President to President

Jenifer Rogers and Om Prakash share why ACCJ leadership matters

As the world transitions to a third year of the coronavirus pandemic, the American Chamber of Commerce in Japan (ACCJ) undergoes a transition of its own as outgoing President Jenifer Rogers passes the baton to incoming President Om Prakash. A newly elected Board of Governors also takes office for 2022, ready to lead the ACCJ through challenging, but exciting, times for global business in Japan.

Rogers, who is general counsel Asia for Asurion Japan Holdings G.K., and Prakash, chief executive of Northrop Grumman Japan, sat down on the day of the new board induction to talk to The ACCJ Journal about the progress the chamber made in 2021, the possibilities for 2022, and why they both are proud to volunteer their time and leadership.

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Prakash: Serving has been my professional life almost in its entirety. I served in the Air Force for over 26 years. I started out mainly as a pilot and a test pilot, but [spent] a lot of time in the Pentagon working on issues for our nation, including industrial policy and working with Congress.

After that, I joined Northrop Grumman, and I’ve been with Northrop Grumman for seven years, three of them here in Japan. I’m super excited to put all that background together and work with all of you and the ACCJ to bring great things for US business, US commerce, and the US–Japan alliance.

Rogers: I’ve been very impressed since I met Om two years ago. I think he has an esprit de corps, and he is such a person with integrity. He reached out to me in the last election to meet up and we’ve had a dialogue over the last two years. I think he is straightforward, a team player, incredibly passionate about improving the US–Japan relationship, and doing the best he can for the chamber. I personally am very excited that he’s been elected to this position.

Prakash: I do absolutely enjoy working with people. I get a lot of energy from hearing other people’s ideas and thinking about it. I’m not afraid to change my mind—so I don’t know if that’ll be sometimes something difficult to work with—but, hopefully, as a group, we’ll all come to good decisions. I like being inclusive and absolutely picking up diverse opinions.

I’m anxious to also get things done. I like to get my hands dirty when necessary, and also see others succeed and be given opportunities. I think the chamber is going to be incredibly fun to work in because, after all, we’re all volunteering our time. We’re putting into it because we believe in something we’re doing. We have passion. Those are interesting things to work with, and around, because we’re not all going to always agree on things. But we’ll certainly be passionate about it, so it’ll be fun.

Rogers: I know from your speech that you have great things to offer. And as the outgoing president, I feel very excited to leave the chamber this year in your very capable hands.

Prakash: Well, thank you. And, also, I can’t thank you enough. I’ve known you for going on two years now, and I was actually really happy you’re the president that I’m coming up behind, because I know you’ve left the chamber in great shape and you’ve done great things with it. I’m truly impressed and thankful for what you’ve done, because you’re certainly going to make it easier for all of us on the next board.

Rogers: Thank you very much. That’s really nice to hear. I feel great that we’ve done a lot of what we set out to do, but I think what’s really nice is that there’s so much more to do. It’ll be exciting to see the chamber continue to succeed under your leadership.

Twenty twenty-one was such an unusual year with the pandemic. We went in thinking we were maybe seeing the end of it. So, we had to really pivot and focus a lot more on pandemic-related advocacy issues: reentry, entry restrictions, vaccines.

What was really nice to see is how our members really communicated their concerns. We rallied to provide vaccine support, get out there into the media, and push the Japanese government to really pursue a more open travel policy and science-based approach to vaccines so we could truly enhance our members’ experience. In a very unique environment—and even though we were virtual—that kind of pandemic situation brought us together.

Also, because of that, I really wanted to leave a legacy around great corporate governance. We established the governance task force, and, really, I wanted to make sure that the chamber was sustainable and a role model in the community. With the constitutional amendments, and a lot of the changes we made within the chamber—including some of the good practices around the induction ceremony today for the Board of Governors—I really feel very proud that we’ve made good strides in being the role model we should be as an organization representing our members in the business community here.

Prakash: I’m just so impressed with all the things that you were able to do in 2021, considering that a really key person—an ambassador, which is so critical for the ACCJ—was absent from the US government side. I’m looking forward to having that person on board quickly in 2022 to really bring new dimensions to what we can do for our members and the US–Japan relationship.

The points you brought up about how none of us expected the pandemic to last this long—how you embraced it and now have made for all our members something that we’re not expecting to ever to go back [from]—it’ll just be continuing evolution of an ongoing situation. I think that’s something that we need to take forward on the new board as One ACCJ, [looking at] all the points that we’ve learned and continuing to learn as the situation evolves.

Rogers: I think we did manage to do some great advocacy around digitalization, sustainability, and even the US–Japan economic partnership in certain ways. But absolutely, I think you’re well positioned with your background. And also, with the new US ambassador and the changes in the government that have taken place under Kishida-san this year as prime minister, I think the chamber is well positioned to make a huge difference. I will be happy to support, but also very excited to see what you’ll be doing in that space next year.

Prakash: Well, all of us will be doing.

Rogers: That’s right.

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ACCJ Kansai D&I Summit

Key takeaways shared over three days of focus on workplace equality

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The 7th Annual ACCJ Kansai Diversity & Inclusion Summit took place over the course of three days—October 4, 13, and 21—in a new series format that delivered a blend of inspiration and practical information sharing. With a focus on diversity-and-inclusion (D&I) initiatives, as well as equality in the workplace, the series featured keynote and plenary speakers, a fireside chat, training sessions, and remote networking.

The first day of the summit began in earnest with a keynote speech by Jenifer Rogers, president of the American Chamber of Commerce in Japan (ACCJ). Rogers noted that the ACCJ is at the forefront of D&I efforts, especially through the Women in Business Committee and its activities, which include advocating for women in the workforce.

