With just days to go before 2025, Norwegian companies are accelerating their hiring process to ensure that at least 40% of their CEOs are women. Failure to do so could result in the company being shut down.
Norway was the first country in the world to introduce a 40% female board standard for listed companies in 2005, in an effort to break down barriers that prevent women from reaching top positions in business.
By the end of 2023, a law was enacted that requires no more than 60% of boards of directors to be of one gender. In practice, that often means ensuring that at least 40% of CEOs are women.
"This is a turning point for equality in business in Norway. We are the first country in the world to do this," said Trade and Industry Minister Jan Christian Vestre.
Mr Vestre said that this effort is based on the government’s ambition to create a fair policy on equality and promote women’s economic development. This will create more value, innovation, creativity and use all resources in society. This will not only ensure a better gender balance but also have a very positive impact on companies’ revenue.
This means that around 8,000 companies in Norway will have to ensure that they have a minimum proportion of women on their boards by December 31, 2024, or face closure. In the first year, the law will only apply to the largest companies with revenues of over NOK 100 million ($8.8 million).
That means about 5,000 more women will join boards in the coming days, according to government figures. “Many companies have rushed in the past few months,” said Hege Rodland, founder of Matae AS, a company that works on strategy and recruitment.
Having women on boards broadens discussions and ensures better decision-making, says Rodland. Women are often better prepared for meetings. Gender representation requirements help ensure equality and diversity, and ultimately create gender balance in the management of Norwegian companies.
Norway’s business sector will need to adapt more than ever to the rules for using collective capabilities in society. Companies will eventually change, even if they are reluctant to comply. Companies will gradually realize the benefits of diversity.
The Norwegian Business Association (NHO) estimates that the law will apply to around 20,000 companies by 2028. The government has calculated that 8,000 more women business leaders will be needed by that year.
Women on Boards of Directors
One company that is making an effort to train women for leadership positions is DNB Bank ASA, Norway's largest bank. Chief Financial Officer Ida Lerner says it's no coincidence that women hold top positions at the company.
The bank is focused on always having a pool of qualified women ready to step up, and equality needs to be at the top of the agenda. “Once you stop engaging in this, you fall behind,” Ms. Lerner said.
Implementation of the 40% female board standard of companies in 5 stages over 4 years:
- First stage: Companies with total operating and financial income above NOK 100 million (USD 8.8 million) must implement by December 31, 2024 at the latest.
- Second phase: Enterprises with more than 50 employees, cooperatives and housing associations with more than 500 members and unit owners, organizations that are doing business or have distribution purposes must implement no later than June 30, 2025.
- Phase 3: Businesses with more than 30 employees must comply no later than June 30, 2026.
- Fourth stage: Enterprises with total operating and financial income of over NOK 70 million must implement by June 30, 2027 at the latest.
- Fifth stage: Enterprises with total operating and financial income over NOK 50 million must complete by June 30, 2028.
Violations of the rules can have serious consequences for the companies themselves and their accompanying contractors. In extreme cases, violations of the requirements can lead to the forced dissolution of the companies.
Source: Bloomberg, WorldatWork
Source: https://pnvnweb.dev.cnnd.vn/na-uy-truoc-gio-g-cua-han-ngach-40-dai-dien-nu-trong-hoi-dong-quan-tri-20241227175944588.htm
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