LONDON (August 20, 2019) – ISS Corporate Solutions, Inc. (ICS), the leading global provider of corporate governance, executive compensation, and sustainability solutions to help companies improve shareholder value and reduce risk, today disclosed the results of an analysis of STOXX600 companies in four major European markets without a quota for corporate board gender diversity.

In examining Stoxx600 companies based in the United Kingdom, Sweden, Netherlands, and Switzerland over the past three years, the analysis finds companies in those four non-quota markets are narrowing the board gender gap with STOXX600 peers in select markets where gender diversity quotas exist.* In 2017 and for the four non-quota markets analyzed, 28 percent of director seats were held by women, representing 5.2 percentage points below the average for quota markets. Today, the gap has narrowed to just 3.4 percentage points, with 31.5 percent of board seats for STOXX600 companies in the U.K., Sweden, Netherlands, and Switzerland now held by women.

Since 2017, companies in non-quota markets saw gains of 3.6 percentage points in the average number of board seats held by women, compared with a 1.8 point jump in quota markets.

“While a small sample, these numbers suggest companies in the U.K., Netherlands, Sweden, and Switzerland are keeping pace, relatively speaking, with their European counterparts despite the absence of a hard mandate to diversify their boards,” said Stephan Costa, Head of Advisory at London-based ISS Corporate Solutions (ICS). “Moreover, these countries have seen steady growth in the representation of female directors while our analysis finds declines in some quota markets.”

According to ICS data for the identified non-quota markets, Sweden has seen the slowest growth in board gender diversity since 2017 at just 1.3 percentage points, or one-third the level for all non-quota markets as a whole. However, Sweden still maintains one of the highest levels of female board representation, globally, with nearly four in 10 Swedish board members now being women.  Notably, the latest data show that 43 percent of Swedish STOXX600 boards have more than 40 percent female directors.  Sweden’s slow and steady rate of increase stands in stark contrast to quota-market neighbors Finland and Norway, both of which saw declines in female board representation since 2017.

“Sweden’s standing is unique having achieved a high rate of women on boards without imposing a quota,” said Costa. “This is likely attributable to Swedish culture where gender equality is imbedded as a societal norm and is, therefore, also reflected in corporate decision-making.”

In the U.K., meanwhile, the Hampton-Alexander Review, a government-appointed independent body, called for a target of 33 percent of women on the boards of FTSE 350 companies by 2020. Our analysis finds that only 45 percent of the roughly 175 U.K.-based STOXX600 companies now have one-third or more women on their boards, suggesting, according to Costa, “that much work needs to be done at companies within the FTSE350 in advance of 2020.”

Compared with the Netherlands, the average percentage of women on the boards at STOXX600 companies in the U.K. and the Netherlands has grown by 6.0 and 3.0 percentage points, respectively, between 2017 and 2019. Currently, the average level of female board representation is at nearly 32 percent in both countries. However, when examining the percentage of companies with 30 percent or more female directors, the U.K. is more diversified with 60 percent of boards studied comprised of 30 percent or more women compared with just 48 percent of Dutch STOXX600 companies.

Female representation on Swiss boards has been one of the lowest among Stoxx600 companies with the averages of 19.2 and 23 percent in 2017 and 2019, respectively. However, while Switzerland has long lagged its European peers, it may become one of the first countries to include a soft quota at the executive level that may, in turn, stimulate an increase of women at the board level. Switzerland’s upper house of Parliament recently approved a measure to increase the number of women in management ranks at large, listed companies. The draft law includes a 30 percent guideline for women on corporate boards and 20 percent representation on executive committees. Non-compliance would not result in a penalty, but companies would be required to provide an explanation in their annual compensation report for the shortfall and present a plan for improvement.

*The analysis is based on gender diversity data on STOXX600 companies incorporated in the following “quota” countries: Spain, Denmark, Germany, Finland, France, Italy, Belgium, Norway.