Recently, the committee created the Women in Business Reading List on the ACCJ’s website where resources are shared to help empower women in the workforce.

Speakers at the summit shared their personal and professional experiences in advancing D&I in Japan and abroad, including strategies that can be employed individually, at work, and in the community at large. Attendees engaged deeply with the themes of the conference, via question-and-answer sessions and breakout training opportunities.

The Way of Change

In her presentation, Rogers looked back at her first experiences in Japan, and how having to “encounter adversity in order to create opportunity” helped to shape her career trajectory.

“That experience changed my life; it changed what I wanted to do with it, and the total direction of it,” she said.

Graduating high school early, Rogers relocated to Japan in 1981 and spent two years as a student at Sophia University. Before that transition, she had intended to study nursing in the United States.

However, because of those early years in Japan, she changed her studies from nursing to foreign studies and law. She also studied Japanese. After graduating from law school in the United States, in 1988 Rogers returned to Japan on a Fulbright Scholarship to conduct research. Her area of study was the impact of the 1985 Equal Employment Opportunity Act on female college graduates.

Why female college graduates? Because, at the time, they were one of the groups most discriminated against in Japan, Rogers recalled. Such women had the least time to work before they had to quit their jobs to raise children.

In the late 1980s, Rogers and her peers had been excited about how the new law would be a game changer for women in the workforce. “Unfortunately, those expectations were not met.”

And yet, by the time Rogers returned to Japan for a fourth time, at the end of 2014, things had changed: D&I had become part of the agenda in business circles here. Why was that?

Societal pressures, such as the aging of society, had created a need for talent—and among the least-tapped demographics in Japan at the time were university-educated women. Japan realized it has to take advantage of that.

In addition to the United States, Rogers has practiced law in six countries. She has studied or worked in Japan for more than 16 years, her career spanning financial services and IT industries. This vast experience has allowed her to develop a global perspective, she said.

Rogers holds non-executive directorships at three companies, positions that have allowed her to share her experience as a lawyer and a business professional. In January, she was elected president of the ACCJ.

Prior to leading the chamber, she worked with not-for-profit boards and in other leadership roles—experiences that helped her to hit the ground running as a leader at the ACCJ.

Looking back at her career, Rogers sees change as the salient theme; indeed, she refers to herself as a “change junkie.” But why embrace change?

Rogers identified at least three reasons: change—whether that’s working with a new team or in a different country or culture—allows you to leave your comfort zone, learn new ideas, and have new experiences.

“I think of change as an opportunity for growth.”

Does that mean she has taken every opportunity to embrace change? No. Rogers notes that she has been thoughtful about when to adopt change, in part because change comes with risk.

That said, the status quo involves risks, too. Nothing remains the same, she shared. For instance, you may get a new boss, your division may be merged with another one, or you may lose your job due to restructuring. What is important is assessing each new opportunity considering your personal and professional circumstances to determine if it is the right change for you and your career goals.

In her case, change allowed Rogers to become a resilient leader. Without it, she would have had no imperative to grow, no motivation to improve, no opportunity to receive input from a wide range of sources, and no incentive to innovate.

“I gained so much confidence in myself after each new opportunity. There were no perfect experiences, only those that taught me a lot of new things that helped me grow.”

Rogers encouraged women not to be held back by the fear of the unknown, and to embrace change.

Throughout her career and in the same way that she embraced change, Rogers has engaged actively with D&I and experiences involving people who have different ideas, backgrounds, gender, and even biases. While diversity can cause discomfort, it can also spur innovation and growth, she noted.

“In some cultural contexts, I need to have very in-depth, one-on-one conversations with people to make sure they understand my point of view, and that I understand theirs. That happens in Japan.”

As another example, Rogers noted that in India, she had to be open to having many meetings and drawn-out debates to ensure the desired outcome for all stakeholders.

In Japan, where she often is the only woman in the boardroom, Rogers often has wondered how she can leverage her personal experiences and skills to bring about change.

There is now a call for D&I in Japan, not as nice-to-have but as a must-have, to improve productivity and competitiveness, she said. The question then becomes, “How can Japan truly accelerate its diversity and inclusion?”

For us, it starts with adapting views so that they have the greatest impact in the context of Japan. Identifying others who are open to your views, finding a mentor or sponsor who is sympathetic to your goals, and mentoring others are great ways to effect change and to learn for yourself.

Surviving Diversity

The second keynote on day one was delivered by Masaaki Ito, executive director of Japanese fast-food chain Yoshinoya Co., Ltd. Previously, Ito worked for P&G in Switzerland, the United States, Singapore, and Japan. He is currently an outside director and adviser to several companies. Ito spoke about how he has survived in a diverse corporate environment abroad and in Japan.

A graduate of Keio University, he recalled that on TOEIC, a standardized test for English proficiency, he had achieved a high score. And yet, he had not been able to speak English well, something he had thought might haunt him while living abroad.

Ito spoke about being the only Japanese on his team in Cincinnati and Geneva. But, when he transitioned to the office in Singapore, the challenge changed: there were 10 nationalities in the office. What’s more, 60 percent of his colleagues were women—a first for him in the workplace.

Looking back, Ito noted a number of things that he learned—despite the challenges—from working as part of diverse teams across many cultures. From the perspective of a marketer, it is important to have diverse views on your team, he acknowledged. A lack of diversity, conversely, is likely to lead to unintended outcomes, such as groupthink.

One way to work through differences—and to identify shared values and good ideas—is to engage in team-building activities, such as office outings, including going out for food and drinks with colleagues, he said. Referencing Aristotle, Ito noted that there are three necessary elements to human communication. One must have the ability to:

• Create trust
• Act rationally
• Display empathy

In addition, he identified three questions—beginning with who, how, and what—the understanding of which are needed to move people. The first is, “Who do you wish to be in the eyes of the listener?” When speaking, it pays to speak to others in the same way that you want them to speak to you.

