Basic Environmental Policy

While information technologies make the world richer and more convenient, they have an impact on the environment in the form of Greenhouse Gas (GHG) emissions from the consumption of electric power and other energies. The environmental impact is increasing with the expansion of the industry as a whole. To realize a sustainable society, the LY Corporation Group will make efforts to address climate change as well as strive to reduce the environmental impact derived from business activities, implement measures to reduce waste, and protect biodiversity and natural capital.
The Group will also aim to help society by preparing and enhancing solutions to respond to the threat of natural disasters that are becoming more intense and frequent due to climate change.

Basic Environmental Policy

The LY Corporation Group, comprised of LY Corporation and its subsidiaries and affiliates, will continue to implement initiatives to conserve the global environment for future generations through the use of information technology. For this, the Group will strive to:

1. Realize a carbon neutral society

The LY Corporation Group will set medium-term environmental load reduction targets and work with the supply chain to achieve these targets.

2. Conserve natural capital

The LY Corporation Group will consider the impact of its business on the ecosystem and strive for sustainable procurement, waste management, and conservation of water resources and biodiversity.
The LY Corporation Group will support efforts to preserve the global environment.

3. Fulfill legal compliance and international responsibilities

The LY Corporation Group will place importance on environmental issues and strive to reduce risks.
The LY Corporation Group will comply with domestic laws and regulations related to environmental conservation.
The LY Corporation Group will support international environmental initiatives and work in collaboration with the international community to combat climate change.

4. Cooperate with the society through our services

In response to natural disasters associated with climate change, the LY Corporation Group will collaborate with the society through cooperation with local municipalities and disaster prevention and mitigation services, etc.
The LY Corporation Group will expand and enhance its recycling-oriented services to realize a sustainable society.

5. Educate and enlighten employees to create the future

The LY Corporation Group will educate and enlighten its employees so that they understand the importance of environmental issues and are able to improve services and create innovations that are environmentally friendly.

This Basic Environmental Policy applies to all business activities, including M&A and new business domains, and is established based on the approval of the Company’s executive corporate officers. In addition, through the annual disclosure of environmental performance data in its securities report and on its website, the LY Corporation Group (the “Group”) promotes transparency in reporting its progress. The Group will also continue to engage in ongoing discussions about environmental issues with stakeholders, including investors.

Environmental Targets

Fulfilling Responsibilities for the Global Environment and Future Generations

One of the LY Corporation Group’s main businesses is the operation of internet media and services, which is heavily reliant on water resources as they are essential for electricity and cooling servers required for data center operations. In addition, as the Group collaborates with a wide variety of companies, the Group's entire supply chain has a tremendous impact on the environment. The Group believes that its responsibility to the global environment for future generations includes reducing greenhouse gas (GHG) emissions from its business activities and being less dependent on water resources. This will also help the Group reduce business risks as it will lead to the enhancement of its own procurement capabilities for raw materials. Therefore, GHG emissions and water consumption issues across the supply chain are prioritized in particular, with specific metrics and targets established as outlined below. The Group also aims to reduce overall energy consumption under the renewable energy strategy and related initiatives. In addition, the Group has established evaluation indicators for resource circulation—another environmental issue—and monitors environmental investment amounts as a metric to measure its ongoing initiatives focused on these and other environmental challenges.

Indicator: Amount of GHG emissions

	Base year^*2	FY2022	FY2023	FY2024
Short-Term Target By FY2025, reduce LY Corporation’s GHG emissions subject to Scopes 1 and 2 to net-zero (mtCO₂e)^*1	FY2022	99,433^*3	79,698	8,400
Medium-Term Target By FY2030, reduce the LY Corporation Group’s GHG emissions subject to Scopes 1 and 2 to net-zero (mtCO₂e)^*1	FY2022	117,759	92,567	19,689
Long-Term Target By FY2050, reduce the LY Corporation Group’s GHG emissions subject to Scopes 1, 2 and 3 to net-zero (mtCO₂e)^*1	FY2022	3,396,196	3,382,376	4,004,124

