The Japan Business Federation, or Keidanren, wants women in more than 30% of executive positions at big companies by 2030.
It is the first time Keidanren has announced a long-term target. Keidanren says boosting the number of women in senior management will create a society where diverse career options are open to women.
Japan women accounted for 5.2% only of executives at all listed companies in 2019 despite outnumbering men in a population of 127 million. Japan's current female-to-male ratio is 100 females to 94.8 males.
Keidanren said "it is only natural" women should account for half of all leadership positions.
Among the 100 leading companies listed on the first section of the Tokyo Stock Exchange, 12.9% only of board-level positions were held by women as of July.
The number of women in managerial roles is low compared with other developed countries such as the U.S. and UK. In the U.S. and Sweden, 40% of managerial positions are held by women, based on data from the International Labor Organization. In the U.K. and France, the it is more than 30%.
And based on corporate leadership, Japan is last among advanced economies, as reported by the World Economic Forum in its gender-gap rankings.
"Given Japan's current social structure, we cannot realistically move forward (on women's participation in the workforce) without setting a clear target," according to Keidanren chairperson Hiroaki Nakanishi, who is also chairperson of Hitachi, Ltd.
"We have decided to set a target despite concern it may be too ambitious because increasing women in the workforce is important in terms of inclusivity and diversity in businesses."
"Keidanren's numerical target on female executives is extremely significant," said Michiko Tadamatsu, founder of the 30% Club's Japan chapter and senior manager at Deloitte Tohmatsu Consulting LLC.
"It's as if a big mountain has moved. It will likely have a big impact given that Keidanren is made up of major listed companies. We will fully support its initiative. With more investors looking at corporate value in terms of environment, social and governance criteria, there is a great momentum to boost the number of female executives."
Analysts said the reason for the gender gap in Japan board rooms is the centuries-old practice of basing an employee's promotion and pay on seniority or length of service.
This means women will continue to lag men in terms of promotions or perks if they take time off for having and caring for children.