Amid growing pressure from institutional investors, 20 of the 29 major companies on the Tokyo Stock Exchange with no female executives will appoint women to their boards during their June shareholders' meetings.

Having no woman on a board has spurred investors seeking diversity in the management team to oppose the reappointment of present executives, leading to a surge in new female appointments.

“Many companies are looking for female board members, but the sense of urgency varies depending on the composition of their shareholders,” said Hidenori Yoshikawa, who works at Daiwa Institute of Research Ltd., a think tank, and is familiar with trends in shareholders' meetings.

Daiwa Institute of Research compiled the data from 383 of the 500 companies listed on the Tokyo Stock Exchange Prime Market that are holding a shareholders' meeting in June. Of these, 29 companies, or 8 percent, don’t have a female board member.

Torey Industries Inc. proposed the appointment of Yuko Harayama, the head of the Japanese Association for the Advancement of Science, at its shareholders' meeting.

Shin-Etsu Chemical Co. proposed the appointment of Mariko Hasegawa, head of the Japan Arts Council. For the two companies, it will mark the first time either has appointed a female board member.

Fuji Media Holdings Inc. plans to appoint Mina Masaya, a managing director of its subsidiary Fuji Television Network Inc.

Fuji Media has also received a shareholders’ proposal to appoint a female board member as there are no women on the board as of the deadline for submitting the proposal.

Newly named female candidates include outsiders such as lawyers, accountants and university professors.

In some sectors, many companies have a low percentage of female employees in the age group that typically assumes executive positions. They could have no choice but to rely on outsiders for the time being.

“If we appoint (female board members) within our company, they would be women who have been working here since joining our company, but we were slower in hiring women than securities firms and other companies,” said Hiromi Yamaji, the CEO of the Japan Exchange Group Inc.

“We will consider appointing them from our company in the future,” he added.

Investors are encouraging companies to appoint female board members in the hope that ensuring diversity on a board will lead to appropriate management decisions.

“I would like this company to foster female executives,” said a shareholder at the June 16 shareholders’ meeting of Japan Exchange Group, which has two female external board members.

SOME COMPANIES SLOW TO ACT

There is growing attention being paid to the concepts of responsible investment and ESG investment, in which shareholders are actively involved in a company’s response to environmental and social issues, along with corporate governance.

In November, Nomura Asset Management Co. revised its voting standards for judging whether to approve proposals by the companies in which it is investing in.

It established new criteria to oppose the reappointment of the president or chair if companies do not have female board members.

Similar moves are spreading among major asset management companies, such as Nissay Asset Management Corp. and Sumitomo Mitsui Trust Asset Management Co.

The shareholders’ meeting of Canon Inc. in March highlighted such changes in investors.

Fujio Mitarai, 87, the chairman and president of Canon who also served as the chairman of Keidanren (Japan Business Federation), garnered an approval rate of only 50.59 percent, barely avoiding rejection.

Canon did not propose the appointment of female executives. Several asset-management companies, including Nomura AM and Sumitomo Mitsui Trust AM, opposed Mitarai remaining in the top position based on criteria for women and diversity.

The nine companies that are not appointing female executives during their June shareholders' meeting have a common element of all having stable major shareholders, such as parent companies and management families.

The pressure from institutional investors on top management is, thus, relatively limited.

For example, Acom Co., a consumer finance company, is a subsidiary of Mitsubishi UFJ Financial Group Inc. The company said there is no specific reason for the lack of female board members.

“But we are promoting gender diversity and will consider (appointing female executives) in the future,” it said.

Taiwan’s Hon Hai Precision Industry Co. owns Sharp Corp., an electronics maker.

Taisho Pharmaceutical Holdings Co. has nearly 40 percent of its shares held by management families and foundations.

“We understand the global trend (of ensuring diversity) and continue to consider the matter,” the company said.

Toyota Industries Corp. belongs to the Toyota Group. Tetsuro Toyoda, 77, chairman of Toyota Industries, saw his approval rate fall in having him remain in the top position at the shareholders' meeting on June 9.

It dropped to 74.9 percent from last year’s 85.5 percent, perhaps due in part to the company's falsification of emissions test data for forklift engines.

However, these companies are not completely unaffected by investors.

Nippon Television Holdings Inc. released a proposal with zero female board members as of June 1, but the company on June 5 provided a supplementary explanation in response to shareholders’ opinions and said it intends to nominate female candidates at next year’s shareholders' meeting.

It emphasized its commitment to diversity by saying the core company of the group, Nippon Television Network Corp., already has a female board member.

The government, which has been promoting female empowerment, has set a goal for Prime-listed companies on the Tokyo Stock Exchange of each having at least one female board member by 2025. The aim is to have at least 30 percent of board members be women by 2030.

“With the government’s numerical targets in place, investors’ criteria for the appointment of female board members are expected to become even stricter,” Yoshikawa said. “We are still at the beginning stages.”

(This article was written by Kohei Higashitani and senior staff writer Toru Nakagawa.)