GFANZ Secretariat Feedback to the Sustainability Standards Board of Japan’s Exposure
Drafts of Sustainability Disclosure Standards
About GFANZ
Launched in April 2021, the Glasgow Financial Alliance for Net Zero (GFANZ) is a global
coalition of eight independent sub-financial sector alliances committed to supporting thetransition to net-zero emissions by 2050, in line with Paris Agreement goals. GFANZ Alliances
members include more than 675 financial institutions – including banks, insurers, asset owners,
asset managers, financial service providers, investment consultants, venture capital firms, andexport credit agencies — from across 50 countries. This includes 25 net zero committed
Japanese financial institutions across the sector-specific alliances that GFANZ supports.
An early priority for GFANZ was to develop global guidance for best-practice net-zero transition
planning and transition plans. Working with a diverse set of financial institutions, technicalbodies and other stakeholders globally, and building on the early guidance that the Task Forceon Climate-Related Financial Disclosures (TCFD) provided on transition plan disclosures (andwhich are also reflected in the ISSB standards), GFANZ delivered — through a CEO-chaired
workstream and global consultation that incorporated over 1,000 points of feedback – thecommon, voluntary GFANZ Net-Zero Transition Plan (NZTP) Framework in November 2022.
In June 2022, GFANZ launched its Asia-Pacific (APAC) Network to support engagement withfinancial institutions and policymakers across APAC, incorporating feedback and ensuring its
work on net zero is inclusive and applicable to all. To further accelerate these efforts, theGFANZ Japan Country Chapter was launched in May 2023. The Japan Chapter exists tosupport local financial institutions in appropriately sharing knowledge and best practices ondeveloping net-zero transition plans, and to support financial institutions in their work withrelevant public and private stakeholders on other policies and initiatives necessary to deliver ajust transition.
For example, as part of this work, the GFANZ Japan Chapter has organised capacity building
sessions to educate local financial institutions on transition planning and GFANZ’s NZTP
Framework, using the GFANZ Workshops in a Box1, translated into Japanese. These sessions
have been targeted at smaller financial institutions that are not members of the GFANZ
Alliances. In addition, in March 2024, the GFANZ Japan Chapter released a 2024 Chapter
Statement, supported by seventeen leading Japanese financial institutions, stressing theimportance of whole-economy transition and credible net-zero transition planning, and calling on
domestic policymakers to “raise awareness and support uptake of and disclosure of transition
plans that are credible, comparable, and transparent.”

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The GFANZ Workshops in a Box are a series of presentation materials that inform and educate on theGFANZ NZTP framework. The presentations contain all the information needed to hold workshops withminimal preparation. These basic workshops aim to provide an overview of the GFANZ’s guidance on
net-zero transition planning, are suitable for a broad spectrum of users, and can be used in any order.

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Feedback to the SSBJ Exposure Drafts
The GFANZ Secretariat welcomes the opportunity to provide feedback on the Sustainability
Standards Board of Japan (SSBJ)’s Exposure Drafts of Sustainability Disclosure Standards. In
our response, we have sought to focus on those issues that are most relevant to GFANZ workto develop frameworks, approaches and tools to support the global financial sector in supporting
whole-economy transition in line with science-based pathways limiting warming to 1.5 degrees.
1. Climate-related financial disclosures
The GFANZ Secretariat is a strong supporter of enhanced climate-related financial disclosures
globally, and we welcome Japan’s commitment to introducing internationally-aligned andstandardised mandatory climate-related disclosure requirements based on ISSB IFRS S1 andS2. Domestic implementation of ISSB standards will help ensure that Japanese companies areable to communicate to investors about the sustainability-related risks and opportunities they
face over the short, medium and long term using a common language and framework.
Given the deep interdependencies that exist between the financial and corporate sectors, it isparticularly welcome that Japan’s Financial Services Agency (FSA) intends to make therequirements mandatory for corporates and financial institutions listed on Tokyo Stock
Exchange Prime Market. By embedding climate-related financial disclosures across both thefinancial sector and real economy, Japan will be well-placed to seize on their intended utility andbenefits, in terms of enabling more effective asset pricing and capital allocation.
The GFANZ Secretariat also commends the SSBJ for ensuring a high degree of alignment with
the ISSB’s recommendations and proposed transition reliefs. It is particularly welcome that inline with ISSB recommendations, the Exposure Drafts limit the exemption period for Scope 3
reporting to one year. In considering additional reporting exemptions and/or adaptations (e.g.,deferring application of the assurance scheme or extending transition reliefs), we would
encourage the SSBJ and market regulators to continue to follow through with timely
implementation and seek alignment with ISSB recommendations wherever possible. Deviatingfrom ISSB recommendations and/or setting transition reliefs that go beyond ISSB proposals
could result in a gap between the ISSB and SSBJ standards, impacting global consistency andpotentially resulting in regulatory fragmentation. This is an especially relevant consideration,
given that many major Japanese firms operate globally and will have to consider emerging
climate disclosure requirements outside of Japan, as will global firms headquartered outside ofJapan but with a significant presence in Japan.
2. Transition Planning
It is very welcome that, in line with ISSB IFRS S2, the Exposure Drafts introduce an expectation
for firms to disclose any transition plan they have. GFANZ believes that strategic transition
planning by governments, financial institutions, and corporates is central to securing an orderly2transition2 to net zero, and is highly supportive of efforts to increase the quantity and quality oftransition plans across the corporate and financial sectors. As highlighted in the 2024 GFANZ
Japan Chapter Statement, leading Japanese financial institutions are similarly supportive ofeconomy-wide transition planning, and recognize that credible corporate transition plans andenhanced climate disclosures (including transition plan disclosures) are critical to scalingtransition finance and accelerating real economy decarbonization. To that end, they are actively“encourag[ing] major corporations and financial institutions to voluntarily develop transition
plans, utilizing the voluntary GFANZ framework which sets out key elements of transition plansthat support credibility, comprehensiveness and comparability.” They are also committing to“independently engaging with [their] clients on their transition plans, to help ensure that financewill get to where it can bring the greatest decarbonization benefits.”
By including the IFRS S2 transition plan disclosure requirement in the Exposure Drafts, Japan isamongst a growing set of leading regulators setting such expectations. However, we note thatbeyond a high-level requirement to disclose any transition plan a firm has - along with key
assumptions and dependencies - ISSB standards do not yet provide any detailed guidance on
what exactly firms should disclose and by extension what a transition plan should consist of.
It is therefore welcome that IFRS have recently announced that they intend to progress work ontransition plan disclosures through ISSB, including by taking ownership of the UK’s Transition
Plan Taskforce (TPT) Disclosure Framework and developing educational materials for firms,
drawing on existing best practice approaches3. GFANZ understands that in time they willconsider developing formal ISSB guidance, aligned with their governance and stakeholder
outreach processes.
Given the importance of transition planning and the need to embed it across the real economy
and financial system in a way that ensures global consistency, we would encourage the SSBJ
and Japan’s national regulators to engage with and ensure alignment of any guidance being
developed for Japan with these forthcoming approaches from ISSB.
By promoting alignment around emerging common frameworks, the SSBJ could help ensurethat Japan’s companies and financial institutions have the tools and guidance they need toproduce and disclose transition plans that are credible, comprehensive and comparable.
The SSBJ could note, for example, they would expect the ISSB’s future transition plan
educational materials and formal guidance to be used by Japanese firms and to be brought into
the Japanese disclosure framework at an appropriate time.