^*1 On a net basis (Scope 1 emissions were offset in FY2024. For more information on carbon offsetting, please click here). Additionally, Scope 2 is based on the market-based approach.
^*2Target revised in March 2022 using FY2022 as the base year, accompanying the announcement of "2030 Carbon Neutrality Declaration” by LY Corporation (then Z Holdings Corporation)
^*3Figure for FY2022 indicates the total GHG emissions of the former Yahoo Japan and the former LINE Corporation ("LINE Corp."), which went through a Group reorganization in FY2023 to form LY Corporation.

Indicator: Water consumption (per JPY 1 million in revenue)

	Base Year (FY2022)^*1	FY2023	FY2024^*2	Targets for FY2030
By FY2030, reduce the LY Corporation Group’s water consumption by 10% from FY2022 levels	0.376	0.367	0.431	0.338

^*1 Water consumption for FY2022 has been partially recalculated and revised. (May 2024)
^*2 In FY2024, water withdrawal increased, partly due to pilot operational changes at some data centers.

Environmental Data

For details, please refer to the ESG Data in the Related Links for the LY Corporation Group’s environmental data.

Management Structure

Oversight by the Board of Directors

LY Corporation (the “Company”) has established an executive structure centered on the Sustainability Committee, chaired by the President and Representative Director under the supervision of the Board of Directors, the highest decision-making body, to promote initiatives to address various sustainability issues across the Group companies. Under the Sustainability Committee, the Company has established an Environment Working Group composed of environmental officers from each Group company. This group is responsible for reviewing the Group’s environmental policies and initiatives, as well as sharing and promoting measures to address specific issues at each Group company. Additionally, the Risk Management Committee, which oversees ERM, and the Supervisory Organization of Risk Management collaborate with sustainability-related organizations to identify, assess, and mitigate risks related to climate change, natural capital, and resource circulation.

Regarding the supervisory structure, the Board of Directors receives proposals and reports on important matters from the Sustainability Committee as needed, and also receives reports on company-wide risks, including sustainability-related risks, from the Risk Management Committee once every six months in principle. The Board of Directors bears responsibility for overseeing climate-related risks—including transition risks—and how they are being addressed, through the deliberation and resolution of important matters brought up for discussion. Specifically, the Board oversees the formulation of the Group’s materiality and the establishment of environmental targets—including GHG reduction goals—and monitors their progress.

The Company acknowledges that addressing risks and opportunities related to climate change may result in trade-offs that generate other sustainability-related risks and opportunities. Accordingly, the Company evaluates the potential occurrence of such trade-offs when discussing and implementing response measures.
Example of Considering Trade-offs:
- Although solar power projects contributes to an increase in renewable energy, they may potentially have adverse impacts on biodiversity.
- To avoid such adverse impacts, the Maniwa Solar Project, covered by a Virtual Power Purchase Agreement (PPA) with the Company, is being constructed on a former golf course in Maniwa City, Okayama Prefecture, scheduled for completion in 2026, eliminating the need for new land development. From a biodiversity conservation perspective, the environment is appropriately protected in accordance with the Environmental Impact Assessment Act, ensuring consideration for local wildlife.
- Furthermore, local employment is planned to be prioritized for hiring contractors and employees necessary for the construction and operation of the Maniwa Solar Project, creating jobs and contributing to regional development.

In addition, in order to ensure that the directors* are committed to promoting sustainability, the Company has incorporated sustainability evaluation (including climate-related aspects, which cannot be separated from other materiality indicators) as an indicator for determining cash bonuses for their executive remuneration within the range of ±5%. The sustainability evaluation consists of the previous fiscal year's results of each materiality indicator, including progress of achieving carbon neutrality, which were established to realize the Company’s mission and medium- to long-term corporate value enhancement, as well as an external assessment by ESG rating agencies. The sustainability evaluation indicator (±5%) is resolved by the Nominating and Remuneration Committee, of which the majority is composed of independent outside directors.

