Quick Guide: Key Sustainability Disclosure Regimes: Japan: Sustainability disclosure standards

On 5 March 2025, the SSBJ issued its inaugural sustainability disclosure standards (the “SSBJ Standards”) which incorporate key elements of the sustainability disclosure standards published by the International Sustainability Standards Board (“ISSB”) – IFRS S1 and IFRS S2 (the “ISSB Standards”).

The SSBJ Standards comprise three key documents: 

• the Application Standard, which tracks the fundamental matters under IFRS S1, outlining basic requirements for sustainability reporting; 
• the General Standard, which is aligned with the core content under IFRS S1, focusing on sustainability-related risks and opportunities; and 
• the Climate Standard, which mirrors IFRS S2, detailing climate-related disclosures.

Since March 2023, the Financial Services Agency (“FSA”) has mandated sustainability-related disclosure in the statutory annual securities report by all listed companies in Japan by following the four pillars recommended by the Task Force for Climate-related Financial Disclosures (“TCFD”). As the  ISSB assumed responsibility for the TCFD in 2023, the issuance of the SSBJ Standards is aimed to ensure the international comparability in sustainability-related financial disclosures. 

In July 2025, the Japanese regulators provided a definitive roadmap for mandatory sustainability disclosures and third-party assurance, phasing in requirements for the country's largest listed companies beginning with the fiscal year ending March 2027 (see here (Japanese language)).  

According to the proposal,

• companies with market capitalisation of JPY3 trillion or more will be subject to mandatory disclosure requirements from the fiscal year ending March 2027, and mandatory third-party assurance on such disclosure from the fiscal year ending March 2028;
• companies with market capitalisation of JPY1 trillion or more will be subject to mandatory disclosure requirements from the fiscal year ending March 2028, and mandatory third-party assurance on such disclosure from the fiscal year ending March 2029; and
• companies with market capitalisation of JPY500 billion or more will be subject to mandatory disclosure requirements from the fiscal year ending March 2027, and mandatory third-party assurance on such disclosure from the fiscal year ending March 2028.

The SSBJ Standards track the four pillars under TCFD’s Recommendations and require companies to disclose the following information on governance; strategy; risk management; and metrics and targets (see Quick Guide on TCFD). 

Companies are required to integrate this information into their financial reports and link it to the improvement of long-term corporate value. 

A "safe harbour" provision to disclosure guideline will also be introduced to protect companies from liability for inaccuracies in Scope 3 greenhouse gas (“GHG”) emissions data, provided they can demonstrate a reasonable internal process for estimation.

The third-party assurance required for each category of listed companies is limited to Scope 1 and Scope 2 GHG emissions alongside information on governance and risk management processes in the first two years of the mandate. 

The SSBJ Standards adopt the concept of single materiality and require disclosure of information related to a company's financial performance. This allows companies to prioritise their reporting efforts by identifying sustainability issues that have a significant financial impact. 

However, information on social impacts is also recommended to be disclosed if it has a financial impact.

The final version of the SSBJ Standards will be issued in 2025, and detailed implementation guidelines will be released before its application in the fiscal year ending March 2027. 

The Japanese regulators continue to deliberate on various topics by taking into account the international trends, including:

• the applicability of mandatory disclosure and third-party assurance requirements to listed companies with market capitalisation of less than JPY500 billion;
• the expansion of the third-party assurance scope for the third year and beyond;
• the limitation of eligible assurance providers to auditors, given the connectivity to financial statements, or alternatively allowing other qualified bodies to foster competition and address resource constraints; and
• broader legal reforms to sustainability disclosure liability frameworks beyond the current “safe harbour” provision.

• Press release: SSBJ issues Inaugural Sustainability Disclosure Standards to be applied in Japan
• About SSBJ Standards
• Interim report on sustainability disclosure and assurance by the FSA working group (Japanese only)
• SSBJ website

• Blog post - Japan consults on adopting its sustainability disclosure standards modelled after the ISSB standards
• Blog post - Japan issues its sustainability disclosure standards which incorporates key elements of the ISSB standards
• Quick Guide on ISSB standards
• Quick Guide on TCFD