In late October 2020, Japan’s Prime Minister Yoshihide Suga set a target for carbon neutrality by 2050. However, Japan is struggling to phase-out coal-fired power plants and ramp up its renewable energy capacity, while the financing of coal-fired power stations overseas by Japan’s banks has attracted investor ire.
Meanwhile, Japan was ranked 121st in the Gender Gap Index in 2020, the worst performance among developed nations. It also ranked 131st in terms of the proportion of women in senior and leadership positions, well below the world average, while ranking poorly in terms of the gender pay gap.
We have accelerated our engagement with Japanese companies on equality and diversity in recent years and in 2019 we started to incorporate this into our voting policy for Japan. In 2020, we raised our expectations for TOPIX 100 companies, wanting to see women account for at least 10% of board members.
In addition to our company engagements on climate, since 2019 we have incorporated various metrics into our global voting policies to measure how well companies are responding to the need to align with the Paris Agreement. We have written to the chairs of companies scoring below a Transition Pathway Initiative Level 3 management rating (Level 4 for companies with a high exposure to fossil fuels), planning to recommend a vote against them if our engagement does not give us assurance about their management of climate-related risks. In 2021, we introduced additional criteria, where we would consider recommending voting against the chairs of companies deemed to be expanding their coal exposure, or with high deforestation risks.
This article appears in our Q3 2021 Public Engagement Report.