The second is, “How would you like to talk to another person?” It pays to be able to find areas of agreement with others, so formulating a conversation using a “yes, and” formula is better than a “yes, but” structure. The former allows you to better understand the other person.

The third is, “What would you like to learn from the other person?” Here, it pays not to focus merely on what you want to say, but to listen. Focus on being objective and eliminating bias about the other person, and listen carefully to them.

Mastering the who, how, and what of communication allows workplace diversity to be transformed from a burden into a boon, Ito shared.

Remote Realities

Day two of the summit began with a keynote by Kyoko Yamamoto, senior vice president and head of human resources at NTT Communications Corporation. In her presentation, entitled “Workstyle Transformation as a Key Driver of D&I,” Yamamoto outlined key barriers to gender diversity in the Japanese workplace.

Speaking from personal experience, she noted long-standing and outdated organizational barriers to women’s inclusion and progress at work, such as inflexible hours and an assumption that employees will stay late at the office. There have also been expectations that work will be carried out face-to-face, as opposed to remotely.

However, the coronavirus pandemic has led to a radical transformation of the work culture in Japan, while expanding the view of what a workplace is. Since the start of the pandemic in early 2020, work practices have become more flexible, “remote-work natives” are now common, and companies have realized that new value can be gained from remote work. What’s more, employee happiness has increased in many respects.

Yamamoto identified four trends in this era of increasing remote work:

• Open communication and management
• Flexible rules and conditions
• The 3Cs of the office
• Digital transformation and data utilization

The first refers to a new culture of open information sharing and management, and setting up remote and interactive management systems.

Yamamoto referenced NTT’s Remote Work Handbook, a guide to telework that is available free online. The guide shares best practices on topics such as how to manage a remote meeting, onboard new employees, and update IT skills.

Flexible rules and conditions, meanwhile, seek to create a work environment that isn’t based on fixed work times and office locations. Here, a new, super-flex-time system allows greater flexibility for employees to choose their work hours and location.

And the 3Cs of the office—change, creation, and collaboration—redefine our understanding of a workplace: the office can now be a remote space for generating ideas and collaborating, but with on/off switches that allow workers to have time for themselves.

The last item, meanwhile, optimizes work via the digitalization of processes and the greater use of data—the advent of which will open new opportunities that align well with the work–life balance needs of women. In such an environment, workers are encouraged to find a balance between individual autonomy and self-management on the one hand, and teamwork on the other. They are also empowered to respect diversity and build trust via open, trust-based workflows.

Since the implementation of this new workstyle paradigm at NTT in early 2020, employee satisfaction has reached record levels. About 80 percent of workers at the company now enjoy remote work, up from less than 20 percent before the pandemic.

Staff told of increased satisfaction and productivity, career development, and a sense of unity. Meanwhile, record increases were reported in employees’ sense of pride, equality, and respect—not to mention trust. What’s more, for the first time, the level of satisfaction among women increased to match that of men. Both had around a 65-percent positive response rate in opinion polls.

Overall, the transformation of workstyles at NTT has led to major changes to its office culture in two ways. From the perspective of the company, business processes have been transformed and data-driven management is now prevalent.

From the perspective of workers, personal growth and well-being have become priorities, work has become more pleasant and diverse, and career opportunities have increased.

Change for Good

The plenary speaker on day two was Daniel Binette, senior director of the immunology business unit at Eli Lilly Japan K.K.

In his presentation, entitled “Beyond the Evidence: D&I in Action,” Binette shared data from a survey, of more than 100 companies in 15-plus countries, which shows a link between financial performance and ethnic or gender diversity in the boardroom.

Other data shows that 67 percent of prospective employees surveyed shared that they consider workplace diversity an important factor when applying to work for a company. Diverse organizations, Binette pointed out, are more likely than less-diverse ones to attract and recruit better talent.

Despite the compelling evidence showing how D&I can improve personal and business outcomes, Binette noted that some organizations have fallen behind global trends in its implementation.

Why? As we focus on diversity targets for age, race, and gender, do we lose our focus on inclusion?

When working in South Africa and Canada, Binette experienced working on highly diverse teams, as both countries have divergent populations. However, there were key differences. Diversity in the workplace in South Africa was notably stratified. While Indian and white colleagues made up older generations of workers, Black people made up most of the recent hires.

Recognizing such subtle differences informed their inclusion strategies that, for instance, aimed at reducing turnover among new hires, which at the time was no better than the industry average for South Africa.

To improve their inclusion scores, Binette and his colleagues asked themselves how they could bring together their organization’s diversity, be it in terms of age, background, culture, or language.

So how did they increase inclusion?

They set a goal: Make life better in communities where most of their Black coworkers lived, while lowering turnover and increasing productivity.

Binette’s D&I goals had four pillars:

• Increase inclusion, productivity, engagement, and retention
• Develop a strategy to build a shared common vision and to coach inclusiveness
• Provide help when wanted
• Create a barometer of discussion

Further, Binette and his team conducted roundtable discussions to find out where their organization stood on inclusion. Employees shared their views and leaders listened.

Most important, however, rather than conduct a top-down initiative, the company invited representatives from their employee base to help shape the overall strategy for inclusion.

After sharing the vision, the next 90 days were critical. Performance management was updated, clear goals around collaboration were set, and it was made clear that, while leadership would support the new strategy, it was the responsibility of all to make it a success.

Managers and employees discussed how to collaborate, and coaching was conducted by everyone. Sessions covered topics such as unconscious bias and microaggressions, remarks that may be perceived as belittling.

As implementation continued, there was a need to support managers further. So diversity training used reverse mentorship to increase interests, pairing managers with employees from vastly different backgrounds. This allowed for better understanding between managers and their colleagues.