Please refer to the Corporate Governance page for details on the remuneration policy.

*Excludes directors who are members of the Audit and Supervisory Committee.

Roles of the management

The Sustainability Committee, chaired by the President and Representative Director, CEO (Chief Executive Officer), has been established under the supervision of the Board of Directors to promote initiatives that address various sustainability issues. "Connect Meetings" are held regularly as the promoting body of sustainability initiatives within the Sustainability Committee, whereby basic policies and measures related to environmental issues are reviewed and deliberated in collaboration with each Group company (CSR Management Division, Corporate Division, and Business Divisions).
The President and Representative Director, CEO (Chief Executive Officer), is committed to environmental issues including the signing of CDP reports. The President and Representative Director, CEO (Chief Executive Officer), also establishes the Group's policy, and reviews and manages the progress of the environmental initiatives by receiving reports as necessary, including at the Sustainability Committee. The reports cover discussions held at the Connect Meetings, the Environment Working Group (which both promote the initiatives throughout the Group), and more.

Human Rights Policy for Stakeholders

In all areas of its business activities, the LY Corporation Group upholds its LY Corporation Group Human Rights Policy and respects the rights of members of regional communities that have deep ties to nature as it contributes to developing a sustainable environment and society. The Group also requires its suppliers and business partners to respect and refrain from infringing on human rights in conformity with international principles of human rights and the LY Corporation Group Code of Conduct.
To implement this, the Group has established the Human Rights Working Group (alongside the Environment Working Group) under the Sustainability Committee.
This new Working Group builds a monitoring system and promotional system—headed by the Board of Directors and management respectively—for basic policies on human rights and progress on related initiatives.

Risk Management

Risk Management Process and Policy

LY Corporation has established an Enterprise Risk Management (ERM) system under the supervision of the Board of Directors, with the President and Representative Director, being the Chief Executive of Risk Management. More specifically, it has set in place a comprehensive company-wide risk management system to accurately identify and respond to management and business-related risks at the Company and its Group companies. Risks related to sustainability are also integrated into the ERM system.
In evaluating risks within the ERM system, the Company identifies risks that could affect its achievement of the Group’s mission and business goals and then analyzes these from two angles: (i) how severe the impact would be if the risk materializes (i.e., how much it would affect the Company’s ability to achieve its goals), and (ii) the likelihood of the risk materializing (i.e., how likely and frequently it would occur). From this, the Company assesses the risk level based on impact × likelihood and prepares measures accordingly.
Within the ERM system, for sustainability-related risks, including climate-related risks, the ESG Management Department, which is in charge of these risks, identifies, evaluates, prioritizes, and monitors them based on risk assessment results collected from business divisions and group companies. The department then reports to the Environment Working Group and Human Rights Working Group under the Sustainability Committee, where response measures are discussed and implemented. Furthermore, in the process of discussions aimed at determining materiality, each Group company and division identifies opportunities from studies made based on the characteristics of their businesses and services.

Climate-Related Risk Management

Based on analyses of both internal and external environments, as well as insights from top management and the persons in charge, the Company identifies particularly critical risks as the top risks of the LY Corporation Group. Climate-related risks are also evaluated, and if they are deemed highly significant, they are selected as part of these top risks. While bearing in mind the impact from the environment, the Company reviews climate-related risks as needed through ERM activities and the annual compilation of environmental data, ranks them by priority level, and carries out and monitors the progress of response measures.

Coverage

Coverage of Environmental Index

The LY Corporation Group calculates each environmental indicator for the consolidated subsidiaries. Coverage ratio for each environmental indicator is calculated based on the sum of the consolidated revenue ratio of the consolidated subsidiaries for which the Group was able to compile data.