Insights 22

SSBJ Standards finalized - Complete version! Detailed explanation of the sustainability disclosure obligation and key points

table of contents

On March 5, 2025, the Sustainability Standards Board of Japan (SSBJ) published the Sustainability Disclosure Standards (hereinafter referred to as the SSBJ Standards), which stipulate the Contents of statutory disclosures in Japan. These are the June versions of the International Financial Reporting Standards (IFRS®) S1 "General Requirements for Disclosure of Sustainability-Related Financial Information" and IFRS S2 "Climate-Related Disclosures" (hereinafter collectively referred to as the IFRS-S Standards), which were established by the International Sustainability Standards Board (ISSB) in June 2023. This article explains the key points of the SSBJ Standards and the actions that will be required of companies in the future.

Background to the development of the standard

In Japan, the Corporate Governance Code was revised in June 2021, and for the first time, efforts to address sustainability Issue were mentioned. In January 2023, a new section for "Attitudes and Initiatives Regarding Sustainability" was added to securities reports and other documents. The new SSBJ standards play a role in ensuring comparable disclosure Contents in securities reports. The timing of the start of application of the standards, who they apply to, and the form of assurance to ensure the accuracy of disclosed information are currently being discussed by the Financial Services Agency's Financial System Council's "Working Group on Disclosure and Assurance of Sustainability Information" and its subordinate "Expert Group on Assurance of Sustainability Information."

The SSBJ was established in July 2022 under the Financial Accounting Standards Foundation (FASF) as a mirror organization of the ISSB , and has been working on Create a Japanese version of the standards. Although the IFRS-S standards will be adopted in principle, the committee, which is made up of accountants, corporate and Financial Institution personnel, and university professors, has been debating how much of the originality should be incorporated to take into account the actual circumstances of Japanese companies. Compared to the public draft issued in March 2024, the final standards give priority to ensuring consistency with IFRS-S standards.

General collection and analysis of ESG data
Zeroboard ESG
Solutions that can withstand legal sustainability disclosures in Japan and overseas, such as European CSRD, securities reports, and SSBJ
View Details

overview of SSBJ Standards

Structure of the SSBJ Standards

IFRS-S standards currently consist of two parts, S1 and S2, while SSBJ standards consist of three parts: universal standards and 2 thematic standards (general disclosure standards and climate-related disclosure standards). IFRS S1 specifies the basic matters for Create disclosures and the matters to be disclosed regarding risks and opportunities of sustainability Issue in general (SSBJ calls this "core content"). For ease of understanding, SSBJ standards have been separated into the first half (SSBJ calls it "universal standards") and the latter half, core content (Figure 1).

Figure 1 : Structure of IFRS-S and SSBJ standards
Zeroboard Create based on SSBJ's "Announcement" ( March 5 , 2025)

Universal Standard

Among the items of the universal standard (Table 1), particular attention should be paid to the fact that, in principle, the disclosures must cover the same reporting period as the financial statements and be reported at the same time as the financial statements (transitional measures will be discussed later). If new information for the reporting period or transactions or other events that occurred up to the approval date could affect the decision-making of primary users between the reporting period and the approval date, disclosure updates are required.

Table 1: Items of the SSBJ Universal Standards
Zeroboard Create based on SSBJ's "Universal Standard for Sustainability Disclosure"

General Disclosure Standards

2 of SSBJ's thematic standards are inherited from the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and are a framework for disclosing four items related to sustainability-related financial risks and opportunities: "governance," "strategy," "risk management," and "metrics and targets." The general disclosure standard applies to sustainability Issue for which no thematic standard exists, and currently this standard is applied to disclosure of various environmental aspects other than climate change, as well as labor, human rights, etc.

Regarding governance, the report requires disclosure of the titles and roles of the organizations and individuals responsible for overseeing strategies to address risks and opportunities, as well as a judgment on whether they have the appropriate capabilities to oversee the strategy. In addition, the report requires disclosure of details of the process for obtaining information to assess risks and opportunities, how the information is considered in corporate strategies, including trade-offs, how related targets are Settings and progress is overseen, and how the information is included in compensation policies.

