#Japan #Tokyo #Human Capital #HR Governance #Diversity Index

Overview

In a progressive move towards transparency, HR Governance Leaders (CEO: Shigeru Uchikazaki) has thoroughly investigated human capital disclosure practices among the companies listed in Japan's TOPIX 100. This research focuses specifically on the implications of required disclosures set to take effect in 2023, marking a significant step in corporate governance. The study's primary aim is to track the current state of these disclosures and examine changes over a three-year period.

Key Objectives

The investigation primarily seeks to assess:

• - The actual values of diversity-related metrics.
• - The disclosure of human capital strategies and specific initiatives.
• - The indicators and objectives used to measure progress in these initiatives.
• - The establishment of governance structures related to human capital.

Major Findings

Increasing Disclosure of Diversity Metrics

According to the enforced disclosure criteria, significant progress has been noted in three key diversity indicators: the ratio of female managers, the rate of maternity leave taken by men, and the gender wage gap. The averages for these indicators have been on an upward trend year-over-year. Notably, the male maternity leave participation rate surged by over ten percentage points within three years, reaching approximately 70%.

In terms of disclosure regarding female manager ratios, the study revealed that around 30% of companies provided consolidated disclosures, with an upward trend observed each year. Conversely, disclosures including overseas subsidiaries have seen a minor decline, remaining slightly above 20%.

Emphasis on Human Capital Strategies

The report highlights that nearly 90% of companies mentioned initiatives related to diversity, making it the most common focus area. Other areas of notable engagement include employee involvement and overall strategies for recruitment and training. Importantly, metrics related to succession planning and next-gen leader development saw an eightfold increase in reporting over the past three years, signaling a strong commitment to future leadership development.

Rising Standards in Measurement and Goals

A closer look at the metrics and goals being reported reveals that more than 70% of companies are now disclosing diversity-related indicators. Public interest in relevant scores, such as employee engagement, has also grown, with firms reporting approximately a 3.3-fold increase in transparency over the past three years.

Enhanced Governance Structures

The establishment of governance frameworks specifically addressing human capital issues is steadily increasing. Companies are increasingly setting up meetings focused on human capital and designating roles such as Chief Human Resources Officer (CHRO). There has been a marked decline in companies lacking specified governance structures related to human resources, dropping to about 40%.

Insights from HR Governance Leaders

Shigeru Uchikazaki, CEO of HR Governance Leaders, commented, "Since the mandate for human capital disclosure was established in 2023, we have observed a tangible progression in initiatives aimed at enhancing diversity and overall employee engagement. Furthermore, the rise in companies disclosing their succession and next-gen leadership development initiatives signifies a shift in corporate culture that attracts and retains talent, thereby increasing corporate value."

Future Directions

HR Governance Leaders will continue to provide support as a 'trusted advisor' to companies navigating the evolving landscape of corporate governance. Their role will be pivotal in creating a sustainability governance model that aligns with clients' diverse needs, ultimately contributing to their growth narratives.

By championing transparency in human capital disclosures, it's expected that companies will foster a culture of equity and engagement that translates into stronger financial performance. The commitment to monitoring and improving human capital governance will play a crucial role in enhancing their competitiveness moving forward.

About HR Governance Leaders Inc.

• - Established: April 2020 (Business start: October 2020)
• - Location: Marunouchi, Chiyoda, Tokyo 100-0005
• - CEO: Shigeru Uchikazaki
• - Services: Sustainability governance consulting, board governance consulting, advisory on human capital and executive compensation, sustainability management and human capital consulting, product development for consulting services, and operational agency work.
• - Website: HR Governance Leaders