In its bid to break free from the ‘old boys club’, the European Central Bank (ECB) has taken a stand against the finance industry’s failure to promote gender diversity in its upper ranks.
Frank Elderson, an ECB Executive Board member and Elizabeth McCaul, an ECB’s Supervisory Board member, have expressed their disappointment with the current state of affairs in a blog post on Tuesday, as per a Bloomberg report.
While acknowledging that some progress has been made in promoting gender diversity, they believed targets set by banks have remained insufficient. Describing banking as “still a man’s world”, Elderson and McCaul called for more ambitious and credible diversity targets to be set.
The ECB has integrated gender diversity into its guide for fit and proper assessments since 2021, ensuring that the right senior managers assume leadership roles within banks. However, of the 361 chief executives named at significant institutions and their subsidiaries between 2020 and 2022, over 300 were men.
While the average diversity targets for management bodies rose from 32 percent in 2020 to 34 percent by the end of last year, the ECB has revealed that approximately one-third of significant institutions did not meet their own targets. This lack of progress has led Elderson and McCaul to doubt the achievability of these targets in the near future.
Moreover, the ECB duo has emphasised the need for countries to adopt the European Union’s forthcoming Women on Boards Directive. According to this directive, boards will only be considered balanced when at least 40 percent of the members are female.
Elderson and McCaul have also affirmed their commitment to utilising the existing supervisory tools available within national legislation to insist on improvements and address any internal governance shortcomings related to gender diversity within banks.
In a related study, the International Monetary Fund (IMF) has criticised central banks, including the ECB, for their inadequate progress in achieving gender diversity. According to the IMF survey, central banks, on average, filled less than half of their positions with women. Furthermore, the study revealed that the hired women were often relegated to lower-paid administrative roles or human relations.
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