Japan Considers Gender Ratio, Wage Gap Reporting Requirements

Japan’s financial regulator, Financial Services Agency, is considering requiring listed companies to disclose the ratio of women in managerial positions and the gender wage gap in their financial statements as early as next year. If implemented, the requirements will have significant impact on the nation’s male-dominated workplace and working culture.  

Pressures from Investors for gender transparency and diversity 

An FSA task force—comprised of company executives and institutional investors—is working on new rules and has acknowledged that investors are increasingly willing to only back companies where gender equality is the norm, in line with general international standards. In 2020, women accounted for roughly 13.3% of managerial positions in Japanese companies, compared to 30 to 40% in many European countries and the U.S. The country lags woefully behind other advanced nations in this regard. Further, some members of the FSA task force are seeking to require all listed firms to disclose their targets of appointing women to managerial posts or efforts to achieve those goals. 

Japan’s new Corporate Governance Code requires diversity targets 

Last year, Japan revised it Corporate Governance Code asking companies to set voluntary targets for promoting diversity in senior management positions by appointing females, non-Japanese individuals, and mid-career professionals. However, under the Tokyo Stock Exchange (TSE) reorganisation plan, only Prime section companies will be subject to the code.  

Outlook: If implemented, the new requirements will add pressure on businesses operating in Japan to increase overall diversity. When making all necessary efforts to help Japanese companies inching towards parity, Japan should also think about how to help women in a bigger social picture.