Regarding strategies, companies are required to identify risks and opportunities that are reasonably expected to affect the short, medium and long-term prospects of their companies, and disclose their impact on their current and future business models and value chains, as well as their quantitative or qualitative impact on the company's financial position, financial performance and cash flows. An assessment of the company's resilience to uncertainties arising from risks to its strategies and business models is also required.

In addition, disclosure is required regarding how scenario analysis is used to identify risks, how the likelihood and scale of risks are evaluated, and the degree of integration into the overall risk management process, etc. For indicators and targets, reference sources, milestones, and time series analysis of performance are required (Table 2).

governance	The name of the governance body responsible for oversight, and the title of the individual responsible The roles, rights and obligations given to the institution or individual Appropriate skills and competencies for institutions and individuals to oversee strategies to address risks and opportunities How and how often do you obtain information about risks and opportunities? How do you consider sustainability-related risks and opportunities in your oversight (including trade-offs)? How do you oversee related goal Settings and monitor progress? How relevant metrics are included in remuneration policies Management's role in processes, controls and procedures
strategy	Risks and opportunities that are reasonably expected to affect the company's prospects, their time frames, definitions of short, medium and long term, and their relationship to the planning period used for strategic decision making The impact of risks and opportunities on current and future business models and value chains, and areas where risks and opportunities are concentrated The impact on the company's financial position, financial performance and cash flows How have risks and opportunities been addressed in strategy and decision-making? Evaluating the resilience of strategies and business models
Risk Management	Information on inputs, etc. (data sources, scope of business, etc.) How to use scenario analysis, if any, for risk identification How to assess the nature, likelihood and magnitude of risk impact How to monitor risk The process of identifying, evaluating, prioritizing and monitoring opportunities The extent to which the process is integrated into the overall risk management process and how it is used; the name of the body responsible for oversight, and the job title of the individual responsible;
Indicators and goals	Disclose the metrics required by applicable disclosure standards Disclose the metrics the company uses to measure and monitor risks, opportunities and related performance. Major Industry-specific indicators related to companies If information sources other than the SSBJ standards are used, the source and its indicators shall be disclosed. If a company discloses a metric it has Create, the definition and type of metric, information about any third-party certification of the metric, and the method and inputs used to calculate the metric Disclosure of performance trends and historical analysis for each of the targets Settings to monitor progress and targets required by law

Table 2: Main items of the SSBJ General Disclosure Standards Reference: SSBJ "Sustainability Disclosure Topic Standards No. 1"

Climate-related Disclosure Standards

In addition to the general disclosure standards, strategies to address climate change-related risks and opportunities will require disclosure of climate change mitigation and adaptation efforts, transition plans to achieve climate-related targets, the need to address impacts identified through scenario analysis, and the ability to respond to changes and uncertainties in current or future business models.

Regarding indicators and targets, greenhouse gas (GHG) emission amount are classified into Scope 1, 2, and 3 based on the basic GHG Protocol, and Scope 3 is broken down into 15 categories, and Financial Institution are required to disclose financed emissions (emission amount of investments and loans). In addition, explanations are required on the amount and percentage or scale of assets and business activity related to risks and opportunities, internal carbon prices, reflection in executive compensation, and carbon credits with usage plans if the GHG emission reduction target is net (Table 3).

