LY Corporation Signs Agreements With Forest Associations to Launch Its First Water Replenishment Initiative

LY Corporation (the "Company") has signed agreements with the Nishishirakawa Regional Forest Owners’ Cooperative and the Fukuoka Prefecture Wide-Area Forest Owner's Association regarding forest management initiatives. The agreements establish a framework to maintain and enhance the water recharge functions of the watersheds that support the water resources used at the Company’s Shirakawa and Kitakyushu Data Centers. Through these efforts, the Company aims to replenish more water within the watersheds than is used at the two data centers. Under the agreements, the Company, together with the Nishishirakawa Regional Forest Owners’ Cooperative and the Fukuoka Prefecture Wide-Area Forest Owner's Association, will carry out forest management and related initiatives (hereinafter, "Initiatives") to support the health of the natural water cycle and contribute to the conservation of local water resources, as well as the maintenance and restoration of the natural environment. This marks the Company’s first initiative specifically focused on water replenishment.

In recent years, due to the impacts of climate change and other factors, risks related to water resources—such as water shortages, water pollution, and flooding—have been increasing worldwide. Consequently, companies are expected to appropriately address the relationship between their business activities and water resources from a medium- to long-term perspective. In international frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD), water resources are positioned as one of the key themes.

Within the LY Corporation Group, more than half of total water usage occurs at data centers, making water resources important to business operations. The Shirakawa and Kitakyushu Data Centers have continuously worked to reduce water usage and improve efficiency. For water used primarily in server cooling, the Company has invested in water-saving measures, including air conditioning systems that utilize outside air and air-cooled chillers that reduce cooling water consumption.
In addition to these measures, the Company also considers it important to replenish water resources on which its data centers depend over the long term. Based on this approach, the Company has decided to address water resources from the perspective of the entire watershed rather than for each site and to engage in water replenishment through forest management and related initiatives.

Under the Initiatives, beginning in spring 2026, forest management will be implemented in watersheds closely associated with data center water use in the Abukuma River system (Fukushima Prefecture) and the Onga River system (Fukuoka Prefecture). Forests perform water recharge functions by allowing precipitation to infiltrate the ground and by maintaining stable groundwater and river flows. Through appropriate forest management such as thinning and reforestation, improvements in the overall health of the water cycle across each watershed are expected. Under the agreements, the Company will provide financial support for forest management costs, while each forest association will conduct forest management in its designated area.

The volume of water replenished in the managed forests has been calculated through water balance analysis, taking into account precipitation, evapotranspiration, geological conditions, and other factors, with technical support from Yachiyo Engineering Co., Ltd. The Initiatives are structured as a phased 10-year forest management plan, with water recharge functions anticipated to increase as forest management progresses.
In the tenth year, the managed forests are projected to replenish approximately 100,000 cubic meters of water per year in the Abukuma River system (Fukushima Prefecture) and approximately 94,000 cubic meters per year in the Onga River system (Fukuoka Prefecture). These estimates are calculated on the premise that the volume of water replenished within the watersheds will exceed the amount of water used at the Shirakawa and Kitakyushu data centers. By combining water replenishment measures through forest management with water-saving and efficiency initiatives at the data centers, the Company aims to improve the health of the water cycle in each watershed.

In Fukushima Prefecture, the Company has signed an agreement with the Nishishirakawa Regional Forest Owners’ Cooperative covering forests located in the upper Abukuma River watershed. Forest management activities, primarily focused on thinning, will be carried out in these areas. In the region, initiatives are already underway at sites managed by the forest association to promote the sustainable use of forest resources, including the effective use of thinned wood. Through the Initiatives, the Company will work to maintain and enhance the watershed’s water recharge functions while also promoting the circulation of forest resources and effective energy use, including the use of wood chips for biomass power generation.

In Fukuoka Prefecture, the Company has signed an agreement with the Fukuoka Prefecture Wide-Area Forest Owner’s Association covering forests located in the upper Onga River watershed. Forest management activities, primarily focused on reforestation, will be carried out. In the region, measures to protect young trees are being implemented on-site by the forest association as young trees planted as part of reforestation efforts are susceptible to damage from deer. Through the Initiatives, the Company will work to restore forest health while maintaining and enhancing the watershed’s water recharge functions.

In relation to the Initiatives, the following comments were received from the Nishishirakawa Regional Forest Owners’ Cooperative and the Fukuoka Prefecture Wide-Area Forest Owner's Association.

Mr. Tsuneo Kunii, Representative Chairman, Nishishirakawa Regional Forest Owners’ Cooperative

About two-thirds of Japan's land area is covered by forests. Forests are often referred to as "green dams," as they absorb rainwater, temporarily store it underground, and gradually release it into rivers and groundwater over time. As a result of this function, rapid rises in river levels and flooding caused by heavy rainfall are mitigated, and water shortages during dry periods are prevented, helping to maintain a stable water supply. Additionally, the risk of soil runoff and landslides is reduced. Considering the economic losses that could result from such disasters, the disaster mitigation function provided by water replenishment has significant value. Recognizing the importance of such water recharge functions, LY Corporation has signed an agreement with our association to help maintain healthy forests in the upper reaches of the Abukuma River (Nishigo Village), which supplies water used at its data center. As part of this agreement, thinning operations will be carried out in plantation forests, such as cedar and cypress, where maintenance has been delayed. Furthermore, thinned wood will be used for general applications, such as construction materials, as well as for woody biomass fuel under the feed-in tariff (FIT) system, helping to reduce residual wood left in surrounding forest areas. We view this pioneering initiative as a turning point for our association’s future operations.

Mr. Hidetoshi Matoba, Representative Director and President, Fukuoka Prefecture Wide-Area Forest Owner's Association

Local forests play an important role in supporting water resources. Through this agreement, we will address local challenges, such as protecting planted trees, while carrying out planned thinning and other activities in the Onga River watershed to improve forest health. In addition, we will carry out planting activities in preparation for regeneration after thinning and improve the working environment needed to establish a framework for future forest management. Through these efforts, we hope to maintain and enhance the water recharge functions of forests and contribute to the stable availability of water resources across the watershed. Going forward, we will move beyond single-year initiatives by developing long-term management plans that support continuous forest management, while strengthening collaboration with local forest owners and related organizations. In addition, we will share information about the results of our activities to the extent possible and work to promote greater understanding of the importance of forest management and its relationship to water resource conservation. Through this project, our association is committed to improving the forest environment in the Onga River watershed and to supporting the sustainable use of water resources.

The Company is advancing initiatives in natural capital, including water resources and biodiversity, in line with its mission, "Create an amazing life platform that brings WOW! to our users." In addition to its forest management initiatives aimed at water replenishment, the Company is also supporting "Nationally Certified Sustainably Managed Natural Sites," certified by the Minister of the Environment, as part of its efforts to protect and sustain forests recognized for their biodiversity value. The Company will continue to contribute to building a sustainable society through its initiatives in natural capital.

Overview of the Agreements

Note: Forest management is scheduled to begin sequentially from spring 2026.

Reference:
LY Corporation’s sustainability initiatives
https://www.lycorp.co.jp/en/sustainability