Japan's Climate Disclosure Rules: What You Need to Know

Japan climate disclosure at a glance

Japan's financial regulator, the Financial Services Agency, now requires the country's largest listed companies to report climate-related risks and greenhouse gas emissions in their annual securities report, the statutory filing listed companies submit alongside their financial statements. Under an amended disclosure ordinance of 20 February 2026, the rules start with companies on the Tokyo Stock Exchange's Prime Market, its top listing segment, that have an average market capitalisation of ¥3 trillion or more, for fiscal years ending on or after 31 March 2027. Companies report under standards written by the Sustainability Standards Board of Japan (SSBJ), which follow the global baseline set by the International Sustainability Standards Board (ISSB), the body now shaping climate reporting rules in Australia, Singapore, Hong Kong, South Korea and beyond.

How Japan got here

Since fiscal years ending March 2023, Japan's annual securities report has included a mandatory sustainability section. An FSA amendment of 31 January 2023 made governance and risk management disclosures compulsory for every filer, with strategy, metrics and targets required where material. The SSBJ issued its first standards on 5 March 2025. The FSA published its roadmap on 8 January 2026, then amended the disclosure ordinance on 20 February 2026 to make the SSBJ standards mandatory for the ¥3 trillion and ¥1 trillion tiers. Japan's parliament, the Diet, passed the matching amendment to the Financial Instruments and Exchange Act on 15 July 2026; its disclosure and assurance provisions take effect on 1 April 2027.

What Japan's climate disclosure rules require

In-scope companies report climate-related risks, opportunities and emissions under the SSBJ Climate Standard, in the "Approach to Sustainability and Initiatives" section of the annual securities report.

• General Standard and Application Standard: Japan's version of IFRS S1. They set the basics: the report covers the same group of companies as the financial statements, it includes the information investors would consider material, and it states that it complies with the SSBJ standards.

• Climate Standard: Japan's version of IFRS S2. It uses the four-part structure of the Task Force on Climate-related Financial Disclosures (governance, strategy, risk management, and metrics and targets) and requires emissions in three scopes: Scope 1 from a company's own operations, Scope 2 from the electricity and heat it buys, and Scope 3 from its value chain, including suppliers. Scope 3 is broken down by the relevant categories of the Greenhouse Gas Protocol (GHG Protocol) value-chain standard (paragraph 55).

• The Greenhouse Gas Protocol as the measurement method: the Greenhouse Gas Protocol is the global accounting rulebook for corporate emissions, and the Climate Standard requires its Corporate Standard (paragraph 49). Large energy users in Japan already report emissions to the government under the Act on Promotion of Global Warming Countermeasures. A company using those figures reports the amounts under each method separately where material (paragraph 50), and SSBJ Practical Standard No. 1 (11 June 2026) explains how.

• Transition reliefs: as in IFRS S2, Scope 3 is optional in the first year of reporting (paragraphs 103 and 105).

For the first two years, a company can file its climate disclosures after the annual securities report, in a separate amendment report due by the deadline for its next half-year report. From year three, climate disclosures are published at the same time as the financial statements.

Who is in scope

The rules cover Tokyo Stock Exchange Prime Market companies in three tiers, based on average market capitalisation at the last five fiscal year-ends.

Prime Market companies, three tiers

• Tier 1, fiscal years ending March 2027: ¥3 trillion or more (68 companies on March 2025 data).

• Tier 2, fiscal years ending March 2028: ¥1 trillion or more (171 companies cumulative).

• Tier 3, fiscal years ending March 2029: ¥500 billion or more (284 companies cumulative). This tier is set in the FSA roadmap; the February 2026 ordinance covers tiers 1 and 2.

The FSA will decide on other Prime Market companies "based on disclosure practice and investor needs". Any listed company can apply the SSBJ standards voluntarily, and companies outside the tiers keep filing the sustainability section required since 2023.

Foreign issuers

Foreign companies in scope can report under the SSBJ standards, IFRS S1 and IFRS S2 as issued, or other aligned standards the regulator approves (Article 19-9, paragraph 6 of the ordinance).