governance	Responsibility and description for climate-related risks and opportunities Appropriate skills and competencies for supervision How and how often to obtain information on risks and opportunities Supervise goal Settings and progress management (including reflecting this in compensation) Management's role in processes, controls and procedures (Avoid unnecessary repetition)
strategy	Consider applicability by referring to cross- Industry indicators and other Industry -specific indicators set out in the " Industry -Specific Guidance for the Application of IFRS S2" Changes or anticipated changes to business models to address risks and opportunities Direct and indirect mitigation and adaptation efforts Climate-related transition plan Contents Using scenario analysis to assess climate resilience Information on inputs used in the analysis, time frame, business scope, and assumptions of the analysis The impact, if any, of the results of the analysis on the assessment of the strategy and business model and the need to address it; the significant uncertainties considered, and the company's ability to adjust its strategy and business model;
Risk Management	The process used to identify, assess and monitor risks and opportunities The inputs and parameters (data sources) used Use of scenario analysis and method How to assess the nature, likelihood and magnitude of risk Prioritization of climate-related risks relative to other risks Degree of integration into the overall risk management process (Avoid unnecessary repetition)
Indicators and goals	GHG emission amount divided into Scope 1, 2 and 3 emission amount GHG emission amount measured according to the GHG Protocol and those measured using methods other than the GHG Protocol (such as the Global Warming Countermeasure ) Contractual instrument information required to understand whether Scope 2 is location-based emission amount+ market-based emission amount Scope 3 will be broken down by category and disclosed. Disclose information about financed emissions if involved in asset management, commercial banking, or insurance Amount, percentage or size of assets and business activity related to risks and opportunities How the internal carbon price will be applied, and what the expected price will be Percentage of executive compensation tied to climate metrics For any carbon credits you plan to use, the method and extent to which they will be relied upon to achieve your targets, the name of the third-party scheme that has been verified and certified, the type of credit, and its reliability and sufficiency

Table 3 : Main items of the SSBJ climate-related disclosure standards
Zeroboard Create based on SSBJ's "Sustainability Disclosure Topic Standard No. 2 "

Differences and Consistency with IFRS-S Standards

The SSBJ standard largely follows the Contents of the IFRS-S standard, but includes some additional provisions tailored to the circumstances of Japanese companies and information users. For example, with regard to GHG Scope 2 emission amount in the climate-related disclosure standard, calculations based on the market standard (based on the Emission intensity of the contracted electricity menu) in the GHG Protocol are permitted, and for Scope 3, as mentioned above, disclosure of a breakdown by 15 categories is required.

In relation to climate-related physical risks and opportunities and transition risks, IFRS-S standards require disclosure of numerical values and percentages of assets or business activity, but SSBJ standards also allow disclosure of "information on size" instead of quantitative data. In addition, if compensation-related evaluation items are incorporated into executive compensation but it is not possible to distinguish between climate-related and other evaluation items, it is possible to disclose the entire evaluation items.

The exposure draft of the SSBJ standards had striking differences from the IFRS-S standards, but the final standards have a number of points where consistency has been prioritized. Unlike the GHG Protocol, when using calculation methods that are required to be reported to the government under the Act on Promotion of Global Warming Countermeasures (Global Warming Countermeasures Global Warming Countermeasure), even if the calculation period does not match the reporting period of sustainability-related financial disclosures (and related financial statements) based on the SSBJ standards, it is required to align them with the reporting period of the SSBJ disclosures (estimated calculations are permitted). Requirements in the exposure draft, such as resilience assessments for each reporting period and disclosure of total GHG emission amount Scope 1, 2, and 3, have been deleted. * 1

