[TOKYO] Two years after Prime Minister Shinzo Abe came to power with a plan to empower women, Japanese boardrooms are still the biggest boys' clubs in the developed world.
Just 196 of the 1,858 firms listed on the nation's benchmark Topix index have female directors, and 1.5 per cent of all board members are women, according to data compiled by Bloomberg. That's an increase from 1 per cent before December 2012, when Mr Abe took power, and the lowest among the main markets of 24 advanced economies, the data show.
The slight increase in female board participation shows progress has been slow in a nation where half of companies only have male managers. And businesses may be worse off for it. Kathy Matsui, who coined the term womenomics in 1999 and advises Mr Abe on his policies, says passing over half of society will hurt innovation.
Having women on a board is "definitely worth a premium," said Ms Matsui, chief equity strategist in Tokyo at Goldman Sachs Group Inc.
"In a very homogeneous society like Japan, to have a diverse set of opinions incorporated in the decision-making process usually produces a better outcome."
Data on corporate performance appears to support Ms Matsui's argument. The five-year average return on equity for the Topix's 196 companies with at least one female director is 6.8 per cent, Bloomberg-compiled data show. That compares with 5.4 per cent ROE for 1,595 companies with all-male boards.
The 1.5 per cent ratio for women on Japanese boards compares with 18 per cent in the US, 28 per cent in France, and 40 per cent in Norway, according to data compiled by Bloomberg. Some 93 per cent of firms listed on the Standard & Poor's 500 Index in the US have at least one female director.
Germany's parliament last week approved a bill mandating more than 100 of the biggest listed companies to allocate 30 per cent of supervisory board positions to women.
As Japan's declining population reduces the pool of working-age people, Mr Abe has reiterated a target for women to hold 30 per cent of leadership positions by 2020. He stopped short of enforcing a quota for companies and hasn't set a target for more female directors.
Women held 11 per cent of management posts in Japan as of 2012, according to the latest labour ministry data. That compares with 43 per cent in the US and 39 per cent in France, the ministry said.
Past studies have shown companies with more female directors tend to outperform. Fortune 500 companies with three or more women as directors had an average return on equity of 15.3 per cent for the five years ended 2008, according to a 2011 report by Catalyst. That compares with 10.5 per cent for companies with no female board members.
In Japan, companies with at least one female director delivered a total cumulative return of 108 percent in the three years through Feb 28, data compiled by Bloomberg show. For firms with all-male boards, the total return was 99 per cent.
The figures for cumulative return include reinvested dividends and take into account changes in the number of companies in the Topix throughout the period.
Increasing the number of female managers "adds new value and brings new ideas and innovation," said Haruno Yoshida, the president of BT Japan, a unit of the UK's BT Group Plc, who is set to become the first female executive to join Keidanren, Japan's biggest business lobby, in June. "That will contribute to an increase in the value of a company."
About 52 per cent of 11,017 companies surveyed last year by Teikoku Databank Ltd, Japan's largest credit research company, didn't have any female managers.
The potential windfall from increased female participation is enormous. More gender equality in the labor force could boost Japan's gross domestic product by almost 20 per cent over the next two decades, according to an estimate by the Organisation for Economic Co-operation and Development.
Mr Abe's cabinet is getting ready to give companies a nudge. It plans to submit a bill in the current session of parliament that would force businesses with more than 300 employees to disclose plans to hire and promote more female workers.
"If you want to thrive as a company and you depend on labour, then the faster you make yourself appealing to the best quality talent available, the better off you will be," said Ms Matsui.