Débat public

Let’s face the elephant in the room!

Reyhan Güleç: “Despite the effort the Grand Duchy is putting to eliminate the gender inequality on political decision-making, Luxembourg has fallen down 2 steps in the Gender Equality Index since 2005.” (Photo: Andrés Lejona/Maison Moderne)

Reyhan Güleç: “Despite the effort the Grand Duchy is putting to eliminate the gender inequality on political decision-making, Luxembourg has fallen down 2 steps in the Gender Equality Index since 2005.” (Photo: Andrés Lejona/Maison Moderne)

In September 2020, Luxembourg has been ranked again as the number 1 European and global financial centre according to the latest edition of the Global Financial Centres Index 28 [1]. This was great news again and made us proud of Luxembourg one more time!

In addition, in October 2020 the new Gender Equality Index of the European Union (“EU”) is published. In this article, I would like to bring the topic of the gender diversity on board level on the table and analyse the score of Luxembourg specifically in the subdomain of power in economic decision-making [2] (“decision-making in the private sector companies”), which has room for improvement. I analyse Luxembourg’s position among other EU members and compare its position with France, Germany and Belgium.

It should be noted that this study excludes the CEO and executive chair status. I aim to raise awareness on the actual status of Luxembourg, compare what other countries have done to reach high targets without waiting for the EU to adopt legislation. Moreover, I briefly add what could be done to improve Luxembourg’s stance and position as a progressive state on this matter to make it a unique finance centre, which is not only being appraised for its finance sector but also for its advancement in gender diversity.

Data: Gender Equality Index 2020 [3]  

Data: Gender Equality Index 2020 [3]  


According to the latest gender equality index [4] of the European Institute for Gender Equality 2020 [5] (the “Gender Equality Index”), in Luxembourg only 12.9% of the members of the boards in the largest quoted companies are women compared to 12.7% in 2019 [6]. The power subdomain [7] of the Gender Equality Index in decision-making in the private sector companies is the lowest score of Luxembourg with 32.1, ranking 17th among 28 states [8].

Luxembourg is only above the EU countries such as Estonia, Romania, Lithuania, Slovakia, Malta, Greece, Cyprus.

Despite the effort the Grand Duchy is putting to eliminate the gender inequality on political decision-making, Luxembourg has fallen down 2 steps in the Gender Equality Index since 2005 [9] and its progress could be defined as snail’s pace compared to the other European states.

Luxembourg’s overall score has improved with an increase of 1.1 point from 69.2 in 2019 to 70.3 in 2020 and is 2.4 points above the EU score of 67.9. However, it should be reminded that this is due to Luxembourg ranking 1st (with a score of 91.8) in the core domain titled “money” of the index as a prosperous country, which increases its overall score.

In addition, the score of Luxembourg in the subdomain of decision-making has increased from 28.2 (2019) to 32.1 (2020). However, this increase of 3.9 point is due to the fact that in gathering the data for the 2019 gender equality index report, the update in the figures of gender diversity on governmental level such as ministries and public institutions was not taken into consideration. Hence, this slight increase in overall is due to the power in subdomain of political decision-making and not economic decision-making in private sector. I would like to draw your attention to the columns in the middle under the economic title where you may see the huge gap between the share of women and men sitting on the boards.

Data: The decomposition of Gender Equality Index Indicators for Luxembourg for 2020 in the domain of power [10]  

Data: The decomposition of Gender Equality Index Indicators for Luxembourg for 2020 in the domain of power [10]  

In another study, according to Deloitte’s Global’s sixth edition of Women in the Boardroom: a Global Perspective Report 2019 [11] (“Global Perspective Report”); in Luxembourg, 12% of the board seats were held by women in 2018. The regional average of the EU was 25.8% in 2018 for the board seats held by women according to this study, which is again more than double of the Luxembourg’s score; an indicator of a retrogress rather than progress.

The industries with the highest percentage of women on the boards in 2018 in Luxembourg include manufacturing and technology, media & telecommunications and the financial services sectors. The figure for the financial services sector is only 6%, which is the most significant one for Luxembourg due its ranking as a number one finance centre in the EU. However, this score is 17.5% for the manufacturing and is 14.3% for the technology, media & telecommunications sectors.


According to the Gender Equality Index 2020 [12], France’s score of the subdomain of decision-making in the private sector companies is 84.6 compared to its score of 29.0 back in 2005. The share of women members of the boards in the largest quoted companies are 43.8% making France ranking 1st in the subdomain of power in decision-making in the private sector companies. In addition, according to the Global Perspective Report the board seats held by women are 37.2%, which demonstrates an increase since 2018 as well.

