Report

2025.03.06

SSBJ: From the Background to the Creation of SSBJ to Sustainability Disclosure Standards

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Introduction.

SSBJ (Sustainability Standards Board Japan) is a Japanese organization focused on developing sustainability-related standards and disclosure frameworks. It is working to develop a Japanese version of the Sustainability Standards for Sustainability Disclosure (SSBJ Standards), which will provide guidelines for companies to disclose non-financial information. an exposure draft of the SSBJ Standards was released in March 2024, and the finalized version of the SSBJ Standards was released on March 5, 2025[1]. Please click here to view the finalized Sustainability Disclosure Standards.

Sustainability Standards Committee
https://www.ssb-j.jp/jp/ssbj_standards/2025-0305.html

In conjunction with the release of the SSBJ Definitive Standards, the investment environment is expected to undergo major changes, including significant changes in disclosure systems and disclosure content, the development of related laws and regulations, and the development of platforms to promote ESG investment. In order to respond to these new developments in corporate disclosure and sustainable finance, a deep understanding of the SSBJ standards will be required. This report provides a comprehensive and easy-to-understand explanation of the SSBJ standards, from the basic knowledge and background of SSBJ to the key points of the SSBJ standards.

Background of the Creation of the Sustainability Disclosure Standards

As interest in climate change and social issues grows worldwide, ESG investment and sustainable finance, in which corporate value is determined based on a company's commitment to social sustainability and investments and loans are made, are becoming increasingly popular.

On the other hand, with regard to the disclosure of non-financial information such as sustainability information, different sustainability standards such as TCFD, TNFD, ESRS, and GRI have been in confusion among companies and investors.

To overcome this situation, the International Sustainability Standards Board (ISSB) was established in 2021 to develop internationally harmonized sustainability disclosure standards and to improve the transparency and reliability of related information. In Japan, the SSBJ was established in July 2022 to create disclosure standards that are consistent with international standards and in line with the realities of Japanese companies.

For more information about ISSB, please see this explanatory article.

Commentary] ISSB - Global Baseline for Sustainability Disclosure
https://aiesg.co.jp/topics/report/2301130_issb/

What is SSBJ (Sustainability Standards Board)?

SSBJ is the organization that prepares the Japanese version of the Sustainability Disclosure Standards. The main objective of SSBJ is to create standards that will ensure transparency in the disclosure of environmental, social, and governance (ESG) information by Japanese companies.

Japan already has its own laws and regulations related to non-financial information disclosure, such as the Law Concerning the Promotion of the Measures to Cope with Global Warming, and there was a need to ensure consistency between the ISSB Standards and its own laws and regulations. In addition, since the ISSB standards are designed for global companies, the application of the ISSB standards to small and midsize Japanese companies would be burdensome.

For this reason, we are working to create a sustainability disclosure standard that is both "consistent with international standards" and "compatible with domestic conditions," without applying the ISSB standards as they are.

(data) item	Contents
Date of Establishment	July 2022
belong to	Organization within the Financial Accounting Standards Foundation (FASF)
Activities	Creation of Japanese Sustainability Disclosure Standards Contribution to the development of International Sustainability Disclosure Standards (IFRS)
development policy	Consistent with IFRS while also taking into account the requirements of Japanese companies

Table 1: Overview of SSBJ (prepared by the author from [2])

organizational structure

SSBJ is one of the committees within the Financial Accounting Standards Foundation (FASF) (Figure 2). The FASF is a public interest incorporated foundation established by 10 private organizations including Keidanren (Japan Business Federation) and the Japanese Institute of Certified Public Accountants (JICPA), and its objectives include research and development of fair accounting standards and sustainability reporting standards [3]. SSBJ was established in July 2022 to focus on corporate disclosures other than financial information as the need for sustainability information disclosure increases.

Figure 1 Organizational structure of FASF (adapted from [4])

SSBJ consists of 13 committee members, 8 researchers and 2 directors[5][6]Members of the committee are from a wide range of industries, including the accounting, finance, and manufacturing industries. The committee members come from a wide range of industries, including ASBJ (Accounting Standards Board of Japan) members, universities, auditing, finance, and manufacturing.

Activities

The SSBJ has two main roles [2].

Development of Sustainability Disclosure Standards (Japanese Standards)
Contribute to the development of international sustainability disclosure standards (IFRS)

(1) Development of Sustainability Disclosure Standards (Japanese Standards)
The most important role of SSBJ is to develop a Japanese version of the Sustainability Disclosure Standards.

