Tokyo Stock Exchange calculates index to show benefits of female empowerment

72-member index outperforms benchmark TOPIX, TSE says

The Tokyo Stock Exchange has calculated an index of companies with strong “female empowerment” practices that has outperformed the benchmark TOPIX index.

The TSE says the 72-constituent index was calculated using the highest scoring companies, by sector, in terms of the empowerment of women. The excess rate of return as of January 2013 was 7.5%, it adds.

The move is part of a project with the Ministry of Economy, Trade and Industry (METI) to help promote “the utilization of female human resources” to revive the Japanese economy.

“Not only can women quantitatively add to the working population of Japan’s rapidly aging society, but they are also expected to contribute from qualitative perspectives, meaning that empowered female human resources in important positions could help companies achieve and sustain competitive advantages in the future,” the exchange says.

Female empowerment would be a key test for Japanese companies pursuing diversity management.

Taking its cue from European notions of board diversity, the exchange points out that “pension funds and other institutional investors are increasing socially responsibleinvestment (SRI) based upon company ratings which include consideration to how they address diversity management and other factors”.

Seventeen listed companies with leading female empowerment policies are highlighted by the exchange and research firm The Japan Research Institute (JRI). They include leading names such as car giant Nissan, manufacturing company Asahi Glass and optics and camera firm Nikon.

Nissan, for example, was “striving to establish a work environment where women can demonstrate their abilities on a global scale”. Female career advisors are assigned to counsel female employees and the company offers training programs and networking events for women. The ratio of female managers in its workforce in Japan increased from 1.6% in 2004 to 6.7% in 2012.

The TSE initiative comes as the Japanese government is considering its own version of a Stewardship Code and a ‘Kay Review’ to consider how capital markets and investors should best function to help create sustainable long term value. In addition, the TSE is launching a new index of companies with good governance, accounting standards and higher return on equity.