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Why Japanese Boards of Directors Should be Held to Gender Diversity Standards of the West

Tracy Gopal

Founder, Third Arrow Strategies LLC

Shiga, 1992-1993

Mounting research indicates that gender diversity on boards is correlated with superior financial performance and governance oversight. Gender diversity fosters innovation, improved risk oversight, and a greater focus on workforce diversity issues. As board gender diversity has become a global issue, and governments, exchanges, and investors around the world have taken significant actions, Japan remains behind on board gender diversity. Historically, Japan was only held to local market standards. The rationale for not expecting Japan to rise to higher global standards included a lack of female talent and culture. However, this historical rationale is no longer valid. The concerns expressed over lack of female talent are no different than those heard when Norway instituted 40 percent gender quotas in 2003 and when California instituted gender quotas in 2018. If the definition of a qualified director is expanded and global boundaries are eliminated, then Japan has sufficient female candidates to fill board positions. For these reasons, certain leading investors and proxy advisors have changed their proxy voting policies to require Japanese companies to have at least one woman on the board. Higher standards for gender board diversity are necessary to shift ingrained cultural gender stereotypes, maximize the usage of talent, and harness the merits of board diversity.

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About the Author

Tracy Gopal taught English in Japan as an ALT on the Japan Exchange and Teaching (JET) Program from 1992 to 1993 in the towns of Maibara and Ohmi in Shiga Prefecture. She holds a BA in Economics from the University of Michigan, Ann Arbor, where she graduated summa cum laude and Phi Beta Kappa. At the University of Michigan, she took extensive coursework in Japanese. She earned her MBA from the Fuqua School of Business at Duke University. She earned the CFA Charterholder designation in 2002. Following an extensive career in transactions and governance with EY and ISS, she founded Third Arrow Strategies, a corporate governance consulting firm. In 2021, Tracy will officially launch the Third Arrow Strategies Japan Board Diversity Network, a membership organization committed to raising the percentage of female board directors in Japan. The author can be reached by email at tracy@thirdarrowstrategies.com.

About the JETs on Japan Forum

The JETs on Japan Forum is a partnership between USJETAA and Sasakawa Peace Foundation USA (Sasakawa USA) that features selected articles of JET alumni perspectives on U.S.-Japan relations. The series aims to elevate the awareness and visibility of JET alumni working across diverse sectors and provides a platform for JET alumni to contribute to deeper understanding of U.S.-Japan relations from their fields. The articles will be posted on USJETAA’s website to serve as resource to the wider JET alumni and U.S.-Japan communities on how alumni of this exchange program are continuing to serve as informal ambassadors in U.S.-Japan relations.

Submissions are encouraged from mid-to-senior level professionals who are established in the current fields OR current/recent graduate degree students in both masters and doctoral programs. Click here for more information on how to submit a proposal for consideration.