Japan is part of a wave of countries adopting ISSB’s framework for climate disclosure standards. In March 2025, the Sustainability Standards Board of Japan (SSBJ) released its inaugural disclosure standards. While Japan is still determining who will be required to report under the standards (and when), proposed timelines indicate that reporting for large listed companies could begin in 2027.
Japan is among more than 30 jurisdictions around the world that have adopted or are in the process of adopting the International Sustainability Standards Board (ISSB) framework for climate disclosure. In March 2025, following extensive public consultation, the Sustainability Standards Board of Japan (SSBJ) issued its inaugural disclosure standards, which incorporate IFRS S1 and IFRS S2. Japan’s Financial Services Agency (FSA) has not yet determined who will be required to comply with the SSBJ standards, or when. However, a proposed timeline is under consideration.?
In this article, we’ll provide an overview of Japan’s sustainability disclosure standards, including potential scope and timeline for reporting.?
Background: What are the ISSB Standards??
Two standards, IFRS S1 and IFRS S2, were designed to create a global baseline for climate disclosure.
Since the ISSB finalized its two climate disclosure standards—General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and Climate-related Disclosures (IFRS S2) in 2023, more than 30 jurisdictions around the world have fully or partially incorporated them.?
The standards are built on the framework created by the Task Force on Climate-Related Financial Disclosures (TCFD), which has shaped climate reporting practices and regulations over the past decade. IFRS S1 and S2 draw on other well-known standards, including those from the Climate Disclosure Standards Board (CDSB) and the Sustainability Accounting Standards Board (SASB). They also provide options for companies to integrate disclosures based on the European Sustainability Reporting Standards (ESRS) and the Global Reporting Initiative (GRI), as long as those disclosures are designed to meet investor needs.
The ISSB is an independent standard setter—it does not impose requirements on any jurisdiction or company. Its standards are designed to serve the markets and to provide a structure for consistent and comparable regulations across borders.?
What Do Japan’s SSBJ Standards Require??
The new ISSB-aligned standards follow existing TCFD reporting.?
For Japanese companies, sustainability reporting is not a new concept. A by the Financial Services Agency (FSA) requires all listed companies in Japan to provide sustainability disclosures in annual securities reports, based on the four pillars of the Task Force on Climate-related Disclosures (TCFD), including metrics for Scope 1, 2, and 3 emissions. Prior to that, the Tokyo Stock Exchange mandated TCFD disclosure on a “comply or explain” basis. The TCFD sunsetted in 2024, transitioning to ISSB.?
In 2022, the country formed the Sustainability Standards Board of Japan (SSBJ), which was charged with developing national disclosure standards and contributing to the development of the ISSB’s global standards.?
The SSBJ issued in March 2025, a significant step in aligning with global norms. The SSBJ standards incorporate IFRS S1 and IFRS S2, calling on companies to report on all sustainability-related financial risks and opportunities, including Scope 1, 2, and 3 emissions.?
In its , the SSBJ explained: “In developing high-quality and internationally consistent sustainability disclosure standards, the SSBJ decided to align SSBJ Standards with the ISSB’s IFRS Sustainability Disclosure Standards. Accordingly, the SSBJ decided to incorporate all the requirements of ISSB Standards into SSBJ Standards and to add, when considered necessary, any jurisdiction-specific alternatives that entities can choose to apply.”
However, Japan’s FSA is still in the process of determining who will be required to comply with the new SSBJ standards, and when.?
Who will be required to comply with the SSBJ standards??
Reporting is currently voluntary, but expected to become mandatory.?
At this point, application of the SSBJ standards is still voluntary. However, the SSBJ developed the standards with the assumption that they would eventually become mandatory. In 2024, the FSA’s Working Group on Disclosure and Assurance of Sustainability-related Financial Information discussed a potential SSBJ timeline, which would phase in reporting for Prime Market-listed companies based on size. While the timeline is not final, it provides some indication of possible reporting deadlines.
Possible SSBJ Reporting Timeline for Listed Companies
- ?3T+ JPY in Market Cap: Annual Reporting Period ending March 2027
- ?1T+ JPY in Market Cap: Annual Reporting Period ending March 2028
- ?500B+ JPY in Market Cap: Annual Reporting Period ending March 2029
- All Other Listed Companies: Sometime in the 2030s
How Should Companies Prepare for SSBJ Reporting?
Although final requirements and timelines are still under review, companies can take concrete steps now to prepare for compliance with Japan’s SSBJ standards, particularly given their close alignment with IFRS S1 and IFRS S2. Early preparation will reduce implementation risk and support higher-quality, decision-useful disclosures.
1. Map Existing Disclosures to IFRS S1 and IFRS S2
Start by conducting a structured gap assessment against IFRS S1 and IFRS S2. This should include:
- Identifying where sustainability-related risks and opportunities are already disclosed (e.g., annual reports, integrated reports, TCFD disclosures)
- Mapping those disclosures to specific IFRS S1 and S2 requirements across governance, strategy, risk management, metrics, and targets
- Documenting gaps, inconsistencies, or areas that rely on qualitative narrative rather than measurable data
This exercise helps clarify the scope of work required and prioritizes remediation efforts ahead of mandatory reporting.
2. Build a Robust Emissions Data Foundation
While many Japanese listed companies already report Scope 1, 2, and 3 emissions, ISSB-aligned reporting requires a stronger focus on data accuracy, transparency, and traceability. Companies should:
- Review emissions calculation methodologies and emission factor sources for consistency and documentation
- Improve Scope 3 data collection by engaging priority suppliers and using more representative data where available
- Establish clear data ownership across sustainability, procurement, finance, and operations teams
A reliable emissions data foundation is critical not only for disclosure but also for risk assessment, target-setting, and future assurance engagements.
3. Integrate Climate Risks Into Financial and Enterprise Risk Processes
IFRS S1 and S2 emphasize the financial relevance of sustainability information. To prepare, companies should:
- Identify climate-related risks and opportunities that could reasonably affect financial performance, position, or future prospects
- Align climate risk assessments with existing enterprise risk management (ERM) and financial planning processes
- Begin linking emissions, transition risks, and physical risks to financial impacts where feasible
This integration supports disclosures that meet investor expectations and regulatory intent.
4. Establish Governance, Controls, and Documentation
As sustainability reporting moves toward the same level of scrutiny as financial reporting, companies should begin formalizing internal controls. Key steps include:
- Defining roles and responsibilities for data collection, review, and approval
- Documenting assumptions, methodologies, and estimates used in climate and emissions reporting
- Preparing for future third-party assurance by ensuring data is auditable and reproducible
Taking these steps early reduces the burden of future compliance and supports consistent reporting over time.
5. Develop a Phased Implementation Roadmap
Given the likelihood of phased adoption based on company size, organizations should create a multi-year roadmap that aligns with anticipated reporting deadlines. This roadmap should:
- Prioritize high-impact disclosure areas first (e.g., emissions, governance, material climate risks)
- Sequence improvements to data systems and processes over multiple reporting cycles
- Account for evolving regulatory guidance and assurance expectations
A phased approach allows teams to move from baseline compliance toward more mature, integrated sustainability reporting.
Preparing for ISSB-Aligned Climate Disclosure in Japan
While Japan is still ironing out the details of mandatory application of its SSBJ standards, listed companies can expect to report in close alignment with IFRS S1 and S2 as soon as 2027. Establishing a reliable system now for collecting and calculating emissions data will streamline the transition to SSBJ reporting and prepare businesses for compliance with other disclosure standards around the world.?