This is due to the fact that in 2017 the French government has declared the gender equality a national cause. Through their 2011 Law they already enacted a legislative quota of 40% for the both genders applying to the listed companies and on the private sector companies gradually with the certain amount of revenue and the employee number. This quota was to be implemented on two schedules, which is a successful example; one for private sector companies and one for public companies. The public companies required 20% female board representation within three years, and 40% within six years. The private sector companies have nine years to reach the 40% quota. A failure results in voided nominations and suspended remuneration against the board members [13]. Non-compliance renders the new appointment ineffective and the director fees can be withheld until the quota is met.


The share of women members of the boards in the largest quoted companies is 32.9% making Germany ranking 7th in the subdomain of power in decision-making in the private sector companies according to the Gender Equality Index. Germany’s score of subdomain of decision-making in the private sector companies is 56.5 compared to its score of 11.9 back in 2005. In addition, according to the Global Perspective Report the overall percentage of the board seats held by women are 26.2% in 2018, which is an indicator of increase in the last 2 years too.

Likewise as in France, Germany has adopted the gender quota approach introduced 30% quota for the non-executive board seats of the listed companies with full employee representation on their supervisory boards and 50% for the state-owned enterprises in 2015. Corporate Governance Code of Germany was aligned in 2015 and 2017 in order to reflect the gender quota legislation [14]. For the first time in 2019 in Germany the percentage of women sitting on supervisory boards exceeded 30% according to the women on-board 185 index. [15]

The interesting point is on 20 November 2020 Angela Merkel’s Christian Democrats and the Social Democrats agreed a deal on requiring management boards of listed companies with more than three members to include at least one woman, reversing a voluntary system that critics argue has failed to achieve the required shift towards gender equality [16] . This move came as an immediate response to the decline in the share of women in DAX executive boards during the crisis. The decline is announced [17] by the Swedish-German AllBright Foundation in their Allbright Report – September 2020.


According to the Gender Equality Index 2020 [18] , Belgium’s score in the subdomain of decision-making in the private sector companies is 41.8 compared to its score of 18.9 back in 2005. This is the most improved subdomain in Belgium. This is because Belgium introduced a legislative quota for 33% of women on the company boards and this resulted a rise in the share of women on the boards of the largest publicly listed companies from 6% to 32.1% in 2020 making Belgium ranking 15th in the subdomain of power in decision-making in private sector [19] . On the other hand, according to the Global Perspective Report, in 2018 in Belgium the overall number of board seats held by women was 30.5%.

The score of Belgium is also more than the double of the figure in Luxembourg, which has 12.9% women board members. This could be explained with the different approach followed by Belgium. Since 2011 the Belgian companies, both small and large listed ones are required to have minimum 1/3 representation on their boards. And the sanctions of non-compliance include withholding of the director remunerations and the new board member appointments to be made from women until the balance is achieved.

Moreover, likewise Luxembourg, Belgium transposed the EU Directive on the disclosure of the non-financial and diversity information in 2017 into the Belgian Company Code. However, unlike Luxembourg, and likewise as in Germany the companies in the scope must mention a timeline if they have not reached the diversity objectives in annual corporate governance statement as part of the companies’ annual reports. We would like to draw attention to a distinction here. The gender diversity is “mandated by law” whereas for other lines of diversity such as age, educational, cultural and professional backgrounds the “comply or explain basis” is determined.

On a separate note, the state-owned enterprises already met the quota by the end of 2012 in Belgium compared to Luxembourg, which achieved this recently in 2019.

Real Gender Diversity, “Lëtz Make It Happen Luxembourg!”

European Union

On 5th March 2020 the European Commission (the “Commission”) presented its new EU Gender Equality Strategy 2020-2025 (the “Gender Equality Strategy”) [20] , which sets out key actions to reach targets. Ursula von der Leyen presented this only 3 months after her taking over the presidency of the Commission on 1st December 2019. The Strategy covers to push for adoption of the 2012 Proposal for Directive of the European Parliament and of the Council on Improving the Gender Balance Among Non-Executive Directors of Companies Listed on Stock Exchanges and Related Measures (the “Proposal”) [21] , which sets the aim of a minimum 40% non-executive women members on the listed company boards. This points out that the Proposal will be submitted to the EU Parliament not in a very far future thus, the urgency of taking action for a proactive preparation.


When it comes to Luxembourg it has launched the implementation of its national action plan for gender equality by the Ministry of Equal Opportunities for the first time in 2006. In 2014, Ms Lydia Mutsch introduced the governmental strategy on women in decision-making positions. Since then the target of 40% women representation is achieved solely in the state-owned company boards recently in 2019. This article is focused only on gender diversity on board level of private sector companies and not in the public sector.

