Key points

  • The SSBJ Standards consist of three parts: “Application of Sustainability Disclosure Standards”, “General Disclosure Standards”, and “Climate-related Disclosure Standards”. It was announced on March 5, 2025 and revised on March 13, 2026.
  • Among companies listed on the prime market, companies with a five-year average market capitalization of 3 trillion yen or more will be required to make statutory disclosures in accordance with SSBJ standards from the fiscal year ending March 2027, and companies with an average market capitalization of 1 trillion yen or more will be required to comply with the SSBJ standards from the fiscal year ending March 2028.
  • In the first year of application and in the following year, two-step disclosure is allowed, in which certain information is later added in an amended report. For Scope 3 emissions, a safe harbor has also been established for specific disclosure of reasoning processes and internal procedures.

What are the SSBJ standards made of?

The standards published by the Sustainability Standards Board (SSBJ) consist of the following three items.

standards Main role
Application of sustainability disclosure standards Defines matters common to the entire standard, such as reporting companies, scope, materiality, comparative information, presentation, and transitional measures.
General Disclosure Standard Establish a framework for disclosing governance, strategy, risk management, metrics and targets for sustainability-related risks and opportunities
Climate-related disclosure standards Define climate-related risks and opportunities, scenario analysis, greenhouse gas emissions, transition plans, targets, etc.

All three were published on March 5, 2025, and revised on March 13, 2026. Furthermore, in June 2026, practical standards were published when greenhouse gas emissions measured and reported under the SHK system of the Global Warming Countermeasures Law are used for climate-related disclosures.

Although the SSBJ standards place emphasis on consistency with ISSB's IFRS S1 and S2, there are also differences in line with Japan's legal system and practices. Even if a company reports in compliance with ISSB overseas, it may not be sufficient to simply post it in the Japanese annual securities report. It is necessary to separately check the requirements of the SSBJ standards and the additional information provided by the Financial Services Agency's disclosure ordinance.

To whom does it apply and when?

The Cabinet Office Ordinance finalized in February 2026 requires SSBJ standards for companies listed on the TSE Prime Market with an average market capitalization of 1 trillion yen or more. The average market capitalization is determined by the average of the market capitalization at the end of the previous fiscal year and the end of the four previous fiscal years.

Target company Start of application
Average market capitalization as of the end of the fiscal year ending March 2026 is 3 trillion yen or more annual annual Securities reports, etc. for fiscal years ending on or after March 31, 2027
Average market capitalization is over 1 trillion yen annual annual Securities reports, etc. for fiscal years ending on or after March 31, 2028
Average market capitalization is less than 1 trillion yen Under the current Cabinet Office Ordinance, obligations under SSBJ standards are not applicable.

For companies that have been listed for less than five fiscal years, the company will be judged based on the average market capitalization at the end of each fiscal year that has passed.

[Confirmation required: For companies listed on the prime market with an average market capitalization of 500 billion yen or more and less than 1 trillion yen, the interim report of the Financial System Council indicated that the basic plan would apply from the fiscal year ending March 2029, but as of August 2026, the start of application for this layer has not yet been determined by Cabinet Office Ordinance. ]

What to write in a annual securities report

Target companies will include information in accordance with SSBJ standards in the "Sustainability Policy and Initiatives" section of their annual securities reports. In addition, the Disclosure Ordinance also requires the following:

  • Compliance with SSBJ standards
  • If two-step disclosure or transitional measures under the standards are used, their application status
  • Reasoning process used to estimate and make assumptions about future information
  • Scope 3 greenhouse gas emissions calculation method, assumptions, and reasoning process
  • Internal disclosure procedures for creating and confirming forward-looking information and Scope 3 information
  • If a finalized value is shown in the semi-annual report, the difference from the previous year's estimated value

What is important here is that this is no longer a voluntary report created solely by the sustainability department. Once a annual securities report is submitted, it is subject to the same disclosure controls as financial reports, supervision by the board of directors, confirmation by auditors, etc., and responsibilities of management.

two-step disclosure

For the first year of application and the following year, it is possible to omit some of the information that should be included in accordance with the SSBJ standards at the time of submitting the annual securities report, and supplement it by submitting an amended report by the deadline for submitting the semi-annual report for the following year.

