Understanding the Sustainability Standards Board of Japan (SSBJ)

On 5th March 2025, the Sustainability Standards Board of Japan (SSBJ) finalised the new standards for sustainability information disclosure in Japan. This article provides an overview of the SSBJ standards, the timing of their application and the companies that will be required to comply with them. The earliest companies will be required to comply from the fiscal year starting in April 2026, so they will need to quickly put the necessary systems in place.

What are the SSBJ disclosure standards?

The Sustainability Standards Board of Japan (SSBJ) was established to standardise corporate sustainability reporting and bring Japan’s disclosure requirements in line with global expectations. The new standards are based on the IFRS Sustainability Disclosure Standards (IFRS S1 and S2) developed by the International Sustainability Standards Board (ISSB), focusing on climate-related risks and opportunities.

While the initial draft contained provisions unique to Japan, the finalised version has been revised to ensure greater alignment with international standards.

To help businesses implement these requirements, the SSBJ will publish an application handbook by March 2025. This will include:

• Guidance on GHG emissions calculation, ensuring alignment with corporate financial reporting periods.
• Definitions and key terms to clarify reporting expectations.

Who needs to comply with SSBJ and when?

The Financial Services Agency plans to gradually require companies to disclose information based on the new standard from the fiscal year ending March 2027. First, it will be mandatory for companies listed on the Tokyo Stock Exchange Prime market with a market capitalisation of 3 trillion yen or more, and then the scope of application will be expanded to include companies with a market capitalisation of 1 trillion yen or more and 500 billion yen or more, and eventually, all companies listed on the Tokyo Stock Exchange Prime market (approximately 1,600 companies).

In addition, amid calls for decarbonisation across the entire supply chain, there is a growing likelihood that unlisted companies and financial institutions of a certain size or more will be required to disclose information based on the same standards as those required of listed companies, in response to requests from investors and business partners. Government support measures are also being promoted, such as joint investment subsidies to reduce emissions across the supply chain.

The Financial Services Agency (FSA) plans to introduce the new disclosure standards gradually from the fiscal year ending March 2027, starting with large corporations before expanding to smaller businesses.

Phased introduction timeline:

Phase 1: Companies listed on the Tokyo Stock Exchange Prime Market with a market capitalisation of ¥3 trillion or more will be required to comply first.

Phase 2: The requirement will then extend to companies valued at ¥1 trillion and above.

Phase 3: Eventually, all companies listed on the Tokyo Stock Exchange Prime Market (~1,600 companies) will be covered.

Impact on unlisted companies

Even if not directly mandated, large unlisted companies and financial institutions may also need to comply, as investors and business partners increasingly expect supply chain-wide emissions transparency. This reflects a broader trend where businesses face pressure to disclose sustainability data to meet stakeholder demands and secure investment opportunities.

Key actions required for businesses

1. Preparing for sustainability information disclosure

The SSBJ standards require companies to disclose clear and credible sustainability-related information. This includes greenhouse gas (GHG) emissions and strategies for managing climate risks. To meet these expectations, businesses need to assess their current systems for collecting and managing sustainability data. Establishing processes that can support consistent, reliable reporting will be essential—especially as disclosures must align with financial reporting cycles.

2. Strengthening carbon accounting

Disclosure requirements around GHG emissions are expected to become increasingly strict in the coming years. Companies will need to measure and report Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (indirect emissions across the value chain). With Scope 3 becoming mandatory for many businesses from 2027, early preparation is key. This includes engaging with suppliers to better understand value chain emissions and improve data quality.

3. Integrating sustainability into business strategy

The SSBJ disclosure standards require companies to embed sustainability into core decision-making by integrating it with financial reporting. Businesses will need to consider how climate risks and opportunities affect their long-term strategies and growth plans. This shift should be driven from the top, with boards and senior leadership playing an active role in shaping ESG (environment, social and governance)  priorities and ensuring they are reflected throughout the business.

4. Strengthening stakeholder engagement

Transparent communication is a key part of building credibility in sustainability reporting. The disclosure of sustainability information has an impact on many stakeholders, including investors, financial institutions, consumers and regulatory authorities. Companies should take a proactive approach to stakeholder engagement, using sustainability reporting as a tool to demonstrate accountability, respond to expectations, and build long-term trust with key audiences.

The future of sustainability reporting in Japan

The introduction of the SSBJ Disclosure Standards will improve the quality of sustainability information disclosure by Japanese companies and will enable them to provide more reliable information to investors and stakeholders. In particular, companies will be required to take into account the need to be consistent with international standards, and this is expected to lead to an improvement in their competitiveness in the global market.

In addition, as the disclosure standards are unified across the entire supply chain, the importance of data sharing and cooperation between companies will increase. Companies will need to keep a close eye on the trends in the SSBJ disclosure standards and build appropriate disclosure strategies.

How Zevero can help

At Zevero, we help businesses navigate carbon accounting and sustainability reporting with:

• Automated Scope 1, 2, and 3 calculations aligned with GHG Protocol and SSBJ requirements.
• Data integration tools that simplify emissions tracking and reduce reporting complexity.
• Expert support to help businesses align with regulatory standards and develop decarbonisation strategies.

If you need guidance on preparing for the SSBJ disclosure standards, get in touch with our team today.