For over fifteen years, we have engaged Japanese regulators to promote governance reform and sustainability. When engaging with Japanese companies, we emphasize policies, targets, and transparency. In 2025, we prioritized ESG governance, board oversight, ESG KPIs linked to compensation, and board training—key areas for Japanese companies. We engaged with key Japanese holdings like Ajinomoto, Hoya, Keyence, Kyowa Kirin, MUFG, Orix, and TDK. Some companies made progress in advancing women, investing in human capital, and strengthening sustainability oversight. We also noted improvements in biodiversity, human rights, and renewable energy.

In 2023, the Japanese government aimed to achieve 30% female executives on the Tokyo Stock Exchange (TSE) Prime Market by 2030, with an interim target of 19% by 2025. Japan nearly achieved this, with 18.4% of women in management positions, primarily through the appointment of external directors. Since 2010, we have encouraged companies to develop internal female leadership through recruitment, retention, mentorship, and promotion, reducing reliance on external board members. Some global holdings have created human capital and diversity councils. Japanese companies continue focusing on broader diversity, supporting female career growth amid an aging workforce.

Advancing Women in Management

Ajinomoto: Japanese multinational Ajinomoto applies amino acid science to food, nutrition, pharmaceuticals, and semiconductors. The company has achieved 27% women’s representation in management at the group level, which is below its 40% global target by 2030. In Japan, the percentage of female managers is only 14%, which is well below the target of 30% by 2030.

Orix: The diversified financial services group achieved 33.2% group-level women’s representation in management, falling short of its 2030 target of 30%. In its Japan operations, women’s representation is 28.8%.

MUFG: Japan’s largest financial group increased women’s representation in management to 24.0% in Japan, still below its target of 27% by 2027. In its EMEA business, MUFG committed to the HM Treasury Women in Finance Charter (June 2025) and achieved 27% women in senior management in EMEA, with a goal of 30% by June 2027.

TDK: This provider of electronic components, sensors, and power solutions has established a global target of 25% women in managerial roles by 2030, with a Japan-specific goal of 15% by 2035. As of April 2025, the proportion of women in management at TDK Corporation (Japan) was approximately 5.3%, a slight increase.

Hoya: Optical lens, medical device, and precision imaging component manufacturer Hoya set overall goals to increase the percentage of female employees in Japan to 32% and the proportion of female leaders to 18% by March 2026. Hoya is working to address the low percentage of female managers through various policies and initiatives. It has yet to set a formal 2030 target, a goal that Boston Common has advocated for.

Kyowa Kirin: This specialty biopharmaceutical developer has a global goal of achieving 40% female representation among managers by 2030 and a 2025 goal of 18% of women in management positions in its Japan operations. It has yet to set a formal 2030 target for Japan, a goal that Boston Common has advocated for.

Keyence: Automation sensor, vision system, and controls designer Keyence has not established formal targets for women in management. Our most recent dialogue (December 2025) reemphasized the need to do so. For one of Japan’s largest companies, it lags its peers in this regard.

Broadly, we recommend that companies:

• Establish 2030 diversity targets aligned with the TSE goal of 30% female executives.
• Support these targets by establishing interim goals.
• Provide annual progress reports.

Companies should assess policy gaps across the employment lifecycle, develop a three-year diversity plan with annual goals, strengthen global governance through DEI Councils, utilize external resources and training, require male managers to mentor women, implement development programs to promote women, and link diversity goals to executive pay for accountability.

Beyond supporting women managers, we have seen progress toward a more professional and strategic approach to human capital management. For example, Orix has expanded disclosure in its Integrated Report 2025, which elaborates on human capital strategies, including diversity and inclusion, flexible work models, career support, and inclusion systems, with updated KPI progress. TDK’s Diversity, Equity, and Inclusion Framework now includes equity as a strategic focus, and the company is tracking more detailed metrics, which are reported to its board.

Governance Maturity including Sustainability

In 2025, Japan’s Sustainability Standards Board (SSBJ) issued its first disclosure standards aligned with International Sustainability Standards Board (ISSB) requirements, covering governance, strategy, risk management, and metrics for material sustainability risks. Voluntary adoption began mid-2025, becoming mandatory for all listed companies by March 2027. This has driven changes in governance oversight, requiring ongoing board training and upskilling. We encourage companies to adopt formalized, proactive board training that utilizes external resources to enhance their governance practices. Over the past two years, we have advocated for greater disclosure and implementation of board training on sustainability topics.

Below, we detail notable practices adopted by several of these companies in 2025:

• Ajinomoto includes a board-level Sustainability Advisory Council and a Sustainability Committee, which oversees key ESG performance.
• Orix has a majority of outside directors in place, conducts ongoing Board effectiveness evaluations, and has implemented more formal board oversight through its sustainability committee on ESG issues, including climate, biodiversity, human rights, and DEI.
• MUFG has strengthened governance by creating dedicated structures (Sustainability Office, Sustainable Business Division) to oversee the integration of sustainability within corporate strategy.
• TDK created a new cross-functional Sustainability Committee (April 2025) to align sustainability agendas (including human capital, DEI, and human rights) with corporate priorities.

Formalizing governance and accountability structures to deepen sustainability integration is a key step for these companies. We will continue to explore how these initiatives can be most effective in practice.

Human Rights and Environment

We engage our Japanese companies on climate, biodiversity/nature, human rights, and supply chain issues. Much of the progress we have seen is driven by global norms, such as the ISSB, and the broad adoption of disclosure frameworks, including the TCFD, TNFD, and Japan’s own climate-related goals.

Notable practices among Japanese companies include:

• Orix includes biodiversity in its risk reporting and has added prohibitions for financing or engaging in certain biodiversity-negative activities (e.g., internationally banned pesticides, dynamite fishing, and specific wildlife trade).
• MUFG issued its second TNFD report, began dependency and impact analysis related to natural capital, and intends to develop further metrics and targets aligned with international frameworks (e.g., Kunming-Montreal 2030).
• Hoya has reduced Scope 1 and Scope 2 emissions (total) by 23% compared with the base year 2021 and increased its renewable energy (RE) share to 19%, vs. its goals for 100% RE by 2040 and 60% by 2030. Hoya expanded its Scope 3 emissions reporting to include all categories in 2025.
• Kyowa Kirin caters to rare diseases and may face challenges in making its products accessible across different geographies. Kyowa Kirin Poteligeo is currently sold in 60 countries, and Kyowa Kirin has entered into licensing agreements to make its products available across the Asia-Pacific region.
• Keyence implemented a more robust human rights policy—a longstanding request by Boston Common—in early 2025, a significant advancement in its sustainability governance.

Next Steps

We assessed Orix and MUFG against our co-authored FSDA Investor Expectations for Commercial and Investment Banks on Deforestation. We will continue to engage with these companies on these expectations, as well as on broader biodiversity/nature risks and opportunities, and climate mitigation and adaptation approaches.

We are also engaging:

• Kyowa Kirin to enhance its disclosure and approach to its access strategies.
• Keyence on improving its human rights due diligence approach and implementation.
• Hoya on climate and establishing a Scope 3 emissions reduction target.

The Growing Importance of Sustainability in Japan

Japanese companies remain responsive to ongoing dialogue, open to suggestions and resources, and have demonstrated progress, particularly in the last two years, with stronger sustainability governance, strategic human capital management, and targets to promote women in management. Like their global peers, these companies are increasingly evaluating climate and biodiversity risks, establishing goals, and reporting progress, all of which is supported by government regulation and investor advocacy.