Japanese listed companies will soon be required to report their greenhouse gas emissions and enhance their climate-related disclosure, under new policies developed by the Financial Services Agency (FSA).

According to a report seen by Nikkei, the Japanese regulator will require approximately 4,000 publicly-listed companies, including those listed on the Tokyo Stock Exchange (TSE), to make disclosures in accordance with Task Force for Climate-related Financial Disclosure (TCFD) recommendations, starting April 2022.

Under the new rules, companies will be encouraged to report on their climate governance, strategy, greenhouse gas metrics, and decarbonization targets.

Companies should also be required to disclose how they identify, manage, and mitigate risks associated with climate change.

The policy will gradually expand to cover all companies that submit annual securities reports after FY2023.

Japanese listed companies have been subject to mounting pressure to enhance their environmental reporting, in order to aid investor decision-making.

In a July comment letter to both the FSA and TSE, Glass Lewis gave its backing to the regulators’ decision to require TCFD-aligned reporting from prime market-listed companies but also brought to attention the importance of a provision requiring companies to establish an “oversight function” responsible for managing sustainability-related issues.