Sustainable investment has been gaining momentum in Japan year after year, triggered by the FSA's publication of the Principles for Responsible Institutional Investors in 2014 and the GPIF's (Pension Fund Investment Management Inc.) signing of the PRI (United Nations Principles for Responsible Investment) in 2015 (Figure 2).

Figure 2: Sustainable Investment Balance in Japan (Adapted from [7])

In order to increase the competitiveness and value of Japanese companies, it is important for each company to actively utilize sustainable finance. In order for sustainable investment to be more active in Japanese companies, companies need to disclose transparent and reliable sustainability information.

To promote the disclosure of sustainability information by Japanese companies and ensure transparency and credibility, SSBJ has been working on the development of the Sustainability Disclosure Standards, a set of guidelines for disclosing non-financial information including sustainability information, and published the finalized version of the Sustainability Disclosure Standards on March 5, 2025. The final version of the Sustainability Disclosure Standards was published on March 5, 2025.

In preparing the Sustainability Disclosure Standards, we have ensured consistency with the International Financial Reporting Standards for Sustainability (IFRS) developed by the International Sustainability Standards Board (ISSB) in order to attract sustainable investment funds from overseas to Japan, while making adjustments to ensure that the standards are consistent with existing laws and accounting standards and fit the actual conditions of Japanese companies[8]. 8].

⑵Contribute to the development of International Sustainability Disclosure Standards (IFRS)
Another secondary role of the SSBJ is to contribute to the development of IFRS.

Sustainability disclosure standards prepared by SSBJ are basically IFRS prepared by the ISSB, adjusted for Japanese companies while maintaining international consistency. Therefore, the completeness of the IFRS disclosure standards is directly related to the completeness of the SSBJ's Japanese standards.

In addition, reflecting Japan's approach to sustainability in IFRS and increasing Japan's presence and influence in the development of sustainability standards will greatly benefit the Japanese market.

SSBJ's specific IFRS development contributions include
Submit comment letters on ISSB exposure drafts and requests for information, etc.
Sustainability Standards Advisory Forum established at ISSB
(SSAF) and other international conferences.
and other initiatives [2].

SSBJ Standards Structure and Development Policy

As mentioned earlier, the SSBJ standards are based on the ISSB standards and have been improved and adjusted to suit Japan. As Figure 3 shows, the ISSB and SSBJ standards have basically the same structure, but differ significantly in that they completely bifurcate disclosure standards and disclosure items.

The SSBJ standards are
Universal Standards
Thematic Criteria
The system is created in two parts (Figure 3).

In addition, thematic criteria are
General Disclosure Standards (Sustainability Disclosure Thematic Standard No. 1)
Climate-related disclosure standards (Sustainability Disclosure Thematic Standard No. 2)
The system is created in two parts (Figure 3).

Figure 3: Structural comparison of ISSB standards (IFRS) and SSBJ standards (adapted from [9])

Here, "the part that defines basic matters" refers to rules and procedures for disclosing sustainability-related information, while "core content" refers to matters that should be disclosed in sustainability information [9]. A major feature of the SSBJ standards is that they improve clarity by separately describing standards related to the preparation of disclosures and standards related to the content of disclosures.

The SSBJ Definitive Standards are based on the ISSB standards, but in order to maintain consistency with various Japanese systems and companies, some items can choose to be treated independently of the SSBJ standards instead of the ISSB standards [10].

When the SSBJ Standards are applied, if the SSBJ does not select the SSBJ's own handling, it means that the disclosed information is also in compliance with the ISSB Standards. However, if you choose the SSBJ's original handling, you need to confirm separately whether the disclosed information is in compliance with the ISSB standards.

Applicable standards (universal standards)

Below is an overview of the three criteria that make up the SSBJ standards, with a brief description of each and a selection of the most important points.

The applicable standard (universal standard) is the part that defines basic matters, including rules for preparing sustainability information disclosures and supplements to the other two disclosure standards. Specifically, it indicates how and where information should be presented in corporate disclosures, as well as the conditions that must be met by the information to be disclosed. The full text can be found here.

proposed rule
https://www.ssb-j.jp/jp/wp-content/uploads/sites/6/2024ed01_02.pdf

Key Issues (1) Supporting Information Required for Sustainability Disclosure Information

The applicable standard provides as a source of guidance to be presented by an entity in preparing its disclosures.
Must be applied."
. shall be referred to and their applicability shall be considered."
. may refer to it and consider its applicability."