Binette admitted that diversity training is a continuous task, but initial results were encouraging: their organization in South Africa became an industry leader in reducing turnover, the workforce was more dynamic and engaged, and prospective employees showed enthusiasm to work for the company.

He shared three key takeaways from the initiative:

• Connectedness—the importance of a shared sense of belonging—grew among employees
• Respect—having deep consideration—for others became more prevalent
• Transparency—the importance of communication among staff and with management to explain the need for the strategy—increased

Binette stressed that leaders are important in:

• Setting clear goals on inclusiveness
• Recognizing their own limits and reaching out for help
• Modeling good behavior
• Assessing progress
• Recognizing change and change-makers

Globally Diverse

Day three began with a keynote by Neal Reed, executive officer and vice president at P&G Japan G.K. In his presentation, entitled “Equality & Inclusion: from Good Intentions to Impactful Actions,” Reed emphasized one main goal: to encourage attendees “to do one thing different, starting tomorrow.”

Reed stressed three assumptions about the attendees:

• They believe that diversity is good
• They know that leaders play a key role
• They are all good people with good intentions

He said that while much progress has been made globally in the D&I space, equal opportunities are still not equally distributed. This means some people do not always feel included.

Warming to the theme of equality and inclusion (E&I), Reed challenged the audience with a question: Are you doing enough? All, not just leaders, are responsible for making a difference, even in a small way.

Reed shared a framework that has guided him in this, allowing him to move from good intentions to actions that have an impact. The framework has three elements:

• Look in the mirror and challenge yourself
• Take action where you have passion
• Help one person at a time

Looking in the mirror and challenging yourself is a reality check, where you ask whether you are doing enough. Faced with a busy life, it is easy to slip into the belief that D&I is not important.

Taking action where you have passion allows one to focus on an area in which you already have a keen interest—a field where you believe you can make the greatest difference in D&I.

Lastly, it may pay to focus on helping one person at a time, a strategy that is less intimidating than trying to solve all organizational or global challenges at once.

In a moment of self-reflection, Reed noted the following elements in his D&I—as well as E&I—journey:

• Coming from a background of privilege brings with it the responsibility to act in support of others who are less privileged
• Change comes from action, not intentions alone
• Diversity is a first step, but enabling equality has greater impact
• Insiders need to help outsiders
• Leaders need to be role models

Reed said that people have always been considered P&G’s biggest asset. The company has long thought of E&I as a business strategy built on diversity in recruitment, equality of opportunity in the workplace, and fostering an inclusive culture.

Recently in Japan, P&G launched initiatives, such as the E&I Board, members of which meet regularly to apprise themselves of their work. Then there’s Beyond Gender, an initiative that builds on previous work around gender, while bringing to the fore challenges faced by the LGBTQ+ community and those with disabilities.

The company’s brands, too, have been used on a greater scale than before to highlight E&I initiatives. So ads for its household products, for instance, have been used to encourage men to do more housework, such as laundry.

Challenge Accepted

The plenary session on day three, entitled “The Possibility of ‘Knowing’,” featured para athletes Kabetani and Norimatsu, both of whom compete in wheelchair rugby and are representatives of AIG Japan Holdings K.K. The moderator was Yumiko Ishii, senior manager in the internal audit office at American Home Assurance Company, Ltd.

Kabetani and Norimatsu spoke about their experiences in the company’s Employee Resource Groups (ERGs), volunteer-led initiatives for the promotion of diversity, equity, and inclusion, including for employees with disabilities.

Looking back at his early days working at AIG, Norimatsu recalled that some of his colleagues, having had little experience working with someone in a wheelchair, were not certain how—or, indeed, if—they could help.

“There were people who were not sure whether they wanted to help me by opening the door,” Norimatsu shared.

Other colleagues wanted to help but found it to be challenging, not knowing how or when to do so. But, as time went by, the distance between Norimatsu and his colleagues naturally closed and many more people began to speak to him. As a result, mutual understanding grew.

ERGs were created to help bridge such gaps, and to bring the workforce closer together. Indeed, survey results from the disability ERG show that colleagues were eager to know how they could assist team members with disabilities. As a member of the group, Norimatsu has been eager to share his experiences with others, and to learn from them, too.

“I know about wheelchairs, but I don’t know much about disabilities that do not involve the wheelchair, including those of people with mental disabilities,” he said.

Such connections, he noted, are especially important in Japan, a country where there have not been many opportunities, in the corporate environment, for people with disabilities to interact with other colleagues. Via the ERG program, both para athletes have not only bridged gaps between employees and supported AIG’s business goals, but they have also helped to inspire colleagues in unexpected ways.

Norimatsu explained: “If speaking about my disability helps someone, I want to proactively communicate [my experiences]. It might not connect directly with business, but it might indirectly produce a good effect.”

Breakout Performance

Throughout the summit, attendees engaged in breakout training sessions facilitated by Miho Takiguchi, director of talent and organization development and diversity at AstraZeneca K.K. The sessions focused on the themes of the conference.

With more than 200 attendees, this year’s summit was organized by ACCJ-Kansai Diversity & Inclusion Committee Co-chairs Yuri Ichihashi, Yuka Nakamura, and Asana Otani. The summit’s master of ceremonies was Vice-chair Daniel Steiner.

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Tipping Point for Change

Injecting diversity into corporate Japan through outside directors

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Over the past decade, Japan has gone from less than one percent of directors at Japanese companies being female to about 10 percent at many of the larger organizations. And while that figure represents progress, it is by far an inferior diversity-and-inclusion (D&I) performance than typically can be seen at companies in the United States, Europe, and other parts of the world. Some of the largest corporations in France, for example, have boards on which women account for 45 percent of the directors.

How Japanese companies might be encouraged to overcome their apparent reluctance to welcome women into their boardrooms was the topic of a November 15 virtual event, entitled Injecting Diversity through Outside Directors. It was hosted by the American Chamber of Commerce in Japan Women in Business Committee and moderated by corporate governance consultancy Third Arrow Strategies LLC founder Tracy Gopal. The discussion drew on the experience and insight of three women who are committed to bringing change to Japan:

• Jin Montesano, executive officer and chief people officer at LIXIL
• Jenifer Rogers, ACCJ president and general counsel for Asia at Asurion
• Kaori Sasaki, founder and chief executive officer of ewoman, Inc.

In her introduction, Gopal pointed out that women are an increasingly critical part of Japan’s workforce and are needed in boardrooms to help ensure the long-term stability of the national economy. Having women on corporate boards also encourages other female employees to make sure that their voices are represented. It also helps attract the best and brightest.

At present, Japan’s corporate code merely suggests that company boards be balanced in their composition, including in terms of gender. However, this request of sorts cannot sufficiently move the needle when men have deep roots in the corporate culture. Thus women such as Montesano, Rogers, and Sasaki have “a responsibility to be the great change-makers,” Gopal said.

Jin Montesano

Jenifer Rogers

Kaori Sasaki

Tracy Gopal

Relative Progress

The change that has been witnessed in Japanese boardrooms might be considered quite rapid when one takes into consideration many corporations’ reluctance to evolve. But it looks poor in comparison with other parts of the world that have really “accelerated their game,” Rogers noted.

Her experiences on the boards of Kawasaki Heavy Industries, Ltd., Mitsui & Co., Ltd., and Nissan Motor Co., Ltd. have reinforced the importance of the task, and her presence is important on several levels. Female staff have approached her and expressed gratitude that she is changing the company by altering the face of the board. Simultaneously, major investors are keen to see diversity on a board and a willingness to accept non-traditional voices.

Beyond the boardroom, another area of evolution that can be seen is in a company’s internal dynamics.

“We know that diversity is a driver of innovation,” Rogers said. “I personally feel that it’s my duty to speak up and share my views, because that is why I have been chosen to join a board as an outside director. And what I’ve found at organizations on whose boards I serve is that, whereas I used to be the first to ask a question or to share my viewpoint, now I can’t get a word in edgewise.”

Rogers said that what she really likes is how this change has created synergy with top management. “There are more obligations on external directors around sustainability, the codification of the corporate governance code, talking about diversity, and other issues at the board level.”

“Women are an increasingly critical part of Japan’s workforce and are needed in boardrooms to help ensure the long-term stability of the national economy.”

When that takes root, Rogers noted, it can trigger a cascade of change that runs down to every corner of the organization.

“I really think that, when female directors have a lot of confidence and are good communicators, they can truly be agents of change within the board dynamic.”

Yet, too often, a single minority voice on a board is not sufficient to bring about change.

Being the only woman is a difficult position in which to be, Rogers admitted. “What you must do is learn how to have influence and make an impact. For me, that means making friends with the other external directors, which allows me to have a much broader voice.”

One board on which she serves now has three female directors. This, she said, has resulted in a significant change.

“It has altered the dynamic, and we have now hit that magic number which shows there has been a general shift in the organization: it is committed to diversity,” she explained. “If you have three women, then you have enough representation to make a difference. Each woman feels comfortable with that level of diversity.”

Sustaining Change

For Montesano, three key components must be in place to make D&I a truly sustainable endeavor:

• A corporate culture that is genuinely more inclusive
• Credible and authentic leadership
• D&I-focused human resource policies and practices

She agreed with Rogers’ point about reaching a tipping point of minorities on a board, something that LIXIL has been keen to attain.

“Our D&I commitment was to achieve 50/50 gender equity on our board by 2030, and we are already at 30 percent,” she said. “At present, the board has three women. And while one might be [seen as] a quota to make women feel better, three normalizes the situation. Then you’re no longer having a conversation about gender; you’re actually having real conversations as a diverse board. And from there, you go from strength to strength.”

Immediately after being appointed LIXIL’s chief people officer, Montesano said she spent a lot of time examining data and conducting her own research to determine D&I best practices, as well as to tailor a strategy best suited to LIXIL. Her seat on the LIXIL board also enables her to act as a strong bridge between the board’s direction and the company’s D&I strategy.

“What I found is that you must focus on the I, or inclusion, not on diversity,” she said. “If inclusion is the goal, then diversity is the natural outcome.” This, she noted makes real D&I change much more sustainable. That determination has enabled LIXIL to formulate the hypothesis that drives its D&I agenda. The company crafted its approach by asking questions such as:

• How can an inclusive culture be created?
• How can managers demonstrate more empathy?
• How can people best be trained to practice inclusive behaviors?
• How can leadership embrace the actions needed to be genuinely inclusive?
• How can a company eliminate bias from policies, processes, and practices?

A key LIXIL initiative during the coronavirus pandemic has been to maximize flexibility in the workplace for women.

Of course, working from home—something that has been critical during the pandemic—was one element of this, but the company has also stepped up its self- and family-care policies. For example, 10 days have been added to maternity leave, and the entitlement has been made more flexible; an employee can now take the time off in half-day or even hourly increments.

Montesano also called for more women to take the plunge and actively seek promotion to serve on corporate boards. She said that she knows there are women ready to make their voice heard, because she meets them all the time.

“The number might seem small but, in absolute terms, it’s a pretty healthy size,” she explained. “For women who are considering it, I think it is really about putting your hand up to sit on this or that statutory entity internally, then joining outside non-profit boards, which are always looking for talented people.”

Montesano believes this can really accelerate things. “In my own company, my CEO is supportive of me sitting on an outside board. While many other companies may not have considered encouraging it, I hope they will. It would accelerate D&I across Japan and add more gender diversity to boards.”

Growing Curiosity

For ewoman founder Sasaki, there has been visible change in the 35 years since she started her first company, Unicul International. Over the past 26 years, Sasaki’s International Conference for Women in Business has been a catalyst for this change and is widely recognized as spearheading the D&I movement in Japan.

“Compared with 30 years ago, more women are in executive or leadership positions and, at the conference, they like to learn more about diversity, global issues, and how to climb the corporate ladder,” she explained.

Sasaki, who has been serving as an outside board member of corporations for 13 years—and currently sits on the boards of four companies—created the female board-member network called The Board. She noted that most companies continue to believe that they are diverse if they just reach a set number of female employees.

“Diversity is not just a gender issue; diversity of thought is very important for a company’s growth. We need to bring a new angle, a new direction of ideas into boardrooms.”

She added that the public, as well as ESG investors, are asking which companies are performing well on D&I. Such information often influences their investment decisions. But the current rankings only utilize the data which companies choose to make public, so they don’t accurately reflect the true D&I culture at these companies.

To remedy this situation, and to help companies determine the status of their own D&I efforts compared with their peers, Sasaki’s ewoman assembled a group of international experts to design the Diversity Index (DI). The DI measures the diversity of an organization by combining the numerical data with the attitudes and perceptions of every employee and executive through an online survey and exam. It not only reveals the true state of D&I in a company, it identifies training opportunities and serves as a recruiting tool.

Buying In

All three women concluded that the outlook is positive for women in senior positions and also, more broadly, for D&I at Japanese corporations.

Rogers summed it up: “The reality is that, for all companies in Japan, there is demographic pressure. It’s the external competitive market that is driving the use of that pool of talented women in Japan who are highly talented but, at present, underutilized.

“I believe that CEOs and CFOs are now really buying into it,” she added. “They can see how diversity can transform their organization and allow people to really bring their best self to work. The leaders have targets, are measuring, and are increasing disclosure. It really is an articulated priority.”

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Third Annual ACCJ Shareholder Forum

Focusing on active engagement and stewardship during the AGM season

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After more than a year of operating during the coronavirus pandemic—and adapting to the changes it has brought forth—companies are facing another season of shareholder meetings. With vaccinations signaling that we may soon emerge from the crisis into a more familiar, although changed, world, leaders are able to focus on other critical areas, such as the environment and sustainability, as well as diversity and inclusion.

On June 16, the American Chamber of Commerce in Japan (ACCJ) Alternative Investment Committee (AIC) hosted the third annual ACCJ Shareholder Forum. Held virtually once again this year, the event brought together six speakers with expert knowledge of the fiduciary and regulatory landscape:

• Satoshi Ikeda, chief sustainable finance officer at Japan’s Financial Services Agency (FSA)
• Nicholas Smith, strategist at CLSA Securities Japan Co., Ltd.
• Paras Anand, chief investment officer for Asia–Pacific at Fidelity International Ltd. (FIL)
• David Baran, chief executive officer of Symphony Financial Partners (Singapore) Pte. Ltd.
• Alicia Ogawa, director of the Project on Japanese Corporate Governance at Columbia University
• Seth Fischer, chief investment officer at Oasis Management Company, Ltd.

The mission of the forum is to address the lack of public information about the existence of shareholder initiatives among listed companies in Japan. This year’s discussion included timely issues for active investors, such as environmental, social, and corporate governance (ESG), climate-change disclosures, the growing emphasis on diversity of boards, and the differing styles of engagement used to achieve successful outcomes.

“These days, lots of attention is focused on boards of directors and corporate governance,” AIC Chair Frank Packard said during his opening remarks. “Less attention is focused on active engagement and stewardship. It is this attention gap that the ACCJ seeks to address with this forum.”

“Active investor engagement can lead to constructive results, and we see that with the Toshiba investigative report. This increased transparency only happened because an actively engaged investor requested an extraordinary general meeting of shareholders,” he added, referring to the revelations in June that the manufacturing giant allegedly colluded with government officials to influence the outcome of votes at its 2020 annual general meeting (AGM).

ACCJ President Jenifer Rogers, who serves as a non-executive director on the boards of three Japanese companies—Mitsui & Co., Ltd., Kawasaki Heavy Industries, Ltd., and Nissan Motor Co., Ltd.—welcomed attendees and shared how the chamber is modeling best practices in terms of governance and member shareholder engagement.

“For almost 10 years, the ACCJ and its members have advocated constructively with the government of Japan to improve corporate governance and investor behavior, to increase corporate value for all investors and stakeholders,” she said. “This event is part of a long-standing interest of our chamber members in these important issues.”

Rogers noted that the coronavirus pandemic has helped hasten the adoption of ESG principles at many companies and prompted more attention to be focused on climate change. “Changed attitudes about sustainability are also—and, should I say, finally—emerging in Japan.”

Response to Reform

Satoshi Ikeda provided perspectives on corporate governance reforms on behalf of the FSA, where he is chief sustainable finance officer. The agency’s reforms were launched in 2015 and recently finalized in time for June’s busy AGM season—despite resistance from Japan’s corporate chieftains.

“To put it bluntly, the corporate governance reform in Japan was really hated by Japanese corporate executives, and it continues to be largely so even today,” Ikeda said, adding that this is no surprise because such moves are intended to strengthen oversight of corporate executives. “It is human tendency to resist being deprived of entitlements,” he noted.

The reforms came after the persistently low profitability and low returns on equity at Japanese corporations came into the spotlight in the early 2010s, Ikeda explained. “It was perceived that Japanese corporate management was maybe too prudent. So, we thought it would be necessary to change the balance.”

Long-term equity investors are in the best position to help realize the “right vision-based finance” in Japan, Ikeda added, despite the negative image that many Japanese have of them as short-term speculators who descend like “a swarm of locusts” and demand an immediate payout through dividends or stock buybacks, and then disappear. But by aligning their interests with those of the company, long-term investors can encourage value creation for shareholders by engaging in stewardship activities, he said.

Reforms to the corporate governance code are also aimed at changing the traditional mindset at Japanese companies that prioritized clients and employees more than shareholders. That way of thinking also was not suitable for responding to civil society organizations pushing agendas, such as greater respect for human rights and addressing climate change.

Expanding Scope

Chris Wells, AIC vice-chair and a partner at law firm Morgan, Lewis & Brockius LLP, explained that, over the past year or so, the thinking about stewardship responsibilities has expanded beyond just improving corporate governance to embracing environmental and social responsibilities. But, he added, the adoption of a stewardship code by investors appears to have had very limited impact on advancing ESG objectives. The framework for the ESG goals envisioned in the stewardship code is “just not working” he explained.

One problem, he stated, is that some companies are criticized for greenwashing—conveying a misleading or false impression about how their products or services are environmentally sound.

What’s needed is the development of a consensus list of ESG metrics—relevant not just to shareholders, but to employees, suppliers, and service providers—that can be used to measure progress toward those goals, Wells said. “We cannot expect Japanese corporate managers, investment managers, or financial intermediaries to take action on ESG objectives if no agreed metrics exist whereby to measure their success.”

Government leadership is needed to help achieve this, Wells added. “Only government action can ensure that investors will receive this information in a consistent format—one in which they can compare apples to apples when making their investment decisions.”

What If?

Nicholas Smith, the Japan strategist for CLSA Securities, used a series of charts to talk about what could happen were Japan to take corporate governance seriously. He said the recently released Toshiba investigation report “totally changed” the governance landscape in Japan. “Activists have been handed a powerful new weapon. A lawyer-mandated investigation is clearly every bit as powerful as US discovery.”

A major reason the Japanese government has focused attention on corporate governance in recent years is that Japan’s ¥1.6 trillion Government Pension Investment Fund has shifted out of low-yielding bonds into stocks, Smith said. This move required three things:

• Investors trusting company numbers
• Companies generating an economic rate of return
• Companies sharing those returns with investors

According to Smith, “This is what corporate governance is about. It’s not about being a goody two-shoes. It’s about not pillaging granny’s pension pot.”

Next, he highlighted how 2021 is shaping up to be a big year for share buybacks, which have already reached three-quarters of last year’s total. Still, half of Japanese stocks are trading below book value, he said, suggesting “real potential in activism as governance issues are ironed out.”

Back in 1995, some 96 percent of companies held their annual meetings on the same day. While that figure has fallen to about a quarter, 82 percent of meetings continue to be held during the same week. This is still “unacceptably atrocious—a deliberate and transparent attempt to make it hard for the owners of these companies to attend the AGM,” Smith noted. And despite the pandemic, most companies are not permitting virtual attendance. Fifty-eight percent don’t permit electronic voting platforms and 55 percent don’t give English documentation, he added. “You couldn’t make this up. It’s almost as if they don’t want their investors to vote.”

The number of activist events in Japan had “exploded” in recent years, Smith stated, with Japan last year being the second-largest global market for activism after the United States.

Thematic Engagements

The forum then heard from three actively engaged managers, beginning with Paras Anand, chief investment officer for Asia–Pacific at FIL, who talked about how active managers are reshaping Japan’s corporate sector.

Anand, who spoke from Singapore, said that one key indicator of change is that five years ago, whenever his team would meet with company leaders, discussions about financial performance would have been separate from any talk of climate or social issues—or those topics would have been squeezed in at the very end. Now, “those two meetings are becoming much more integrated,” he said.

FIL has also held more “thematic engagements” with companies on single issues, Anand explained, such as trying to help address the plight of 400,000 stranded seafarers who operate the huge shipping vessels that carry much of the world’s cargo. These crew members are usually not allowed to disembark for a break or to see their families, meaning they are kind of stuck onboard “floating prisons.”

FIL has worked with shipping companies, airlines, and non-governmental organizations to spotlight the issue and, together with a coalition of investors, wrote a letter to the United Nations outlining measures they felt would alleviate this problem.

Anand said a smart way to amplify your voting rights as an active investor is to lay out your voting policy ahead of time—including what might be some red line issues—to show people how you’re going to vote. FIL has, for example, adopted new policies on climate change and gender-balanced boards that look at how companies are doing on those scores.

In Japan, FIL has adopted a new campaign for gender diversity which asks all investee companies to achieve a level of 30 percent by 2030 for three indicators:

• Percentage of women on the board of directors
• Ratio of women in management positions
• Percentage of all employees who are female

Long View

The second active investor, Symphony Financial Partners founder and CEO David Baran, was interviewed by Alicia Ogawa, director of the Project on Japanese Corporate Governance and Stewardship at Columbia University’s Business School, in a video shot just prior to the forum.

Asked about how he engages Japanese companies, Baran said there are plenty of very good Japanese companies trading at depressed prices. So, rather than getting confrontational with poorly run business, he tries to take a constructive approach. “Isn’t it easier to buy good companies that are trading at deep discounts and help the share price go up?”

Japanese companies aren’t broken, Baran noted, it’s the market that’s broken. “The function of the market as a battleground for discovering value [is broken] and the pricing doesn’t work,” he explained.

Changes that activist investors and corporate governance reforms seek will take time, and habitual practices are hard to break. Japanese companies are often faulted for sitting on too much cash, but Baran pointed out that this is the result of the administrative guidance the enterprises received from the government after the asset bubble of the 1980s burst.

Changing business culture takes time—particularly in Japan. “I think the fuse was lit, it’s just a very long fuse for a lot of these things,” Baran said. “You’re not just dumping a set of rules on the table. You’re saying, ‘Here’s the change in culture. Now you’ve got to learn to adapt to it; decide how you’re going to adopt it.’”

“Companies are living things,” Baran reminded attendees. His team meets with company leadership seven to 10 times a year, and often they are talking about the same topics. “When you leave, they’re like, ‘OK, now I need to absorb that.’ Your conversation does not stop when you walk out of the room.”

You need to take the long view in Japan, but change can accelerate once consensus is reached. “Nothing happens quickly—until it does,” Baran said. “You’re waiting and waiting and waiting … and then the next day you go from zero to 100 miles per hour in execution.”

Positive Response

The third active investor was Seth Fischer, founder and chief investment officer at Hong Kong-based Oasis Capital Management. He highlighted how shareholder activism during last year’s AGM season reached new heights as measured by the number of companies receiving shareholder proposals and the number of proposals submitted by funds, as well as the number of candidates proposed by directors.

In a whirlwind of slides, Fischer gave numerous specific examples of his fund’s engagement with several companies. At last year’s Mitsubishi Logistics AGM, Oasis urged the company to implement a buyback of five percent of its shares, and the company responded with a 5.8-percent buyback.

Oasis also proposed electing outside directors and abolishing the komon system—under which former presidents, chairs, and top executives stay on as senior advisors—a practice seen by many as a hindrance to innovation. The company abolished two komon posts.

Oasis has also been active in Tokyo Dome Corporation, which owns the home stadium of the Yomiuri Giants baseball team. A year-and-a-half ago, Oasis came forward with an asset-improvement plan that went through a “long and quite public engagement with the company,” Fischer explained. At an extraordinary general meeting, Oasis proposed removing three board members, two of whom had held their posts for at least 15 years. Tokyo Dome was taken private by Mitsui Fudosan Co., Ltd. and Yomiuri for a 45-percent premium, and Fischer said, “Our business plans are being fully implemented.”

This year, Oasis plans to submit proposals at the AGM of Tenma Corporation, a plastics manufacturer that has struggled with governance issues following a bribery scandal at one of its Vietnam subsidiaries. The incident has spurred a battle for control between two of the founding families, distracting the company from its main business operations. Fischer’s firm is proposing that three directors be elected to help unify the business “and improve governance at the company.”

Wrapping up the forum, Packard said a key takeaway from the diverse views shared was that, if “activism is viewed constructively and done properly, it can receive the support of management.”

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Finding Success through Diversity

Outside directors can play a key role in your business and personal lives

It’s annual general meeting (AGM) season in Japan. I will participate in a few for the boards on which I serve as an independent director and anticipate that this year will be quite exciting, because the calls for greater independence of corporate boards are more insistent than ever. Indeed, some activist investors are setting the table stakes at 30-percent independent outside directors—in line with proposed changes to Japan’s Corporate Governance Code regarding Prime Market companies—before they will even consider voting in favor of a company-sponsored resolution.

Independent outside directors help to broaden the perspective of the board and hedge against the risk of insiders simply following the company position out of self-interest, loyalty, or groupthink. Studies have shown that companies with boards that include independent members tend to outperform those with boards comprising only insiders. As we seek reform in important areas—such as environmental, social, and corporate governance, as well as diversity and inclusion—it is believed that boards with greater independence will push for more rapid change.

The American Chamber of Commerce in Japan (ACCJ) has been advocating for Japan to improve corporate governance, so we are pleased to see, in the proposed changes to the Corporate Governance Code, a greater focus on sustainability, a recommended increase in the number of independent directors, and a call for companies to present a policy and targets for diversity in senior management.

Many Voices

At the ACCJ, we’re fortunate to have a diverse board that could be viewed as being made up entirely of independent directors. While all ACCJ board members are members of the chamber, our positions are voluntary and not paid, and—except in rare cases—we have no other business relationships with the chamber. As such, we could fall within the meaning of outside—or independent—directors.

As an organization, the ACCJ benefits from this tremendous diversity of backgrounds, experiences, and expertise, and the quality and range of the ACCJ’s white papers, statements, and events are a direct result of the diversity and depth of our membership. Having been involved in many ACCJ committees, and in the development of our papers and positions, I can tell you that divergent voices are the engine that drives our ability to effectively advocate on behalf of all members.

These experiences and imperatives got me thinking about the role that diversity, inclusion, and independent voices can play in our own lives and careers. When we look at our personal networks of peers, colleagues, mentors, family, and friends, how often do we see a mirror of our own experience and how often are we benefiting from a truly outside perspective?

Broaden Your Network

In the corporate world, consultants and coaches are paid to deliver their independent viewpoints and advice. But beyond these formal arrangements, there’s much we can do as individuals to broaden our perspectives. It’s comforting to be in the company of like-minded individuals, but staying inside your established circle can sometimes lead to an echo-chamber effect—and that’s not fertile ground for the type of innovation and constructive change we need to feed our energy as business leaders.

This month we’ve launched a revamped ACCJ Membership Directory and we’re piloting Wai Gaya—a new platform designed to facilitate informal conversations among members. Both initiatives offer opportunities for discovery and connection to broaden your network within the chamber.

I hope you’ll take this opportunity to get in the spirit of AGM season by not only expanding your ACCJ network, but by actively seeking out those with different views. Instead of simply connecting with people across your professional or industry sector, make a point of reaching out to people whose resumes and experiences look nothing like your own. Bring a few outside directors into your life. If the model holds true, you might just realize the same kind of performance benefits in your own career that we hope to achieve by pushing for more independence in corporate Japan.

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