Timeline for the Implementation of the SSBJ Standards (Sustainability Disclosure Standards) — Disclosure Changes Coming to Japanese Companies

Introduction

In response to the international trend toward sustainability (ESG) disclosure, the Sustainability Standards Board of Japan (SSBJ) published the Sustainability Disclosure Standards (SSBJ Standards) in Japan on March 5, 2025.

It will be voluntary from the fiscal year ending March 2026, and disclosure is expected to become mandatory in stages from the fiscal year ending March 2027 onwards.

This column outlines the timeline from the publication of the SSBJ standards to their gradual application and their currently planned future full mandatory implementation, and points out the points that companies should consider when preparing.

Background and purpose of establishing SSBJ

First, let us clarify the background to its establishment, its role, and its relationship with the TCFD.

International trends and developments in Japan

Internationally, the ISSB(International Sustainability Standards Board), established by the IFRS Foundation, which holds the International Financial Reporting Standards, published the "IFRS Sustainability Disclosure Standards (IFRS S1 and S2)" in 2023.

In response to this trend, the Accounting Standards Board of Japan (ASBJ) was established under the Accounting Standards Board of Japan (ASBJ) to promote corporate disclosure consistent with international standards (launching in July 2023).

The objective is to formulate a "Japanese version of IFRS S Standards" that is suited to the practices and systems of Japanese companies while taking into account international disclosure standards.

Role and characteristics of SSBJ

The main mission of SSBJ is to develop Japanese sustainability disclosure standards based on IFRS S standards.

At the same time, it is also necessary to specify the methods and scope of disclosure in accordance with the practices and institutional environment of Japanese companies.

For example, a notable feature of the Act is that it is developing rules that companies can implement in practice, with an eye toward integrating them into existing statutory disclosure documents such as securities reports.

Specific SSBJ Contents

A. Applicable Standards (Universal Standards)

This is the overall rule and is positioned as the "common ground" for all disclosure activity. This rule is the premise regardless of the topic (climate, human rights, etc.) being addressed.

Main Contents

• Definition of disclosure purpose → To provide "sustainability-related financial information" that investors and capital providers can use for decision-making.

• Clarify the scope and units of reporting → Clarify the scope of business and consolidated groups covered.

• Criteria for determining importance (materiality) → Identify sustainability factors that affect corporate value and disclose information based on those.

• Ensuring comparability and consistency → Present information using the same standards and units each year.

• Rules for correcting errors and restating figures → Clarify the method for correction if there is an error in the figures for the previous period.

• Responsibility for approval and publication of reports → Ensure that management (board of directors, etc.) has a process for approving the Contents of disclosure.

B. General Disclosure Standards (Thematic Standard No. 1)

It defines "basic disclosure items" common to all companies and corresponds to the core of ISSB's IFRS S1 (governance, strategy, risk management, metrics and targets).

Main Contents

• Governance

  • System for overseeing sustainability-related risks and opportunities

  • Roles, responsibilities and reporting lines of the board of directors and management

  • How sustainability Issue are reflected in management strategies and compensation systems

• Strategy

  • Impact of sustainability Issue on business models and strategies

  • Organizing short-term, medium-term, and long-term risks and opportunities

  • Analysis of impact on corporate value and response policy

• Risk Management

  • Sustainability risk identification, assessment, and response process

  • How to integrate with existing enterprise risk management (ERM) systems

• Metrics & Targets

  • Settings quantitative and qualitative KPIs (e.g., employee safety indicators, supplier audit rates, etc.)

  • What are your goals and how do you track them?

  • Data sources and calculation methodology

C. Climate-Related Disclosure Standards (Thematic Standard No. 2)

A standard for disclosing, from a financial perspective, the risks and opportunities that climate change poses to corporate activity.

It has almost the same structure as ISSB's IFRS S2 (based on the TCFD structure).

Main Contents

• governance

  • Oversight and execution system for climate-related risks and opportunities

  • How climate risk is integrated into management decisions and compensation systems

• strategy

  • Identifying major climate risks (physical risks and transition risks) and climate opportunities

  • Financial Impact Analysis

  • Scenario analysis (assessing the impact of multiple temperature rise scenarios on corporate strategy)

  • overview of the Transition and Adaptation Plan

• Risk Management

  • Climate risk identification, assessment, and monitoring methods

  • Integration with other risk management systems

• Metrics & Targets

  • Disclosure of greenhouse gas emission amount(Scope 1, 2, 3)

  • Emission reduction targets, progress, and whether or not offset are used

  • Energy consumption, impact of carbon pricing, etc.

Transitional measures and Japan-specific measures

• Disclosure of comparative information may be waived in the first year.

• Regarding Scope 2 calculation methods, either "market-based" or "location-based" methods are acceptable.

• For the time being, some items, such as financed emissions (emissions resulting from lending and investment by Financial Institution), will be disclosed voluntarily.

overview of the main steps leading up to application of SSBJ standards

The SSBJ standards have finally been finalized! A thorough explanation of corporate reporting obligations and key points for complying with regulations .<br />We also explain the detailed schedule and roadmap for each applicable company.
Download here

Key points for companies to prepare for each phase

1.2025-2026: Preparation period

• Gap analysis (differences from current TCFD compliance)

• Internal system development and governance construction

• Data acquisition flow design, system development

• Trial disclosure
  
  

2. Mandatory phase for the fiscal year ending March 2027

• Final adjustments for full disclosure

• Management and Board of Directors Review

• Dialogue with external stakeholders and obtaining feedback
  
  

3. Mandatory expansion phase (2028 onwards)

• Target companies for expansion will utilize the knowledge of leading companies

• Guarantee response (establishment of guarantee agencies and schemes)

• Improving the quality of disclosure and ensuring comparability
  
  

4. After warranty starts - 2030s

• Transition from limited assurance to reasonable assurance

• Expand disclosure items (including Scope 3)

• Revision response: Maintaining consistency with IFRS S/international standards

Summary: Early response determines corporate value

Compliance with SSBJ will not be achieved overnight.

With the expansion of disclosure scope and the introduction of a guarantee system in mind, determining early on "where to start within your company" will determine your future corporate value.

Make sure you understand the publication schedule accurately and proceed with practical responses in stages.

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source:

SSBJ Official: Announcement of Sustainability Disclosure Standards (March 5, 2025)
https://www.ssb-j.jp/jp/ssbj_standards/2025-0305.html

Financial Services Agency: Sustainability Information Disclosure and Assurance Working Group Minutes (5 14, 2024)
https://www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/gijiroku/20240514.html

Financial Services Agency Secretariat Explanatory Document (5 14, 2024) PDF p. 8
https://www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/shiryou/20240514/01.pdf

Ibid. (p. 9) and Deloitte Japan: Accounting Information Frontline (8)
https://www.deloitte.com/jp/ja/services/audit-assurance/perspectives/kaikeijyoho-202408-02.html

Enegaeru: What is SSBJ? (2024)
https://www.enegaeru.com/sustainabilitystandardsboardofjapan

Financial Services Agency: Future Direction of Sustainability Information Disclosure (5 document)
https://www.fsa.go.jp/singi/singi_kinyu/sustainability_disclose_wg/shiryou/20240514/01.pdf

Financial Services Agency Working Group Minutes (5 14, 2024) / Commentary by Deloitte Japan
https://www.deloitte.com/jp/ja/services/audit-assurance/perspectives/kaikeijyoho-202408-02.html