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Japan

Governance

Equality legislation

In force

Companies with more than 40 employees (as of January 2026)

The law aims to ensure equal opportunities and treatment in employment for persons with disabilities and to enable them to function effectively in the workplace.

Companies with more than 40 employees are required to hire persons with disabilities so that they comprise at least a certain percentage of the total number of the company’s employees, are prohibited from discriminating against persons with disabilities, and are obligated to provide reasonable accommodations for disabled people.

This percentage was raised in 2024, and is due to be raised further, subject to consultation with businesses.

Governance

Government-led standard

Revised plan from December 24, 2025

The government, government-related organisations, local governments, and corporations

On December 24, 2025, Japan’s government revised its National Action Plan on Business and Human Rights (the “NAP”) to strengthen respect for human rights in corporate activities. This update reflects global trends and aims to align Japanese companies with international standards such as the UN Guiding Principles on Business and Human Rights.

The main pillars and focuses of the revised NAP are as follows:

  1. human rights due diligence and supply chains;
  2. the promotion of measures to "leave no one behind" (including women, foreign workers, children, people with disabilities, and the elderly);
  3. AI technology, the environment, and human rights;
  4. capacity building to promote the implementation of NAP core principles (e.g., providing information to small and medium-sized entities, and promoting awareness of the NAP);
  5. corporate disclosure, following international trends and standards;
  6. public contracts, including public procurement and subsidy projects, aiming to ensure that human rights are protected at all layers of the bidding and procurement process;
  7. access to remedies in cases of abuse(s) and failings; and
  8. the establishment of an implementation and monitoring system.
Social

Government-led standard

Published on September 13, 2022

All businesses that carry out activities in Japan

The Guidelines on Respecting Human Rights in Responsible Supply Chains (“the Guidelines”), issued in 2022, provide a soft law framework based on the UN Guiding Principles on Business and Human Rights and other international standards.

The Guidelines are not legally binding but aim to provide businesses with clear guidance on aligning their practices with these international standards. Adopted by the Government of Japan as part of its National Action Plan on Business and Human Rights (2020-2025), they emphasise the importance of respecting human rights within companies, their group entities, and throughout their supply chains, covering both upstream and downstream activities.

The Guidelines set out three core expectations for businesses:

  1. establishing a human rights policy that meets the objectives set out in Section 3 of the Guidelines;
  2. conducting and regularly updating human rights due diligence to identify, prevent, and mitigate adverse human rights impacts across the supply chain; and
  3. creating grievance mechanisms that enable individuals to raise concerns and seek remedies for human rights impacts, in accordance with the requirements set out in Section 5.1 of the Guidelines.
Governance

Corporate governance policy

In force (amendment will become effective from December 2026)

Entities operating in Japan

The Act aims to protect whistleblowers by prohibiting dismissal or other disadvantageous treatment on the ground of whistleblowing.

Business entities employing more than 300 employees on a regular basis are required to institute a whistleblower system. Those with 300 or fewer employees are required to “endeavour to instigate” such a system.

Disadvantageous treatment of employees includes, for example, a demotion, reduction of salary, or refusal to pay retirement allowance.

The Act was amended in June 2025, and the following changes will come into effect from December 2026:

  1. The amendments include a drive towards thorough implementation of current systems and a resulting enhancement of their effectiveness.
       
    In addition to the powers under the current law, under the new amendment the relevant authority is empowered to issue orders when recommendations are not followed, and criminal penalties for violation of the same (a fine of up to 300,000 yen). Furthermore, on-site inspections can/may take place and criminal penalties will be imposed for failure to report, false reporting, or a refusal of inspection. 
  2. The expansion of coverage to protect freelancers under the Act. 
  3. Addressing factors that inhibit public interest disclosures. 
  4. The strengthening of deterrence against adverse treatment arising from public interest disclosures (e.g., making void by law any contract or agreement that prevents or discourages lawful whistleblowing, and prohibiting attempts to identify whistleblowers unless there is a legitimate reason.)
      Governance

      Anti-money laundering policy

      In force

      Specified operators as defined in Article 2 of the Act on Prevention of Transfer of Criminal Proceeds (banks, securities firms, insurance companies, crypto asset exchange providers, real estate agents, and lawyers)

      establishes regulations aimed at combatting money laundering and the financing of terrorism.

