Finland

Rose Kenerson, Associate
Paul Hastings (New York)

As the first country in the world to grant full political rights to women in 1906, Finland has remained a prominent figure in the development of women’s rights in the decades that followed.1  According to the World Economic Forum’s 2017 Global Gender Gap Report, Finland ranked as the third most gender-equal country in the world.2  In fact, Finland has landed a spot in the Report’s top ten since 2006.  One focus has been increasing female representation on corporate boards and in executive positions.  Finland is one of only ten European countries where women hold at least a quarter of corporate board positions.3  Despite this advancement, Finland still has room to grow in order to achieve gender parity, especially as it pertains to corporate and executive diversity.

Constitution and Legislation

The Finnish government has addressed discrimination in several ways.  First, the Constitution itself contains a provision mandating that, “[e]veryone is equal before the law.  No one shall, without an acceptable reason, be treated differently from other persons on the ground of sex, age, origin, language, religion, conviction, opinion, health, disability or other reason that concerns his or her person.”4  In addition, the Constitution also calls for the promotion of equality in societal activities and working life.5

Second, the Finnish Parliament has passed a number of pieces of legislation focused on promoting equality.  For example, the Finnish Act on Equality between Women and Men seeks to address sex discrimination more broadly.  Published in 1987, the Act seeks “to prevent discrimination based on gender, to promote equality between women and men, and to improve the status of women, particularly in working life.”6  In furtherance of this goal, the Act includes language requiring female representation on public bodies.  Specifically, Section 4a mandates that, “[t]he proportion of both women and men in government committees, advisory boards and other corresponding bodies, and in municipal bodies and bodies established for the purpose of inter-municipal cooperation, but excluding municipal councils, must be at least 40 per cent, unless there are special reasons to the contrary.”7  The Act calls for both a man and woman to be appointed into positions in these bodies wherever possible.8  The Act does not just focus on diversity in public governing bodies. Instead, it contains sections addressing gender equality in education, working life, pay, and the workplace generally.

The Norwegian Parliament has also passed the Non-Discrimination Act, which seeks to “promote equality and prevent discrimination as well as to enhance the protection provided by law to those who have been discriminated against.”9  This Act applies broadly to both private and public institutions, and contains provisions addressing the promotion of equality in areas such as compensation, discriminatory contract terms, and education.10

To ensure compliance with the Equality Act and the Non-Discrimination Act, Finland has appointed two ombudsmen.  The Ombudsman for Equality, part of the Ministry of Justice, oversees compliance with the Equality Act by providing guidance.11 The Non-Discrimination Ombudsman, also part of the Ministry of Justice, oversees compliance with the Non-Discrimination Act.12  Those who feel a violation of either the Equality or Non-Discrimination Acts has occurred can seek to have their cases heard before the National Non-Discrimination and Equality Tribunal, which aims to “give legal protection to those who consider they have been discriminated against or victimized.”13  The Ombudsmen and Tribunal assist in ensuring that progress is made in accordance with the Equality and Non-Discrimination Acts.

On the international level, Finland has also ratified human rights treaties aimed at addressing inequality.  For example, Finland ratified the Convention on the Elimination of Discrimination against Women (CEDAW) on September 4, 1986.14  As part of its duties under CEDAW, Finland submits periodic reports addressing related issues.  The 2014 report noted that though “the proportion of women among the members of parliament, ministers in the government, municipal councilors and EU parliamentarians is approximately 40%,” there was still room to grow.15

Although Finland has incorporated anti-discrimination language into its Constitution and other pieces of legislation, it has not passed legislation requiring a certain quota of women to be represented on corporate boards unlike some of its Nordic neighbors.  Instead, the focus has remained on eliminating discrimination and promoting women more broadly. 

