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JPX and Nikkei to launch new index on human capital in July
The index will include 100 companies in Japan that are highly rated in human capital strategies, and aims to encourage both local and foreign investments in companies that effectively utilize human resources.
Human capital refers to treating employees' knowledge, skills and motivation as valuable assets. Increasingly, corporate executives and investors believe that companies that are proactive in managing human capital -- through strategies such as inclusive hiring across gender and nationality, training advanced talent in areas like digital technology, and raising pay to reflect performance -- can better attract skilled workers and strengthen competitive positions globally.
The new index is expected to represent 100 companies from the JPX-Nikkei Index 400. The index's value will be updated and published in real time, with constituents reviewed annually every August.
This is the third stock index created by JPX and Nikkei, following the JPX-Nikkei Index 400 and the JPX-Nikkei Mid and Small Cap Index.
The JPX-Nikkei Index Human Capital 100 will assess companies based on how well they address human capital issues, such as through increased wages and annual salaries -- which is a growing challenge for many Japanese firms. Inclusion in the index may improve a company's market standing, potentially encouraging more companies to adopt human capital-driven strategies.
Companies from the JPX-Nikkei Index 400 will be ranked according to the Comprehensive Human Capital Score, with the top scorers making it onto the new list.
This score reflects human capital assessments by ESG Book, a Germany-based provider of environmental, social and governance (ESG) data. Companies receive extra points for meeting each of the following conditions: if the growth rate of the average annual salary of employees is in the top 10% of the JPX-Nikkei Index 400; if the growth rate of operating profit per employee is in the top 10% of the JPX-Nikkei Index 400; and if the ratio of female managers is 30% or more.
The 100 constituent stocks at the time of launch can be found on the official Nikkei Indexes page.
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