Japan launches consultation on ISSB-based disclosure standards

April 18, 2024|Written by Katy Lee|Sustainability Standards Board of Japan, Japanese Financial Services Agency

The Sustainability Standards Board of Japan (SSBJ) is seeking feedback on its plan to introduce disclosure standards for major companies, in the latest push towards mandatory reporting in one of Asia’s leading economies.

The SSBJ standards are based on those of the International Sustainability Standards Board (ISSB), the initiative launched in 2021 to create a global baseline for environmental financial disclosures that can be used by companies, governments and investors alike.

The Japanese standards include certain “jurisdiction-specific options” such as the ability to report information for a different period from that covered by the company’s financial statements in some circumstances.

“We are interested in hearing the views from market participants, in particular, the need for such jurisdiction-specific options,” SSBJ chair Yasunobu Kawanishi said in a statement.

The Japanese board has released a document setting out the differences between its drafts and the ISSB standards, including details on how companies should report their greenhouse gas emissions if they are subject to the Japanese Act on Promotion of Global Warming Countermeasures, one of Japan’s central climate laws.

At the request of Japan’s Financial Services Agency (FSA), the standards have been developed with a view to the final version eventually becoming mandatory for companies listed on Tokyo’s “prime” market – those interacting with international and institutional investors.

The board is running a consultation on three drafts until 31 July: a universal sustainability disclosure standard and two theme-based standards for general disclosures and climate related disclosures.

“The Exposure Drafts incorporate all requirements in IFRS S1 and IFRS S2,” Kawanishi said, referring to the International Financial Reporting Standards’ general requirements for disclosing sustainability-related information (S1) and those for climate-related disclosures (S2).

The drafts add to a fast-developing landscape of sustainability disclosure requirements for Japanese companies, many of which are therefore already having to adapt to similar measures in order to operate in the EU, US and elsewhere.

The Tokyo Stock Exchange revised its corporate governance code in 2021 to require companies listed in its prime segment to begin providing information in line with the Task Force on Climate-related Financial Disclosures.

The FSA meanwhile began implementing rules last year requiring all listed companies to include a section on sustainability-related information in their annual filings, covering strategy, governance, risk management and targets.

This page was last updated April 19, 2024

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