According to figures published in January of this year by the National Statistics Office, 24 per cent of the ‘chief executives, senior officials and legislators’ in Malta are women.

The ‘Gender Balance In Business And Finance’ study published last year by the European Institute for Gender Equality found that in 2022, the share of women on the boards of the largest publicly listed companies registered in the EU reached a new high of 32.2 per cent.

More recent data by the European Institute for Gender Equality also shows that in 2023, the share of women on boards of the largest listed companies in Malta was still among the lowest across the EU with 17.5 per cent, compared to the average of 33.8 per cent across the EU.

Four member states, namely France, Italy, the Netherlands and Denmark already have at least 40 per cent of each gender at board level, Belgium is edging closer to this mark while Germany, Finland, Spain, Sweden, Ireland, Portugal and Austria have also achieved the 33 per cent target proposed by the EU.

According to the same study, however, only 3 in 10 board members in large corporations in the EU are women, over a third of non-executive positions are held by women, and less than 1 in 10 of the largest listed companies in Member States have a woman chair (8.8 per cent) or a woman chief executive officer (8.4 per cent), only men hold the governors’ positions of EU national central banks and EU financial institutions are mostly led by men.

Within the financial services sector at a European level, the latest European Financial Services Boardroom Monitor study published earlier this year by EY notes how appointments of female board directors to Europe’s largest financial services firms declined seven percentage points year-on-year.

The same study also reported that 44 per cent of all appointments last year were of women, down from 51 per cent in 2022.

While all European financial services firms monitored had female representation at the boardroom level, the current gender split across all firms stands at 57 per cent male and 43 per cent female (down from 58:42 in 2022), and 31 per cent of listed European financial services firms are still reporting under 40 per cent female representation in their boardroom.

The EU Women on Boards Directive

The Women on Boards Directive is a crucial part of the 2020-2025 EU Gender Equality Strategy to achieve gender equality in the workplace and seeks a comprehensive approach to foster gender-balanced decision-making within companies at all levels.

The Directive had been 10 years in the making. The text was approved by the European Parliament in 2012 but then was blocked by the European Council. Some countries opposed regulation, preferring voluntary measures at a national level. Eventually, the Directive was adopted by the EU in November 2022.

By mid-2026 every listed company within the European Union (to the exclusion of SMEs) needs to have at least 40 per cent female non-executive directors or have a female representation of executive and non-executive of at least 33 per cent in compliance with the European Commission’s European Women on Boards Directive.

In Malta

In Malta, the Women on Boards Directive will apply to certain listed companies with shares admitted to trading on the Regulated Market, which will be impacted by the directive.

Currently, the MFSA is transposing the directive based on introducing the requirements only for the listed companies falling within the scope of the directive.

With regards to unlisted and/or unregulated entities that do not fall within the MFSA’s remit, any policy decisions to impose this Directive on them will need to be taken at Government level with amendments made to other legislative frameworks such as the Companies Act.

Dr Catherine Formosa, Senior Associate at Ganado Advocates noted that “The Directive defines a listed company as ‘a company which has its registered office in a Member State and whose shares are admitted to trading on a regulated market in one or more Member States.”

“Therefore, the criteria for compliance are local registration and the listing of shares on the Malta Stock Exchange or any regulated market within the EU. Companies that may be majority-owned by third-country (non-EU) shareholders will also need to comply,” she said.

Applying the Directive in the spirit of better governance

SMEs are described as companies which employ less than 250 persons and have an annual turnover not exceeding €50 million or an annual balance sheet total not exceeding €43 million.

In Malta, 90-95 per cent of businesses qualify as SMEs. So, if this Directive will only be applied to listed companies, what real future is there for a realistic successful implementation of the Women on Boards Directive across the business sector?

According to Dr Roberta Lepre, a lawyer and ESG consultant, and an active promoter of gender diversity in business, the business sector needs to embrace the spirit of this Directive and not just view it as an ‘imposition’.

“There is no indication that this Directive will eventually apply to most companies, but in any case, gender diversity at the board level is a strong indicator of good governance and if Maltese businesses truly believe in good corporate governance, they should voluntarily increase gender diversity in their boardrooms with or without this Directive.”

“Having said that, businesses need to better understand the ‘business case’ for diversity. Raising awareness amongst SMEs and family businesses on the benefits of diversity in terms of corporate governance, efficiency and productivity would be a good start,” added Dr Lepre.

This same sentiment was also echoed by Renee Laiviera, the National Commissioner for the Promotion of Equality (NCPE) who believes that further awareness on the aims of the EU’s Women on Boards Directive and the benefits of gender-balanced representation in boards will help businesses appreciate better how inclusive business cultures and policies can lead to increased productivity talent retention, stronger reputation, and better ability to gauge consumer demand.

“According to a study by the International Labour Organization (ILO) when boards are gender-balanced, companies are almost 20 per cent more likely to have enhanced business outcomes,” notes Laiviera.

The study showed how two-thirds of companies agreed that diversity initiatives improved their business outcomes, with inclusive business culture and inclusive policies companies predicted a 63 per cent increase in profitability and productivity, a 60 per cent enhanced ability to attract and retain talent, 59 per cent greater creativity innovation and openness, 58 per cent enhancement in reputation and 38 per cent better ability to gauge consumer interest and demand.

Some positive local examples

While no statistics are available on a national level, some companies are already setting an example.

At Bank of Valletta, out of twelve directors, four are women. In Melita’s executive team, eight are men and five are women. Out of Atlas Insurance’s board of seven people, three are women. Out of APS Bank’s board of eight directors, three are females. At Epic, three out of seven directors are women.

Perhaps, Vivian, one of the leading healthcare companies in Malta is also leading in this respect. Out of seven board directors, four are females.

According to Nadia Pace, an international business mentor with a non-executive directorship on several Maltese boards, the reason for the lack of women on boards is a cultural one.

“Culturally, men seem to be more trusted when it comes to big important decisions because they have always enjoyed more exposure and as a result, they enjoy more clout, familiarity and trust.

“However, there are many women with real talent and huge potential out there. What’s missing is a strong education platform for those women who would like to pursue directorship positions.”

“At this stage, just like the issue with quotas, imposing a Directive is perhaps the only way to get started with bringing change. Once things change, women’s potential in the boardroom will shine,” added Pace.

This article first appeared in the Corporate Times.