      Specified operators are obliged to follow certain rules including but not limited to the following:

      1. Customer Due Diligence (KYC): operators must verify customer identity (name, address, date of birth) at the start of a transaction and apply enhanced checks for high-risk or non-face-to-face transactions;
      2. Transaction Purpose and Source of Funds: operators must confirm the purpose of each transaction and the source of funds involved;
      3. Record Keeping: operators must retain identity verification and transaction records for 7 years; and
      4. Suspicious Transaction Reporting: operators must promptly report to the authorities (JAFIC) if there is suspicion of money laundering or terrorist financing.

      In response to the recommendations outlined in the Financial Action Task Force’s Fourth Round Mutual Evaluation Report, Japan implemented a series of regulatory enhancements. Under the framework of this Act, effective June 2023, crypto-asset exchange providers became subject to notification obligations regarding virtual asset transfers.

      Governance

      Government (and Tokyo Stock Exchange)-led standard

      In force

      Companies listed on the Tokyo Stock Exchange

      The Securities Listing Regulations outline the duties and responsibilities of companies listed on the Tokyo Stock Exchange. The purpose of these regulations is to promote transparency and support appropriate informed investment decisions by requiring companies to disclose their governance structure and initiatives to investors.

      Based on the Securities Listing Regulations, all listed companies on the Tokyo Stock Exchange are obliged to submit a “Report Concerning Corporate Governance”, which must outline the company’s corporate governance policy and standards.

      Listed companies are also obligated to maintain compliance with timely and accurate disclosures of material information such as financial results, corporate actions, and governance changes. 

      Governance

      Corporate governance policy

      In force, originally enacted in 1948

      Companies listed on the Tokyo Stock Exchange

      The Act establishes rules governing securities (such as stocks and government bonds) and derivatives transactions (such as futures trading) to ensure fairness in capital markets and to protect investors.

      The Act imposes disclosure and unfair trading requirements (including insider trading and market manipulation) for listed companies and financial instruments business operators.

      From FY2023, in scope companies are obligated to include a section on sustainability in their annual reports.  Under the 2023 amendments to the Ordinance on the Disclosure of Corporate Affairs, in scope companies must also disclose the following additional information in their annual security report: 

      • governance structures and risk management processes related to sustainability;
      • policies and indicators for human resource development and training; and
      • specific indicators on female participation and advancement in the workforce.

      In scope companies may also make “Voluntary Disclosures”, comprising their strategies, metrics, and targets for sustainability-related risks and opportunities.

      Governance

      Corporate governance, environmental policy, sustainable finance and investments

      Phased mandatory implementation beginning March 2027

      Public companies listed on the Tokyo Stock Exchange Prime Market

      In March 2025, the Sustainability Standards Board of Japan published three sets of standards (collectively, the “SSBJ Standards”) aiming to align with the global IFRS S1 and S2 standards.

      1. the Application Standard, which tracks the basic requirements under IFRS S1;
      2. the General Standard, which focuses on sustainability related risks and opportunities under IFRS S1; and
      3. the Climate Standard, which mirrors IFRS S2 and sets out standards for climate related disclosure(s).

      The Financial Services Agency (“FSA”) has announced that Prime Market listed companies with a market capitalisation of JPY 3 trillion or more are required to prepare annual securities reports in accordance with SSBJ Standards from FY2027. In FY2028, this requirement will extend to companies with a market capitalisation of JPY 1 trillion or more, and in FY2029 companies with a market capitalisation of JPY 500 billion or more will also be subject to the requirement.

      Governance

      Government-led standard

      Revised plan from December 24, 2025

      The government, government-related organisations, local governments, and corporations

      On December 24, 2025, Japan’s government revised its National Action Plan on Business and Human Rights (the “NAP”) to strengthen respect for human rights in corporate activities. This update reflects global trends and aims to align Japanese companies with international standards such as the UN Guiding Principles on Business and Human Rights.

      The main pillars and focuses of the revised NAP are as follows:

      1. human rights due diligence and supply chains;
      2. the promotion of measures to "leave no one behind" (including women, foreign workers, children, people with disabilities, and the elderly);
      3. AI technology, the environment, and human rights;
      4. capacity building to promote the implementation of NAP core principles (e.g., providing information to small and medium-sized entities, and promoting awareness of the NAP);
      5. corporate disclosure, following international trends and standards;
      6. public contracts, including public procurement and subsidy projects, aiming to ensure that human rights are protected at all layers of the bidding and procurement process;
      7. access to remedies in cases of abuse(s) and failings; and
      8. the establishment of an implementation and monitoring system.
      Governance

      Principles on corporate governance

      In force

      Companies listed on the Main Markets (First Section and Second Section), Mothers Index and JASDAQ on a “comply or explain basis.