The standard also classifies information sources into three types of information sources, which must be used to support the information presented in corporate disclosures [11]. This classification of information sources is also used in the climate-related disclosure standard (Thematic Standard 2).

(a) Identification of sustainability-related risks and opportunities
The following sources of information must be applied and referenced to ensure the reliability of sustainability-related disclosures that are expected to affect the company's prospects (Table 2).

must be applied	SSBJ Standards
reference and its applicability must be considered	SASB Standard
Can refer to and consider its applicability	IFRS and IFRS Guidance Guidance on Applying the CDSB Framework for Water-Related Disclosures. Guidance on Applying the CDSB Framework for Biodiversity-related Disclosures. Most recently published documents by other standard setters Sustainability-related information already identified by companies in the same industry or region

Table 2 Sources for identifying sustainability-related disclosures (prepared by the author from [11])

The universal standards published in March 2025, in addition to the SSBJ standardsSASB Standard and CDSB FrameworkThis section covers the following topics. It should be noted that these two standards can also be used when preparing corporate disclosures after the application of the SSBJ standards.

The SASB Standard is a framework for sustainability disclosure released by the U.S. Sustainability Accounting Standards Board in 2018. It has been adopted by more than 2,500 companies worldwide[12] and is unique in that it identifies sustainability issues that are likely to impact a company's financial performance by industry.

The CDSB Framework is an ESG disclosure standard designed to support investors' decision-making regarding the environment by integrating environmental information into financial information [13]. It is unique in that it covers a wide range of environmental issues, including water, biodiversity, forests, and land, as well as climate change.

For an explanation of the SASB, please see this article.

What is the SASB Standard for ESG Information Disclosure? (Part 1)Outline of SASB
https://aiesg.co.jp/topics/report/2301025_sasb1/

(b) Identification of information that is materially relevant to (a) (identification of sustainability-related risks and opportunities)
In principle, information that is associated with sustainability-related matters and that may have an impact on a company's prospects should be identified from the content of the SSBJ Standards. However, if there is no specific applicable content within the SSBJ Standards, the following sources of information must be applied and referenced (Table 3) [11].

Reference and applicability must be considered	SASB Standard
Can be referenced and considered for applicability	CDSB Framework Application Guidance GRI Standard 1 ESRS 1 Most recently published documents by other standard setters Sustainability-related information already identified by companies in the same industry or region

Table 3 Sources for identifying information of importance (prepared by the author from [11])
*1 is allowed to be applied and referenced to the extent that it does not conflict with SSBJ standards.

In addition to the SASB Standard and the CDSB Framework, the GRI Standard and the ESRS (European Sustainability Reporting Standard) are permitted to be referenced and applied here.

The GRI Standard and ESRS are explained in the following article.

Commentary] From GHG to ESG: International Trends and the Shift to Broader Sustainability Considerations
https://aiesg.co.jp/topics/report/240529_securities-report/
Commentary No.1] Overview of ESRS (European Sustainability Reporting Standards)
https://aiesg.co.jp/topics/report/2301208_esrs/

Important Issue 2) Obligation to present comparative information

All figures presented when preparing disclosure materials applying the SSBJ Standards must include not only the current year's figures but also the previous year's figures and be presented as comparative information[11]. However, if an entity voluntarily makes disclosures in accordance with the Sustainability Disclosure Standards, or if it is applying the SSBJ standards for the first time in its annual report, the following two transitional measures may be applied after disclosing that fact.

No disclosure of comparative information
Disclose only climate-related risks and opportunities in accordance with the Climate-related Disclosure Standards.

General Disclosure Standards (Thematic Standards ①)

The General Disclosure Standards define the content of sustainability information disclosures that are not directly related to climate issues (i.e., core content). Click here to read the full text.

General Disclosure Standards
https://www.ssb-j.jp/jp/wp-content/uploads/sites/6/jponly_20250305_02.pdf

Key Issue 3) What is the core content of the General Disclosure Standard?

Disclosure documents applying the General Disclosure Standards must disclose four components (i.e., core content): principles, governance, strategy, risk management, and indicators and objectives. The following is an overview of the four components [14].

