The growing importance of sustainable investment could help diversify the old men’s club mentality of Japan Inc. boardrooms, as companies look to draw from a nontraditional talent pool for senior positions.
From Recruit Holdings Co. to Sumitomo Life Insurance Co., Japanese firms are hiring younger and more diverse workers to lead sustainability roles that require thinking outside the box of traditional management practice.
Burgeoning demand for talent that can take on these roles seems inevitable given the expanding global ESG market and the need for Japan and other countries to encourage companies to take action to achieve carbon-neutral goals. That could help improve the country’s poor standing on measures of corporate diversity.
These positions are “comparatively open to non ‘gray-haired men,’” said Junko Matsumi, a principal at consulting firm Mercer Japan. For companies seeking to raise the percentage of less-represented personnel on their boards, it’s also easier to assign them to these newly established positions, said Matsumi.
While evidence of a different hiring approach for these positions remains anecdotal, the increasing need among Japanese firms for sustainability-linked jobs is more clear-cut.
A survey conducted by Japan’s largest business lobby Keidanren last summer showed 42% of companies had incorporated a sustainability policy into their midterm business plan — a fourfold jump compared with 2 years ago. Nearly half the respondents also said they had set up a team responsible for innovation linked to sustainable development goals.
38-year-old Ayano Senaha is one example of a younger, female board member who’s also in charge of sustainability. Senaha became an executive director at recruitment and staffing-service provider Recruit Holdings three years ago, and was deeply involved in the company declaring its goal of making all management and regular employee positions 50% female by fiscal year 2030.
“The environment we’re in is changing quickly,” said Senaha, referring to the rapid advancement in technology for companies to be more conscious of sustainability. Companies will either drive change or adapt to it, she said.
“Of course your business opportunity is larger if you’re on the side that’s creating change,” she added.
Appointments like Senaha’s are spurring hopes that the world’s third-largest economy can change its image of being a bastion of decision-making power held by aging men.
Japan ranks 120th in the world according to the World Economic Forum’s latest gender gap ranking, while the average age of CEOs for companies on Japan’s benchmark index is 62.7, the oldest among Group of Seven nations, according to Bloomberg data.
“Companies are increasingly assigning outside or younger talents to SDGs-related roles, hoping to bring in perspectives independent from industry practice or corporate culture,” according to Keisuke Mizobe, a director of Spring Professional at Adecco Group Japan.
Adecco, a competitor of Recruit’s, appointed 23-year-old Kohtaro Kosugiyama head of SDG last summer. Kosugiyama has already played a key role in developing the company’s mid-term strategy by bringing on board the 17 sustainable development goals championed by the United Nations.
Adecco President Kenichiro Kawasaki says he had no hesitation in appointing the recent graduate to a position that shapes the company’s sustainability policies, given Kosugiyama’s experiences as a student delegate to U.N. council meetings on sustainability.
“Past experiences are not always requisite for creating future. Having preconceptions can become a shackle when taking on something new,” Kawasaki said, dismissing concern about Kosugiyama’s age.
Both Adecco and Recruit said they chose the young and female candidates for the positions based on their talents and passion and not to tick a diversity checkbox.
There are some criticisms that allocating minorities symbolically in non-fiscal positions is a greenwash, and it’s important for companies to consider how to avoid them, says Mercer’s Matsumi. Sustainability officers actually play an active role in drafting and implementing business strategies, she said.
Other Japanese companies breaking with the tradition of appointing based on seniority include Eisai Co. The drugmaker announced in April it will increase the percentage of managers aged 30 or younger to 20% or more, as a part of its diversity and inclusion target.
Sumitomo Life plans to hire talent in their early-30s as management in a new team that will handle with ESG and venture capital investment projects, the Nikkei reported in June. The team will proactively hire female and young talent with specialized skills, it said.
Hitachi Ltd. said in April it aims to have women or foreigners occupy more than 30% of executive positions by fiscal year 2030.
Behind these moves exist a worldwide push toward investing in sustainability. Global ESG assets under management could jump to $53 trillion by 2025, up from $37.8 trillion by year-end, according to analysis by Bloomberg Intelligence. That would make ESG assets around a third of all managed assets in the world.
Emiko Nagasawa, deputy director of the SDGs Promotion Bureau at Keidanren, says a Davos report showing sustainable development efforts could generate $12 trillion of business opportunities a year and create more than 380 million jobs by 2030 sparked interest at the business lobby to push ahead with sustainable development goals.
Still, she sees a need to keep both a top-down and a bottom-up approach when making decisions on sustainability policy.
“Sustainable development won’t be achieved unless capitalism is redefined,” with companies maximizing their profit through business models built on the premise that they’re solving social problems, said Adecco’s Kosugiyama.
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