The ISSB was established in November 2021 to develop IFRS Sustainability Disclosure Standards, with the goal of enabling investors to receive detailed information regarding companies' sustainability risks and opportunities. The SSBJ started operations in July 2022 as an initiative funded by Japan for developing international disclosure standards.
In March 2024, the SSBJ released exposure drafts of its sustainability disclosure standards emphasizing that SSBJ has incorporated all the requirements of ISSB standards. The SSBJ comprises the following 3 standards as opposed to ISSB's 2 standards-
Establishes fundamental guidelines for companies in preparing sustainability-related disclosures
Aligning with the ISSB’s IFRS S1 framework, General Disclosure focuses on sustainability risks and opportunities
Presents reporting guidance for climate-related risks, based on the principles of IFRS S2
Prior to these changes, Japanese firms used to follow the Tokyo Stock Exchange's 2021 updated corporate governance code, which required climate-related disclosures following the Task Force on Climate-related Financial Disclosures (TCFD) recommendations on a 'comply-or-explain' basis. The new SSBJ standards, in line with ISSB guidance, offer a more extensive and mandatory framework, increasing the consistency and comparability of sustainability information disclosed by corporations.
The SSBJ’s adoption of ISSB-compatible reporting standards equips Japan to achieve increased corporate transparency thus building investor trust in the marketplace.
