LY Corporation and Owase City Conclude 10-Year Sales and Purchase Agreement for Forest-Derived J-Credits

LY Corporation (the "Company") and Owase City have concluded an agreement (the "Agreement") under which the Company and Owase City will trade J-credits*1 generated from forests owned by Owase City (the "Credits") for ten years from 2025 trading 500 tons of CO2 absorption every year. This Agreement is for Owase City’s first*2 J-credits transaction, which is scheduled in March 2025.

By purchasing these Credits, the Company will offset*3 Scope 1 CO2 emissions of the Company and some of its Group companies, toward achieving the LY Corporation Group’s "2030 Carbon Neutrality Declaration" (Scopes 1 and 2*4). Owase City will utilize the revenue from the Credits mainly for forest maintenance and to support nature-positive efforts in the primary industries, including forestry.

The Company and Owase City are committed to the cultivation of rich forests that coexist with nature and aim to link their efforts to the following initiatives:

Sustainable reduction of CO2

Green carbon will be generated by maintaining Owase’s traditional Owase Hinoki forestry and promoting thinning and other practices. In addition, blue carbon will be generated through the seaweed bed restoration efforts in Kukiura, a fishing village in Owase City. These activities will contribute to sustainable CO2 emissions reduction.

Conservation of biodiversity

Owase City, surrounded by mountains and the sea, is committed to conserving forest and marine biodiversity through forest maintenance and seaweed bed restoration. Through ecosystem research and other means, Owase City will aim to be certified as the owner and manager of Nationally Certified Sustainably Managed Natural Sites in the "30by30"*5 program promoted by Japan's Ministry of the Environment, and the Company to be certified as a supporter.

LY Corporation’s background to the Agreement

In its Basic Policy on Sustainability, LY Corporation stipulates that it will bring a positive impact to society through its businesses and promote sustainability management that takes responsibility for future generations by addressing social issues, including the global environment and human rights. Furthermore, one of the Company's six identified materialities is "fulfilling responsibilities for the global environment and future generations." The Company is committed to carrying out initiatives on reducing the environmental impact of its business activities, waste management, and conservation of water resources and biodiversity. It also strives to promote global environmental measures by setting medium- and long-term goals in cooperation with the international community in support of international environmental initiatives. 

LY Corporation has carried out the “Regional Carbon Neutrality Promotion Project,” as part of its efforts to promote carbon neutrality in Japan. In the Project, the Company leveraged the enterprise hometown tax donation program to recruit local development efforts led by municipalities with a focus on carbon neutrality and supported the accepted projects through donations*6.

The Company selected Owase City as one of its donation recipients and donated a total of JPY56.846 million in FY2021 and FY2022. The donations have been allocated to safeguarding the traditional forestry of Owase City, replanting aged trees with reduced CO2 absorption capacity, and supporting projects in Kukiura, such as seaweed bed restoration and blue carbon initiatives. The Company has concluded this Agreement to further support and engage in Owase City’s CO2 emission reduction and blue carbon initiatives.

Owase City’s background to the Agreement

Owase City, with forests covering 92% of its area, sees forestry as integral not only to its economy as a primary industry but also for its important functions in land conservation, such as maintaining water sources and preventing landslides. The natural landscape of Owase is characterized by the closeness of its mountains with the sea and villages, with a straight-line distance of just about 7 kilometers from sea level to the Odai Mountain Range, which rises to heights over 1,000 meters. This area is renowned for its heavy rainfall, exceeding 4,000 millimeters each year.

Owase City has historically prospered through primary industries that capitalize on these distinctive geographical and climatic features. In recent years, however, the nationwide economic downturn has brought significant challenges in managing forests and the accompanying preservation of watersheds, Satoyama (managed landscapes between mountain foothills and arable land), and Satoumi (managed coastal areas).

