Insights 2025.04.22

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 set out the Contents of statutory disclosures in Japan. These are the Japanese versions of International Financial Reporting Standards (IFRS®) S1 "General Requirements for Disclosure of Sustainability-Related Financial Information" and June 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 responses that companies will be required to make in the future.

Download the "Easy to understand SSBJ Standards Book" here↗

Background to the development of the standard

In Japan, the Corporate Governance Code was revised in June 2021, and for the first time, it mentioned efforts to address sustainability Issue. In January 2023, a new section for describing "Sustainability-related principles and initiatives" was added to securities reports (annual reports). The new SSBJ standards serve to ensure comparable disclosure Contents to annual reports. The Financial Services Agency's Financial System Council's "Working Group on Sustainability Information Disclosure and Assurance" and its subordinate "Expert Group on Sustainability Information Assurance" are currently discussing the timing of the implementation of the standards, who they apply to, and the type of assurance required to ensure the accuracy of disclosed 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. While the IFRS-S standards will be adopted in principle, committee members made up of accountants, corporate and Financial Institution representatives, and university professors have been discussing how much of the standards should be uniquely tailored to the circumstances of Japanese companies. Compared to the exposure draft released in March 2024, the final standards prioritize ensuring consistency with IFRS-S standards.

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overview of SSBJ Standards

Structure of the SSBJ Standards

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

Figure 1: Structure of IFRS-S standards 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

Both of SSBJ's thematic standards are based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and provide 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 standards apply to sustainability Issue for which no thematic standards exist, and currently apply to disclosure of various environmental aspects other than climate change, as well as labor and human rights.

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 Thematic 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, with Scope 3 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 regarding the amount and percentage or scale of assets and business activity related to risks and opportunities, internal carbon pricing, reflection on executive compensation, and, if the GHG emission reduction target is net, carbon credits for which there are plans to use them (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 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 categorized 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 is 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 Thematic Standards No. 2

Differences and Consistency with IFRS-S Standards

The SSBJ standards largely follow the Contents of the IFRS-S standards, but include 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 standards, calculations based on the market standard (based on the Emission intensity of the contracted electricity menu) under 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 show some 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 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 can disclose market-based emission amount instead of the contractual 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 emissions using a methodology other than the 2004 GHG Protocol and the GHG emission amount measured using that methodology are material, the entity must disclose a breakdown of the emission amount measured using that methodology and the emission amount measured using that methodology. Disclosure of Scope 3 GHG emission amount 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 the FSAF/IFRS Foundation "List of Differences between SSBJ Standards 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, "The publication of the SSBJ 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 for capital markets in promoting global comparability of sustainability-related disclosures." *2 Therefore, it is likely that disclosures made in accordance with the SSBJ standards will be considered to be in line with international standards.

Download the "Easy to understand SSBJ Standards Book" here↗

Scope and timing of application of SSBJ standards

At a meeting of the Financial System Council's Working Group on Sustainability Information Disclosure and Assurance 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 one year later, and for companies with a market capitalization of 500 billion yen or more from the fiscal year ending March 2029, and that the scope would then be expanded to all Prime-listed companies, which currently number more than 1,600 companies. Discussions are currently moving in this direction. The proposal also stipulates that third-party assurance of disclosed information would also be required one year after the mandatory disclosure date (Figure 2 ) *3 .

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

Meanwhile, consideration is underway to adopt the transitional measures allowed under the IFRS-S standards and allow for "two-stage disclosure" in the first year of the mandatory standard. Two-stage disclosure refers to a method in which the first stage of disclosure is made in the annual report, followed by additional disclosure of sustainability-related matters in an amendment to the annual report or a semi-annual report. The Financial System Council has also suggested delaying the deadline for submitting annual reports by one month to four months after the fiscal year-end, and extending the two-stage disclosure period from one year to two to three years, or even indefinitely.*4 and 5

Download the "Easy to understand SSBJ Standards Book" here↗

Introduction of a third-party guarantee system

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

In Japan, the Financial System Council is also considering the introduction of a third-party assurance system for SSBJ disclosures, based on consistency with ISSA 5000 and IESSA. The level of assurance will be "limited assurance," and consideration will be given to whether to transition to "reasonable assurance" in the future, taking into account the current state of 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 mandatory assurance requirement is introduced, but from the third year onward, consideration will be given to international trends. Since Scope 3 GHG emission amount depend on value chain data, there has been extensive discussion about a safe harbor (a scope where assurance providers will not be held liable for violations of laws and regulations) for assurance providers.

