Rainbows and Ratings: Assessing indices of LGBTQ+ inclusivity in the Japanese workplace

Abstract

With a growing global interest in environmental, social and governance (ESG) policies, ESG indices and ratings have gained significant influence, but have also come under increasing academic scrutiny as to their validity. As part of this development, LGBTQ+ indices and pledges have also grown in popularity to signal the LGBTQ± friendliness of companies worldwide. This article begins by discussing the overall state of LGBTQ+ employees in the Japanese workplace and addresses to what extent Japanese LGBTQ+ indices can help to assess inclusive work environments. After proposing a novel framework to evaluate the components behind such indices, we apply it to two Japanese LGBTQ± friendliness indices, namely the PRIDE Index and the D&I Award. We find that both LGBTQ+ indices show potential to assess the degree of LGBTQ+ inclusive policy measures. At the same time, they still have weaknesses and leave room for misuse. Yet, these indices have a much stronger validity than other LGBTQ± friendliness markers used in Japan, such as the widely popular United Nations Sustainable Development Goals (SDGs). These findings are not only a timely contribution to the academic literature on the validity of ESG indicators, but they are also relevant to the LGBTQ+ community in Japan, as the newly enacted LGBTQ+ Understanding Law in 2023 lacks effective anti-discrimination measures.