The Sustainability Standards Board of Japan (SSBJ) has unveiled its inaugural sustainability disclosure standards, closely aligned with ISSB’s IFRS Sustainability Disclosure Standards to ensure international comparability.
Three Key Standards Introduced
The framework introduces three essential disclosure standards: General Disclosures, Climate-related Disclosures, and an Application Standard, guiding businesses on sustainability-related risks and opportunities.
Future Regulatory Implementation Anticipated
These standards are expected to apply to companies listed on the Tokyo Stock Exchange’s Prime Market, reinforcing Japan’s commitment to transparent ESG reporting.
SSBJ Enhances Corporate Sustainability Reporting
The SSBJ has officially launched its Sustainability Disclosure Standards (SSBJ Standards) to improve corporate sustainability reporting in Japan. This milestone signifies a major step toward more transparent and globally consistent ESG disclosures.
The newly issued standards include three fundamental requirements:
- Application of the Sustainability Disclosure Standards – Outlines general requirements for sustainability-related disclosures.
- General Disclosures – Covers core sustainability risks and opportunities, aligning with the ISSB’s IFRS S1 framework.
- Climate-related Disclosures – Establishes reporting guidelines on climate risks, modeled after IFRS S2.
By aligning with ISSB’s IFRS Sustainability Disclosure Standards, these regulations enhance international comparability, helping Japanese corporations meet global investor expectations while accommodating local regulatory considerations.
Strengthening Japan’s ESG Framework
Established in July 2022, the SSBJ was created to develop sustainability reporting standards and support the evolution of international disclosure practices. Japan’s approach mirrors the ISSB’s global framework, ensuring that companies listed on the Tokyo Stock Exchange’s Prime Market comply with both domestic and international sustainability requirements.
SSBJ Chair Yasunobu Kawanishi emphasized the significance of industry feedback in refining these standards:
“We would like to express our sincere gratitude to everyone who has responded to our Exposure Drafts. Based on the feedback received, we have reduced further potential differences between SSBJ Standards and ISSB Standards. A few differences remain, but we are committed to monitoring how disclosure practices develop in Japan and internationally.”
Although the SSBJ Standards are currently available only in Japanese, an English-language overview, concordance tables, and details on key differences from ISSB Standards will be published soon.
Global Endorsement for SSBJ’s Standards
The ISSB has welcomed Japan’s move toward unified sustainability reporting. ISSB Vice Chair Sue Lloyd expressed strong support for this initiative, stating:
“The ISSB warmly welcomes the SSBJ’s basic policy to align with ISSB Standards to ensure international comparability of disclosures. We look forward to continued engagement and collaboration with the SSBJ and Japan’s Financial Services Agency (JFSA) as they consider the application of SSBJ Standards.”
Japan’s adoption of ISSB-aligned reporting frameworks marks a significant advancement in its sustainable finance landscape, strengthening corporate transparency and competitiveness in global markets.
As sustainability disclosures increasingly shape investment decisions, Japan’s commitment to standardized ESG reporting reinforces its role as a leader in corporate governance and responsible business practices.