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Japan falls behind on women in boardrooms as Europe makes strides

  • June 9, 2022
  • , Nikkei Asia
  • English Press

EIKI HAYASHI and KOHEI YAMADA, Nikkei staff writers


FRANKFURT/TOKYO — Japan is struggling to place more women on corporate boards even as Europe and Asian hubs like Hong Kong make progress, dealing a potential blow to Tokyo’s ambition to become a center of global finance.


Women held 12.6% of board seats across major Japanese companies in 2021, according to the Organization for Economic Cooperation and Development. The figure is even lower among constituents of the Tokyo Stock Exchange’s Prime market, at 9.3%.


A total of 539 companies, or about 30%, did not have a single woman on their boards.


In contrast, women held 45.3% of board seats in France, 36% in Germany and 29.7% in the U.S.


The TSE in 2021 revised Japan’s corporate governance code to promote diversity in senior management, including women and foreign nationals. But the code stopped short of setting numerical targets.


Investors are increasingly frustrated by the lack of progress in Japan. In April, Tokyo-based Asset Management One began voting against chief executives nominated by constituents of the Topix 100 companies with no women on their boards.


U.S. proxy advisers Institutional Shareholder Services and Glass Lewis have outlined similar plans.


Elsewhere in Asia, the Hong Kong Stock Exchange in January adopted a rule requiring companies to have at least one female board member.


Those listing starting in July need to meet the requirement before their debut. Companies that are already listed, which include major state-owned enterprises and technology companies from mainland China, have until the end of 2024 to comply. No exceptions will be made.


Companies will be required to set numerical goals and action plans to diversify their boards as well.


Nearly 30% of Hong Kong-listed issuers had no women on their boards as of the end of 2021, according to HKEX. Though the city is currently on a similar standing with Japan, improvements there could lead environmentally, socially and governance-focused investors to pull more funds from Tokyo to Hong Kong.


Meanwhile, the European Union is leaps and bounds ahead. The bloc on Tuesday agreed to a landmark directive requiring women to make up at least 40% of nonexecutive directors, or 33% of all directors, at listed companies across the 27 member nations by mid-2026. Those that fall short must report their reasons and could face penalties.


“Diversity is not only a matter of fairness. It also drives growth and innovation,” European Commission President Ursula von der Leyen said.


“It is high time we break the glass ceiling,” she said.


France in December began requiring all companies with 1,000 or more employees to place women in at least 40% of board seats, expanding a rule adopted in 2011. Executive pay is partially held back at companies that fall short.


Beyond the EU, the U.K. set a new requirement in April that women make up 40% of directors at listed companies. A woman will also need to hold least one senior position, such as company chair, CEO or chief financial officer.


As of January, there were about 1,140 women holding 38% of board seats across the components of the FTSE 350 index — a major increase from around 10% a decade ago. None of the index’s components have had an all-male board since 2020.

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