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Interim Report of the Study Group on Disclosure Policies for Non-financial Information Compiled

- Toward a virtuous cycle of sustainability-related information disclosure and creation of corporate value -

November 12, 2021

The Ministry of Economy, Trade and Industry (METI) inaugurated a Study Group on Disclosure Policies for Non-Financial Information in June. To date, the study group has held five sessions and discussed which direction to take in order to achieve high-quality disclosure of non-financial information both domestically and globally while sharing global trends regarding such information as well as policies and standards related to it. Today, METI has released an interim report summarizing the discussions held by the study group to date.

International moves regarding non-financial information have been picking up the pace: for example, the IFRS Foundation announced the inauguration of the “International Sustainability Standards Board (ISSB)” on November 3. This study group will continue to discuss sustainability disclosures while taking into account the progress of discussions both at home and abroad.

1. Background

In recent years, non-financial information has become increasingly important worldwide in terms of corporate disclosure. Typical examples include information on ESG (environmental, social, and governance) matters and MD&A (Management Discussion and Analysis regarding the financial, business performance, and cash flow situations). In line with this trend, companies inside and outside Japan are now committed to disclosing non-financial information through various media.

In addition, we are in the midst of global changes regarding the disclosure of non-financial information, such as the moves toward rule-making for disclosing non-financial information by European and U.S. regulatory authorities, existing standard-setters' organizational mergers, and the establishment of the International Sustainability Standards Board (ISSB) by the IFRS Foundation.

Against this background, METI inaugurated the Study Group on Disclosure Policies for Non-Financial Information in June, and has held five sessions to discuss which direction to take in order to achieve high-quality disclosure of non-financial information both domestically and globally.

2. Summary of the interim report

This interim report summarizes four key points that the preparers and users of information need to be aware of in order to disclose sustainability-related information in a way that expresses sustainable creation of corporate value, and presents them as four recommendations.

  1. Focus on value relevance in the sustainability-related information disclosure
  2. Demonstrate ownership in the application of sustainability disclosure standards
  3. Deepen understanding of the relevance between corporate value and sustainability information
  4. Disclose sustainability-related information in a manner that leads to dialogues with stakeholders

The study group has also presented the latest developments of parties involved in the disclosure of non-financial information (major standards setters, IFRS Foundation, EU, etc.), and has compiled its discussions on the disclosure of climate-related and human capital information, which is becoming increasingly important internationally, and key points to note when disclosing these kinds of information.

METI will use this interim report to promote high-quality sustainability disclosure and further dialogues (engagement) in Japan, and to facilitate discussions for this purpose. By actively communicating the content of the interim report both domestically and internationally, METI hopes that the essence of the study group's discussions will be incorporated into international discussions, including those in the ISSB.
In the future, the ministry will continue to discuss sustainability disclosure while taking into account the progress of discussions both at home and abroad.

Related materials

*English version of "Outline of the Interim Report" was posted on January 6, 2022. *English version of the "Interim Report" was posted on January 28, 2022.

Related Links

Division in Charge

Corporate Accounting, Disclosure and CSR Policy Office, Economic and Industrial Policy Bureau