World’s Largest Wealth Fund Takes Stand Against All-Male Boards in Japanese Companies
Norway’s sovereign wealth fund, renowned as the world’s largest, recently announced its decision to oppose the appointment of all-male boards in Japanese companies. In an effort to foster diversity and gender equality, the fund, valued at over $1.34 trillion USD, already rejects board nominations for companies in Europe and North America that lack at least two female members.
Carine Smith Ihenacho, the head of governance and compliance at the fund, explained that Japan had been granted a grace period due to its significantly male-dominated business landscape. “We hadn’t begun voting against Japanese companies within developed markets because they lagged so far behind. Doing so would have impacted a considerable number of companies,” she stated.
Ihenacho further mentioned that in 2021, the fund allotted a two-year period for Japanese companies to improve their gender diversity. However, given the limited presence of women in senior positions within Japanese businesses and politics, the fund has decided to alter its approach. “This year, we declared that we will vote against companies in Japan that don’t have a single woman on their boards. We will communicate this stance clearly ahead of the voting season in June,” Ihenacho explained.
Reports indicate that women currently occupy an estimated 10% of board positions in Japanese companies, according to the Nikkei business daily. The fund’s decision could impact more than 300 Japanese companies based on nominations made last year. In March, the fund already opposed the appointment of the chairman of electronics group Canon’s board.
As the second-largest recipient of the fund’s investments, Japan is only second to the United States. At the end of 2022, the fund had holdings in 1,533 Japanese companies, amounting to approximately $57 billion, which represented 4.9% of the fund’s overall stockholdings.
Coinciding with a Group of Seven meeting focused on gender equality scheduled for June 24-25, Japan aims to elevate the percentage of women in board positions to 30% by 2030. This target aligns with the minimum level stipulated in the fund’s 2021 diversity document.
Last year, the fund opposed 171 nominations in the United States and Europe due to its gender equality policy, reflecting its commitment to promoting inclusivity and diversity across global boardrooms.
The gender equality problem in Japan
Japan has deeply ingrained traditional gender norms that often relegate women to domestic roles, resulting in limited opportunities for career advancement. Societal expectations regarding marriage, child-rearing, and caregiving responsibilities place significant pressure on women to prioritize family over their careers. This also leads to unconscious bias against women in hiring, promotion, and career advancement decisions.
In Japan’s professional and political realms, women face significant barriers in attaining leadership positions in Japanese companies and politics. Hugely male-dominated corporate cultures, biased promotion practices, and the prevalence of of “old boys’ clubs” make it challenging for women to break through the glass ceiling.
Japan also has a culture of long working hours, often referred to as “salaryman culture,” which can be particularly challenging for women who bear a disproportionate burden of household responsibilities. Insufficient support systems such as affordable childcare options and flexible work arrangements make it difficult for women to balance work and family obligations.
Japanese women frequently experience a significant gender pay gap, with lower wages compared to their male counterparts for similar positions and qualifications. This pay disparity further hinders their economic empowerment and professional growth.
Japan has the widest gender pay gap in the Group of Seven (G7), with Japanese women in 2020 on average earning about 75 percent as much as men for full-time work.
Despite efforts by successive Japanese governments to tackle gender inequality, Japan ranked 116 out of 146 countries for gender parity in the World Economic Forum’s global report last year and 104 of 190 countries in the World Bank’s latest report on women’s economic opportunities.
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