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

The assurance work is expected to be provided by audit firms or other assurance service providers registered under the new registration system, but current discussions suggest that the provider may also utilize external experts as necessary . *6

Download the "Easy to understand SSBJ Standards Book" here↗

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 now mandatory in accordance with the SSBJ standards, mid-sized and small- to medium-sized enterprises (SMEs) in the value chain of listed companies will be required to accurately grasp and provide information on at least their Scope 1 and 2 emission amount. All companies will likely be required to ensure the accuracy and timeliness of data by utilizing 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 are aimed at investors and disclose financial risks and opportunities based on a single materiality. However, even if this becomes mandatory, the need for voluntary sustainability reporting using the Global Reporting Initiative (GRI) Standards, which are based on the significant positive and negative impacts (impact materiality) that a company has on the environment, society, and the broader economy, as well as integrated reporting, which asks how a company creates value from the six types of capital (resources) on which it depends: financial, Manufacturing, intellectual, human, social/relationship, and natural, will not disappear.
In addition to Industry-specific guidance on the application of SASB Standards and IFRS S2, the SSBJ Standards also state that they take into consideration the applicability of the GRI Standards and the European Sustainability Reporting Standards (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 dual materiality . *7

In fact, neither IFRS-S nor SSBJ clearly articulates the basis or origin of sustainability-related financial risks and opportunities. Experts and investors believe that financial risks and opportunities result from a company's dependence on various resources and the impacts of its activity. ESRS, paragraph 38 of Issue 1, states that "assessment of impact materiality and financial materiality [author's note: synonymous with single materiality] are interrelated," urging companies to consider "the interdependence of these two dimensions." *8 Furthermore, its implementation guidance advises that "Because many impacts pose financial risks and opportunities, companies generally assess whether identified impacts result in significant financial consequences" (paragraph 91) *9 (Figure 4).

In November 2024, the SSBJ and the Global Reporting Initiative's Standards Board (GSSB) signed a memorandum of understanding to explore ways to share the two disclosure frameworks. In response to this, the GRI launched the "Impacts, Risks, and Opportunities" (IRO) project to clarify the relationship between the two concepts and compile guidance. I plan to participate in the discussions. At the IFRS® Foundation's Integrated Thinking and Reporting Conference held in Tokyo in April 2025, the Foundation stated that it would explore the relationship between financial reporting (IFRS® Standards) and IFRS-S Standards, as well as the connection with the International Integrated Reporting (IR) framework, which has been absorbed into the IFRS® Foundation. This raises the possibility of a unified framework for corporate financial and non-financial disclosure in the future.

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

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*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, Financial System Council "Working Group on Disclosure and Assurance of Sustainability Information" (Second Meeting) Agenda, 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" (3rd Meeting) Minutes, June 28, 2024: www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/gijiroku/20240628.html
*5) Financial Services Agency, Financial System Council "Working Group on Disclosure and Assurance of Sustainability Information" (4th Meeting) Minutes, October 10, 2024: www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/gijiroku/20241010.html
*6) Financial Services Agency, Financial System Council "Fifth Meeting of the 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 tasked the European Financial Reporting Advisory Group (EFRAG) with simplifying the ESRS and making it interoperable with global sustainability reporting standards [author's note: understood to refer to IFRS-S standards and GRI standards], and asked them to complete a draft revision by the end of October ( www.efrag.org/sites/default/files/media/document/2025-03/Commissioner%20Albuquerque%20Letter%20to%20EFRAG%20March%202025.pdf ). EFRAG is seeking public comments on the elements of the simplification until May 6th. www.efrag.org/en/news-and-calendar/news/efrag-launches-a-public-call-for-input-on-esrs-set-1-revision
*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 journalist for the Asahi Shimbun, he is now involved in supporting corporate and government sustainability strategies internationally. He worked on guideline revisions at the GRI International Secretariat and led eco-innovation policy research at the OECD's Directorate for Science, Technology and Industry. He is responsible for knowledge management of renewable energy technology data from around the world at the International Renewable Energy Agency (IRENA) and for developing strategies and policies for the green economy and climate change response at the UAE Federal Government. He served as Deputy Director of the United Nations Climate Technology Centre Network (CTCN), supporting technology transfer to developing countries, before returning to Japan in 2021. He served as a partner in charge of decarbonization and ESG at ERM, a foreign consulting firm, and became Director of Zeroboard Research Institute in August 2023. He has served as a director of the Global Sustainability Standards Board (GSSB), a GRI advisory body, since January 2024, and as a member of the GHG Protocol TWG since March 2025. He holds a B.A. in Journalism from the Faculty of Letters at Sophia University and a Master's degree from the School of International Development at the University of Sussex, UK.