To address these challenges, Owase City aims to create new environmental value in its traditional primary industries by developing new forestry systems and restoring seaweed beds in coastal inlets in collaboration with LY Corporation. This approach represents a new style of primary industry revitalization that aligns with nature-positive management practices expected for corporations to emphasize carbon neutrality and biodiversity among others. 

As partners committed to bridging the Earth's environment to the future, LY Corporation and Owase City strive towards realizing a sustainable society.

*1 J-Credit Scheme is a scheme in which the Japanese government certifies as "credits" the amount of greenhouse gas emissions (such as CO2) reduced through the introduction of energy-saving devices and use of renewable energy, and the amount of CO2 absorption through appropriate forest management. The credits created under the scheme can be used for various purposes, such as achieving the targets of Keidanren's Carbon Neutrality Action Plan and carbon offsetting. (Keidanren: Japan Business Federation)
Reference: Ministry of the Environment and the Ministry of Economy, Trade and Industry, "J-Credit Scheme"
https://japancredit.go.jp/english/

*2 J-credit transactions are simultaneously scheduled with multiple entities thus the Company is not the sole transaction partner.

*3 Carbon offsetting is the concept of compensating for unavoidable GHG emissions such as CO2 emissions in day-to-day living and economic activities by first making efforts to reduce them as much as possible, and then investing in GHG reduction activities and other means that match the amount of unavoidable GHG emitted.
Reference: Ministry of the Environment, "J-Credit Scheme and Carbon Offsetting”
https://www.env.go.jp/earth/ondanka/mechanism/carbon_offset.html(Japanese only)

*4 Scope 1 refers to direct GHG emissions from the business operators themselves. Scope 2 refers to indirect emissions from the consumption of electricity, heat, and steam provided by other companies.
Reference: Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry, "Basic Sustainability Terms You Need to Know — 'Scope 1, 2, and 3,' a Measure of Supply Chain Emissions"
https://www.enecho.meti.go.jp/about/special/johoteikyo/scope123.html (Japanese only)

*5 "30by30" is a target to effectively conserve at least 30% of land and sea areas as healthy ecosystems by 2030 with the goal of halting and reversing biodiversity loss (achieving nature positive) by 2030.
Reference: Ministry of the Environment, "Japan's 30by30 Roadmap" https://policies.env.go.jp/nature/biodiversity/30by30alliance/documents/3030emap.pdf

*6 The application for donations has been suspended in FY2023 and after, and future support methods are currently being considered.

About LY Corporation

LY Corporation is one of Japan's largest tech companies formed in October 2023 through the reorganization of Group companies including LINE Corporation and Yahoo Japan Corporation. LY Corporation spans diverse businesses, including search, portal website, e-commerce, communications, and advertising under its mission, "Create an amazing life platform that brings WOW! to our users."
With a workforce comprising over 10,000 individuals from approximately 40 countries and regions, LY Corporation is dedicated to continually delivering inspiring services to its users and contributing to the realization of a more enriching and convenient lifestyle through the power of the internet.
https://www.lycorp.co.jp/en/

About Owase City

Owase City was established in 1954 through the merger of the former Owase Town and four villages and marks the 70th anniversary as a city in 2024. Located in the southern part of Mie Prefecture, almost at the center of the Kii Peninsula, Owase City borders Nara Prefecture to the west via the Odai Mountain Range and faces the Pacific Ocean (Kumano-nada) to the east, nestled in a picturesque ria coastline inlet.

The Kuroshio Current, flowing offshore, brings warm and moist air throughout the year, resulting in a mild and rainy climate. Owase City is rich in tourism resources and attractions, such as over 200 types of seafood provided annually by the rich fishing grounds in the coastal inlets, and the primary industry including the “Owase Hinoki (Japanese cypress),” which was recognized as Japan’s first Nationally Important Agricultural Heritage System. The City is also home to the World Heritage Kumano Kodo, a historic route for the Kumano and Ise pilgrimages, attracting travelers since ancient times.