Japan’s Sustainability Reporting: A Guide for the Aviation Sector

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In response to growing global climate risks and investor demand for transparency, Japan introduced a comprehensive sustainability disclosure framework.

These standards provide listed companies with a clear roadmap for reporting on environmental, social and governance (ESG) issues, in alignment with international best practices.

This guide covers:

 

What is Japan’s sustainability reporting standard?

In March 2025, Japan introduced its first Sustainability Disclosure Standards, issued by the Sustainability Standards Board of Japan (SSBJ) under the Financial Accounting Standards Foundation (FASF).

The standards consist of:

  • Application Standard: overarching disclosure principles
  • General Disclosures: aligned with the International Sustainability Standards Board (ISSB)’s IFRS S1
  • Climate Disclosures: aligned with ISSB’s IFRS S2 1

These standards are designed to ensure consistency, transparency and comparability in environmental, social and governance (ESG) disclosures, particularly those related to climate.

 

Who do the Japanese Sustainability Disclosure Standards apply to?

The Sustainability Disclosure Standards issued by the Sustainability Standards Board of Japan (SSBJ) apply broadly to ensure consistent ESG reporting across the nation’s capital markets.

The scope includes:

  • All companies listed on the Tokyo Stock Exchange Prime Market
  • Foreign companies listed in Japan, which are subject to the same reporting obligations as domestic firms

Phased adoption

To support a smooth transition, the implementation of the standards is phased according to market capitalisation thresholds as follows:

Voluntary adoption

  • Fiscal year ending March 2026: Voluntary adoption begins for eligible companies regardless of size, allowing early movers to prepare and align their reporting.

Mandatory adoption

  • Fiscal year ending March 2027: Mandatory reporting begins for companies with a market capitalization of ¥3 trillion or more (approximately €17.4 billion*). These are typically the largest listed firms with significant market influence.
  • Fiscal year ending March 2028: Mandatory reporting expands to companies with a market capitalization of ¥1 trillion or more (approximately €5.8 billion*), covering a broader group of mid-sized firms.
  • Fiscal year ending March 2029: Full adoption is required for all remaining listed companies with a market capitalization of ¥500 billion or more (approximately €2.9 billion*), ensuring comprehensive coverage across the market.
  • Full adoption extends to all listed firms by the fiscal year ending March 2029.

This staggered timeline allows firms time to build internal ESG systems, secure external assurance processes, and align their reporting with international frameworks 1,2.

Note: The euro equivalents are based on an average exchange rate of 1 JPY = 0.0058 EUR observed in July 2025, as reported by the European Central Bank and other reliable exchange rate sources.

How does it align with Global Standards?

Japan’s Sustainability Disclosure Standards are explicitly designed to align with international best practices, particularly those established by the International Sustainability Standards Board (ISSB). This alignment ensures consistency in sustainability reporting across borders and enhances comparability for global investors.

Specifically, the Japanese standards incorporate the core elements of the ISSB’s inaugural disclosure framework:

  • IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) is reflected in Japan’s General and Application Standards, which cover broad ESG topics, governance, and risk management
  • IFRS S2 (Climate-related Disclosures) is integrated into Japan’s Climate Standard, which focuses on emissions, transition planning, and climate scenario analysis 1

By adopting these standards, Japanese firms can produce ESG disclosures that are globally recognised, investor-relevant, and strategically aligned with multinational expectations. This positions companies to compete more effectively in international capital markets while meeting domestic regulatory demands.

 

How to Prepare for SSBJ standards: Step-by-Step Guidance

Implementing the Sustainability Disclosure Standards issued by the Sustainability Standards Board of Japan (SSBJ) requires structured preparation across governance, data, and assurance processes. The following step-by-step approach will help companies align with the standards efficiently:

1. Understand Your Obligations

Start by determining your company’s classification under the phased implementation timeline:

  • Confirm your organisation’s market capitalisation and whether it falls under voluntary or mandatory reporting phases
  • Identify which of the SSBJ standards – Application, General, or Climate – are applicable based on your business activities and sector exposure
  • Understanding the scope of obligations ensures accurate resource planning and avoids compliance gaps.