      The Governance Code provides for a number of ESG principles for listed companies, including but not limited to:

      1. the development of a basic ESG and sustainability policy together with disclosures in connection therewith;
      2. the enhancement of the quality and quantity of climate related disclosure; and
      3. disclosure of policies and voluntary measurable targets in respect of promoting diversity in senior management by appointing females, non-Japanese and mid-career professionals.

      In June 2021, the Corporate Governance Code was revised to encourage higher levels of governance in anticipation of the Tokyo Stock Exchange’s market restructuring in April 2022. Recent developments focus on:

      1. enhancing Board independence;
      2. promoting diversity; and
      3. increasing attention to sustainability and ESG factors.

      Although the Corporate Governance Code is not legally binding, nor does it contain any punitive provisions, applicable companies/investors who do not comply must fully explain their reasons for non-compliance. 

      Governance

      Principles for institutional investors

      In force

      Institutional investors who invest in the Japanese stock market.

      As of the end of November 2022, 322 domestic and foreign institutional investors have announced their acceptance.

      The Stewardship Code provides for a number of ESG principles for institutional investors, including but not limited to:

      1. instructing institutional investors to consider medium and long term sustainability in their management strategies in the course of their constructive engagement with investee companies; and
      2. requests institutional investors to clearly explain in their stewardship policies how they consider sustainability issues according to their investment management strategies.

      Similarly to the Governance Code, The Stewardship Code is not legally binding, nor does it contain any punitive provisions. However, investors who do not comply must be able to fully explain their reasons for non-compliance.

      A third revised Stewardship Code was released in June 2025. Some key changes include the following:

      1. institutional investors were encouraged to disclose the number and nature of shares held by them if requested by investee companies;
      2. the previous triennial review cycle was dropped in favour of continuous, responsive updates that reflect market conditions and global best practices; and
      3. the FSA urged proxy advisors and service providers to develop local expertise to facilitate meaningful communication and supervision, moving beyond mere compliance to proactive engagement.

      Existing signatories were expected to update their disclosures in line with the new Code by December 2025. 

      Governance

      Government-led standard

      In force

      Companies listed on the Main Markets (First Section and Second Section), Mothers Index and JASDAQ & institutional investors who invest in the Japanese stock market

      The Engagement Guidelines are intended to supplement the Governance Code and the Stewardship Code, summarising the agenda items for engagement that should be the focus of discussions by listed companies and institutional investors in order to promote constructive engagement between both parties.

      The Engagement Guidelines were revised in June 2021 to reflect recent developments in the Governance Code and the upcoming restructuring of the Tokyo Stock Exchange. Corresponding to the Governance Code revisions, the revised Engagement Guidelines include provisions that further encourage ESG factors, such as diversity and inclusion.  

      Governance

      Corporate governance policy

      In force (amendment will become effective from December 2026)

      Entities operating in Japan

      The Act aims to protect whistleblowers by prohibiting dismissal or other disadvantageous treatment on the ground of whistleblowing.

      Business entities employing more than 300 employees on a regular basis are required to institute a whistleblower system. Those with 300 or fewer employees are required to “endeavour to instigate” such a system.

      Disadvantageous treatment of employees includes, for example, a demotion, reduction of salary, or refusal to pay retirement allowance.

      The Act was amended in June 2025, and the following changes will come into effect from December 2026:

      1. The amendments include a drive towards thorough implementation of current systems and a resulting enhancement of their effectiveness.
           
        In addition to the powers under the current law, under the new amendment the relevant authority is empowered to issue orders when recommendations are not followed, and criminal penalties for violation of the same (a fine of up to 300,000 yen). Furthermore, on-site inspections can/may take place and criminal penalties will be imposed for failure to report, false reporting, or a refusal of inspection. 
      2. The expansion of coverage to protect freelancers under the Act. 
      3. Addressing factors that inhibit public interest disclosures. 
      4. The strengthening of deterrence against adverse treatment arising from public interest disclosures (e.g., making void by law any contract or agreement that prevents or discourages lawful whistleblowing, and prohibiting attempts to identify whistleblowers unless there is a legitimate reason.)
          Environmental

          Environmental policy

          In force

          National government, municipalities and business entities

          The Act aims to promote measures to combat global warming and thereby contribute to ensuring the healthy and cultural lifestyles of the present and future generations of the nation and to the welfare of humankind.

