Norway is known for its progressive stance on gender equality, and the Norwegian government has recently taken a historic step to promote gender balance on the boards of Norwegian companies. The new law, which will be phased in gradually from next year, requires medium-sized and large companies to have at least 40 per cent representation of each gender on their boards.
This post is from June 2023, and some of the content may be out of date.
According to the government, gender equality and diversity in business can lead to more innovation, a better working environment, smarter decisions and greater value creation. Despite this, only 20 per cent of board members in Norwegian limited companies are women. That is an increase of just 5 percentage points from 20 years ago – progress the government considers far too slow.
The law will introduce gender balance requirements for the boards of Norwegian enterprises above a certain size. For enterprises with at least three board members, no more than between 67 and 50 per cent of them may be of the same gender, depending on the size of the board. In practice, this amounts to a 40 per cent requirement. There will also be requirements for the gender composition of deputy members, and of board members and deputies elected by and from among the employees.
The rules will apply from as early as next year and will then cover around 8,000 companies. The new law will be phased in gradually, and initially it will apply to companies with more than NOK 100 million in combined operating and financial income. The rules will then be extended annually until 2028, when they will apply to around 20,000 companies. In 2028, the rules will include companies with more than 30 employees and more than NOK 50 million in combined operating and financial income.
The requirement will mean that many companies have to change the composition of their boards. Estimates show that almost 13,000 new board members will need to be recruited by 2028. When the first stage is introduced next year, around 6,600 new board members will be needed, most of them women.
Through gradual implementation, there will within a few years be broad gender representation in the governance of Norwegian companies, which the government believes will have a significant impact on value creation in Norwegian society.
Here you can read the full government bill to the Storting (the Norwegian parliament) or contact us and we will help you!