The resolution still needs ratification by the council of ministers before it can become effective, but the vote in parliament was overwhelmingly in favour (459 v 148 against).
“We adopted a consistent resolution and sent out a strong signal to the council, but also to European stakeholders and societies,” said women's rights committee co-rapporteur Rodi Kratsa-Tsagaropoulou.
“It is essential for listed companies to evolve so as to include highly skilled women in their decision-making processes, with a view to achieving competitiveness, while fully respecting EU principles and values of equality.”
The move follows the revelation that, in spite of repeated threats about quotas, only 17.6% of non-executive board members of the European Union’s largest companies in 2013 are women. Under the new regime, companies that fail to comply with the quota will be required to explain why not and what they plan to do to achieve the target in future.
The MEPs say that the companies will be penalised, not for failing to meet the target but for failing to follow transparent appointment procedures. Mandatory penalties will include fines and exclusion from public calls for tenders.
“The resolution clarifies and improves the open, transparent procedure for appointing non-executive board members to listed companies,” legal affairs committee co-rapporteur Evelyn Regner said.
“Parliament has done its homework, and now it's the turn of the council to move on, finish this directive together with us and the commission before the European elections, so as to move closer to gender equality within European companies.
“This will demonstrate to our citizens that we are fighting for non-discrimination and equal opportunities for all in the labour market.”
There has been strong opposition to quotas in the past from campaigning groups, such as the 30% Club, and women directors themselves. The 30% club, which was set up in 2010 by Helena Morrissey, chief executive of Newton Investment Management, believes that the more women join boards without the imposition of quotas, the more they can demonstrate the value they can add.
The group argues that the system will become “self-perpetuating” after representation reaches a tipping point at 30%. It boasts an impressive list of supporters, including executives from corporate giants such as Goldman Sachs, HSBC Lloyds Banking Group, PwC and Shell.
It described the resolution as "disappointing and unnecessary". "Rehashing the quota debate brings us tiresomely back to square one. The arguments against quotas have not and will not change; to appoint women on anything other than merit creates only an optical solution and will never facilitate meaningful change."
However, the MEPs say that “qualifications and merit must remain the key criteria”. But they add that where candidates are equally well-qualified, priority should go to the woman."