Greater female leadership representation benefits firms in Japan
Organisations in Japan with more female directors tend to beat their peers in terms of stock market performance, according to analysis by Bloomberg Intelligence. The report found that over three and five years, organisations ranked in the top 10% for female directorships outperformed the Topix index (Tokyo Stock Price Index) by about 7%.
The report by Bloomberg Intelligence suggested that there is a potential upside for Japanese stocks if organisations make an effort to close the gap with global peers in terms of female representation on boards. Women accounted for just 15.5% of director roles at Japan’s largest organisations in 2022, compared with 31.3% in the US, according to the Organisation for Economic Cooperation and Development (OECD).
Sony Group is one example of a Japanese organisation that has benefited from having more women on its board. In 2020, Sony raised its proportion of female directors to 33%, from 15% two years earlier. Since then, its shares have outperformed the Topix index by a significant margin.
Japan is also making strides towards gender diversity, with a plan to achieve at least 30% female representation on major organisation boards by 2030, emphasising the connection between diversity, innovation, and growth.
Investors like Sumitomo Mitsui Trust Asset Management and Nomura Asset Management are taking gender diversity into account when voting board-election proposals, favouring organisations with female director candidates, reported The Japan Times.
While Bloomberg Intelligence found that having more women on boards has a positive impact on stock market performance, it also noted that it has not necessarily led to higher compensation for women in leadership roles, and the country still struggles with a significant gender pay gap compared to other OECD nations, an analysis of 2,800 organisations conducted by WTW revealed.