are actively expanding such initiatives. This is based on the assessment that policies to break the glass ceiling are necessary to ensure corporate sustainability.

On November 22, 2022, Ursula von der Leyen, President of the European Commission (fifth from the left), and other key officials are commemorating the adoption of the European Parliament's 'Guidelines on Gender Balance in Corporate Boards.' European Commission

From next year, listed companies in Europe will be required to ensure that at least 40% of their non-executive directors and at least 33% of all directors are from "minority genders." This follows the official adoption of a new law on gender balance in corporate boards by the European Union (EU) on November 22, 2022. Target companies must achieve these goals by June 30 of next year and report the gender composition of their boards to their respective national governments annually. If the required ratios are not met, companies must submit an achievement plan and disclose it on their company website for public viewing. Failure to meet the stipulated ratios may result in sanctions such as fines and public disclosure of company names.

The European Union (EU) spent ten years working to introduce the female executive quota system. In November 2012, the European Commission submitted a proposal on gender balance in corporate boards, and the following year, the European Parliament adopted this position. However, an agreement with some member states, such as Germany, was not reached. It was only after Ursula von der Leyen became President of the European Commission and actively pushed for negotiations that a final agreement was achieved.

After the bill was passed, President von der Leyen, along with Vice President Vera Jourova and others, issued a statement saying, "We now have a law that breaks the glass ceiling in the boards of listed companies," and emphasized, "There are many women qualified to hold top positions, and the new law will guarantee them a real opportunity to actually attain these roles."

Neighboring Japan is also pursuing similar policies. In June 2023, the Japanese government adopted the "Priority Policy for Women's Empowerment and Gender Equality," setting a goal for prime-listed companies on the Tokyo Stock Exchange to increase the proportion of female executives to at least 30% by 2030. The policy states, "Domestic and foreign investors are placing importance on the proportion of female executives in companies," and "This is also an important task for Japan's economic growth." While the policy is not legally binding, companies that do not comply are required to disclose reasonable grounds for non-compliance, and if the reasons are not deemed valid, sanctions such as fines may be imposed.

In Korea, the so-called "female director quota system" has been in effect since August 2022. Listed companies with a total capital of over 2 trillion won are prohibited from composing their boards with only one gender (Article 165-20 of the Capital Markets Act). However, due to the lack of specific sanctions, some companies have not complied. According to this year's Gender Equality Index survey, as of the first quarter, companies such as Hyundai Corporation and KCC, each with total capital of around 6 trillion won, had no female board members.

The National Assembly Research Service's report, "Future Tasks of the Female Director Quota System," noted, "The significance lies in having taken the first step toward gender equality within companies," but also pointed out, "The requirement is limited to appointing just one female director, and further discussion has not taken place." The report further recommended, "We must move away from insincere 'tokenism,' where a few members of minority groups are selected as symbolic representatives just for appearances."

Editor's NoteThe "Asia Economy Gender Equality Index," launched with the aim of examining the utilization of female talent and gender equality efforts at major domestic companies and promoting the spread of work-life balance, marks its 10th anniversary this year. The Gender Equality Index has served as a catalyst for spreading a culture of inclusion and coexistence within companies. On the occasion of its 10th year, Asia Economy has adjusted the evaluation criteria and methods and enhanced the analysis system to improve the objectivity and reliability of the index. As the value of sustainability and diversity grows, we hope the Gender Equality Index will serve as a compass for companies.