How transition planning can shape Japan’s corporate strategy: six insights for 2026
How transition planning can shape Japan’s corporate strategy: six insights for 2026
The transition to a net zero economy is emerging as a core strategic priority for Japanese businesses. Organizations are navigating a rapidly evolving and complex landscape, where technological change and global market expectations compete with reporting demands and sustainability ambitions. Across the business community, there is growing recognition that credible transition plans are an essential part of long-term value creation, managing job security, supporting regional economies and maintaining competitiveness. Yet structural challenges remain, included limited access to consistent data and practical guidance, and a high reliance on coal and gas.
This creates a clear gap between intent and execution – one that well-designed transition plans can help bridge, unlocking opportunities to strengthen supply chain resilience, reduce costs, manage climate risks and capture new sources of growth.
To support this progress, Accounting for Sustainability (A4S) has convened senior leaders across business and finance to build mutual understanding and identify key drivers for sustainable progress. Gatherings have included a Transition Planning Symposium (March 2025), Early Adopter Forum meetings and a Finance Leaders’ Summit in Tokyo (October 2025).
These discussions highlighted emerging trends in shaping Japan’s transition landscape and the work still required to accelerate progress:
1. Japan is building a strong foundation for leadership and global competitiveness
Japan’s adoption of emerging sustainability standards has been consistently positive, with the country emerging as a leading force in the global adoption of the Integrated Reporting Framework, the Task Force on Climate-related Financial Disclosures (TCFD) and in aligning with international standards (IFRS S1 and IFRS S2). The government’s Green Transformation (GX) strategy is unique in its ‘whole of government approach’. Many participants emphasized how this alignment is helping create a more coherent reporting environment.
Japan’s strong regulatory base, combined with increasing complexity and uncertainty globally, provides Japanese organizations with a unique opportunity to lead the transition in global markets, particularly across Asia. Adapting to new commercial dynamics and implementing new rules present challenges, but the consensus among participants – both from corporates and regulators – was clear: navigating the switch to a net zero economy successfully can significantly enhance Japan’s global competitiveness.
By sharing best practices and addressing systemic bottlenecks, Japanese businesses and standard setters can ensure an effective just transition that secures both environmental goals and corporate resilience.
2. Transition planning should be a strategic value creation tool, not a compliance exercise
Robust transition plans drive better decision making and create value, something that is often lost in a focus on meeting compliance hurdles. This message was repeated across events, by corporates, investors, regulators and standard setters, such as the GX Acceleration Agency, the Financial Services Agency (FSA), Japan Exchange Group (JPX) and the International Sustainability Standards Board (ISSB). They stressed that organizations should move beyond viewing transition plans merely as a reporting obligation and instead recognize the strategic advantages they offer.
For CFOs, finance leaders and sustainability teams a practical starting point it to build a clear business case for transition – tailored to their specific organization and involving senior leaders from day one. This ensures external reporting is aligned with internal strategic priorities.
Aligning transition plans with the GX policy and international capital requirements also unlocks government support, as well as global investment. This approach could be tailored by industry:
High-emitting sectors can focus on practical greenhouse gas (GHG) reduction in collaboration with government bodies
Consumer goods companies can leverage GHG reduction (including scope 3) to respond to evolving consumer expectations and enter new markets
Financial institutions can play a critical role by engaging with corporate clients and investees to support their journey toward sustainable business models
3. Regulation and investor expectations are making credible transition plans essential
Japan’s regulatory landscape is evolving towards mandatory disclosure to “reform the entire economic and social system”, away from coal and oil to “a new structure relying on clean energy with no CO2”. 1
Participants in the GX emission trading scheme (GX-ETS) will be required to prepare transition plans from April 2026. In parallel, the Sustainability Standard Board of Japan (SSBJ) will introduce phased requirements for financially material climate-related disclosure, starting with the largest listed companies from April 2027.
Regulators are also introducing mechanisms, such as safe-harbour provisions and the ability to amend sustainability disclosures, to support organizations as practices mature.
Investors at our events noted that a lack of disclosure may increasingly be interpreted as the absence of a credible plan. However, they also acknowledged that many companies remain early in their transition planning and are navigating significant uncertainty. Transition plans should strengthen existing strategy by clearly articulating how and why the business is positioned to navigate the transition. What investors most value is evidence of practical actions and value creation – not broad statements on long-term intent and ambition.
4. Data and skills gaps are slowing progress
Data availability, as well as the ability to manage, process and use data effectively, are significant barriers to transition planning.
This is particularly the case for supply chain data. Organizations face high costs, incomplete and differing data standards and varying levels of maturity. Some participants suggested a single, regulator-backed public registry – led by government or standard setters – featuring standardized and verified sustainability, transition and nature-related disclosures could provide consistent definitions and reduce duplication and reliance on multiple proprietary providers.
At the same time, there is a recognized shortage in transition planning expertise, with a need for targeted skills development and capacity building across finance, corporate, investor and assurance providers.
5. Limited consumer willingness to pay a green premium constrains investment
Participants highlighted that many Japanese consumers – both corporate and individual – are reluctant to pay higher prices for more sustainable products. This makes it difficult for companies to justify a "green premium” required to invest in lower carbon alternatives. Addressing this issue was noted as requiring system-wide solutions, including public education and targeted government support, alongside corporate action to build awareness and demand.
6. Greater clarity is needed around emerging technologies
The sudden energy demand of AI highlights a wider concern around the impact of future technology on current roadmaps and investment plans. While the government has provided sector specific pathways, businesses expressed a desire for greater clarity on which technologies will receive sustained policy support. Many emerging technologies require economy-wide infrastructure and market changes, underlining the importance of consistent and coordinated government, industry and consumer backing.
Looking ahead
Momentum around transition planning in Japan is building and 2026 is expected to be a pivotal year. Creating confidential spaces for dialogue and peer learning is essential for stronger transition planning.
Through forums, workshops and publications, A4S’s work in Japan in 2025 brought transition planning firmly into focus for more than 60 Chief Financial Officers, Chief Investment Officers, Chief Sustainability Officers and other senior leaders from corporate Japan, alongside representatives from regulators, policymakers and standard setters.
In 2026, A4S will expand this work further – including through Early Adopter Forum meetings and a symposium in March – offering organizations across the country the opportunity to build capacity, deepen understanding and accelerate their transition planning efforts.
For organizations interested in participating, details of upcoming events will be shared via the A4S website and newsletter. To register interest in the Early Adopters Forum or for further information, please contact george.teng@a4s.org.
1. 2025, Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry
