David Prosser: A missed opportunity to improve Britain's boardrooms overnight

Outlook The sigh of relief from the boardrooms was audible. Lord Davies' investigation into why there are so few women on the boards of Britain's biggest companies stopped short of recommending the introduction of a legal requirement that a minimum proportion of directors should be female.

How disappointing. Countries such as Norway have shown us how introducing quotas – in its case a 40 per cent requirement for women on the board – can drive a dramatic transformation of previously male-dominated boardrooms. Other companies in Europe are following its example. The UK, meanwhile, has decided to be much more timid.

The disappointment is multilayered. First, even the target Lord Davies has set – for 25 per cent of directors to be women by 2015 – lacks ambition. Second, that target only applies to the 100 biggest companies. The rest will be entitled to set their own figure. Third, there is no promise (or threat) from the Government of intervention should this modest review fail to get the job done.

It is worth remembering why this issue is so important. It is not just that the cause of equality demands that women get their fair share of the most senior jobs, though of course it does. There is also the need to improve the quality of company boards, so many of which have failed to properly represent the interests of shareholders – and other stakeholders – in recent years, and not just in the financial services sector. All the evidence shows, as Lord Davies himself acknowledged yesterday, that companies with more diverse boards perform better.

Will limited targets and a requirement for greater disclosure on equality focus the minds of those executives who have so far failed to appoint more senior women (remember, the number of women on the board of FTSE 100 companies rose from 12.2 to 12.5 per cent last year)? If so, only at the margins, for these executives rarely accept they have failed.

Nor, by the way, do many executive search agents, who Lord Davies hopes will play a role in increasing female representation on the board. One such agent recently told me quite candidly that he did not see a problem because women were well-represented in sectors to which they were suited. He offered the retail sector as a good example (presumably because women like shopping rather than, say, the sort of muck seen in manufacturing, or the tricky sums required for banking).

The introduction of quotas, by contrast, would have been both an end and means. In complying with the change in the law, companies would rectify the under-representation of women once and for all. Crucially, to do that they would also be forced to address the issues responsible for that under-representation – to look at what it is that happens over the course of employees' careers that means roughly equal numbers of men and women enter the workforce, only for inequality to rise steadily as recruits clamber up the hierarchy.