The Sustainability Standards Board of Japan (SSBJ) has issued its first sustainability disclosure standards, which align with the ISSB's IFRS Sustainability Disclosure Standards. The SSBJ Standards aim to improve corporate sustainability reporting in Japan.

The release of new standards is expected to push private market firms, asset managers, and impact investors to improve ESG reporting, align investment strategies with compliance requirements, and make more informed decisions using standardized sustainability data.

Let’s explore the SSBJ standards in detail. 

About the SSBJ standards

On March 29, 2024, the SSBJ issued the Exposure draft for the SSBJ standards. After reviewing feedback and making changes, the SSBJ recently released its final version. These standards include three main parts: 

• Universal Sustainability Disclosure Standard “Application of the Sustainability Disclosure Standards” (hereinafter referred to as “the Application Standard”)

• Theme-based Sustainability Disclosure Standard No. 1 “General Disclosures” (hereinafter referred to as “the General Standard”)
• Theme-based Sustainability Disclosure Standard No. 2 “Climate-related Disclosures” (hereinafter referred to as “ the Climate Standard”)

Yasunobu Kawanishi, Chair of the SSBJ, stated:

“We would like to express our sincere gratitude to everyone who has responded to our Exposure Drafts. Based on the feedback received on the Exposure Drafts, we reduced even further potential differences between SSBJ Standards and ISSB Standards. A few differences remain, but we are committed to monitoring how disclosure practices in Japan and overseas develop in the coming years and to considering changing SSBJ Standards if determined necessary. We hope many entities apply SSBJ Standards, and we welcome any feedback from entities that have applied SSBJ Standards.”

Key aspects of the SSBJ standards

• The SSBJ designed its standards to align with the ISSB’s IFRS Sustainability Disclosure Standards ("ISSB Standards") to ensure consistency and comparability on a global scale. This alignment creates a unified approach to sustainability reporting, making it easier for organizations to disclose relevant information in a standardized way.
• The SSBJ has split the ISSB’s IFRS S1 standard into two separate standards for easier use. 
   
  • The first is the General Standard, which covers sustainability-related risks and opportunities disclosures. 
  • The second is the Application Standard, which outlines the basic requirements for preparing sustainability-related financial reports.
• Under the Japanese securities laws and regulations, the SSBJ Standards will eventually be required to be applied by entities that are listed on the Prime Market of the Tokyo Stock Exchange.
• The SSBJ Standards are only available in Japanese. However, for the convenience of English speakers, its overview is available in English. Additionally, the SSBJ will release the differences and table of concordance between ISSB Standards and SSBJ standards in English shortly. 

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