The Japanese government is set to introduce mandatory climate reporting requirements for the country’s largest corporations as part of the next phase of its national emissions trading system. Starting in April, between 300 and 400 companies with annual direct (Scope 1) emissions of at least 100,000 metric tons will be required to adhere to the new regulatory framework.
The affected businesses collectively account for approximately 60% of Japan’s total emissions. Under the timeline established by the Ministry, these entities must submit detailed calculations of their climate footprints and formalise specific reduction targets by September 2027.
The initiative is a central component of the Green Transformation Emissions Trading System (GX-ETS). This cap-and-trade model follows similar implementations in the European Union and China, designed to incentivise heavy-polluting sectors to decarbonise. The GX-ETS serves as a primary pillar in Japan’s broader strategy to achieve net-zero emissions by 2050.
Formal trading within the market is scheduled to commence next year, following the official allocation of emissions allowances to participating firms. While the new rules necessitate increased reporting and third-party assurance activities, some covered entities have indicated the transition is manageable.