Having said that, concerning the private sector companies, the Ministry of Equal Opportunities counts on the good will of the business leaders to increase the proportion of women at all levels of the company hierarchy. The efforts of the Ministry of Equality of Women and Men through the National Action Plan, the Inter-ministerial Committee for Gender Equality and the Committee for Affirmative Action in the Private Sector are highly appraised. However, the empirical evidence of the Gender Equality Index and different implementations in the best practice countries demonstrate the reason why Luxembourg is way behind the other EU member states. We see that we need more than the soft and optional solutions in the private sector and more steps shall be taken on a wider scale in the gender equality matters. As Ms Bofferding says: “Admittedly, quotas are not a quick fix, but they can help to overcome the weight of tradition.” [22] We hope and expect to see that approach for the “private sector” both for public and non-public companies as in France.

According to the Oliver Wyman’s Women in Financial Services 2020 Report [23] the representation of women on boards is globally 26% in asset management in 2020 with an increase of 7 points compared to 2016. However, this score is around 12% in Luxembourg, which is the result of insufficient attention on the private sector.

Between 2005 and 2018 the share of women on boards of the largest publicly listed companies in Luxembourg jumped approximately from 3% to 12%. However, this pace of progress is not in place for the last 2 years. The slow down is due to the fact that the progress that could have been reached in the private sector with soft and optional implementations is already complete. In other words, a lot of
the low-hanging fruit has been picked and now the tough part is in place. Taking into consideration the empirical evidence, we need not only quotas both for public companies and private companies but also more comprehensive implementations to start the cultural change in society, battling unconscious bias and changing behaviours such as out-dated work place cultures, which require a complex reform that will not deliver results from today to tomorrow. But it will never come if we do not act on it in all areas comprehensively with a correct tailored strategy.

Critic from CEDAW Committee

The Committee on the Convention on the Elimination of All Forms of Discrimination against Women (“Convention”) in its report in 2018 [24] recalls that Luxembourg does not give sufficient priority to the advancement of women in order to achieve substantive equality in all areas of the Convention.

Practical Aspect

Lets take a look at how it works; the board members are typically appointed in two ways: 1) internally, through in-firm appointments of high level executives or 2) externally, through appointments made from outside the firm. As the evidence suggests the quota system is the starting point to fix this issue only. Because the quota system improves only the gender representation share on boards but might not affect the number of women appointed from the employees of companies [25]. Because the companies may import non-employee women board members from outside. Hence, despite being a controversial matter and shall be based on meritocracy, in addition to the mandatory quotas the policy makers shall also focus on increasing women’s representation in senior management positions in companies as a part of the career ladder [26] to reach a true success in solving the root of the problem.

Root of the Problem

When we look at the root of the problem, empirical evidence [27] suggests that the pool from which candidates are chosen for board memberships is out of proportion occupied by men.

This root goes back to the broken rung in early career phase for women. According to the McKinsey Women in the Workplace Report 2019 [28] , the biggest obstacle starts with the first step on the way to become a manager and this has a long-term impact on the talent pipeline. Because this broken rung results in more women getting stuck at the entry level. There is no data suggesting that men overall outperform women in the workplace without any preconceived bias. According to the same study, men end up holding 62% of the manager-level positions, while women hold just 38%.

This means that there are fewer women to promote to senior levels and thus, to executive levels as a domino effect. In addition, according to the study of Professor Nina Smith [29] the supply of qualified women in senior executive positions is thin due to the same reason.

Policy Making

These points demonstrate that the quota system shall be in place but is not the only solution and the problem shall be taken on a wider scale with supplementary policies and pave the way for women progressing to senior management and thus, top executive positions. This requires a work between different ministries for creation of a comprehensive and coherent work.

The advancement in gender diversity depends also on the economic prosperity and in Luxembourg’s case it has all the resources to achieve this goal. Hence, the policy makers are expected to recognize the practical links between their policy field and gender equality proactively and strong reference persons in the relevant ministries may push for the implementation of gender mainstreaming. This requires gender equality embedded in their mindset. In addition, for the policy makers to be able to build their decisions on evidence based policy approach they need accurate and detailed data and Statistics Portal of Luxembourg – Statec shall provide more detailed data on the break down of gender equality and diversity in different sectors comprehensively including the small and medium sized companies as well with both public and non-public companies.

International Arena

Another question that maybe raised is why Luxembourg not to become an advocate of the matter declaring the gender equality a national cause? For example, in 2019, the United Nations Secretary General Antonio Guterres [30] appointed the new Sustainable Development Goals [31] (“SDGs”) advocates. There are 17 public figures whose role is to raise awareness, inspire greater ambition, and push for a faster action on the SDGs, which include gender diversity as well. We would like to see a prominent figure from Luxembourg among these advocates representing Luxembourg as the most prosper state in the EU and see it as a model for others in the international arena in gender diversity. While the Queen Mathilde of Belgium is among those advocates, why Luxembourg not to be represented with a strong figure as part of the Benelux as well? But first we need to do our homework.