          The basic principle of the Act is to achieve decarbonization goals, consistent with the Paris Agreement, by  2050 by collaboration of citizens, national government, municipalities business entities., etc.

          The national government must establish a Global Warming Countermeasures Plan which includes basic matters concerning measures to be taken by the national government, municipalities, business entities, and citizens to reduce greenhouse gas emissions. Municipalities are required to establish a Municipality Action Plan consistent with the Global Warming Countermeasures Plan.

          While the Act expects most entities to use products in a manner that reduces greenhouse gas emissions as much as possible, those who are specified by the Cabinet Order as emitting a considerable amount must report matters regarding calculated greenhouse gas emissions.

          The Japan Green Investment Corp. for Carbon Neutrality ("JICN") is established under the Act to support business activities that reduce greenhouse gas emissions. The national government must constantly hold at least half of the stocks issued by JICN.

          Environmental

          Environmental policy

          In force from April 2022

          Manufacturers of plastic products, distributors of plastic products, single-use plastics providers, business entities that waste plastic products (excluding certain small and medium-sized enterprises), and local governments

          The purpose of this legislation is to reduce the environmental impact of the consumption and production of plastics through reducing their use and increasing their recycling. The Act outlines the following key obligations for in scope entities:

          1. manufacturers are required to manufacture plastic products in accordance with product design guidelines;
          2. certain single-use plastics providers (e.g. hotels, restaurants, food and beverage retailers) are required to take effective measures in order to reduce the discharge of plastic waste;
          3. manufacturers and distributors of plastic products are required to implement measures for the collection and recycling of plastic waste; and
          4. all business entities (excluding certain small and medium-sized enterprises) that dispose of or otherwise waste plastic products are required to implement measures to reduce the waste of plastic products and recycle plastic.

          Should certain single-use plastics providers’ measures be insufficient, the government will provide or impose guidance, recommendations, announcements, orders and/or fines.

          Furthermore, waste generators above a certain level are required to set targets for reducing waste and recycling and to publicly announce their progress.

          Environmental

          Public administrative law, industrial policy legislation, and environmental policy legislation

          In force since 2023; the 2025 amendment will take effect from April 2026

          (a) Businesses emitting more than 100,000 tons of CO2 annually (GX‑ETS companies);

          (b) Importers and suppliers of fossil fuels (from FY2028); and

          (c) Entities eligible for GX Investment Support

          The GX Promotion Act, formally the Act on the Promotion of Smooth Transition to a Decarbonised Growth-Oriented Economic Structure, entered into force in 2023. It established Japan’s Green Transformation (“GX”) strategy, brought JPY 20‑trillion worth of GX Transition Bonds (10 years) onto the market, created a carbon pricing scheme (ETS and fossil fuel surcharge), and instituted the GX Promotion Organisation.

          Under the 2025 amendment (scheduled to take effect in April 2026), the GX Promotion Act introduced the following key requirements:

          1. mandatory participation in the Green Transformation Emission Trading System (the “GX-ETS")
          2. compliance obligations for fuel importers and suppliers of fossil fuels under the fossil‑fuel surcharge (from FY2028). In scope entities are required to pay the surcharge, follow deadlines and penalty rules, and apply for exemptions for fuels not used domestically; and
          3. enhanced fiscal support for GX investments, funded by GX Economic Transition Bonds. Under this provision, companies receiving support funded by GX Economic Transition Bonds are required to submit reports and documentation necessary for tax credit and financial‑support schemes.
          Environmental

          Environmental policy

          In force

          Both individuals and companies

          The Act has 3 goals: (i) the implementation of regulation for smoke and soot, as well as dust from factories and business establishments; (ii) the implementation of countermeasures for hazardous air pollutants; and (iii) to stipulate the allowable pollution limits for transport, particularly in relation to automobiles.

          Emitters are also required to comply with emission standards for air pollutants admitted from stationary sources (e.g. factories, warehouses, other industry).  These standards are categorised according to the type of substance and the type or scale of the facility. 

          The primary restricted air pollutants include: 

          1. smoke and soot (baien);
          2. volatile organic compounds (VOCs);
          3. dust (general dust and specified dust);
          4. mercury and mercury compounds; and
          5. hazardous air pollutants.

