Japan mandates ISSB-aligned sustainability reporting for major listed companies

Posted on March 10, 2026 by Editor

Japan has formally joined the growing list of jurisdictions embedding global sustainability disclosure standards into regulation. The Financial Services Agency has finalised new rules requiring large companies listed on the Tokyo Stock Exchange Prime Market to report sustainability information using standards issued by the Sustainability Standards Board of Japan, frameworks designed to align closely with those of the International Sustainability Standards Board (ISSB).

The requirement will apply to companies with an average market capitalisation of ¥1 trillion or more, with implementation staggered by size. The disclosures will be incorporated into annual securities reports and will reflect the global baseline set by IFRS S1 and IFRS S2.

There is, however, a pragmatic grace period. For the first two years, companies may use a "two-step disclosure" approach, allowing them to add certain sustainability-related financial disclosures later through an amendment filing. The rules also address thorny areas such as Scope 3 greenhouse-gas emissions and forward-looking climate information, asking companies to explain their methodologies and assumptions rather than promising perfect precision.

Japan's move signals that the ISSB's global sustainability framework is steadily becoming embedded in national rulebooks. For regulators, investors and the growing world of structured corporate reporting, that alignment brings the promise of more comparable data. The next step is to tag it. This is not a substantial change for Japanese corporates: they already tag a growing body of sustainability information.

Read the press release (in Japanese) here.