Breaking barriers: Intersectionality discrimination and the new EU Women on Boards Directive

The concept of intersectional discrimination and the promotion of gender diversity in corporate leadership has recently been enshrined in legislation through the EU’s introduction of the Pay Transparency Directive (EU) 2023/970 (PTD) and the Women on Boards Directive (EU) 2022/2381 (WOBD), respectively. These measures aim to bring greater transparency and equity to workplace practices across the EU.

In this article, Safine Hadri, Partner in our Paris office, considers the impact of this legislation on businesses, particularly in light of the reporting obligations imposed by the EU Corporate Sustainability Reporting Directive (CSRD).

Intersectionality discrimination

The concept of intersectionality discrimination, namely how a person’s individual social attributes, such as race, gender and sexuality, connect and interact to create unique experiences of discrimination, had no clear legal basis in legislation until it was addressed for the first time by PTD.

The PTD aims to strengthen the application of the principle of equal pay for equal work of equal value between men and women through pay transparency and enforcement mechanisms.  It requires employers to report on the pay gap between female and male workers, starting on 7 June 2027.  Reporting will be on a phased approach based on the number of employees in an organisation.  Member States are required to transpose the PTD into national law by 7 June 2026.

Intersectionality discrimination has been defined in the PTD as “discrimination based on a combination of sex and any other ground or grounds of discrimination protected under Directive 2000/43/EC (The Race and Ethnicity Equality Directive) or Directive 2000/78/EC (Employment Equality Directive)”. 

The concept of intersectionality discrimination is not entirely novel; it has been touched upon in earlier legislation and judicial opinion, including in the recitals of the EU Race and Ethnicity Equality Directive and the Employment Equality Directive which reference “multiple discrimination”.  

In 2017, the dissenting opinions of Judge Pinto De Albuquerque and Judge Vehabovic in Garib v. the Netherlands of the European Court of Human Rights underlined the necessity of taking this phenomenon into consideration to reach a global understanding of these discrimination situations and to guarantee the effectiveness of rights under the Convention for the Protection of Human Rights and Fundamental Freedoms. 

There have been more frequent references to intersectionality discrimination since 2020.  In its paper titled “A Union of Equality: Gender Equality Strategy 2020-2025”, the European Commission stated that “[t]he intersectionality of gender with other grounds of discrimination will be addressed across EU policies”.  The European Parliament also adopted a resolution of 6 July 2022 on intersectional discrimination in the EU regarding the socio-economic situation of women of African, Middle Eastern, Latin-American and Asian descent.

While the CSRD does not expressly call for the disclosure of intersectionality data as part of a company’s disclosure obligations, it does require in-scope companies to disclose information on social and governance factors, such as equal treatment and opportunities for all i.e. gender equality, diversity and human rights, which could cover intersectionality data.  Recital 49 of the CSRD also contains an implicit reference to “intersectional information”, namely that “sustainability reporting standards that address gender equality and equal pay for work of equal value should specify, amongst other things, information to be reported about the gender pay gap, taking account of other relevant Union law”. 

Business impacts

In light of this, companies may wish to take a precautionary approach to the reporting of intersectionality information under the CSRD.  The absence of disclosure of such information could lead to:

• incomplete risk assessments, particularly in areas relating to social issues
• blind spots in managing human capital risks
• reputational challenges, as the company could be perceived as not addressing the complexity of social issues related to race, gender, and other identity factors
• a more complicated development of global strategies that should address all of the needs and risks faced by employees, clients, and surrounding communities
• pressure from stakeholders, including investors and employees, who expect companies to recognise and address these issues.

The EU Women on Boards Directive (WOBD)

The WOBD, which is due to be implemented by Member States into national law by 28 December 2024, aims to foster greater equality among the directors of listed companies and eliminate sex discrimination. By 30 June 2026, listed companies must ensure that:

• 40% of non-executive director positions or
• 33% of total board positions (executive and non-executive), are occupied by members of the under-represented gender.

These companies will be compelled to annually report on the composition of their boards, including information regarding their efforts to achieve gender balance.

As the CSRD requires companies to disclose data on their governance, decision-making processes and the transparency of their management practices, companies should be aware of the clear interaction between the CSRD and the WOBD.  Notably, recitals 3 and 49 of the CSRD highlight, respectively, that “diversity on company boards might have an influence on decision-making, corporate governance and resilience” and that “[s]ustainability reporting standards that address diversity should specify, amongst other things, information to be reported on gender diversity at top management and the number of members of the under-represented sex on their boards”.

The Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023, which established the first set of European sustainability reporting standards, also specifies that companies should disclose information on the number of executive and non-executive members and the board’s gender diversity.

Consequently, gender diversity has become an increasingly important metric for assessing good governance, and the introduction of quotas through WOBD is likely to lead to enhanced transparency in CSRD reports.

Business impacts

Companies should proactively:

• ensure fair and transparent board selection processes by introducing transparent and objective criteria for board appointments
• implement gender diversity quotas internally
• strengthen diversity and inclusion policies
• set up mechanisms for regular monitoring (for example, an audit) and communication with the competent authorities, particular by a company’s regulatory lawyers, to guarantee the confidentiality of the analyses.

These steps should help companies mitigate against the risks of claims than can arise out of non-compliance or failing to provide accurate information.