Since 1 January 2021, the amended Swiss Code of Obligations (CO) includes new guidelines for a minimum quota for representation by women on the board of directors and executive management. Article 734f of the CO calls for larger listed companies to have at least 30% more women on their board of directors and at least 20% women in management positions. In an ongoing drive for transparency, this amendment will also encourage compliance with the constitutional obligation to ensure equality between women and men contained in article 8 of the Swiss Constitution. In the event of non-compliance with these quota criteria, companies will have to explain in their compensation reports why these have not been met and show what they are going to do to correct it.
The gender benchmarks apply to publicly listed companies domiciled in Switzerland which, over two consecutive financial years, can meet at least two of the following three criteria: total assets of 20 million Swiss francs (balance sheet total); sales revenue of 40 million Swiss francs and who employ more than 250 full-time equivalent employees (FTE) (art. 727 para. 1(2) CO).
It is important to mention, however, that there will be no legal sanctions for companies who do not comply with these quota requirements. Instead, the Swiss authorities decided to follow a “comply or explain” approach. This means that the law sets benchmarks. If these are not met, companies must justify their non-compliance in their compensation report and show how they intend to meet the quota.
On a practical level, this new measure raises several questions as to how companies can meet these new requirements. Will this be achieved through a bottom-up approach by promoting more women through succession planning or by attracting more outside female talent or will it be a combination of the two? If companies seek to attract more talent from the outside, how can more female talent be attracted to join the commodities trading industry? The benefits are clear: an increase in gender diversity will directly translate into a broader representation of opinions and a more balanced approach to risk. One thing is certain, there will need to be a cultural change in recruiting practices. Working practices will need to evolve to accommodate flexible working hours for family priorities for example. Companies will have to adapt to tap into the pool of potential talent available. As well as building more awareness of career opportunities with business and management schools for example, they will have to make their hiring communications more inclusive and create more women ambassador networks to attract new talent.
