Chair Yasunobu Kawanishi
Sustainability Standards Board of Japan
Fukoku Seimei Building 20F
2-2-2 Uchisaiwai-cho
Chiyoda-ku
Tokyo 100-0011
Japan19 July 2024
Dear Chair Kawanishi,
Subject: Draft Sustainability Disclosure Standards for JapanThe International Corporate Governance Network (ICGN) appreciates the opportunity tocomment on the Sustainability Standards Board of Japan’s draft Sustainability DisclosureStandards (the “SSBJ Standards”). We provide comments on the comparative summary
provided in English on the SSBJ’s website.
Led by investors responsible for assets under management of $77 trillion, ICGN is anauthority on global standards of corporate governance and investor stewardship.
Headquartered in London, our membership is based in more than 40 countries ICGN CEOJen Sisson is a Member of the Japan Financial Services Agency’s Council of Experts
Concerning the Follow-up of Japan’s Stewardship Code and Japan’s Corporate GovernanceCode. ICGN’s Global Governance Principles and Global Stewardship Principles, written froman investor perspective, are widely used by our members in their company assessments andvoting decisions, and by regulators when developing corporate governance rules. 1
We welcome the SSBJ’s efforts to develop sustainability disclosure standards
functionally aligned with the International Sustainability Standards Board’s (ISSB)
Standards. ICGN supports the ISSB’s mission to develop a global baseline of sustainabilityrelated corporate disclosures.2 Investors have been calling for comparable, reliable, andverifiable corporate sustainability disclosures grounded in financial materiality to makeinformed investment and stewardship decisions, and for their own reporting to beneficiaries.
Global adoption of the ISSB Standards is key to achieve this.
ICGN, alongside 120 investors, stock exchanges, and others, signed a statement by the UN
Principles for Responsible Investment (PRI) asking jurisdictions to commit to adopting theISSB Standards by 2025. 3 So far, jurisdictions representing over half the global economy byGDP, including Japan, announced steps to adopt or use the ISSB Standards.4
To ensure comparability, it is important that the ISSB Standards are adopted without
substantial modifications. Therefore, we respectfully ask the SSBJ to consider these points:

1 ICGN Global Governance Principles (2021), ICGN Global Stewardship Principles (2020)2 ICGN Letters “Inaugural global sustainability disclosure standards, International Sustainability Standards Board(ISSB)” (26 June 2023), “Proposed establishment of an International Sustainability Standards Board” (14September 2021)
3 UN PRI, London Stock Exchange Group, UN Sustainable Stock Exchanges initiative, World Business Council
for Sustainable Development, “Call to Action: ISSB Global Adoption” (22 May 2024)
4 IFRS Foundation, “Jurisdictions representing over half the global economy by GDP take steps towards ISSBStandards” (28 May 2024)

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To ensure that investors are provided with timely and cohesive information, thereporting period for GHG emissions should be the same as for all reportedinformation. We note that the SSBJ Standards allow different reporting periods forclimate reporting and financial statements.5 The SSBJ Standards allow entities
subject to the Japanese Act on Promotion of Global Warming Countermeasuresalternative reporting periods for greenhouse gas (GHG) emissions, which we advise
against, where and if possible.
Climate-related risks and opportunities disclosure requirements should be thesame as in the ISSB Standard (IFRS S2).6 The SSBJ’s proposal makes it optional,
rather than required, for companies to disclose the amount and percentage of assetsof business activities vulnerable to climate-related transition risks and physical risks,
and those aligned with climate-related opportunities. We believe these are important
disclosures that should be mandatory under the SSBJ standard.
We recommend full alignment with the ISSB Standards regarding internalcarbon prices.7 We encourage the SSBJ to use, to the greatest extent possible, thesame wording as in the ISSB Standards. This ensures that investors can compare
information disclosed by companies globally.
We recommend retaining IFRS S1 paragraphs B4-B5, which are currently
excluded from the SSBJ Standards.8 B4-B5 set out important explanations onresources and relationships that a company depends on and affects by its activities,
and throughout a company’s value and supply chain. These explanations help
illustrate the scope of information required for reporting in line with ISSB.

We are pleased to see the following:••

We welcome the requirement that the reporting shall align with theSustainability Accounting Standards Board (SASB).9 The SASB Standards, with
their industry-based approach, are an internationally recognised best-practice
blueprint for sustainability-related risk disclosures and are central to the ISSBStandards.
Finally, we commend the SSBJ for aligning its Scope 3 disclosure
requirements with the ISSB Standards. Investors need companies to disclose theirabsolute Scope 1, 2, and 3 GHG emissions.10 For many companies, Scope 3emissions can represent the majority of their carbon footprint, and this information isoften financially material. It is relevant for investors’ investment and stewardshipdecisions, and for their own reporting to their beneficiaries. Given that Scope 3disclosures are sufficiently captured by the ISSB Standards, we recommend theSSBJ to remove its proposed requirement ‘6. Total absolute amount of greenhouse

5 SSBJ, “Summary of Differences between IFRS Sustainability Disclosure Standards and the SSBJ ExposureDrafts”, 2. Reporting period, page 4
6 SSBJ, ibid., 5. Climate-related risks and opportunities, pages 6-7
7 SSBJ, ibid., 9. Internal carbon prices, page 15
8 ISSB, IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’, page 26
9 SSBJ, “Summary of Differences between IFRS Sustainability Disclosure Standards and the SSBJ ExposureDrafts”, 1. Sources of Guidance, page 3
10 See, for example, Institutional Investors Group on Climate Change, “Investor approaches to scope 3: Its
importance, challenges, and implications for decarbonising portfolios” (24 January 2024)

gas emissions’.11 Requiring an additional reporting element deviating from the ISSB
Standards may reduce comparability.
Thank you again for the opportunity to share our perspective. If you would like to follow up
with questions or comments, please contact our Global Policy Director, Séverine Neervoort(severine.neervoort@icgn.org) or Policy Executive, Wendela Rang
(Wendela.rang@icgn.org).
Yours faithfully,Jen Sisson
Chief Executive Officer, ICGN

11 SSBJ, ibid, 6. Total absolute amount of greenhouse gas emissions, page 13