EU directives: A new era in corporate gender equality

Diversity and equity are not merely buzzwords, but essential cornerstones for any forward-looking company. With the new tide in the European Union's regulatory landscape, the values of gender equality have become even more pivotal. As corporate leaders look ahead, it is crucial to consider the intertwined paths of sustainability, management success, and gender equity. Here is where Deloitte’s cross-functional teams and experts are primed to guide businesses through these transformative times.

A Historic Moment: EU’s Emphasis on Gender Equality

The EU has been a forerunner in embedding the values of diversity and gender equity into its legislation. Building on the foundational treaties and the Charter of Fundamental Rights, two newly adopted key directives stand out: the Pay Transparency Directive and the Women on Boards Directive. Both serve as critical tools for companies aiming to propel their gender diversity ambitions, particularly in leadership roles.

Pay Transparency Directive: Putting the Spotlight on Fair Compensation

The Pay Transparency Directive is slated to fundamentally reshape how companies address and disclose remuneration. The core highlights of this directive include:

  • Transparency First: Businesses must now offer clear pay ranges in job vacancy notices, thus making compensation expectations transparent from the very beginning of the recruitment process.
  • Eliminating Historical Bias: Employers can no longer ask about an applicant’s prior salary, ensuring new roles are offered based on skills and experience rather than perpetuating past inequities.
  • Promoting Open Conversations: Businesses cannot use confidentiality clauses to prevent employees from discussing their salaries.
  • Right to Information: Employees can access average pay data for their roles, split by gender, ensuring greater visibility into potential disparities.
  • Reporting on Gender Pay Gap: Businesses will newly have to publicly disclose their gender pay gap.

This directive is not merely about compliance. It is about nurturing a culture of transparency and fairness. Companies are encouraged to analyse their gender pay gaps, fortify their diversity, equity, and inclusion policies, and foster an environment where gender-based pay disparities become relics of the past.

Women on Boards Directive: Paving the Way for Diverse Leadership

The Women on Boards Directive marks a significant step towards diversifying corporate leadership. Among its numerous mandates:

  • Setting Benchmarks: By mid-2026, listed companies within the EU must ensure that at least 40% of their non-executive directors, or 33% of both executive and non-executive directors (depending on the nation-state) belong to the underrepresented gender.
  • Accountability and Transparency: Companies must openly report gender proportions on their boards, the measures they have undertaken, and their plans to achieve the set quotas.
  • Merit-Based Selection: While gender diversity is emphasised, merit remains paramount. Transparent, neutral, and non-discriminatory criteria are essential for board selections.

To meet these mandates, companies need to reevaluate their recruitment strategies, ensuring a fair representation of women at all management levels, setting the stage for a more gender-balanced future in leadership roles.

Deloitte: Your Partner in Navigating the Future

Change is not merely about adaptation but about anticipation. As businesses stand at the crossroads of legal mandates and societal expectations, early preparation and well-designed strategies become imperative.

At Deloitte, we are not just spectators but active participants and facilitators of this transformative journey. Through collaborative solutions that merge our multi-disciplinary expertise, we offer a holistic approach to navigating these directives. When you partner with Deloitte, you are choosing a team that values diversity and equity as core pillars of business excellence.

As we step into this new era of corporate gender equality, let us not just comply but lead with conviction. And together, let us reimagine a corporate world that is not just equitable but also profoundly successful.

The article was written by Kryštof Stupka.
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