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GFANZ uses the term “orderly transition” to refer to a net-zero transition in which both public policychanges and private sector action are early and ambitious, thereby limiting economic disruption related tothe transition (e.g., mismatch between renewable energy supply and energy demand). This explanation
applies to all mentions of the term “orderly transition” in this document.
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https://www.ifrs.org/news-and-events/news/2024/06/issb-delivers-further-harmonisation-of-the-sustainabili
ty-disclosure-landscape-new-work-plan/3

In the meantime Japan could recommend that firms take account of best practice market
approaches, including voluntary frameworks such as the GFANZ Net-Zero Transition Plan(NZTP) Framework4 which identify core themes that are important for delivering credible,comprehensive and consistent transition plans and are being adopted by a range of national
and international initiatives. In the GFANZ framework, these are:
1. Governance: a set of measures to oversee, incentivize and support implementationof a plan at all organizational levels (e.g., board oversight, executive remuneration
linked to net-zero objectives, developing necessary skill sets among staff)
2. Foundations: an articulation of the organization’s overall approach to net-zero (forfinancial institutions, this includes general strategy for scaling finance across thefour transition financing strategies)
3. Implementation Strategy: to align business activities, products, services, andpolicies with the net-zero objectives
4. Engagement Strategy: to engage with external stakeholders in support of net-zeroobjectives (across government and public sector, industry peers and clients,portfolio companies, and – in the case of real-economy companies – the valuechain)
5. Metrics and Targets: using a suite of metrics and targets to assess and monitor
progress towards the net-zero objectives (including real-economy transition,
portfolio emission and plan execution metrics and targets)
Many leading jurisdictions – including the UK TPT, US Treasury Principles on Net ZeroFinancing and Investment, and Hong Kong Monetary Authority’s Planning for Net Zero
Transition – have taken such an approach and issued transition plan guidance that goesbeyond the very high-level requirements set out in ISSB standards, and explicitly leverages
existing market best practice, such as the GFANZ NZTP Framework. Providing arecommendation to firms that they should apply market best practices is important for ensuringthat firms prepare and disclose transition plans that are credible, comprehensive andcomparable, and that users of financial reports are able to utilize transition plans to effectively
assess and compare strategies for net-zero transition.
The G20, FSB, IOSCO and the other standard setting bodies are also undertaking importantwork on transition planning. The Japanese authorities play a vital role in ensuring that this work
supports regulatory convergence and raises expectations around firm and regulatory
approaches to the development and disclosure of transition plans.
4The Framework is a voluntary tool which aims to provide financial institutions with background on
potential avenues for meeting net zero commitments intended to address the financial and economic risks
and opportunities posed by climate change and the transitions that would be necessary to mitigate thoserisks. It does not prescribe a specific course of action but offers information and options to help thosefinancial institutions preparing net zero transition plans. – please see the ‘How to Read this Report’section of the Framework for more information.

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