            It should also be noted that if health damage occurs due to air pollution, the emitter may be liable for damages even without any negligence (i.e. strict liability). In addition, violations such as non-compliance with emission standards or failures to make required notifications may be subject to criminal penalties (including but not limited to fines and/or imprisonment).

            Recent regulatory enhancements and reviews include:

            1. the expansion of asbestos controls for demolition/renovation works to certain structures, with mandatory pre‑work surveys by qualified personnel (most provisions take effect on January 2026); and
            2. the strengthening of mercury emission controls through enhanced measurement, revised standards for certain facilities, and expanded regulatory coverage including IGCC facilities (effective Oct 2025).
            Environmental

            Environmental policy

            In force

            Central and local government, corporations operating in Japan, and Japanese citizens

            The Act is the cornerstone to Japanese biodiversity law, and aims to establish a basic framework for promoting the conservation and sustainable use of biodiversity in Japan.

            The Act establishes the fundamental principles that: (i)   endangered species and wildlife must be conserved; and (ii) the natural environment must be conserved in line with the existing and natural conditions of the relevant region.

            The Act requires Japanese central and local government to formulate basic plans for conservation and implement corresponding measures.  It also sets out a duty for citizens and business entities to endeavour to reduce their impact(s) on biodiversity in their daily business activities/lives.

            Environmental

            Environmental policy

            In force

            Forest owners, persons who, by title, use or profit from forests and successors of such rightsholders (collectively "Owners")

            The Forest Act aims to protect land and develop the national economy by stipulating basic matters concerning forests and promoting the maintenance and cultivation of forests and the enhancement of forest productivity.

            The Act requires the Minister of Agriculture, Forestry and Fisheries to make a National Forest Plan at every five years. The prefectural governor is required to make a Regional Forest Plan corresponding to the National Forest Plan every five years. Owners are required to comply with the relevant Regional Forest Plan.

            Generally, Owners that intend to conduct development activities in forests subject to the Regional Forest Plan must obtain permission from the prefectural governor.

            Environmental

            Environmental policy

            In force

            Issuers, investors and other market participants

            The Guidelines aim to provide issuers, investors, and other market participants with guidance for the issue, purchase, and dealing with of Green Bonds for the Japanese market while being consistent with the Green Bond Principles ("GBP"), which are voluntary, internationally accredited guidelines promoting transparency in international sustainability debt markets.

            This guidance closely aligns with the Social Bond Guidelines.

            One of the key stated goals of the Guidelines is to prevent the greenwashing of financial products.  To achieve this and other aims, the Guidelines set out the expected composition of Green Bonds in Japan, as well as guidance on best practice for issuing, purchasing, and promoting Green Bonds.  They include provisions for the:

            • use of raised funds, including the carbon impact of any funds raised;
            • project evaluation and selection process, including guidance that issuers should provide detailed explanations and evidence for the goals they state they are attempting to achieve through the issue of Green Bonds);
            • management of raised funds, including guidance that issuers should keep track of raised funds to ensure funds are allocated to green projects; and
            • the reporting of progress and the provision of updates to investors, including guidance that issuers should disclose information on the use of funds at least once a year or whenever there has been a major change in circumstances.

            The Guidelines expect investors to have a high level of insight into sustainable development, accumulate knowledge on green projects, and pay close attention to international trends in the Green Bond market.

            In a 2022 overhaul culminating in the Green Bond and Sustainability-Linked Bond Guidelines (“GBSLBG”), the principles section was clearly separated from the guidance section tailored to Japanese market participants, allowing for more effective application in local contexts.

            In 2023, a working group was implemented into the Annex 1: Green List guidelines, with the aim of expanding and refining the list to include circular economy initiatives and ecosystem biodiversity strategies. This resulted in a revision of the Annex in February 2025, enhancing the guidance to further reflect international standards.

            Environmental

            Public administrative law, industrial policy legislation, and environmental policy legislation

            In force since 2023; the 2025 amendment will take effect from April 2026

            Businesses emitting more than 100,000 tons of CO2 annually (GX‑ETS companies)

            The GX-ETS is a nationwide emissions trading system that is designed to put a price on CO2 emissions and promotes emission reductions through economic incentives.  It mirrors similar ETSs worldwide, such as the EU and UK systems.

            Starting in FY2026, participation in the ETS will be mandatory for companies with annual CO2 emissions exceeding 100,000 tons (e.g. large-scale operators in the power, steel, chemical, and cement industries).