Since 2004, however, the Finnish government has published objectives for state-owned companies, which includes  the goal of 40% representation of men and women on their boards.  This action plan is not mandatory and there is no reporting mechanism related to implementing this quota.  The Finnish government recognizes the achievement of relatively high female representation on boards as meaningful, because “the record figures have been achieved via companies’ own initiative and self-regulation as opposed to mandatory guidance of the authorities or new legislation.”16  Noting that quotas “do not fix the reasons behind the development,” Finland has focused on the preparation and promotion of women in order to achieve gender parity.17

Corporate Governance Code

Although no legislation exists that mandates quotas for private corporate board diversity, Finland has updated its Corporate Governance Code to include recommendations on gender diversity in the corporate setting.  Applicable to all companies listed on the Helsinki Stock Exchange, the Finnish Corporate Governance Code recommends that, “[b]oth genders shall be represented on the board.”18  Language regarding the inclusion of both men and women on corporate boards first appeared in the Code in 2003. Later revisions in 2008 strengthened the language, calling for all companies to include both genders on their boards.19

The Code requires that all companies adhere to the Code on a “comply or explain” basis, meaning that if a company fails to comply with the provisions of the Code, it must publish the reason for the deviation on its website and in the required annual Corporate Governance Statement.20  For example, companies with all-male boards are required to issue a public statement with this information.21  This grants companies some leeway in complying with each provision.  As of 2012, the majority of the departures from the Code related to recommendation 9 (gender representation on the Board), recommendation 10 (term of directors), and recommendations 14 and 26 (independence of Board and Committee members).22  The Securities Market Association has signaled that some of the departures from recommendation 9 (gender representation on boards) have given insufficient explanation.23  Yet, the “comply or explain” strategy remains in place.

Other Areas of Government Involved

Other branches of the Finnish government have also addressed these issues.  The Chamber of Commerce hosts a Women Leaders Program, which regularly issues reports on the status of female directors in Finnish companies.  The 2017 report, titled Record Number of Women Directors in Finnish Listed Companies, noted that the increased number of women board members – 27% of boards seats of listed companies are now held by women – has been obtained without the use of quota legislation.24  Instead of focusing on quotas, Finland has focused on creating programs that encourage and develop women, so as to prepare them for board membership.  In addition, the Chamber of Commerce also hosts a mentoring program that provides both seminars and one-on-one sessions to women in middle management positions seeking to expand their opportunities.25  The goal of this program is to prepare women for positions both on boards and in executive roles.

The Ministry of Social Affairs and Health also implements a government action plan for gender equality.  The plan for 2016-2019, adopted on May 4, 2016, contains about 30 measures aimed at ensuring that all governmental ministries take gender equality into consideration when making decisions.26  They specifically target areas such as equal pay, immigrant reception, education, working life, and violence against women.  One of the long-term objectives contained in the plan states that, “[b]y 2020, women and men will be equally represented (40-60%) on the boards of listed and state-owned companies.”27

These objectives, though not mandatory, apply to state-owned companies and companies in which the government has a majority holding; companies with a direct or indirect government minority holding must “promote gender equality by nominating candidates for board members in a manner that is consistent with gender equality objectives.”28  By establishing these goals, the Finnish government seeks to “ensure development that will lead into equal representation of women and men on the boards of large and medium-sized listed companies.  The Government will continue the ongoing programme to ensure the equal representation of women and men on state-owned company executive boards.  The programme will also be extended to include other publicly owned companies.”29  As part of this process, the government will monitor companies’ progress and determine whether legislation is required in the fall of 2018.30  The Finnish government also plans to continue to monitor the program aimed at increasing female representation in state-owned companies to determine whether the Code and action plans have encouraged enough improvement in female representation.

European Union/European Commission

Finland is also a member of the European Union (EU), which has contemplated issuing a directive regarding gender quotas for years.  In 2017, the European Commission contemplated requiring companies with a 60% male executive leadership to prioritize female candidates for board positions.31  Critics of such a directive have argued that this encroaches on businesses’ decision-making authority and autonomy.  Regardless, a 2012 EU directive called for all members to aim to achieve 40% female representation on corporate boards.32

In comparison to its EU neighbors, however, Finland maintains a high percentage of female representation on corporate boards.  A 2016 study revealed that the average European country had 23% women on companies’ boards, while Finland had 29.2%.33

Conclusion

Although Finland has championed women’s rights for decades, it still has room to grow to achieve true equality.  Finland has achieved its rapid increase in female representation on corporate boards through its Corporate Governance Code and government-sponsored programs aimed at preparing and mentoring women to take on these and other top positions.  In the past, the government has refrained from passing legislation requiring certain quotas of female representation on boards.  Whether that will continue remains to be seen, as the government plans to revisit whether legislation is necessary in the fall of 2018.

1 Finland: Pioneer in Gender Equality, Int’l Gender Equal. Prize, https://genderequalityprize.fi/en/finland-gender-equality.

