The Financial Services Agency would write Japan's sustainability-assurance standards itself, on the model of international rules, and ideally finish by the end of March 2027, according to a draft opinion prepared for the Corporate Accounting Council's third sustainability assurance subcommittee meeting. The meeting is scheduled for October 29, 13:00 to 15:00, with a secretariat explanation and discussion on the agenda.
The document is a draft: its date is left blank, and it says it sets no new requirements. Providers must follow the standards the FSA eventually writes, not the opinion. Earlier Tokyo Brief coverage
Who is covered, and what is checked
The draft starts from legislation enacted in July 2026. It amends the Financial Instruments and Exchange Act and the Payment Services Act to require certain Prime Market companies to disclose under SSBJ standards and obtain third-party assurance on that information. The draft says assurance becomes mandatory from the March 2028 fiscal year-end for Prime Market companies with a market capitalisation of ¥3tn or more.
For the first two years of the regime, the draft says, mandatory assurance would cover Scope 1 and 2 greenhouse gas emissions, governance and risk management. Coverage from the third year is left to later review in light of international developments. The assurance level would be limited, and the draft says a move to reasonable assurance is not to be examined. It also says the law needs to define the specific scope and applicable criteria where only part of a company's sustainability disclosure is assured. Anything outside that scope becomes "other information" that the provider must read and consider.
Who writes the rules
The draft names three Japanese standards: JSSA 5000 for assurance engagements, JSQM 1 for quality management and JESSA for ethics and independence. They are based on the International Auditing and Assurance Standards Board's ISSA 5000 and the international ethics board's IESSA, treated as equivalent in principle with Japan-specific adjustments.
The draft proposes the FSA as standard-setter because no self-regulatory body exists for sustainability-assurance providers, and because audit firms and other providers can both register if they meet the requirements. It points to practice guidance the Japanese Institute of Certified Public Accountants published in March 2026. The FSA would amend that guidance so firms of either kind can comply, and would consult preparers, providers and investors before finalising.
One subcommittee member from a quality-assurance foundation, who will be absent on October 29, submitted written comments. The member supports the draft and asks the FSA to examine whether guidance written mainly for audit-firm practice works for other providers.
Where Japan departs from the international text
The draft proposes three additions. Providers would agree with the client in advance which body to treat as "those charged with governance", with the board of directors or an audit and supervisory body as examples. Engagement quality review modelled on ISQM 2 would be required. Handover between providers and joint assurance would become explicit requirements, because the international standards have no detailed rules on them.
Where the provider is not the financial-statement auditor, the draft says confidentiality duties should not by themselves stop the two from communicating. It suggests providers agree with the company beforehand on cases where confidentiality is lifted.
The standards are to be designated through related legislation, and the draft asks the FSA to settle how they relate to the institute's guidance in consultation with the parties concerned.