Adapting to Japan's ESG Regulations: How Dasseti Helps Companies Stay Compliant

In March 2023, Japan took a significant step toward enhancing transparency in corporate sustainability. The Financial Services Agency (FSA) introduced mandatory sustainability disclosure rules that apply to all listed companies. This move highlights Japan’s commitment to improving the quality and accessibility of sustainability-related information, keeping the country at the forefront of global ESG standards.

What the New Rules Entail

The new regulations require companies in Japan to integrate sustainability information directly into their annual securities reports. These disclosures must follow the Task Force on Climate-related Financial Disclosures (TCFD) framework, focusing on four key pillars: governance, strategy, risk management, and metrics & targets.

In addition to these measures, the Tokyo Stock Exchange revised its Corporate Governance Code in June 2021. This revision compels companies listed on the Prime Market to disclose climate-related information aligned with TCFD recommendations, positioning Japan as a global leader in ESG disclosure.

Japan’s Continued ESG Leadership

Japan’s proactive approach has made it a leader in TCFD adoption, boasting one of the largest numbers of organizations supporting the TCFD globally. This commitment continues as the Sustainability Standards Board of Japan (SSBJ) works toward new standards, expected by 2025, that align with the International Sustainability Standards Board (ISSB) standards.

These regulations will impact not only Japanese companies but also foreign companies listed on the Tokyo Stock Exchange and Japanese firms operating globally, many of whom may face additional requirements, such as the EU's Corporate Sustainability Reporting Directive (CSRD).

How Dasseti Can Support TCFD Compliance

As companies work to navigate this evolving regulatory landscape, Dasseti offers critical tools for ensuring seamless compliance with Japan’s TCFD-aligned sustainability rules.

Streamlined Data Collection

Dasseti ESG simplifies the process of collecting and managing ESG data. Organizations can gather ESG metrics from General Partners (GPs), portfolio companies, and more. Our platform allows users to:

• Directly aggregate data at multiple levels—manager, fund, and underlying entity—ensuring compliance and enabling performance tracking.
• Customize metrics according to the TCFD guidelines, allowing for flexibility in adapting to both current and future regulatory frameworks.

Advanced Reporting Capabilities

Dasseti’s reporting tools are built to meet the demands of regulatory compliance:

• Dynamic dashboards enable users to visualize ESG data and generate insights for internal strategies and external reporting.
• Client-specific reporting allows automated generation of reports tailored to meet both client and regulatory needs, ensuring full compliance with TCFD standards.

Benchmarking and Validation

Dasseti partners with Clarity AI to offer access to industry benchmarks, helping companies validate their ESG performance:

• Comparative analysis: Users can benchmark their ESG data against peers using Clarity AI’s extensive database of over 70,000 companies, crucial for demonstrating compliance.
• Data gap solutions: Where data is missing, Dasseti can draw from proxy data to provide a comprehensive picture for reporting.

Adapting to Future Regulatory Changes

Dasseti is built to evolve alongside changing regulations:

• Metric flexibility: Organizations can easily adjust data collection and reporting as new ESG rules emerge, keeping compliance processes agile.
• Ongoing improvement: The platform encourages continuous tracking and refinement of sustainability disclosures, ensuring firms remain aligned with regulatory expectations.

Conclusion

As Japan continues to lead the way in sustainability disclosure, organizations must keep pace with these expanding requirements. By leveraging Dasseti’s ESG solutions, companies can not only comply with current regulations but also prepare for future developments in ESG standards. In doing so, they will strengthen their sustainability credentials and maintain a competitive edge in the market.

For more information on how Dasseti can help your firm navigate Japan's ESG regulations now and in the future get in touch.