Private Sector Managers

Speaking of homework, in the light of the foregoing, it shall be accepted that diversity is not a box ticking issue but a business imperative rather than an optional initiative for the private sector in Luxembourg not to lose momentum in the long run.

This shall be a priority on the top managements agenda to truly advance and progress. The companies shall set bold goals on a more micro level to grow the number of women at the manager level rather than unconsciously be blind to keep them stuck at the entry level. The ambition on this matter shall be redefined.

There is another study which is worthy to take into consideration; the McKinsey Diversity Wins – How Inclusion Matters 2020 Report, which has an expanded the data set of more than 1.000 large companies in 15 countries [32]. This study suggests that their original 2014 data set demonstrated that the companies whose boards are in the top quartile of gender diversity were 15% more profitable above peer-average. 3 years later this has increased to 21% and in 2019 data set this has increased to 25%. For the US and UK companies this difference is found as 48%. It is mentioned that: “while the correlations were positive between the board gender diversity and outperformance on earnings before interest and taxation (EBIT) margin, they were not statistically significant; now they are.”

The leaders in business will be those who bring diversity to every business discussion, when it’s embedded in the mindset, operations of business and very importantly embedded in the business and growth strategy.

We cannot no longer overlook the question of gender diversity on board level. The top executives and the boards of companies are the ones who will own this matter and call for public commitment to contribute to the difficult task of societal cultural change. This approach will push the issue into the daily path of the managements and will ultimately drive better business outcomes and the next wave of progress for Luxembourg. We must be laser focused to push further than the historical 30% representation targets and get closer towards gender parity on the executive teams and senior management level. This is to reach the needs of today in a fast paced global economy with explicitly setting targets at a more granular level in the organization of companies.

It could be said that the slow pace of progress is preventing the untapped talent to come into play in Luxembourg and creates missed opportunities in addition to long-term profitability, not to mention staying behind the other countries and competitors in the sectors with better and the best practices. This requires the business leaders in Luxembourg to come to a mutual understanding to advocate for gender balance on the boards and the strategy for solving the problem at its root. This not only encourages better leadership and governance, but also contributes to an all-round better board performance, and ultimately increased corporate performance for both companies and their shareholders [33] . In addition to the business leaders, also the policy makers are expected to make evidence based policy for the private sector companies taking into consideration the best practices to keep up with the global changes to make Luxembourg a “unique” finance centre as well.

[1]  https://www.luxembourgforfinance.com/news/gfci-luxembourg-financial-centre-ranked-1st-in-eu/

[2] The domain of power measures gender equality in decision-making positions across the political, economic and social spheres. The sub-domain of political power examines the representation of women and men in national parliaments, government and regional/local assemblies. The sub-domain of gender-balance in economic decision-making in the private sector companies is measured by the proportion of women and men on corporate boards of the largest nationally registered companies listed on stock exchanges and national Central banks. The Gender Equality Index for the first time presents data in the sub-domain of social power, which includes data on decision-making in research-funding organisations, media and sports.

[3]  https://eige.europa.eu/gender-equality-index/2020/compare-countries/power/2/bar

[4] The core domains taken into account in the Gender Equality Index are clustered as (i) Work, (ii) Money, (iii) Knowledge, (iv) Time, (v) Power and (vi) Health.

[7] The sub-domains taken into account in the Gender Equality Index are clustered as (i) Work: a. Participation, b. Segregation and quality of work (ii) Money: a. Financial resources, b. Economic situation, (iii) Knowledge: a. Attainment and participation, b. Segregation, (iv) Time: Care activities, b. Social activities, (v) Power: a. Political, b. Economic, c. Social and (vi) Health: a. Status, b. Behaviour, c. Access. Please see footnote no.2 as well.

[10]  https://eige.europa.eu/gender-equality-index/2020/country/LU#indicators

[14] Regierungskommission Deutscher Corporate Governance Kodex, May 2015 and 2017

[25] Bertrand, M., Black, S. E., Jensen, S., Lleras-Muney, A. “Breaking the glass ceiling? The effect of board quotas on female labor market outcomes in Norway” The Review of Economic Studies (Forthcoming).

[26] Smith, N., Parrotta, P. “Why so few women on boards of directors? Empirical evidence from Danish companies in 1998–2010” Journal of Business Ethics 147:2 (2018): 445−467.

[27] Burgess, Zena; Tharenou, Phyllis (2002). “Women Board Directors: Characteristics of the Few”. Journal of Business Ethics. 37 (1): 39-49. 

[32] Australia, Brazil, France, Germany, Norway, Denmark, India, Japan, Mexico, Nigeria, Singapore, South Africa, Sweden, the United Kingdom, and the United States.

Cet article a été rédigé pour l’édition magazine de Paperjam du mois d’avril qui est parue le 25 mars 2021.

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