2026 will be remembered as a pivotal year for sustainability disclosure in Japan.
On February 20, an amendment to Cabinet Office regulations formally established the mandatory basis for including disclosure standards developed by the SSBJ (Sustainability Standards Board of Japan) in Annual Securities Reports (Yuho). The first mandatory fiscal year is the period ending March 2027 — fiscal years beginning on or after April 1, 2026. In the first year, companies with a market capitalization of ¥3 trillion or more are required to comply, though voluntary adoption is open to other listed companies, and early preparation efforts are already underway.
The SSBJ framework is based on ISSB's S2 standard (climate-related financial disclosures), requiring the identification of climate-related risks and opportunities, scenario analysis, and disclosure of Scope 1, 2, and 3 emissions. Of these, calculating Scope 3 — indirect emissions across the entire supply chain — is widely regarded as the most demanding aspect of preparation.
CBAM Moves Forward on the Same Timeline
Meanwhile, in the EU, the Carbon Border Adjustment Mechanism (CBAM) exited its transition period on January 1, 2026, entering full enforcement with actual carbon costs. The six covered sectors are steel, aluminum, cement, fertilizers, electricity, and hydrogen. Exports destined for the EU now require the purchase of CBAM certificates corresponding to carbon emissions generated during production. As certificate prices track EU Allowance (EUA) prices, this directly affects the EU export costs of Japan's steel and chemical manufacturers.
SSBJ (From April 2026)
A February 20 amendment to Cabinet Office regulations mandates inclusion in Annual Securities Reports (Yuho). The first year covers companies with a market capitalization of ¥3 trillion or more. Required disclosures include Scope 1/2/3 emissions and scenario analysis.
CBAM (From January 2026)
Mandatory purchase of CBAM certificates based on carbon emissions from the production of EU-bound exports. Covers six product categories: steel, aluminum, cement, fertilizers, electricity, and hydrogen.
A Shared Requirement
Both regulations require visibility into supply chain emissions. Scope 3 calculation data and CBAM reporting data largely overlap.
The First Real Cost Increases
Indian aluminum exports to the EU fell 41.7% following CBAM enforcement. Japanese manufacturers face the same structural risk.
What the Convergence of Two Regulations Means
The simultaneous activation of SSBJ and CBAM in 2026 ripples across multiple departments within a single organization. IR and disclosure teams advance SSBJ compliance — Scope 3 calculation and scenario analysis — while export and procurement teams confront the shifting cost structures imposed by CBAM.
Implications for Management, Procurement, and Engineering
Fiscal year 2026 marks the first year in which data preparation and organizational readiness for SSBJ and CBAM compliance shift into earnest. Companies managing the two regulations as separate projects will incur the cost inefficiency of duplicate supply chain emissions data management. Whether corporate planning, IR, procurement, and engineering teams can share a common data foundation will significantly determine compliance costs over the next three years.