A Closer Look at DEI #2
Disability Inclusion to Increase Corporate Values
By Reika Mihara
WHO estimated in March that 1 in 6 of the world’s population experiences significant disability. As attention to DEI (diversity, equity, and inclusion) grows, companies are increasingly demanded to provide everyone – including those with and without disabilities – with equal opportunities of employment and career development.
Disability inclusion is becoming a crucial topic of ESG investing. 31 investors representing more than $2.8 trillion in combined assets – including Bank of America and Voya Financial – released a joint statement in March 2022 urging their portfolio companies to work on disability inclusion. The statement encourages their portfolio companies to analyze their disability inclusion policies through a third-party benchmarking tool such as the Disability Equality Index.
The Valuable 500, a global network of companies dedicated to corporate disability inclusion, released a white paper in January recommending five standardized Disability Inclusion KPIs:
- Workforce representation – the percentage of employees with disabilities
- Goals of the company regarding disability inclusion and measures against the goals
- Disability inclusion training for the company’s managers and employees
- Disability-specific Employee Resource Groups (ERGs)
- Digital accessibility
In the context of ESG investing, Initiatives to assess and grade disability inclusion of companies are now global phenomena.
Under Japan’s legal requirement, employees with disabilities have to make up 2.3% of the workforce of companies with over 45.5 employees. Less than half of companies meet this requirement, according to the Ministry of Health, Labour and Welfare. The requirement will be 2.5% in FY 2024 and 2.7% in FY 2026.
Construction of a workplace that allows employees with disabilities to execute and cultivate their capabilities is becoming an essential part of human capital management. How can disability inclusion increase corporate values? Here are some professional insights.
- Disability inclusion is not solely for people with disabilities; it brings positive impacts on companies.
- Inclusion comes with corporation-wide initiatives rather than limited actions in designated subsidiaries.
- Inclusive business is becoming the standard.
Disability Inclusion Brings Positive Impacts on Companies
Professor Makoya Kageyama at the Graduate School of Urban Social and Cultural Studies, Yokohama City University argues that employing people with disabilities help companies improve their workplace environment. A key to the sustainable employment of people with disabilities is to ensure that employees are assigned with tasks that they can maximize their capacities and that they work in a comfortable environment. Reasonable accommodations include installing partitions for individuals who prefer to work in a quiet environment. “Whether you are with or without disabilities, your performance decreases if your tasks and work environment do not suit you,” says Professor Kageyama. Disability inclusion encourages companies to create a workplace where all employees with and without disabilities can demonstrate their abilities.
To support employees’ long-term career development, Professor Kageyama encourages companies to provide each employee with personalized training that suits characteristics of the individual’s disability. For many companies, employee development is an issue that goes beyond disability inclusion. According to the Ministry of Health, Labour, and Welfare, more than 30% of the university graduates who started working in 2019 left their first jobs within three years. Disability inclusion can make companies pay more attention to cultivating educational frameworks that motivate employees with diverse skills, strengths, and personalities.
Inclusion Calls for Corporation-wide Initiatives
Under Japan’s regulations, subsidiaries with an emphasis on accommodations for employees with disabilities can get certified as special subsidiary companies. The number of employees with disabilities at the subsidiary can be counted as those employed by the parent company. If many employees with disabilities work for the special subsidiaries, the corporate group as a whole can achieve the legally mandated employment rate even if the employment rates at the parent company or other subsidiaries remain low.
Some companies, however, identify their designated subsidiaries not as mere means to secure the number of employees with disabilities but to facilitate inclusion of the whole corporations. Seven & i Holdings own a special subsidiary Terube. 19 of the 31 employees at Terube are people with disabilities. Hiroyuki Arimura of the Human Rights Promotion Center of Seven & i Holdings says, “Terube’s role is not only to hire people with disabilities but also to encourage normalization of the entire corporation. Each company of our corporate group is actively working on disability inclusion.” As a part of Seven & i Holdings, Ito-Yokado has 26,000 employees. Approximately 700 of them are with disabilities and the number exceeds the one mandated by the law. By offering internships to students with disabilities and by increasing employees certified as counselors for people with disabilities, Ito-Yokado has been putting emphasis on following up with employees with disabilities before and after their employment. Mr. Arimura stresses, “We must work on disability inclusion not to fulfill the regulations but to make a society where people with and without disabilities work together.”
Inclusive Business to be the New Standard
French IT service giant Atos allocated over €5 million in 2021 to its Global Accessibility and Digital Inclusion Program. Neil Milliken, Global Head of Accessibility & Digital Inclusion at Atos explains that following a long-term strategy aligned to sustainability is the key by using the analogy of treating exclusion like pollution; “LED lights used to be expensive and much less popular than incandescent light bulbs. As the market’s concern over the negative impacts on the environment grows, demands from consumers and regulators grew for incandescent light bulbs to be replaced by LED lights. This applies to inclusion in business. As the needs of business and society meet, disability inclusion will be the norm for businesses.”
Japan’s population aged 65 and over is approaching 30% of the whole. Since 2021, employers have been obligated to create systems to secure employment up to the age of 70. Considering that Japan is one of the most super-aged society, Mr. Milliken said, “Many people will acquire disabilities as they age. It is imperative that businesses enable people to be independent and economically active for as long as possible throughout their lives.”
DEI – Companies Let People Grow, People Let Companies Advance
Focusing on gender pay gaps and disability inclusion, this and the previous articles have covered investors’ engagement and companies’ initiatives around DEI. Dialogues between investors and companies have expanded disclosure on gender equality. A growing number of companies are making efforts toward disability inclusion, and investors are starting to request disclosure of corporate disability inclusion using benchmarking tools. Companies employ a diverse workforce and cultivate their capacities. Employees in turn help companies advance. The cycle can be a form of the human capital management to be envisaged in the ESG investment.