The Board Director Training Institute of Japan (BDTI) - Director, governance and compliance training

Solving Gender Gap in Higher Education Is Key, as Political Leadership Can’t Be Count On

The World Economic Forum (WEF) released its Gender Gap Report on June 21. I would like to discuss Japan’s ranking in the Gender Gap Index.

Japan’s ranking in the Gender Gap Index is as follows.
Among the G7 countries, Germany was the top-ranked country in 6th place, up four places from 10th the previous year. It was followed by the United Kingdom (15th), Canada (30th), France (40th), the United States (43rd), and Italy (79th). Japan was the only country that did not even make the top 100, falling nine places from 116th the previous year to its lowest ranking ever. The percentage of women in parliamentary and ministerial positions is low, and the country is in the lowest group in the political field, ranking 138th. Japan also ranked 123rd in the economic field, reflecting the labor participation rate and the gender gap in wages. In the education sector, the country also fell in rank to 47th place due to a lower enrollment rate of women in higher education.

The Gender Equality Bureau of the Cabinet Office, which promotes “women’s activities” rather than gender equality, usually posts a statement on the Gender Gap Index on its website, but although Japan’s ranking in the Gender Gap Index of 125th/146th countries (announced on June 21, 2023) is posted, the rankings for each field have not yet updated as of June 24.

Discussion Point 1: “Japan’s ranking in the Gender Gap Index is 125th/146th, a drop of nine places from 116th place last year and a record low.”
Since the Gender Gap Index rankings are relative, it is only natural that the country’s ranking would be lower than the speed at which the gender gap in other countries is improving. The main reason for this is that the ranking in the areas of “Politics” and “Economy” has not improved at all from its very low ranking position, compared to “Education” (99.7%) and “Access to Health Care” (97.3%), when looked at by sector.

What Should the Legal Department Know about ESG?

A conversation between several lawyers at Tanabe & Partners (T&P) on the topic —


In this discussion, I would like to look at ESG international voluntary disclosure standards that legal departments should be aware of. Since hundreds of standards are gradually converging, why don’t we focus on two standards, GRI and ISSB. First, should legal departments keep up with ESG disclosure standards? Some people seem to think that the corporate department, committee or task force charged with sustainability should know about such standards, and that the legal department should leave things up to them. What do you think about this?


ESG has become an integral part of corporate strategy and risk management. The legal department is expected to fulfill its role in both promoting strategy and improving risk management, so it cannot afford to be ignorant of the basics of ESG disclosure standards. International disclosure standards are gradually being woven into regulatory disclosure. For starters, Japanese companies are required to include a statement of “sustainability-related views and initiatives” in their Yuho.

When you are asked to review a contract from a legal perspective, what do you rely on? You can only review the contract, if you know the Civil Code, the Companies Act, etc. Legal is asked to review because Legal is able to foresee what will happen if the contract is breached, what will happen if the law is violated, etc. It is difficult to conduct an effective review of ESG disclosure without knowing the system and the concept of ESG disclosure standards.

METRICAL: Share Buybacks Are Likely Due to Reduction of Shares in Retirement Benefit Trusts and Policy Holdings

Since the disclosure regarding retirement benefit trusts was made by NSK on April 20, I would like to share my thoughts on the issue of policy shareholdings and deemed shareholdings held in retirement benefit trusts.

On April 20, NSK issued a disclosure titled “Notice of Partial Return of Retirement Benefit Trust.” The contents of this disclosure were as follows: “The pension assets including the retirement benefit trust are significantly overfunded in relation to the retirement benefit obligation, and this situation is expected to continue in the future, so we sold part of the shares in the trust in the fiscal year ending March 31, 2023. The partial return of the retirement benefit trust is expected to result in an extraordinary gain of approximately 10 billion yen in the non-consolidated accounts (there will be no impact on the consolidated income statement for the fiscal year ending March 31, 2024).”

A New Era in Reporting: Empowering Board Members with IFRS Sustainability Standards

By Helle Bank Jorgensen, CEO of Competent Boards

As we enter summer, an extraordinary shift is taking place in the realm of corporate sustainability. A momentous occasion occurred on Monday, June 26th, marking a significant milestone in our journey towards a more sustainable and resilient economy. The International Sustainability Standards Board (ISSB), an independent entity operating under the esteemed IFRS Foundation, has introduced its groundbreaking inaugural standards: the IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2: Climate-related Disclosures. These transformative standards, set to come into effect on January 1, 2024, are poised to revolutionize the complex landscape of sustainability reporting, rendering it more accessible for businesses and analysts alike.

