• Global Consistency Advocated: Norges Bank urges Japan to align its sustainability disclosure standards with global frameworks like the ISSB’s IFRS S1 and S2.
• Reporting Consistency Highlighted: The bank emphasizes the need for synchronized financial and sustainability reporting periods, particularly in GHG emissions disclosures.
• Mandatory Climate Disclosures: Norges Bank insists on making climate-related risk and opportunity disclosures mandatory in Japan’s standards.

Norges Bank Investment Management (NBIM), the investment arm of the Norwegian Central Bank, has submitted a letter to the Sustainability Standards Board of Japan (SSBJ) advocating for enhanced alignment between Japan’s sustainability disclosure standards and the global framework established by the International Sustainability Standards Board (ISSB). The letter, dated July 31, 2024, emphasizes the critical importance of consistent, comparable, and reliable information for long-term investment decisions.

NBIM, which manages the Norwegian Government Pension Fund Global with assets totaling ¥215,031 billion at the end of 2023, including ¥10,793 billion invested in Japanese companies, highlighted the need for Japan to closely follow the ISSB’s global baseline standards, specifically IFRS S1 and S2. “We strongly support the ISSB and its mission to deliver a global baseline of disclosure standards that provide decision-useful information to investors,” NBIM stated, underscoring the importance of global comparability in sustainability disclosures.

The bank welcomed the SSBJ’s efforts to align Japan’s standards with these global benchmarks but suggested further refinements. NBIM recommended limiting deviations from the ISSB standards and instead addressing any jurisdiction-specific requirements through additional disclosures rather than modifications. This approach, they argue, would reduce fragmentation and enhance the comparability of sustainability information across markets.

A significant concern raised in the letter pertains to the potential misalignment between financial reporting periods and sustainability reporting periods, particularly regarding greenhouse gas (GHG) emissions. NBIM warned that allowing different reporting periods could hinder the connectivity between financial and sustainability disclosures, thereby impairing investors’ ability to fully understand the financial implications of sustainability risks and opportunities. “The reporting period for GHG emissions should be the same as for all reported information to ensure its timeliness and consistency,” the letter recommends.

Moreover, NBIM urged the SSBJ to make climate-related risk and opportunity disclosures mandatory under its standards, rather than optional. They emphasized that such disclosures are crucial for informed investment decision-making. “These disclosures are important for investors and should remain mandatory under the SSBJ Standard,” NBIM asserted, reinforcing the need for comprehensive climate-related information to be available to investors.

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The letter also called for full alignment with the ISSB standards in areas such as internal carbon pricing and the sections on “Resources and Relationships” and “Dependencies and Impacts.” NBIM suggested that adopting the precise language used in the global standards would ensure greater clarity and consistency in reporting.

In conclusion, NBIM reaffirmed its commitment to engaging with the SSBJ on these issues, expressing readiness to discuss their recommendations further. The letter represents a significant contribution to the ongoing global dialogue on sustainability disclosure standards, highlighting the crucial role of investor feedback in shaping effective and transparent reporting frameworks.

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