Gender Diversity on Boards in Iceland: Pathway to Gender Quota Law Following a Financial Crisis

Abstract

Iceland became in 2010 amongst the very first nations to pass a law on gender quota for corporate boards. The law went a step further than the Norwegian “role model” by stating that 40% of each gender must be represented on corporate boards of directors in all state-owned enterprises, publicly traded firms and all private limited companies with 50 or more employees. No other country has legalised such extensive requirements for firms. This very extensive gender quota law calls for an evaluation of the attainment of the legislative original purpose and also both close monitoring and assessment of the process applied and the short-term and long-term consequences for directors, boards, firms and society. Various actors, who have been either for or against the gender quota, have also been trying to pay attention to some of the processes and short-term and long-term consequences of the gender quota legislation. The results now, in 2017, four years after the implementation of the legislation, seem to point to changes on several fronts. The Icelandic experience of the gender quota so far has revealed that mandatory regulation is a key to the successful increase of female representation around the board table. Further, in the authors’ opinion this mandatory change has led to a sharper focus on the concept of diversity among the business community as well as clearer focus on the director selection process.