Both mandatory and optional		If otherwise provided by law, such law shall take precedence.
Mandatory application	Added options unique to SSBJ standards (climate standards)	For Scope 2 GHG emission amount, you may disclose market-based emission amount in lieu of the contractual instrument information required by IFRS-S2. In relation to climate-related transition risks, and climate-related physical risks and opportunities, companies may disclose information on the size of their assets or business activity instead of figures and percentages of those assets or business activity. If compensation-related items are incorporated into executive compensation but are combined with other items in the compensation package such that the portion of the compensation package that relates to climate-related items cannot be separately identified, the entire package may be disclosed, including the climate-related items. The definitions in the SSBJ standards (based on the SASB standards) can be used for activity related to asset management, commercial activity , and insurance related to financed emissions. Information regarding absolute amounts of financed emissions and gross exposures disaggregated using the Global Industry Classification Standard (GICS) may not be disclosed for the time being
	Additional applicable standards for IFRS-S	Provisions regarding units of display for indicators The date on which the sustainability-related financial disclosures were approved for publication and the name of the approving organization or individual If disclosure is made in accordance with the SSBJ Standards based on legal requirements, the name of the relevant law
	Additional climate standards for FRS-S	Provisions regarding units for displaying GHG emissions If an entity chooses to measure GHG emission amount using methodologies other than the GHG Protocol (2004), and those emission amount are material, then disclosure of the breakdown of the emission amount measured using methodologies other than the GHG Protocol from those measured using methodologies other than the GHG Protocol. Disclosure of Scope 3 GHG emission amount breakdown by category
Voluntary application		There are differences in where information is provided, contemporaneous reporting, disclosure of comparative information, and transitional measures.

Table 4 : Main differences between SSBJ standards and IFRS-S standards
Zeroboard Create based on FSAF/IFRS Foundation "List of differences between SSBJ and ISSB standards"

Some global companies have expressed concern about the need to disclose information in accordance with both IFRS-S and SSBJ standards, but Sue Lloyd, Vice Chair of the ISSB, who visited Japan in April 2025, stated that "The publication of the ISSB Standards, which are designed to produce results that are functionally consistent with the ISSB Standards (author's note: synonymous with IFRS-S Standards), will mark a significant milestone in promoting global comparability of sustainability-related disclosures for capital markets" * 2 , and it is likely that disclosures made under the SSBJ Standards will be deemed to be in line with international standards.

Scope and timing of application of SSBJ standards

At a meeting of the Financial System Council's Working Group on Disclosure and Assurance of Sustainability Information in May 2024, the secretariat (FSA) proposed that sustainability-related financial information disclosure based on the SSBJ standards be applied to Prime-listed companies with a market capitalization of 3 trillion yen or more from the fiscal year ending March 2027, and that it would be mandatory for companies with a market capitalization of 1 trillion yen or more 1 year later, and for companies with a market capitalization of 500 billion yen or more from the fiscal year ending March 29 , and thereafter expand the scope to all Prime-listed companies, which currently number more than 1,600 companies, and discussions are proceeding in this direction. The proposal also stipulates that third-party assurance of disclosed information will be mandatory 1 year after disclosure becomes mandatory (Figure 2 ) * 3 .

Figure 2 : Proposed implementation schedule for SSBJ standards
Zeroboard Create based on the " 5 Working Group on Disclosure and Assurance of Sustainability Information" (December 2, 2024)

On the other hand, the adoption of transitional measures allowed in the IFRS-S standard is being considered, and "two-stage disclosure" is being accepted in the first year of the obligation. Two-stage disclosure refers to a method in which the first stage of disclosure is made in the annual report, and then sustainability-related matters are additionally disclosed in an amendment to the annual report or a semi-annual report. The Financial System Council has also expressed the opinion that the deadline for submitting the annual report should be delayed by one month to four months after the settlement date, and that the period for two-stage disclosure should be 2 to 3 years or even indefinitely instead of 1 year.* 4

Introduction of a third-party guarantee system

As the application of IFRS-S standards and the EU Corporate Sustainability Reporting Directive (CSRD) progresses internationally, in order to ensure the accuracy of disclosed information and increase the usefulness of information to investors and other users, the International Auditing and Assurance Standards Board (IAASB) has established the assurance standard for sustainability disclosure (ISSA5000), and the International Ethics Standards Board for Accountants (IESBA) has established the International Ethics Standard for Sustainability Assurance (IESSA).

