Hopping On The ISSB Bus: Japan Confirms Its Commitment To Voluntary Reporting

Hopping On The ISSB Bus: Japan Confirms Its Commitment To Voluntary Reporting

On March 5, 2025, the Sustainability Standards Board of Japan (SSBJ) issued its inaugural Sustainability Disclosure Standards. Established in July 2022, in response to the International Sustainability Standards Board (ISSB) and its pursuit of a global reporting baseline, the SSBJ represents Japan’s jurisdiction-specific incorporation of ISSB standards. In addition to Japan and the EU, 28 countries – representing 57% of global GDP – are working towards their own national or supra-national disclosures. Japan’s finalized publication, and the continued consultation pursued by countries such as Indonesia, Qatar and Rwanda, confirm the significant impact of investor demand.

What has Japan done?
Established in 2022, the SSBJ is intent on ensuring ‘international comparability’ with sustainability disclosure standards. To achieve this, the SSBJ has committed to ongoing review of ISSB educational material, enabling it to keep abreast of any changes in standards. Revisions will be made in the form of Supplementary Documents as appropriate – to be discussed and published by the SSBJ.

Japan has provided its own spin on ISSB standards
The SSBJ splits the ISSB’s two standards into three. IFRS S1 has been divided into the Application Standard and the General Standard. However, all three standards must still be applied together.

Optional jurisdiction-specific alternatives have also been added by the SSBJ, and the wording of the ISSB standards has been edited, so that the flow of paragraphs can be better understood in Japanese. 

What does this mean? And why is it significant?
The Verdantix 2024 global corporate ESG and sustainability survey revealed that voluntary standards were a top three priority for 50% of respondent firms. Furthermore, our analysis finds that the voluntary reporting landscape will continue to be managed alongside mandatory reporting – to cater for the data requirements of various stakeholder groups. Our research also indicates that significant interoperability will continue to occur between voluntary and mandatory standards, to account for upcoming mandatory disclosures.

On this point, the SSBJ has confirmed that the standards it holds remain voluntary. However, it also states that the standards are developed under a key presumption: that Japanese securities laws and regulations will soon require firms listed on the Prime Market of the Tokyo Stock Exchange to implement these standards.

The push-pull dynamic between investor demand and the regulatory landscape continues to intensify. Transparency relating to climate risk and opportunity is being increasingly encouraged by regional markets. Japan’s standards, and the intention of Indonesia to follow in its footsteps, highlight the growing importance of this interrelationship – particularly within the Asia-Pacific (APAC) region. Those seeking to invest in these markets should take note of this latest development, the potential for more, and the impressive national and regional response elicited by the ISSB (see Verdantix Strategic Focus: ESG Reporting In The Age Of CSRD And ISSB).