2 The Global Gender Gap Report 2017, World Economic Forum (2017), http://www3.weforum.org/docs/WEF_GGGR_2017.pdf.

3 Vera Jourova, Gender Balance on Corporate Boards: Europe is Cracking the Glass Ceiling, European Commission, www.ec.europa.eu/newsroom/document.cfm?doc_id=46280. 

4 Suomen perustuslaki [Constitution] June 11, 1999 (Fin.), http://finlex.fi/en/laki/kaannokset/1999/en19990731_20111112.pdf.

5 Finnish Ministry of Social Affairs and Health, https://stm.fi/en/gender-equality/legislation (last visited Sept. 12, 2018).

6 The Act on Equality Between Women and Men 2015, Ministry of Social Affairs and Health Booklet 7 (2016), https://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/75131/Act_on%20Equality_between_women_and_men_2015_FINAL.pdf?sequence=1.

7 The Act on Equality Between Women and Men (Fin.) https://www.finlex.fi/fi/laki/kaannokset/1986/en19860609.pdf.

8 Id.

9 Non-discrimination Act (Fin.), https://www.finlex.fi/fi/laki/kaannokset/2014/en20141325.pdf.

11 Ombudsman for Equality, Tasa-Arvo, https://www.tasa-arvo.fi/web/EN/.

12 Non-Discrimination Ombudsman, Syrjinta, https://www.syrjinta.fi/en/web/EN/frontpage.

13 National Non-Discrimination and Equality Tribunal, YVTLTK, http://yvtltk.fi/en/index.html.

14 Convention on the Elimination of All Forms of Discrimination Against Women, U.N., https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=IV-8&chapter=4&lang=en (last visited July 5, 2018).

15 Submission to the United Nation’s Committee on the Convention on the Elimination of All Forms of Discrimination against Women, NYTKIS (Jan. 2014), http://tbinternet.ohchr.org/Treaties/CEDAW/Shared%20Documents/FIN/INT_CEDAW_NGO_FIN_16086_E.pdf.

16 Record Number of Women Directors in Finnish Listed Companies, Finncham Women Leaders Program 8 (2017), https://naisjohtajat.fi/wp-content/uploads/sites/28/2016/05/eng-keskuskauppakamarin-naisjohtajaselvitys-2017.pdf.

17 Id.

18 Id.; see also The Corporate Governance Code (Fin.), Sec. Market Ass’n, https://cgfinland.fi/en/corporate-governance-code/.

19 Finncham Women Leaders Program, supra note 16.

20 Finnish Corporate Governance Code, 2015, Sec. Market Ass’n, https://cgfinland.fi/wp-content/uploads/sites/39/2018/04/hallinnointikoodi-2015eng.pdf.

21 Finncham Women Leaders Program, supra note 16.

22 Comply or Explain: Departure from the Recommendations of the Finnish Corporate Governance Code, Sec. Market Ass’n (Jan. 20, 2012), https://cgfinland2.fi/wp-content/uploads/sites/6/2012/01/Guideline_comply-or-explain_en.pdf.

24 Finncham Women Leaders Program, supra note 16.

25 Mentoring Program – Taking Top Women to the Top, Women Leaders Program, https://naisjohtajat.fi/en/mentoring-programme-2/.

26 Government Action Plan for Gender Equality 2016-2019,Ministry of Social Affairs and Health (2017), http://julkaisut.valtioneuvosto.fi/bitstream/handle/10024/79305/03_2017_Tasa-arvo-ohjelma_Enkku_kansilla.pdf.

27 Id. at 9.

28 Id. at 20. 

29 Id.

30 Id. at 10.

31 Daniel Boffey, EU to Push for 40% Quota for Women on Company Boards, The Guardian (Nov. 20, 2017), https://www.theguardian.com/world/2017/nov/20/eu-to-push-for-40-quota-for-women-on-company-boards.

32 Proposal for a 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, European Commission 5 (Nov. 14, 2012), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52012PC0614&from=EN.

33 Women in the boardroom: A global perspective, Deloitte 44, 51 (2017), https://www2.deloitte.com/content/dam/Deloitte/za/Documents/technology-media-telecommunications/za_Wome_in_the_boardroom_a_global_perspective_fifth_edition.pdf.