Supply-chain reach (Terrascope analysis): the 284 companies in the three tiers include Japan's largest manufacturers, trading houses, food companies and retailers. From the second year of each tier, their Scope 3 figures depend on emissions data from suppliers across Southeast Asia, China, Australia, Europe and the Americas, and the safe harbour protects only the figures whose source and method are documented.

Key dates and milestones

Limited assurance is a lighter review than a financial audit: the provider checks that nothing suggests the figures are materially wrong. The FSA will decide how far the assurance scope widens after the first two years "considering the developments in international practices", and Japan's assurance standards are being aligned with ISSA 5000, the new international standard for sustainability assurance.

Why this matters beyond Japan

1. Supply-chain ripple across Asia and beyond. Japanese Prime Market groups buy components, commodities and ingredients from Southeast Asia, China, Australia and the Americas. Scope 3 reporting from fiscal years ending March 2028 turns those purchases into emissions data requests, and each supplier's figures feed a disclosure the buyer has to defend to its assurance provider. Supplier engagement at that scale needs a repeatable process.

2. One inventory for the region. Japan's standard-setter and the ISSB have confirmed that Japan's standards deliver the same outcomes as IFRS S1 and IFRS S2, and a company that uses none of Japan's optional alternatives also meets the global standards. Australia, Singapore, Hong Kong and South Korea have built their climate rules on IFRS S2 too, so one emissions inventory measured under the Greenhouse Gas Protocol serves all five.

3. Statutory disclosure with a safe harbour. Japan put climate reporting into its statutory annual filing and paired it with legal protection for good-faith estimates and supplier data. South Korea's Financial Services Commission cited Japan's safe harbour as its model in its July 2026 roadmap.

How companies should prepare

The first measurement year for the ¥3 trillion tier began on 1 April 2026 for companies with a March year-end, so the data for the first report is being generated now.

• Build your emissions inventory on the Greenhouse Gas Protocol. Scope 1 and 2 across the consolidated group is the year-one deliverable, and the corporate carbon footprint you build now is the one the assurance provider reviews in year two. If you already report to the government under the Act on Promotion of Global Warming Countermeasures, map those figures to Greenhouse Gas Protocol boundaries now.

• Map your value-chain exposure. Scope 3 arrives in year two, by category. Identify the categories that drive your footprint and the suppliers behind them, and bring data in any format into one inventory.

• Build assurance-ready processes early. Assurance starts one year after your first report, and the safe harbour protects Scope 3 figures only when your assumptions and internal review process are on the record. Document methodology, data sources and review steps from the first inventory.

• Build on the reporting you already do. Your 2023 sustainability section, responses to CDP (the global environmental disclosure platform) and reports under the Task Force on Climate-related Financial Disclosures framework use the same four-part structure as the Climate Standard.

How Terrascope can help

Terrascope's AI-powered platform helps companies in Japan move from baseline emissions data to audit-ready disclosures, including Mitsubishi Shokuhin, one of Japan's largest food wholesalers, which grouped more than 240,000 individual products into over 2,000 product categories to measure its Scope 3 emissions and disclose them publicly.

• Scope 1, 2, and 3 emissions measurement. Integrations pull emissions data from your source systems monthly, so your inventory covers every entity in the consolidated group and every Scope 3 category the Climate Standard requires.

• Audit-ready reporting. Audit Trail makes every figure traceable from data entry to disclosure, with assurance-provider access built in, so your year-two assurance and your safe harbour record draw on the same evidence.

• Supply-chain intelligence. Analytics shows where your Scope 3 hotspots sit, as it did for Mitsubishi Shokuhin, where Scope 3 made up close to 99% of the footprint and purchased goods and services over 80% of Scope 3.

• Multi-framework alignment. Climate reporting drafts your disclosures from measured data in the IFRS S2 structure the SSBJ standards share, reviewed by your team.

Frequently asked questions

Speak to an expert

Are you ready to get ahead of Japan's SSBJ climate disclosure requirements? Speak to a Terrascope expert and see how we help companies move from baseline emissions data to audit-ready disclosures.