This two-step disclosure is a transitional mechanism in response to Scope 3 and overseas subsidiary data, which require time to collect information. This is not a system to postpone the submission deadline. In the initial annual securities report, it is necessary to clarify what will be disclosed in two stages and the reason for adding it at a later date, and to manage the process up to the revised report.

In practice, the following three classifications are valid:

  1. Information that can be determined when submitting a annual securities report -- Governance system, strategy, major risks, goals, Scope 1 and 2, etc.
  2. Information to be disclosed based on reasonable estimates - future outlook, scenario analysis, and emissions for which data are not yet determined.
  3. Information to be supplemented later through two-step disclosure - Information that takes time to collect from overseas subsidiaries and value chains and cannot be calculated at a reasonable value at the time of submission.

Scope 3 safe harbor

Scope 3 emissions depend on data from business partners and customers, industry averages, estimated coefficients, etc., so the figures are likely to change later. The Financial Services Agency has clearly stated that as long as the factors that cause the discrepancy, the reasoning process, and the internal disclosure procedures are specifically described to the extent that is generally considered reasonable, even if a discrepancy occurs as a result, the company will not be immediately liable for misstatements, etc.

The safe harbor is not a system that unconditionally allows rough numbers. Rather, the premise is to explain what data was used, what was estimated, and who verified it. It is important for IR personnel to be able to disclose not only the calculated value itself, but also the calculation process.

To what extent is the assurance system fixed?

Regarding the assurance of sustainability information, the Financial System Council has indicated a direction to gradually introduce limited assurance. For companies with an average market capitalization of 3 trillion yen or more, discussions are underway with a focus on starting assurance from the fiscal year ending March 2028, one year after the start of application of the SSBJ standards. In the early stages, proposals are being made to limit the scope, such as Scope 1 and 2 emissions and governance and risk management.

[Confirmation required: As of August 2026, the entire system has not been finalized as a law, including who will be responsible for assurance services, registration and supervision, and timing of expansion of assurance scope. It is necessary to check the latest Financial System Council materials and legal revisions. ]

Therefore, companies should not wait for the assurance scheme to be finalized. Evidence that can be verified by a third party, data responsibilities, change history, scope of consolidation, and estimate approval procedures need to be in place from the first year of disclosure.

Divide preparation into five tasks

work Specific confirmation
Application judgment Calculate the average market capitalization for 5 fiscal years each period and determine the applicable year.
Difference analysis Compare current integrated reports, TCFD disclosures, and CDP responses with SSBJ requirements
Data maintenance Scope 1, 2, 3, financial impact, migration plan, and target data ownership decisions
disclosure control Document accounting, review, management approval, board oversight, and correction procedures
assurance support Prepare evidence, system privileges, audit trails, and preliminary dialogue with external assurance providers

Particularly difficult is the connection between sustainability information and financial statements. Investors question consistency when companies describe climate risks as material but do not reflect them in impairment tests, useful lives, provisions, and capital investment plans. Sustainability disclosure needs to be linked to business planning and accounting decisions, rather than being a separate reporting exercise.

Implications that IR personnel should be aware of

  1. First, determine the applicable year. Judgment is based on the average of 5 fiscal years, not the market capitalization of a single year. A common calculation table is used for accounting, legal affairs, and IR.
  2. Check the SSBJ standards and disclosure ordinance separately. Compliance with the standards alone may not satisfy additional statements in the annual securities report.
  3. Use two-step disclosure as a planned transitional measure. Do not put off the same information every year. Indicate a permanent plan for data collection from the first year.
  4. Scope 3 solidifies processes over numbers. If you can explain data sources, estimation methods, judgments, approvals, and history of changes, you can appropriately communicate numerical uncertainty.
  5. Leave a trail with an eye to the assurance. Manual spreadsheets used in the era of voluntary disclosure are not enough. Create internal controls similar to financial reporting.

Source/reference materials

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