            Under the system, the government allocates free CO2 emission allowances to in scope entities. Companies conduct their business activities within these allowances, and if they exceed their allocation, they must purchase additional allowances on the market. Conversely, companies with surplus allowances may carry them over to the next year or sell them on the market to generate revenue.

            The detail of the system is currently subject to a public consultation and is not yet finalised.  However, key requirements of the GX-ETS include:

            1. subject companies must formulate and submit plans including emission reduction targets for achieving carbon neutrality by 2050;
            2. subject companies must apply for allocation of emission allowances calculated based on government guidelines;
            3. subject companies must report their baseline emission targets and actual emission volumes. This requires mandatory verification by a registered verification body approved by the national government;
            4. subject companies must disclose their progress toward relevant targets on the “GX Dashboard.”; and
            5. under the statutory ETS from FY2026, subject companies must surrender allowances equal to verified emissions, shortages must be covered through market purchases, surpluses may be traded or carried over, and non‑compliance may trigger a statutory monetary charge.
            Environmental

            Environmental policy

            In force

            All entities in Japan

            The Nature Conservation Act promotes conservation of the natural environment, including ensuring biodiversity in areas where this is particularly necessary, thus contributing to securing a healthy and civilized lifestyle for current and future citizens.

            The Act allows the Minister of the Environment to designate Wilderness Areas, Nature Conservation Areas and Offshore Seabed Nature Conservation Areas (collectively "Areas"). In these areas, certain activities such as construction, seizure of designated animals and plants, mining, exploration and even entering are regulated.

            The Act also allows each prefecture to designate special zones by Prefectural Ordinance and regulate certain activities in these zones in a manner similar to the way the Areas are regulated.

            Social

            Social Policy (Soft law)

            In force

            Issuers, investors and other market participants

            Social Bonds are an International Capital Markets Association (“ICMA”) concept, and are financial instruments designed to raise funds for new and existing projects judged to have positive social outcomes.  See the ICMA Social Bond Principles for more detail. 

            In October 2021, the Japanese FSA published the Social Bond Guidelines, which aim to popularise Social Bonds by providing examples and interpretations that are appropriate to the Japanese market, while being consistent with the ICMA Principles.  This guidance closely aligns with the Green Bond Guidelines

            Although not legally binding, most financial projects for social bonds in Japan are subject to the Guidelines. It includes details of the expected formulation of Social Bonds and provides examples of possible approaches for the: (i) use of raised funds; (ii) project evaluation and selection process (iii) management of raised funds; and (iv) reporting.

            Environmental

            Public administrative law, and industrial and environmental policy legislation.

            Enacted in 2019; the 2025 amendment will take effect no later than June 11, 2026.

            After the 2025 amendment takes effect, developers seeking to install offshore‑wind facilities in the EEZ or territorial waters.

            The Act on the Promotion of Use of Sea Areas for Marine Renewable‑Energy Power Generation Facilities establishes the legal framework for: (i) the designation of relevant zones for renewable energy projects; (ii) public tendering; and (iii) occupancy permits for offshore renewable‑energy projects, mainly offshore wind.

            The Act originally applied only to internal waters and territorial waters, and did not cover Japan’s Exclusive Economic Zone (EEZ) prior to the 2025 amendment. The 2025 amendment (promulgated in June 2025) expanded the Act to Japan’s EEZ and established a new permit-based framework that includes zone designation, public tendering, coordinated stakeholder councils, and government‑led environmental surveys.

            Environmental

            Environmental policy

            In force

            Companies operating factories, transport companies, residential and commercial real estate developers

            The Act is a foundational piece of legislation for Japan’s energy efficiency policy and standards, and targets all sectors of production in Japan.   It has been updated eight times, most recently in 2018, with each update including stricter and wider measures and controls.  

            The purpose of the Act is to implement measures for rationalising energy use and ensuring efficient energy utilisation. As part of this, the Act creates energy efficiency standards for common household goods such as refrigerators and ovens, as well as legislating for large commercial operations, such as factories.  

            In scope factories are split into two categories:

            1. From 1979: Type 1 Designated Energy Management Factories, which have annual consumption of at least the equivalent of 3,000 kilolitres crude oil, or 12 GWh of electricity.
            2. Type 2 Designated Energy Management Factories, which have annual consumption of at least the equivalent of 1,500 kilolitres crude oil, or 6 GWh of electricity.