In Japan, the Financial System Council is also considering the introduction of a third-party assurance system for SSBJ disclosures based on consistency with ISSA5000 and IESSA. The level of assurance will be "limited assurance," and in the future, consideration will be given to whether to transition to "reasonable assurance" based on the state of affairs in practice and overseas trends (Figure 3). The scope of assurance will be limited to disclosure of GHG emission amount Scope 1 and 2, governance, and risk management for the first two years after the obligation to provide assurance is in place, and from the third year onwards, consideration will be given to international trends. As scope 3 GHG emission amount depend on value chain data, safe harbors (scope of not being held liable for violations of laws and regulations) for assurance providers are also being discussed.

Figure 3: Concepts of limited assurance and reasonable assurance Source: Ministry of the Environment "Calculation and Verification of Greenhouse Gas emission amount"

The assurance services are expected to be provided by auditing firms or other assurance service providers registered under the new registration system, but current discussions indicate that the provider may also use external experts if necessary . * 6

What companies need to do to comply with SSBJ standards

For the time being, the application of the SSBJ standards will be limited to large companies, so other listed companies have plenty of time to prepare. However, some companies operating overseas will likely aim to comply with the IFRS-S standards as soon as possible. It will be necessary to build and promote a management system that oversees not only climate change but also sustainability-related financial risks and opportunities in general. At the same time, there will be a demand for speed, accuracy, and process recording of information collection and processing in order to accommodate simultaneous disclosure with financial reports and third-party assurance.

It has been decided that the IFRS-S standards will expand their thematic criteria to include areas such as biodiversity and human capital in the future, and SSBJ will also revise its standards accordingly. Methodologies such as scenario analysis for Issue other than climate change have not yet been established worldwide, so companies are required to accumulate practical experience and share their experiences.

With the disclosure of GHG Scope 3 emission amount and their breakdown becoming mandatory in accordance with the SSBJ standards, small and medium-sized enterprises in the value chain of listed companies will be required to accurately grasp and provide at least their Scope 1 and 2 emission amount at a minimum. All companies will likely be required to gradually ensure the accuracy and timeliness of data by using systems, build seamless management systems, and prepare to handle ESG data other than GHG.

The importance of double materiality remains unchanged

IFRS-S and SSBJ standards disclose financial risks and opportunities based on a single materiality for investors, but even if this becomes mandatory, it does not eliminate the need for voluntary sustainability reporting using the Global Reporting Initiative (GRI) standards based on the significant positive and negative impacts (impact materiality) that a company has on the environment, society, and the broader economy, or integrated reporting that asks how a company creates value from the 6 types of capital (resources) on which it depends: financial, Manufacturing , intellectual, human, social/relationship, and natural.
The SSBJ standards also state that in addition to Industry-specific guidance on the application of SASB standards and IFRS S2, they also take into consideration the applicability of the GRI Standards and the European Sustainability Reporting Standard (ESRS) set out in the CSRD. The CSRD is expected to significantly reduce the scope and Contents of disclosure with the announcement of its omnibus format in February 2025, but it maintains the principle of double materiality . * 7

In fact, neither IFRS-S nor SSBJ standards clearly indicate on what basis and where sustainability-related financial risks and opportunities arise. Experts and investors take the view that financial risks and opportunities are a result of dependencies on various resources and the impacts of a company's activity. 1, paragraph 38, states that "the assessment of impact materiality and financial materiality [author's note: synonymous with single materiality] are interrelated," and asks companies to consider "the interdependence of these 2 aspects." * 8 Its implementation guidance also advises that "Because many impacts pose financial risks and opportunities, companies generally assess whether the identified impacts will result in significant financial consequences" (paragraph 91) * 9 (Figure 4).

In November 2024, the SSBJ and the GRI Standards Board (GSSB) signed a memorandum of understanding to explore ways to share the two disclosure frameworks. In response to this, the GRI has launched the "Impacts, Risks and Opportunities" (IRO) project to clarify the relationship between the two concepts and compile guidance, and I plan to participate in the discussions. When the IFRS® Foundation held its Integrated Thinking and Reporting Conference in Tokyo in April 2025, it mentioned that it would pursue the relationship between financial reporting (IFRS® standards) and IFRS-S standards, as well as the connection with the International Integrated Reporting (IR) framework absorbed by the IFRS® Foundation, and it is expected that a unified framework for corporate financial and non-financial disclosure will be formed in the future.

Figure 4: Relevance of each disclosure framework in identifying materiality Zeroboard Create

Cloud solutions that support sustainable management
Zeroboard

For detailed information and Contact us about the entire Service ,
Please check here.

<Source>
* 1) Financial Accounting Standards Board (FASF) / IFRS® Foundation, “List of Differences between SSBJ Standards and ISSB Standards,”March 31, 2025: www.ssb-j.jp/jp/wp-content/uploads/sites/ 6/ssbj_20250331_01.pdf
* 2) SSBJ, “SSBJ and ISSB confirm consistency between SSBJ standards and ISSB standards,” news release, March 31, 2025: www.ssb-j.jp/jp/news_release/402639.html
* 3) Financial Services Agency, “Agenda for the 2 Meeting of the Financial System Council Working Group on the Disclosure and Assurance of Sustainability Information,”May 14, 2024: www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/shiryou/20240514.html
* 4) Financial Services Agency, Financial System Council “Working Group on Disclosure and Assurance of Sustainability Information” (3 Meeting) Minutes, June 28, 2024: www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/gijiroku/20240628.html
* 5) Financial Services Agency, “Minutes of the Fourth Meeting of the Financial System Council Working Group on the Disclosure and Assurance of Sustainability Information,”October 10, 2024: www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/gijiroku/20241010.html
* 6) Financial Services Agency, Financial System Council "5 Working Group on Disclosure and Assurance of Sustainability Information" (Minutes), December 2, 2024: www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/shiryou/20241202/01.pd
* 7) In March 2025, the European Commission instructed the European Financial Reporting Advisory Group (EFRAG) to simplify the ESRS and make it interoperable with global sustainability reporting standards [Author's note: This is understood to mean IFRS-S and GRI standards], and has asked them to complete a revision proposal by the 10( www.efrag.org/sites/default/files/media/document/2025-03/Commissioner%20Albuquerque%20Letter%20to%20EFRAG%20March%202025.pdf ). EFRAG is calling for public comments on the elements of simplification until May 6. 1
* 8) European Commission (2023), Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/ 34/EU of the European Parliament and of the Council as regards sustainability reporting standards https://eur-lex.europa.eu/eli/reg_del/2023/2772/oj/eng
* 9) EFRAG (2024), EFRAG IG 1: Materiality Assessment Implementation Guidance www.efrag.org/sites/default/files/sites/webpublishing/SiteAssets/IG%201%20Materiality%20Assessment_final.pdf

Article author

Tomoo Machiba(Director of Zeroboard Research Institute)
After working as a reporter for the Asahi Shimbun, he is involved in supporting companies and governments in responding to sustainability strategies internationally. He was involved in revising guidelines at the GRI International Secretariat and led eco-innovation policy research at the OECD Directorate for Science, Technology and Industry. He is in charge of knowledge management of renewable energy technology data from around the world at the International Renewable Energy Agency (IRENA) and is involved in creating strategies and policies for green economy and climate change response at the UAE Federal Government. He is responsible for supporting technology transfer to developing countries as Deputy Director of the United Nations Climate Technology Centre and Network (CTCN), and returned to Japan in 2021. He served as a partner in charge of decarbonization and ESG at ERM, a foreign consulting firm, and became the director of Zeroboard Research Institute in August 2023. He will serve as a director of the Global Sustainability Standards Board (GSSB), a GRI advisory body, from January 2024 and as a member of the GHG Protocol TWG from March 2025. He graduated from the Department of Journalism, Faculty of Letters, Sophia University, and obtained a master's degree from the Institute of International Development Studies, University of Sussex, UK.