Challenges for Japanese Companies Regarding Assurance Opinions Under The Corporate Sustainability Reporting Directive

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The CSRD, which entered into force on January 5, 2023, imposes significant disclosure burdens not only on EU companies but on foreign companies operating within the EU regarding sustainability reporting. This paper examines the challenges that arise when Japanese companies seek assurance opinions compliant with the CSRD for their sustainability reporting. These challenges include the substantial room for improvement in Japanese companies’ sustainability management to seek CSRD-eligible assurance opinions, the lack of sustainability reporting standards that align with the ESRS, insufficiently established internal control processes regarding sustainability matters within companies, and the risk that Japanese assurance providers may be unable to express CSRD-compliant assurance opinions due to the absence of domestic qualification systems for assurance providers. To address these challenges, some form of policy response will be necessary. However, given the current situations, ultimately Japanese companies will likely need to address these challenges through self-help efforts.