Fidelity International set ambitious gender diversity targets for Japanese companies it holds shares in, calling on them to achieve 30% female representation for their boards, management and workforces by 2030 with interim targets along the way.
Fidelity may "vote against the re-election of the chair of the nomination committee or representative director" for companies that don't reach those targets, it said in a news release Tuesday.
More immediately, Fidelity called on companies in Japan to reach at least 15% female representation on their boards by Japan's next set of annual general shareholders' meetings in 2022.
The company said it "will consider voting against the re-election of the chair of the nomination committee of investee companies" that don't reach that nearer term goal.
"We estimate roughly half of our investee companies have 15% female representation or above on the company board," Tomohiro Ikawa, a portfolio manager and Tokyo-based head of engagement with Fidelity International, said in an email.
"We believe this proportion will increase over the next year as a result of our ongoing engagement," as well as stricter listing requirements by Japanese market regulators, he said.
As part of its campaign for gender diversity progress, Fidelity also called on Japanese companies to voluntarily calculate and disclose their workforces' gender pay gap.
A Fidelity International spokeswoman said it is the first time the company has set country-specific targets for gender diversity.
That move reflects the fact that Japan continues to lag behind companies in other developed markets in terms of gender diversity, Mr. Ikawa said. Japan ranked lowest among developed countries — and 120th out of 156 countries overall — in terms of gender diversity in a 2021 World Economic Forum gender gap report cited by Fidelity.
"We hope that as a global investor, by setting ambitious targets, we can help accelerate this transition," Mr. Ikawa said.
Asked about the threat to vote against the chair of lagging companies' nomination committees, Mr. Ikawa said, "The nomination committee is the body that recommends to the board on the election and dismissal of directors. They are directly responsible for ensuring gender diversity is given a strong consideration in the election of new board members, so it is appropriate that they are held accountable on this front by investors such as ourselves."
But while Fidelity said it may vote against the chair of the nomination committee of companies that don't meet the 2022 goal, it could vote against the representative director — in most cases the CEO — for companies that fail to meet the longer term, broader goals Fidelity set for 2030, the spokeswoman said.