Japan’s Push for Women on Boards Propels Lawyers, Accountants

Japanese companies struggling to promote women within their leadership ranks are turning to lawyers, accountants, and professors, among other professionals, to make progress toward the government’s looming gender diversity targets.

Japan set a national goal for women to represent 30% of executive officers, including board members, at top publicly listed companies by 2030. The Tokyo Stock Exchange also has called for at least one female executive officer by 2025 in each company listed on its prime market, oriented toward global investors.

But with 2025 soon approaching, businesses still have a ways to go toward reaching the voluntary milestones. Women accounted for about 16% of executive officers at companies listed on the Tokyo Stock Exchange’s prime market in July, up from 14% a year earlier, according to a gender balance report released in October by Keidanren, Japan’s top business group. About 4% of these companies had no female executives, the report showed.

The vast majority of women who serve on the boards of prime market-listed companies come from outside rather than within a company, Keidanren’s research found. More than half of the outside directors are lawyers, accountants, and university professors, the report said.

“So far, most companies have not managed to nurture women as candidates to join their boards of directors,” said Hiroshi Kitani, a professor at Prefectural University of Hiroshima who researches human resources management and diversity.

It remains to be seen what the outside additions will mean for corporate governance.

“I do not see much impact on corporate management and business as a result of increasing external female executive officers,” Kitani said, adding that’s “because lawyers, university professors, and accountants tend to lack experience and knowledge of the businesses where they are members of the boards, as well as a sense of belonging.”

Pipeline Problem

Yasuhiro Goto is an outside director of the board at San-In Godo Bank Ltd., a regional bank based in Matsue city, and an outside director at Foster Electric Co. ltd in Tokyo. He likewise pointed to problems with the pipeline for women to become corporate executives in Japan.

There are “a limited number of women who have been working for the companies and moving up the career path from manager to department head and executive officer,” said Goto, who also is an expert on Asian economies and industry and a professor at Tokyo’s Asia University.

Accounting and consulting firm Deloitte’s business in Japan teamed up with Shagai Laboratory Incorporated Association to launch a training and networking initiative for female executives in October. The association focuses on assisting women to become outside independent board members. Their joint project is targeting 1,000 women as members.

“We provide hard skills, management strategies, how to read financial balance sheets and networking opportunities with more than 20 company presidents and executive officers,” said Taiko Otsuka, a partner at Deloitte Tohmatsu who leads its sustainability advisory work and is involved in the project. “We also arrange coaching and mentoring with them,” she said.

The initiative follows other earlier efforts to help with women’s professional development. Keidanren, the business group which counts more than 1,500 companies as members, established a network for female executives in 2015 to try increasing the pool of candidates. The network had 291 women as members as of April 2024.

“We have launched the network to help women executives break the ‘glass ceiling’ to be able to be members of boards of directors or company presidents,” said Yoshihisa Masaki, director of Keidanren’s social communication bureau. “There are role model programs and mentoring programs.”

Pace of Change

Former Japanese Prime Minister Fumio Kishida set the 30% target for female executives in 2023.

Japan ranked 118th out 146 countries in the World Economic Forum’s 2024 global gender gap index, far below its Group of Seven (G7) peers in Europe and elsewhere. The index measures gender parity across different dimensions, including economic participation and opportunity.

Only 39 of the company presidents at 3,235 businesses in the prime market and standard market are women, representing 1% of the total, according to a gender balance survey conducted in 2024 by the Japan Research Institute Limited, a unit of Sumitomo Mitsui Financial Group.

Prime-market companies have significant market capitalization and more sophisticated corporate governance than companies on the exchange’s standard or growth markets.

Given the slow pace of change so far, some observers have suggested stricter measures, such as fines for noncompliance or releasing lists of companies with the fewest female executives.

“There are no sanctions if they do not reach the targets, and they aren’t required to provide plans for improvement or explanations of why they lag behind,” said Yoshimasa Moriguchi, chief researcher at the Japan Research Institute Ltd.

Seniority Systems

Japanese companies should make long-term plans to help women successfully climb the managerial ladder, becoming department heads, and then executive officers and presidents, Kitani from Prefectural University of Hiroshima said.

Gender issues are exacerbated by standards for promotion at Japanese companies, which tend to value seniority and long hours instead of quality of work, Deloitte’s Otsuka noted.

“Japan should change its current seniority system and allow the younger generation, even 30- to 40-year-olds with adequate ability, to become board members or executive officers,” she said.

Shiseido Company, a top Japanese cosmetic maker, is an outlier when it comes to gender diversity. Women hold almost half of its executive posts.

Maki Yamamoto, department head of diversity and inclusion strategy promotion at Shiseido, is also an official in Japan’s chapter of the 30% Club. The club campaigns to boost the number of women in board seats and executive leadership positions at companies globally.

“Once Japanese companies accept people from different countries, backgrounds and cultures at their headquarters, their thinking will move toward real diversity and acceptance,” Yamamoto said.