Diversity drives corporate governance reform

ICAEW interviews Vassilios Kaminaris, Partner at EY in Greece and staunch advocate of diversity, on new legislation requiring 25% of board members to be women.

 A new bill in Greece, based on EU reforms, requires 25% female membership on boards, along with wider diversity measures within corporations. According to EY Partner Kaminaris, the legislative changes are a welcome move.

Following new EU legislation (EU Shareholder Rights Directive II), Greece has adopted new measures aimed at improving corporate governance. This was a necessity due to market pressure, and the fact that the previous corporate governance framework was out of date. 

The change has come around swiftly. Back in July of 2019, there was a public consultation and various public events in which the Chair of the Hellenic Capital Market Commission spoke openly about the need for change, diversity and improvements to the framework. 

Kaminaris explains: “We have realised the importance of a dialogue with stakeholders and a transparent agenda. This is a great thing for the capital markets that require confidence and trust. Our role as auditors is to provide that confidence and trust. The changes are very positive. Regarding the quota on female membership, while for some it may not yet go far enough, it is definitely a step forward and in the right direction.”

Impacts of the new legislation

The law introduces new committees, an enhanced role for independent members and the increased participation of women on the boards. There will be additional cost, and those opposed to the law claim this will be too high. But as Kaminaris describes: “In the long-run, this will be worth it. We are looking to improve corporate governance.”

Further impacts include increased education for women aspiring to board level. There will also be a search for those who already have the credentials, and a need for workshops for people with different experiences, training events, sharing ideas, reviewing best practices and looking at what has happened in other markets.

Additional requirements of the new legislation mean that boards will have to specify criteria on diversity, which goes beyond just gender equality. The goal is to make boards more diverse in general. Guidance is expected soon on how the law will be implemented, including specificity around the new diversity criteria. 

“We are part of the dialogue in relation to all these changes, and we are happy to see this process happening,” continues Kaminaris. “We need to consider the positive contribution of these individuals moving up, bringing out the best of themselves through participation on the boards.”

Pressures from the pandemic

Kaminaris expects the Hellenic Capital Market Commission to come out loudly and explain that corporate governance (including board membership) is still a priority during the pandemic. The system has to operate ethically, demonstrating certain behaviours that will maintain trust in capital markets. 

While COVID-19 has added pressure on corporate governance, with social distancing inhibiting some sharing of ideas, this is not the time to lose focus, particularly at the top. “We are still planning for the future,” Kaminaris says, despite the uncertainty. The highest standards must be maintained. 

Promoting gender equality

When it comes to promoting gender equality, the local market (in Greece) is behind. The number of female executives is low, for example. Companies will need to implement internal quotas for women’s inclusion and promotion at all levels. Without this, the quota for boards will be impossible to achieve. 

And it is not just about the quotas themselves. “The end goal is making sure that a company really aligns education and ambition within individuals”, emphasises Kaminaris. Companies need to push more. Women’s participation in clubs, discussions and think tanks mobilises other women to consider being on boards, for example.

Kaminaris wants to see the 25% quota increased over time. If the Commission wants to be more radical, in three years from now the quota should be increased to 35%, continuing to rise regularly. This will maintain pressure on the market to change. Looking at the Greek market, there is a great amount of talent available. The first step has been made by the government, setting the tone, and now companies have to follow through. 

“This is a global trend and the markets will follow,” concludes Kaminaris. “The train has already left the station and it’s time to get on board.”