            In scope companies (comprising over 90% of all factories in Japan), developers, and transportation companies are required to formulate medium to long-term plans to achieve nationally mandated targets for transitioning to non-fossil energy sources and to report on their energy usage. For instance, in scope factories are required to appoint an ‘energy manager’ to monitor the actual status of energy use in the factory.  In particular, Type 1 factories have been required since the 1998 amendment to reduce their energy intensity by an average of 1% per year. 

            Penalties for noncompliance include the publishing of the name of the relevant company, and the issuing of administrative orders against the offending company. 

            For a more detailed explanation, see the IEA page here.

            Environmental

            Environmental policy

            In force

            Entities engaged in handling fluorocarbons

            The Act on Rational Use and Appropriate Management of Fluorocarbons aims to reduce the emission into the atmosphere of fluorocarbon, which deplete the ozone layer and have a serious impact on global warming, and to thereby contribute to the healthy and cultural lives of the people, both now and in the future.

            The Act requires the relevant minister to establish guidelines for the rational use of fluorocarbons and the appropriate management of fluorocarbons used in specified products, and to prescribe the responsibilities , etc. of manufacturers, etc. of fluorocarbons and products using fluorocarbons and managers of specified products, as well as to take measures, etc. for the rational use of fluorocarbons and the appropriate management of fluorocarbons used in specified products.

            Environmental

            Environmental policy

            In force

            Central government, local governments, corporations and the people

            The Law forms the basis of Japanese environmental law and policy. The Law declares the basic principles of environmental policy, defines the responsibilities of each actor in the society, and prescribes the policy instruments to protect the domestic and global environment.

            In accordance with Article 15 of the Law, Japan adopted its Sixth Basic Environment Plan in May 2024. The plan reinforces the country’s commitment to achieving net-zero greenhouse gas emissions by 2050 under the Paris Agreement, and to move towards renewable resources and a high-value added, circular economy. 

            Environmental

            Environmental policy

            In force

            The owner, manager or occupier (collectively "Owners") of land used as a site for Specified Facilities as defined in the Water Pollution Prevention Act or land that is susceptible to the risk of soil contamination by specified hazardous substances that will cause harm to human health.

            Persons who intend to make changes to the form or nature of land whose area is a certain size or larger.

            The Soil Contamination Countermeasures Act facilitates the implementation of countermeasures to address the issues of soil contamination by specified hazardous substances and includes measures to prevent harm to human health resulting from that contamination, and protect citizens' health.

            The Act protects citizens' health by requiring, where contamination has occurred, the prefectural governor to designate  areas contaminated by a specified hazardous substance requiring measures to remove relevant contamination, prevent the dispersion of relevant contamination, or other measures in order to prevent relevant contamination from causing harm to human health. In such a case, Owners must submit a plan for contamination removal , etc. and implement measures in accordance with the plan.

            Furthermore, the Act stipulates regulations regarding removing contaminated soil and requires the prefectural governor to create a registry of soil contamination areas which is generally viewable to anyone.

            Environmental

            Environmental policy

            In force

            Specified Facilities and Designated Facilities as defined in Article 2 of the Water Pollution Prevention Act

            The Water Pollution Prevention Act aims to prevent water pollution in public water and groundwater by regulating facilities that discharge polluted water or wastewater ("Specified Facilities") and facilities that manufacture, store, use or process harmful substances ("Designated Facilities").

            When installing either facilities, a prior notification to the prefectural governor is generally required.

            There is strict liability when a person's life or health has been negatively affected due to the discharge or permeation underground of harmful substances by business operators.

            Governance

            Equality legislation

            In force

            Companies with more than 40 employees (as of January 2026)

            The law aims to ensure equal opportunities and treatment in employment for persons with disabilities and to enable them to function effectively in the workplace.

            Companies with more than 40 employees are required to hire persons with disabilities so that they comprise at least a certain percentage of the total number of the company’s employees, are prohibited from discriminating against persons with disabilities, and are obligated to provide reasonable accommodations for disabled people.

            This percentage was raised in 2024, and is due to be raised further, subject to consultation with businesses.

            Governance

            Policy for certain foreign workers

            In force from April 2027 

            Businesses operating in industrial fields facing labour shortages, such as manufacturing, construction, and agriculture

            The ESD Program provides a legally binding framework designed to develop foreign workers' technical skills in sectors facing labour shortages in Japan.

