Women in Japan the focus for new MSCI index
MSCI has launched two new ESG-focused indexes: the MSCI Japan Empowering Women Index (WIN) and the MSCI Japan ESG Select Leaders Index, with Japan’s Government Pension Investment Fund (GPIF) – one of the largest pension funds in the world – adding the indexes to its ESG strategy.
The WIN index is made up of companies ‘whose gender diversity initiatives have been determined by MSCI ESG Research to encourage more women to enter or return to the workforce,’ according to a statement.
Bringing more women into the workforce is part of the ‘third arrow’ of Prime Minister Shinzō Abe’s ‘Abenomics’. Japan has a target in place to see women in 30 percent of leadership positions by 2020, though as of 2016, just 7 percent of senior roles were held by women, and nearly three in four businesses had no women in senior management, according to Catalyst, a non-profit organization that promotes gender equality in the workplace.
In terms of the general workforce, roughly two thirds of Japanese women are now working, up from around 60 percent in 2010, Kathy Matsui of Goldman Sachs told CNN in October. That figure is far below the 80 percent of men in work, and many of the women are employed in part-time or temporary jobs. Matsui estimated that ‘bringing the percentage of Japanese women in work into line with that of men would lift the country’s GDP by as much as 13 percent.’
The WIN index looks at a number of different metrics, including reporting of women as a percentage of board directors – which all companies on the index report – women in senior management (reported by 73 percent of firms), the difference in average employment years between female and male employees (70 percent), women as a percentage of total workforce (69 percent) and women as a percentage of new hires (reported by 62 percent of companies).
Last year a law came into effect that requires companies with more than 300 employees to disclose the number of female employees and managers, along with specific targets and plans to support them.
The MSCI Japan ESG Select Leaders Index ‘targets companies with the best ESG profile relative to their sector peers,’ says MSCI in a statement.
‘We are pleased that GPIF has selected these new MSCI benchmarks as it expands its ESG investing initiatives,’ comments Seiichiro Uchi, head of Japan index & ESG coverage at MSCI, in the statement. ‘These two indexes come at a time when the importance of ESG integration is becoming ever-more important and diversifying Japan’s workforce is increasingly viewed as a key factor in the country’s continued economic development.’
GPIF, which manages around $1.2 tn in assets, also announced the adoption of a third ESG index, the FTSE Blossom Japan Index. Norihiro Takahashi, GPIF president, says in the fund’s announcement that ‘GPIF expects the selected ESG indices [to] incentivize Japanese companies to improve their ESG evaluations and enhance enterprise values in the long term. If overseas investors focusing on ESG with a long-term horizon follow [these indexes], the investment returns of Japanese equities are likely to improve.’