Figure 4 Schematic of core content (created using napkin AI from [14])

(1) In the Governance section, it is pointed out that users should be able to understand the governance process used by the company to oversee sustainability-related matters. Specifically, the company should disclose where the responsibility for oversight of sustainability-related matters lies, the frequency and method of obtaining sustainability information, the supervisor's approach to sustainability-related matters, and whether management's role is delegated to other organizations.

The section on "Sustainability (2) Strategy" requires that the following information must be disclosed in order for the public to understand the company's strategy on sustainability-related matters.
Purpose of disclosure
Sustainability-related risks and opportunities *2
Impact on business model and value chain
Financial Impact
Strategic and decision-making implications
Resilience *3

*2 This refers to "sustainability-related matters that are expected to affect the entity's prospects" as described in the section on applicable standards. The company is required to disclose these matters, and when disclosing them, the company shall define "short term," "medium term," and "long term" and indicate "the period of time it will take for the impact to occur" at the same time.

*3 Resilience is defined as "a company's ability to respond to uncertainty arising from sustainability-related risks. Companies are asked to make a qualitative assessment of the resilience of their strategies and business models in relation to sustainability-related risks.

(3) The section on risk management states that the objective is to understand and assess the company's sustainability-related risks and opportunities and the overall risk management process. Specific information that must be disclosed includes information for prioritizing and evaluating risks, and if scenario analysis is used, information on how it is used.

The section on ⑷Indicators and Targets states that the objective is to enable users to understand a company's performance with respect to its sustainability-related initiatives and the progress it has made toward achieving the targets set by the company. When disclosing sustainability information, companies shall disclose the indicators required by the standards applied and the indicators used to measure and evaluate sustainability information.

Climate-related disclosure standards (Thematic Standard #2)

The Climate-related Disclosure Standards define the content of corporate disclosures related to climate issues. Similar to the General Disclosure Standards, the Climate-Related Disclosure Standards also focus on the core content of the Climate-Related Disclosure Standards [16]. Please click here to read the text (reprinted here).

Climate-related disclosure standards
https://www.ssb-j.jp/jp/wp-content/uploads/sites/6/jponly_20250305_03.pdf

Similar to the General Disclosure Standards, corporate disclosures applying the Climate-Related Disclosure Standards must disclose the following four items related to climate-related corporate disclosures: governance, strategy, risk management, and indicators and targets. These disclosures should enable users to understand how the company oversees and assesses climate-related risks and opportunities, and its related strategies and progress.

Since the basic structure of the core content is the same as that of the General Disclosure Standards, this report picks up elements that differ significantly from the General Disclosure Standards and explains them.

Key Issue 4: Climate-related scenario analysis (strategy)

Disclosures applying the Climate-related Disclosure Standard must assess a company's ability to respond to climate-related changes and uncertainties (i.e., climate resilience) based on a climate-related scenario analysis. However, while climate resilience must be assessed each reporting period, climate-related scenario analysis should be updated at least every strategic planning cycle.

The following must be disclosed when climate-related scenario analysis is performed

Information on inputs used in scenario analysis
Assumptions underlying the analysis
Reporting period for which climate-related scenario analysis was conducted

Similarly, the following must be disclosed when climate resilience is assessed

The impact of the results of climate-related scenario analysis on the evaluation of corporate strategies and business models.
Areas of significant uncertainty considered in the assessment of climate resilience
The ability of companies to adjust their strategies and business models to climate change over the short, medium, and long term.

Key Issue 5: Disclosure of absolute total greenhouse gas emissions (indicators and targets)

Disclosures also provide information on the absolute total amount of greenhouse gas emissions generated during the reporting period.

Scope 1 GHG emissions...GHGs directly emitted by companies
Scope 2 GHG emissions...GHGs indirectly emitted by companies
Scope 3 GHG emissions...GHG emitted when purchasing raw materials and after sales

The three categories of GHG emissions must be disclosed in three categories. In addition, the measurement of these greenhouse gas emissions is in principleGHG Protocol (2004)This must be done in accordance with the In particular, Scope 3 greenhouse gas emissions must be calculated back through the supply chain, making it a difficult sustainability information to handle.

Scope 3 greenhouse gases is explained in this article.
Commentary】Trends in SSBJ (Sustainability Standards Board of Japan) Deliberations - Scope 3 Disclosure Standards in Japan

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