30 July 2024
To: Sustainability Standards Board of Japan
Fukoku Seimei Building 20F, 2-2-2 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Subject: GRI’s response to the consultation on the public draft of the sustainability disclosure
standards
Dear Sustainability Standards Board of Japan,
With this letter, the Global Reporting Initiative (GRI) would like to offer our suggestions andrecommendations on the Sustainability Disclosure Standards published for public consultation.
GRI is an independent non-for-profit organization that has pioneered sustainability reporting since 1997.
With now over 14‘000 companies around the world using GRI Standards to report on their impacts, GRI
is the most widely used standard. GRI operates in public interest and serves a large pool of constituents– investors, businesses, civil society, labor unions, mediating institutions. The GRI Standards enableorganizations to report information about the most significant impacts of their activities and business
relationships on the economy, environment, and people, including impacts on their human rights.
We believe the objective of the Sustainability Standards Board of Japan is to provide stakeholders withmaterial sustainability information, ensuring that reporting entities do not overlook sustainability-relatedrisks and opportunities stemming from their operations and business relationships. In this regard, we
strongly encourage the adoption of the double materiality approach: even if not financially material at
the time of reporting, most, if not all, of the outward sustainability impacts of an entity’s activities andbusiness relationships will eventually become financially material issues.
Thus when adopting sustainability disclosure standards, it is important to consider placing impact
reporting on an equal footing with reporting financially relevant sustainability information. The mostefficient way to achieve this is through mandating the internationally-recognized sustainability reporting
frameworks, such as the IFRS Sustainability Disclosure Standards and the GRI Standards.
In addition to the main point, below is our detailed input for your consideration. This input is based on
GRI’s body of knowledge in sustainability reporting and reflects the evolving global debate on
sustainability information needs of a broad set of stakeholders:•We note that the objective of the Sustainability Standards Board of Japan is to transpose theIFRS S1 and S2. The IFRS Foundation and GRI together provide two ‘pillars’ of double
materiality reporting – a first pillar representing investor-focused capital market standards ofIFRS Sustainability Disclosure Standards developed by the ISSB, and a second pillar of GRI
sustainability reporting requirements set by the GSSB, compatible with the first, designed tomeet multi-stakeholder needs. This is recognized through the Memorandum of Understanding
signed by both organizations, committing to coordinate work programs and standard-setting
activities.

When it comes to climate reporting specifically, the requirements in GRI 305 Emissions 2016and IFRS S2 are highly aligned as, for example, both standards draw on the TCFD and theGHG Protocol (see the summary of interoperability considerations for GHG emissions jointly
published by the IFRS Foundation and GRI). The high degree of alignment will allow entities
that already disclose Scope 1, 2 and 3 GHG emissions using the GRI standards to report
information about GHG emissions in accordance with IFRS S2.
•Increasingly business enterprises and financial institutions are being mandated to disclose
information on a broad set of sustainability-related topics, beyond their financial impact on areporting entity itself. Adopting a framework that covers a range of sustainability topics can help
them respond to future information requests. GRI Standards include 31 Topic Standards,
providing guidance to companies on the most relevant information to report. In connection tothat, we note that both Practical Handbook for ESG Disclosure issued by Japan ExchangeGroup (JPX) in 2020 and the JPX-QUICK ESG Issues Commentary 2022 point reporters to theGRI Standards and lists a wide spectrum of topics to report on, beyond climate.

•Incorporating the GRI Standards under the mandatory ESG/sustainability disclosure regime canstrengthen the global competitiveness of Japanese companies. Particularly, this will prepare
reporting entities for requests from other jurisdictions, notably the European Union, or for
responding to information needs of business partners that fall within other jurisdictional reporting
regimes. To this point, GRI has been involved in the EU process as a formal co-constructor of
the European Sustainability Reporting Standards (ESRS) (based on double materiality) with theaim to ensure global alignment and maximum interoperability.
The ESRS also prescribe using the GRI Standards to report on material topics missing in thecurrent ESRS set of standards as the GRI Standards are more expansive. EFRAG (TheEuropean Standard Setter) and GRI have jointly published a GRI-ESRS Interoperability Index;
an easy to use tool allowing companies to re-use reported information and decrease thereporting burden.

•The positive aspect of the GRI Standards implementation is that it will not impose an additionalburden on Japanese companies but rather acknowledge and signal the existence of a levelplaying field: KPMG biennial Survey of Sustainability Reporting 2022 indicates nearly 90% GRIadoption rate among largest national 100 companies in Japan (N100). In addition to that, 75%of Japanese N100 companies seek assurance on sustainability reporting. The International
Federation of Accountants (IFAC) research published in February 2024 shows that information
disclosed using the GRI Standards is subject to assurance more often than that of any otherreporting framework.

We remain committed to continue exchanging views further, should you seek any clarification.
Sincerely,Peter Paul van de Wijs, GRI Chief Policy Officer