JP Sustainability Standards Board of Japan (SSBJ) Sustainability Disclosure Standards
ENFORCEMENT TIMELINE
Final standards published end of March 2025 (phased mandatory application for Prime Market companies expected from the fiscal year ending March 2027)
Overview
The Sustainability Standards Board of Japan (SSBJ), established under the Financial Accounting Standards Foundation (FASF), develops sustainability disclosure standards for Japanese companies. The standards are designed to align with IFRS S1 (General Requirements) and S2 (Climate-related Disclosures) issued by the International Sustainability Standards Board (ISSB), while reflecting Japan's legal system and business practices as a "Japanese version" of the disclosure standards. The Financial Services Agency has indicated a policy of phasing in mandatory disclosure based on these standards in annual securities reports for companies listed on the Prime Market of the Tokyo Stock Exchange.
Enforcement Timeline
July 2022: The Sustainability Standards Board of Japan (SSBJ) is established.
March 2024: SSBJ publishes exposure drafts of the universal standard and the thematic standard on climate.
End of March 2025 (planned): The final standards are published.
Fiscal year ending March 2027 (planned): Mandatory application begins in annual securities reports for Prime Market companies with a market capitalization of 3 trillion yen or more.
Fiscal year ending March 2028 (planned): The scope of mandatory application expands to Prime Market companies with a market capitalization of 1 trillion yen or more.
Business Impact
Companies listed on the Prime Market, and the companies that make up their supply chains, will be required to accurately calculate and obtain third-party assurance for greenhouse gas emissions not only from their own direct and indirect emissions (Scope 1 and 2) but across their entire supply chain (Scope 3, particularly Category 1 purchased goods and services). Because disclosure will be mandatory in the annual securities report, a statutory disclosure document, errors or omissions in sustainability information carry a direct risk of being treated as a false statement under the Financial Instruments and Exchange Act, along with potential breach of directors' duty of care. Prime Market companies are also rapidly moving to exclude from their procurement any suppliers that cannot provide emissions data or that show insufficient progress on decarbonization, in order to meet their Scope 3 reduction targets.