The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (SI No 360 of 2017) came into effect on 21 August 2017. This piece of legislation had the purpose of transposing Directive 2014/95/EU of the European Parliament and of the Council amending Directive 2013/34/EU, concerning the need for disclosure of non-financial and diversity information. The new Regulations will apply to all reports from 2018 that contain information dated after 1 August 2017.

 

Who is affected?

This legislation concerns “applicable bodies”, who meet all three of the following conditions:

  • It is a public-interest entity;
  • It is a large company or a parent company of a large group;
  • It, or the group of which it is the parent company, has an average of more than 500 employees.[i]

 

In a press release following the enactment of the legislation, representatives of Business in the Community commented that non-financial reports can

“act as a catalyst to companies to engage stakeholders and encourage constructive dialogue on the impact of the business”.[ii]

In the main, the Regulations compel applicable bodies to publish non-financial information about the organisation, including policies on issues such as environmental impact, anti-corruption measures, and social engagement. Notably, organisations will also have to disclose diversity policies, including the gender balance of the organisation’s board.

 

Focus on diversity

The inclusion of the diversity report has garnered significant response. Reg. 6(2) contains the following items to be included:

“A diversity report shall include—

  • a description of the diversity policy applied in relation to the company’s board of directors with regard to aspects such as age, gender or educational and professional backgrounds,
  • the objective of that diversity policy,
  • how that diversity policy has been implemented by the company, and
  • the results of that policy in the financial year.”[iii]

 

This requirement has cast a light on the presence of gender equality on company boards. Research done by Accreate shows that Ireland is still falling behind our neighbours in gender equality in boardrooms. Women only make up 14% of company boards (as listed on the Irish Stock Exchange), much below the 25% EU average. In 2015, we also lagged significantly behind the most gender-balanced countries of the EU: Norway at 47%, France at 34%, and Sweden at 34%. This highlights a possible issue in the coming years, as

“Under EU rules by 2020 the boards of all stock exchange-listed companies must have at least 40% representation for each gender among their non-executive directors”.[iv]

 

Chief Executive of the Institute of Directors in Ireland, Maura Quinn, spoke at the launch of the IoD’s latest report. She applauded the “open and transparent process of appointment to State boards which takes diversity into account, private sector boards in Ireland would appear to be lagging behind.”[v]

These new regulations, then, would bring listed companies in line with the requirement for state boards to ensure that “at least of 40% of the candidates for each Board role are of each gender”.[vi]

However, Irish State boards have also struggled to meet this target. At the beginning of 2017, an independent news source found that just under 54% of State Boards did not meet this requirement.[vii] This is based on the Government Decision of 23 July 2014. This requirement has come under fire from critics who note that, while there is a basis for the quota, there is no legal enforcement for non-compliance.

 

Moving towards a culture of diversity

The Institute of Directors Ireland report, published in mid-2017, noted that, due to the high level of male-dominated boards at present, unconscious biases may stop Boards appointing women. This is redoubled by the comments of male respondents, who believed:

“Pressure to appoint females mitigates against males”,

and

“[There is] Bias towards women over and above ability”.[viii]

 

Further, the report found that 44% of the male respondents believed that the greatest barrier to appointing women to boards was that:

“the pool of suitably qualified women is not large enough”.

However, the majority of women believed it was this unconscious bias that presented the biggest challenge.[ix]

 

Although the Employment Equality Acts 1998–2015 prohibit employers from discriminating against candidates based on their gender (among other factors), there is no legislative answer to unconscious bias. The best option, at present, appears to be calling attention to the need for greater diversity. Creating opposition between the conscious effort to increase the number of places for women on boards and the developed, unconscious belief that there are few qualified women can contribute to improving gender balance figures.

 

Challenging biases

PAI will run a half-day seminar on Equality-Proofing your interview process on Wednesday 20 September 2017. The workshop-style session will challenge attendees to explore their unconscious biases in order to carry out all interviews with equality at the fore. The session will be led by Sile O’Donnell, who has over 25 years’ experience working in the public sector. Sile is a member of PAI’s Academic Council. She is also an Adjunct Associate professor in Organisational Behaviour and HRM in the School of Medicine, Trinity College Dublin.

 

For more information, or to reserve a place on this workshop, click here.

Notes

[i] Regulatory Impact Analysis, pg 3, available here.

[ii] BitC Press release, available here.

[iii] SI No 360 of 2017, pg 6, available here.

[iv] Press Release, available here.

[v] IoD Press Release, available here.

[vi] DPER Guidance on Appointments to State Boards, pg 8, available here.

[vii] Kevin Doyle, “More than half of Government’s State boards fail to meet gender quota”. Irish Independent, 3 January 2017. Available here.

[viii] Institute of Directors Report 2017, pg 10, available here.

[ix] Institute of Directors Report 2017, pg 12, available here

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