This unveiling of the IFRS Sustainability Standards is akin to the birth of a new language—one that distills intricate concepts into actionable insights. Are we standing on the precipice of a game-changer? All signs point to a resounding yes.

Imagine a shared vocabulary that empowers stakeholders to discern, compare, and evaluate companies uniformly, presenting a transparent and cohesive view of the corporate sustainability panorama. This is precisely the promise encapsulated by these pioneering standards.

95% Execs and Directors Say Sustainability Key to Shaping Future Boardrooms

By Helle Bank Jorgensen, CEO of Competent Boards

The vast majority (95%) of business leaders and board directors believe that sustainability plays an important or very important role in shaping successful future boardrooms. That’s according to a Competent Boards white paper Why sustainability plays a key role in shaping future boardrooms that examined five key areas of focus for company board directors.

Two-thirds (66%) of poll respondents cited investor demand as the key driver of sustainable change in boardrooms. Other critical factors noted by respondents include: regulations; customer, employee and stakeholder demands; and board members’ fiduciary duty. 

AGM Season in Japan: Time to Encourage Director Training!

Unfortunately, every June at AGMs in Japan most investors approve the vast majority of director candidates –even first-time director candidates — without confirming whether they have ever received any form of director training to prepare them, or a “refresher” course on emerging issues and new best practices. Because of this, an increasingly large percent of directors in Japan have served less than three years (at least 30% in the case of outside directors!) in their very first director position, but have never even received basic training.  METI and the FSA are starting to consider this as a major problem.

Serving as a director on a public company board is not the same job as serving as a lawyer, academic, or the head of global sales.  It requires different knowledge, mindset and preparation.  Raising PBRs, improving sustainability, DEI, and optimizing the business portfolio are not going to “happen” by themselves just because those topics appear in pronouncements and the press.  They will only take root and consistently improve if the quality of Japanese boards increases.  But right now, the average quality of boards is quite low, as can be seen from these…

Collaborative Engagement in the UK: Much More Active

The 2022 report by the FRC in the UK, “The influence of the UK Stewardship Code 2020 on practice and reporting”, shows a stark contrast between the virtual absence of collective engagement in Japan as compared to the UK. A large proportion of asset managers in the UK are participating in a variety of collaborative engagements:

Some Quotes from the FRC’s report:

“Most respondents identified collaborative engagement (working with other investors) as an increasingly important escalation tool.”

“One of the things about collaboration is you don’t have to do all the work yourself. You are adding the value of your assets to the engagement and hopefully sending a better signal – that’s quite a lot of change in the sector in dealing with [ESG] issues.”  (Head of responsible investment, large UK asset owner)

Director Skills in Japan: The Picture Worth 1,000 Words

Take a look at the chart below, from materials recently published by the FSA’s Committee on the Stewardship Code and the Corporate Governance Code.  This is from an analysis of ALL directors (both executive and non-executive) at TSE1 firms that disclosed a skills matrix in 2019.  From left to right, the categories are: a) technology; b) finance and/or accounting; c) executive management experience; and d) global (international) experience.  Can you guess which country is the dark blue bar?  Yep, that low guy is Japan. Right across the board.

Director skill gaps in Japan - BDTI

Taro Kono, Could You Please Speak to the FSA and TSE?

The FSA and TSE have been assiduous in encouraging more engagement between investors and Japanese companies, and in highlighting the problems raised by the ever-increasing share of funds invested on a passive basis in the Japanese market – which is leading to a sort of “hollowing out” of meaningful feedback from institutional investors.  I would encourage anyone who reads Japanese to read the most recent Action Plan for corporate governance, especially including the reports by the Secretariat in the FSA’s May 16th meeting.  This is very commendable.

On the other hand, there is a stark contradiction between this stance and a big defect in the machine-readability of the Corporate Governance Reports (CG Reports)  submitted by Japanese companies to the JPX/TSE, which is regulated by the FSA . The defect renders a major portion of these reports almost entirely useless for rigorous analysis by computers… even though I pointed  it out some six years ago. In a word, the 11 (or more) different “disclosure items” required to included in CG Reports, which account for close to half of the meaningful information in each report, are all mashed together into one XBRL “barrel” that does not even have a standardized format.


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