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Business Trends

Boardroom diversity moves forward in Japan

Nearly 70% of blue chips to have foreign or female directors

Indeed co-founder Rory Kahan, left, has been nominated as a director at Japanese staffing agency Recruit Holdings. Veteran banker Teiko Kudo, left, has taken a seat on Toyota's board.

TOKYO -- More companies in Japan are promoting ethnic and gender diversity on their boards, with nearly seven in 10 large corporations expected to have at least one non-Japanese or female director after shareholders meetings this month.

Of the 170 Nikkei Stock Average components with March book-closings that had published shareholder meeting notices by the end of May, 36 will have non-Japanese directors, an increase of seven, according to data compiled by Takara Printing.

Daikin Industries, the world's biggest air conditioner maker by market share, has nominated Kanwal Jeet Jawa for a board seat. Jawa, who has served as chief operating officer of Daikin's Indian unit, would join Yuan Fang, a Chinese-born director proposed for reappointment.

Sony stands poised to add a third foreign-born director. Staffing services group Recruit Holdings has nominated Rony Kahan -- co-founder of the U.S.-based job search website Indeed, which the Japanese company acquired in 2012 -- to its board.

Panasonic has nominated its first non-Japanese board member. Laurence Bates, who previously covered Japan as a legal officer at General Electric, has been picked to serve as director in charge of legal affairs.

Aerospace and railroad equipment maker Kawasaki Heavy Industries has nominated Jenifer Rogers as an outsider director. The American lawyer worked at the Industrial Bank of Japan, one of the predecessors of Mizuho Bank, and at Merrill Lynch Japan Securities. She now serves as an external director at trading house Mitsui & Co.

Toyota Motor welcomed its first female board member at a shareholders meeting on Thursday, appointing Sumitomo Mitsui Banking Corp. executive Teiko Kudo.

Assuming shareholders approve all of the nominations, 112 companies will have at least one female director or auditor, accounting for 66% of the total, up 7 percentage points from a year earlier. Twenty-eight companies will newly appoint or increase board seats for women. 

This trend comes after the Tokyo Stock Exchange earlier this month updated the corporate governance code it adopted in 2015, urging listed companies to make their boards more open to women and people with international backgrounds.

Institutional investors are putting their weight behind this movement. "Ensuring boardroom diversity is important," said Emi Onozuka at Goldman Sachs Asset Management.

Many Japanese companies are adding women from outside the group to their boards, but Komatsu has drawn one from its own ranks. The construction machinery maker is slated to give Kuniko Urano, general manager for human resources, a seat on its board.

Increased diversity can lead to new ways of working. Chip-testing equipment maker Advantest made English the official language at board meetings last year. Sharing information with non-Japanese directors and executive officers has been "smoother" since the change, President Yoshiaki Yoshida said.

Yet corporate Japan still has a long way to go on diversity. Women accounted for a mere 3.7% of all officers, including directors and auditors, at listed companies, according to a 2017 survey by the Cabinet Office. That is a far cry from 18% and 34% at companies in the U.S. and France, respectively, in 2015.

One factor is difficulty finding talent.

As a result, many women serve on multiple boards. Toshiko Oka, slated to join Sony as an external director, already holds the titles of outside director or auditor at three companies, including Mitsubishi Corp. and Hitachi Metals. Female directors in Japan also tend to have professional backgrounds in law or academia, with relatively few from business.

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