2. Conduct a Gap Analysis

Evaluate your current sustainability disclosures to identify discrepancies with the SSBJ requirements:

Compare your existing ESG reporting (e.g. based on the Task Force on Climate-related Financial Disclosures (TCFD)) to the new standards

Identify unaddressed areas such as:

  • Scope 1–3 greenhouse gas emissions
  • Climate scenario analysis and risk modelling
  • Governance structures for sustainability oversight

This diagnostic step is critical for prioritising areas needing improvement and investment.

3. Build Data Infrastructure

SSBJ-aligned reporting demands data that is verifiable, comparable and auditable:

  • Upgrade internal data systems to consistently track ESG metrics over time
  • Integrate tools or platforms that help automate data collection, calculation, and visualisation of KPIs
  • Ensure that systems can capture forward-looking metrics and scenario outcomes, especially under the Climate Standard
  • Robust infrastructure lays the foundation for credible disclosures and future assurance.

 

4. Secure External Assurance

The SSBJ places strong emphasis on reliability and third-party assurance:

  • Engage qualified assurance providers early to evaluate internal controls and data reliability
  • Prepare documentation, audit trails and metadata that support the transparency of your reported figures
  • Align with existing assurance frameworks (e.g. ISAE 3000) to streamline verification
  • Assurance not only meets regulatory expectations but also enhances investor confidence.

 

5. Strengthen ESG Governance

Effective sustainability reporting is underpinned by strong governance and leadership:

  • Designate responsibility for ESG reporting at board level or senior executive leadership
  • Create cross-functional ESG task forces to implement disclosure standards across departments
  • Provide ongoing training for staff to understand the strategic and regulatory importance of the SSBJ standards
  • Embedding sustainability into governance ensures accountability and long-term integration into business strategy.

Aviation Sector Integration of SSBJ’s reporting standard

Japan’s aviation sector is leading in adopting the Sustainability Standards Board of Japan (SSBJ) framework, especially for reporting on Sustainable Aviation Fuel (SAF) and climate-related risks. This aligns with ICAO’s CORSIA and domestic expectations for Scope 1–3 emissions disclosure, climate scenario analysis, transition plans, and governance structures.

SAF as a Cornerstone

Japan targets 10% SAF usage by 2030, supported by METI/MLIT and initiatives like ACT FOR SKY and the SAF Public-Private Council. Cosmo Energy’s Sakai refinery, completed in December 2024, began trial SAF production in January 2025. Full-scale output of 30,000 kilolitres annually started in April 2025, supplying JAL, ANA, DHL, and the JASDF’s Blue Impulse team. The facility is ISCC CORSIA/EU-certified.

Aviation Finance & ESG Alignment

Aviation financing increasingly incorporates SSBJ-aligned disclosures and Sustainability Performance Targets (SPTs) tied to emissions or SAF usage, enhancing transparency and reinforcing Japan’s low-carbon aviation goals.

Key Milestones for the SSBJ Reporting Standards

  • 2022: SSBJ established under the Financial Accounting Standards Foundation; SAF Public-Private Council formed
  • 2024: Draft sustainability standards released for public consultation; JAL and ANA decarbonisation plans certified
  • March 2025: Final SSBJ standards published; voluntary reporting begins for Prime Market-listed firms
  • April 2025: Cosmo Energy launches Japan’s first SAF production facility
  • Fiscal Year 2026: Voluntary adoption begins for eligible firms
  • Fiscal Years 2027 to 2029: Mandatory phased adoption begins based on market capitalisation

Conclusion

Japan’s 2025 sustainability disclosure framework represents a significant shift toward globally aligned ESG transparency. With detailed reporting obligations, third-party assurance requirements, and integration into finance instruments, the standards provide a roadmap for meaningful climate action and investor trust. The aviation sector’s early compliance—through SAF milestones and disclosure-aligned financing—highlights what is possible across industries.

 

References

  1. Sustainability Standards Board of Japan. (2025). Final 2025 Sustainability Disclosure Standards. https://www.ssb-j.jp/en/ssbj_standards/2025-0305.html
  2. Kim & Chang. (2025). Japanese ESG developments: mandatory sustainability disclosure. https://www.kimchang.com/en/insights/detail.kc?idx=31910&sch_section=4
  3. Reuters. (2025). Japan’s Cosmo to supply domestic SAF to two airlines from April. https://www.reuters.com/sustainability/climate-energy/japans-cosmo-supply-domestic-saf-2-airlines-april-2025-01-27
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