            The program replaces the previous Technical Intern Training Program, introducing a new residence status of “employment for skill development” and mandating accredited employment plans that specify training content, work categories, and support systems.

            Social

            Equality legislation 

            In force

            Employers other than the national government and local governments (hereinafter referred to as "general employers") with over 100 regularly employed workers

            The Act aims to create an environment in which women can play an active role in society and sets out a number of rules for women’s employment.

            Under these rules, employers are required to formulate and submit a general employer action plan and to publish information on the activities of female employees. The information must include the percentage of female workers employed, the difference in average length of service between men and women, the status of working hours (including the average number of overtime hours worked per month) and the percentage of female workers in management positions.

            Companies with more than 301 employees are required to disclose additional information regarding the gender pay gap in addition to above.

            Social

            General industry rules

            In force

            Specified digital platform providers as defined in Article 4 of the Act

            The Act aims to improve the transparency and fairness of "Specified Digital Platforms" (digital platforms that are larger than the scale specified by Cabinet Order) by taking necessary measures to promote their information disclosure and mutual understanding.

            Under the Act, digital platforms users are classified into either "Users Providing Goods, etc." or "General users". "Users Providing Goods, etc." are users that use digital platforms to provide goods, services or rights. "General users" are all other users that are not "Users Providing Goods, etc." 

            Specified digital platform providers must disclose matters according to the type of user.

            To "Users Providing Goods, etc.", such matters include but are not limited to:

            1. The criteria for refusing to provide such specified digital platform, if any;
            2. In cases where the specified digital platform provider acquires data on the provision of products the details and conditions of such acquisition; and
            3. The method for "Users Providing Goods, etc." to file a complaint or request for consultation.

            To "General users", such matters include but are not limited to:

            1. In cases where information pertaining to goods. is displayed with a rank attached to it, the main matters used to determine such rank; and
            2. In cases where the specified digital platform provider acquires purchase data, the details and conditions of such acquisition.
            Social

            Social Policy (Soft law)

            In force

            Issuers, investors and other market participants

            Social Bonds are an International Capital Markets Association (“ICMA”) concept, and are financial instruments designed to raise funds for new and existing projects judged to have positive social outcomes.  See the ICMA Social Bond Principles for more detail. 

            In October 2021, the Japanese FSA published the Social Bond Guidelines, which aim to popularise Social Bonds by providing examples and interpretations that are appropriate to the Japanese market, while being consistent with the ICMA Principles.  This guidance closely aligns with the Green Bond Guidelines

            Although not legally binding, most financial projects for social bonds in Japan are subject to the Guidelines. It includes details of the expected formulation of Social Bonds and provides examples of possible approaches for the: (i) use of raised funds; (ii) project evaluation and selection process (iii) management of raised funds; and (iv) reporting.

            Environmental
            Social

            Social policy

            In force

            All entities in Japan

            The Waste Management and Public Cleaning Act aims to protect the living environment and improve public health by controlling waste emissions and proper disposal.

            The Act stipulates regulations regarding both general waste and industrial waste. Any waste that does not meet the definition of industrial waste is considered to be general waste.

            Municipalities are required to make a General Waste Disposal Plan with which persons who intend to engage in collecting or transporting general waste as a business must comply to obtain and retain permission from the mayor of the relevant municipality.

            Business operators are responsible for disposing their industrial waste.

            Social

            Government-led standard

            Published on September 13, 2022

            All businesses that carry out activities in Japan

            The Guidelines on Respecting Human Rights in Responsible Supply Chains (“the Guidelines”), issued in 2022, provide a soft law framework based on the UN Guiding Principles on Business and Human Rights and other international standards.

            The Guidelines are not legally binding but aim to provide businesses with clear guidance on aligning their practices with these international standards. Adopted by the Government of Japan as part of its National Action Plan on Business and Human Rights (2020-2025), they emphasise the importance of respecting human rights within companies, their group entities, and throughout their supply chains, covering both upstream and downstream activities.

            The Guidelines set out three core expectations for businesses:

            1. establishing a human rights policy that meets the objectives set out in Section 3 of the Guidelines;
            2. conducting and regularly updating human rights due diligence to identify, prevent, and mitigate adverse human rights impacts across the supply chain; and
            3. creating grievance mechanisms that enable individuals to raise concerns and seek remedies for human rights impacts, in accordance with the requirements set out in Section 5.1 of the Guidelines.

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