July 19, 2024

Fukoku Seimei Building 20F,

Impax Asset Management
Hong Kong Limited
Unit 15, 16th Floor
Nexxus Building
41 Connaught Road
CentralHong Kong

2-2-2, Uchisaiwai-cho,

impaxam.com

Sustainability Standards Board of Japan

Chiyoda-ku, Tokyo,
Japan 100-0011

By Email:
Re: The Sustainability Standards Board of Japan’s Exposure Drafts of Sustainability
Disclosure Standards to be applied in Japan
Dear Sustainability Standards Board of Japan Members,
Impax Asset Management is a company founded in 1998 that specialises in making
sustainable investments in companies contributing to the transition to a more sustainableeconomy. Nowadays, we are one of the world’s largest specialised asset managers in thesustainable investing field. We are also a long-term investor that has been investing in theJapan market for over two decades. In March 2023, Impax opened our Tokyo office upon thesupport from the Tokyo Metropolitan Government.
We are pleased to have this opportunity to comment on the Sustainability Standards Boardof Japan (SSBJ)’s Exposure Drafts of Sustainability Disclosure Standards to be applied in Japan
based on the International Financial Reporting Standards (IFRS) Sustainability DisclosureStandards, issued on March 29, 2024. We would like to first congratulate you for issuing thisdraft which we understand had been in discussions with the Financial Services Agency (FSA)
and the ISSB’s Japan office since 2022. We believe this marks an important benchmark in theJapanese capital market development that will be welcomed by both domestic andinternational investors and serve as a starting point for the development of local standards.
In making this draft, we appreciated the SSBJ’s efforts in listening to the opinions fromvarious stakeholders, including the government, regulators, investors, related organisations,private experts, academics and so on. We particularly like the fact that the SSBJ decided toincorporate all requirements in the IFRS Sustainability Disclosure Standards (namely, IFRS S1and IFRS S2) with a few local adjustments that Japan issuers can choose to apply. We are also
encouraged by the emphasis on disclosing market-based as well as location-based scope 2
greenhouse gas (GHG) emissions and provide information about any contractual instruments
IMPAX ASSET MANAGEMENT HONG KONG LIMITED
Unit 15, 16th Floor, Nexxus Building, 41 Connaught Road, Central, Hong Kongthat is necessary to help readers’ understanding. It is also great that the draft asks companies
to disclose their scope 3 GHG emissions, which we found could represent the most of many
Japanese companies’ carbon footprints. This information is often material for us investors.
Impax has been promoting our invested companies in Japan to follow this practice for many
years through continuous engagements with local companies and regulators.
However, we still see some room for the improvement of this draft and here are somesuggestions based on our engagements and experience on similar topics with regulators andcompanies in the Asia-Pacific region for your reference:•On the high level, we are concerned that the draft standards allow for different
reporting periods for climate reporting and financial statements. The draft allows
entities subject to the Japanese Act on Promotion of Global WarmingCountermeasures to follow alternative reporting periods for GHG emissions. We thinkthat to ensure investors are provided with timely and comparable information, thereporting period should be the same for all material information disclosed.

•

More specifically, the draft mentioned that when climate-related considerations arefactored into executive remuneration but combined with other considerations, thecompany could choose to disclose that fact or not. We do not agree with the reason
given that climate-related considerations cannot always be separately identified. We
are worried that this would be abused by some companies to delay the incorporationof climate-related considerations into their executive compensation restructuring.

•In addition, we think the scenario analysis for climate resilience assessment is thecore of the TCFD disclosure. So, we do not fully agree with the draft that an entity
may disclose based on the results of the entity’s resilience assessment in the previous
reporting period if other theme-based sustainability disclosure standards issued by
the SSBJ do not have specific requirements. We understand it may not be necessary
for an entity to assess its climate resilience in each reporting period, but given thechanging climate, we feel it is necessary to set a deadline for each reassessment. For
example, a reassessment every five years with no significant changes in disclosures.

•On internal carbon pricing, we noticed that the wording used in the draft was a bit
ambiguous. We encourage the SSBJ to use the same wording as in the ISSB Standards
to ensure that information disclosed by Japanese companies can be compared byinvestors across different markets.

•We were encouraged to see that in early 2024, the Tokyo Stock Exchange has
required all Prime-listed companies to provide English disclosures after March 2025.
However, we are disappointed by the fact that this whole consultation draft was only
available in Japanese. Although we appreciated the summary of differences offered inIMPAX ASSET MANAGEMENT GROUP PLC
7th Floor, 30 Panton Street, London, SW1Y 4AJ, UK. Office: 7th Floor, 30 Panton Street, London, SW1Y 4AJ, UK. Registered in England, Company Registration No:3262305 VAT Reg No: 743707624

English, it is still challenging for foreign investors like us to respond to thisconsultation. We believe this is against the goal of the Japanese government toattract more foreign investors to the market.
•Last but not least, from our communications with some local stakeholders, it wasbrought into our attention of the apparent lack of coordination between the SSBJ andthe FSA. We understood that this had been resolved over the past few months, but
we are still wary by this potential conflict. This is on top of the overlapped disclosure
requirements Japanese issuers face in various reports in the past and amid thepushback from issuers in general for higher compliance burden. We would be grateful
if the SSBJ, the FSA and other relevant authorities would improve the coordination.

We would like to conclude our letter by sharing the vision that we believe the Japan
market will be much more attractive to international investors with a higher sustainability
standard and more transparency from market disclosures (including more Englishdisclosures). We look forward to seeing if the proposal in this exposure draft will be madeinto the disclosure requirements for Prime-listed companies in the near future. We hope
our suggestions above will make a constructive contribution to the ongoing developmentof the Japanese capital market and economy. Thank you!

Yours truly,

Nana Li
Head of Sustainability & Stewardship, Asia-Pacific
Impax Asset Management

IMPAX ASSET MANAGEMENT GROUP PLC
7th Floor, 30 Panton Street, London, SW1Y 4AJ, UK. Office: 7th Floor, 30 Panton Street, London, SW1Y 4AJ, UK. Registered in England, Company Registration No:3262305 VAT Reg No: 743707624