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Business trends

UK fund operator to press harder for diversity on Japanese boards

LGIM voted against 10 Japanese groups last year over lack of female directors

LGIM's move is part of a broader investor trends that call for more diversity in corporate management. (Source photos by Nozomu Ogawa and screenshot from LGIM's website) 

TOKYO -- The UK's biggest fund manager Legal & General Investment Management is pressing harder on Japanese companies to take on more female directors and is expanding policies to vote against proposals by those that have none, it announced on Wednesday.

LGIM, which had voting rights at 1,400 Japanese companies as of 2020, voted against 10 Japanese companies that had no women on their boards last year. The fund manager's voting policy only applied to Japan's TOPIX 100 companies in 2020, but will expand to companies on the TOPIX Mid 400 index from this year.

The fund manager's move is part of a broader investor trends that call for more diversity in corporate management. Other global investors putting increased pressure Japanese companies include the U.S.'s AllianceBernstein, which from this year is opposing director slates nominated by Japanese companies that include no female candidates.

Aina Fukuda, Japan ESG Manager at LGIM, suggested that the number of "all-male-board companies are gradually decreasing every year." Back in 2017, there were 37 TOPIX 100 companies with no female directors. However, she suggested that companies should also not be satisfied by having just one woman on the board.

"For a minority group to have a voice in an organization and make changes, they need to account for 30% of the organization," said Fukuda. She said that only 3% of TOPIX 100 companies have executive boards that are made up of 30% women, "which is lower compared to other countries." Over half of the TOPIX 500 companies that have women on the board have only one female director.

Fukuda added that having a low number of women on a company's board affects their environmental, social and corporate governance scores, which in turn affects fund investment decisions.

In the rest of the Asia-Pacific region, LGIM voted against 23 companies in 2020.

Japanese companies named by LGIM for not having female board members in 2020 included optical products maker Olympus, machinery company Kubota and railway operator Central Japan Railway.

"We will continue to appoint those who would contribute to the sound management and further development of the company regardless of gender," a JR Central spokesperson commented. "While there is no female executive yet, there are many female managers who are active," he said.

Kubota appointed a new female external director in March, and Olympus also plans to appoint a woman on its board this year. Olympus' new board candidate Sachiko Ichikawa is a lawyer certified in New York, and "she would be able to look at management from a global perspective, as well as [from that of] being a woman," said the company's spokesperson.

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