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

Japan climate disclosure at a glance

Japan's Financial Services Agency (FSA) amended the Cabinet Office Ordinance on Disclosure of Corporate Affairs on 20 February 2026 to require Tokyo Stock Exchange Prime Market companies with average market capitalisation of ¥3 trillion or more to report under the Sustainability Standards Board of Japan (SSBJ) standards for fiscal years ending on or after 31 March 2027, with the ¥1 trillion tier following a year later and limited assurance one year after each tier's first report. The SSBJ standards are functionally aligned with IFRS S1 and IFRS S2, which puts Japan alongside Australia, Singapore, Hong Kong and South Korea on the ISSB baseline.

How Japan got here

Japan's annual securities report has carried a mandatory sustainability section since fiscal years ending March 2023. The FSA's ordinance amendment of 31 January 2023 made governance and risk management disclosure mandatory for all filers and required strategy and metrics and targets where material. The SSBJ issued its inaugural standards on 5 March 2025. The FSA published its roadmap on 8 January 2026 and amended the ordinance on 20 February 2026, designating the SSBJ standards and setting the ¥3 trillion and ¥1 trillion tiers. The Diet enacted the Financial Instruments and Exchange Act amendment on 15 July 2026; its sustainability disclosure and assurance provisions take effect on 1 April 2027. On 15 September 2026 the FSA updated its designation to cover SSBJ standards published up to 11 June 2026.

What Japan's climate disclosure rules require

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

• General Standard (No. 1) and Application Standard: the Japanese counterparts of IFRS S1. They set the reporting entity (the same group as the financial statements), the materiality test, and a statement of compliance with the SSBJ standards.

• Climate Standard (No. 2): the Japanese counterpart of IFRS S2. It follows the four-pillar structure of governance, strategy, risk management, and metrics and targets, and requires Scope 1, Scope 2 and Scope 3 emissions. Scope 3 is disclosed by the categories of the GHG Protocol Corporate Value Chain (Scope 3) Standard (2011) (paragraph 55). Scope 2 is reported location-based, plus either contractual instrument information or market-based figures (paragraphs 53 and 54).

• The GHG Protocol as the measurement standard: the Climate Standard carries IFRS S2 paragraph 29(a)(ii) as its paragraph 49, so emissions are measured under the GHG Protocol Corporate Accounting and Reporting Standard (2004). A company using another method, such as Japan's GHG Reporting System under the Act on Promotion of Global Warming Countermeasures, discloses the amounts under each method separately where material (paragraph 50). SSBJ Practical Standard No. 1 (11 June 2026) sets out how GHG Reporting System data is used.

• Transition reliefs: the Climate Standard carries the IFRS S2 reliefs, including no Scope 3 in the first year of application (paragraphs 103 and 105).

For the first two years of mandatory application, a company can file its SSBJ disclosures after the annual securities report in an amendment report, due by the deadline for the next half-year report. From the third year, disclosure is at the same time as the financial statements.

Who is in scope

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

Prime Market companies, three tiers

• Tier 1, fiscal years ending March 2027: average market capitalisation of ¥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. Companies outside the tiers keep filing the sustainability section required since 2023.

Foreign issuers

In-scope foreign companies report under the SSBJ standards, ISSB Standards as issued, or ISSB-aligned standards approved by the FSA (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 disclosures depend on emissions data from suppliers across Southeast Asia, China, Australia, Europe and the Americas, and the safe harbour rewards companies that can document where each supplier figure came from.

Key dates and milestones

Expansion of the assurance scope after the first two years will be decided "considering the developments in international practices". Assurance standards are being set to align with ISSA 5000.

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 disclosure from fiscal years ending March 2028 turns those purchases into 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. Regional ISSB convergence. The SSBJ and ISSB have confirmed functional alignment, and a company that applies none of Japan's optional alternatives also meets ISSB Standards. One GHG Protocol inventory serves Japan, Australia's AASB S2, Singapore's rules, Hong Kong's HKFRS S2 and South Korea's KSSB standards.

3. Statutory disclosure with a safe harbour. Japan put the SSBJ standards into the statutory annual securities report and paired them with a safe harbour for estimates and third-party 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 runs from 1 April 2026 for March year-end companies, so the inventory work is already in the reporting period.

• Establish your GHG inventory on the GHG 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 report under the GHG Reporting System, map those figures to GHG 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. Limited 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 frameworks you already use. Your 2023 sustainability section, CDP responses and TCFD reports rest on the same four pillars the Climate Standard uses.

Your first climate audit, made practical

Preparing for limited assurance on your SSBJ disclosures from the fiscal year ending March 2028? Download Your First Climate Audit: A Practical Guide for a step-by-step walkthrough of what assurance providers ask for and how to get your data ready.

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 product SKUs 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 file 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.