Realizing a Decarbonized Society

To realize a sustainable society, the LY Corporation Group (the “Group”) makes efforts to address climate change, sets medium-term targets for reducing its environmental impact, and works with the supply chain to achieve the targets.

Environmental Data

Outline of Environmental Load

The LY Corporation Group's material balance (FY2023)

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Greenhouse Gas Emissions and Total Energy Consumption

The figures of the greenhouse gas (GHG) emissions and total energy consumption of the LY Corporation Group are as follows. GHG emission per energy consumption is decreasing as a result of improved energy use efficiency at each site and the introduction of renewable energy.

Energy Consumption of Data Centers

In addition to improving energy usage efficiency, LY Corporation is working to introduce renewable energy in its data centers, which account for the majority of the Company's energy consumption.

*The data until FY2021 represents values for former Yahoo Japan Corporation, while the data after FY2022 represents values for the Group.

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Climate Change Strategies

Policy for Addressing Climate Change

A healthy global environment is the basis on which people's lives and society function. Without it, there can be no development of an information technology society. The LY Corporation Group addresses climate change by setting targets in terms of "mitigation" and "adaptation." In terms of mitigation, it carries out various initiatives to reduce the emission of greenhouse gases, which is the cause of climate change and global warming. In terms of adaptation, the Group takes measures based on an outlook that global warming will continue for the foreseeable future. In particular, increasingly intensifying disasters are considered as a priority area, along with BCP. Going forward, the LY Corporation Group intends to engage in further measures such as shifting to 100% renewable energy.

Endorsement of TCFD Recommendations

The Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board (FSB), an international body participated by central banks and financial supervisory agencies of major countries, issued a recommendations report stating to "support companies that disclose information on risks and opportunities relating to climate change" in June 2017. In June 2020, the LY Corporation Group (then Z Holdings Group) declared that it supports the recommendations, and officially joined the supporters. The Group strives to disclose information related to climate change in accordance with the disclosure format presented by TCFD. Please refer to the following related link for details of the Group's disclosures.

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Targets for Mitigation of Climate Change

* GHG emissions after compensations (A portion of the total emissions, specifically from Scope 1 and Scope 2 hot and cold water and steam, has been offset.). For carbon offsetting, please see here.
*1 Target 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)
*2 Figure 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.

Initiatives Related to Mitigation of Climate Change

Efforts Toward Carbon Neutrality

In February 2022, the LY Corporation (then Z Holdings Group) announced its "2030 Carbon Neutrality Declaration," a commitment to reduce GHG emissions from the business activities of the entire Group to net-zero by FY2030.

To achieve the target by FY2030, first, more than 80% of the electricity used by major Group companies will be generated from renewable energy sources by around FY2025, and then the remaining electricity will be converted to 100% renewable energy sources over the following five years. In addition, to fulfill the "2030 Carbon Neutrality Declaration" by the entire Group, LY Corporation will begin initiatives to become carbon negative^*1 in the 2030s. The Group also plans to cooperate with the companies operating businesses together to reduce the indirect GHG emissions^*2 of the collaborating companies. For more information on the initiatives conducted by the Group companies, please refer to the links below.

Due to the Group reorganization among Yahoo Japan, LINE Corp. and others, LY Corporation carries out initiatives to attain the "2025 Carbon Neutrality Declaration" as its new target.

*1 GHG emissions subject to the GHG Protocol Scope 1 and 2.
*2 GHG emissions subject to the GHG Protocol Scope 3.

Roadmap to Carbon Neutrality

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Initiatives to Achieve Net-Zero

In addition to its commitment to eliminate GHG emissions from its own business processes and energy consumption (Scope 1 and 2) to net-zero by FY2030, the LY Corporation Group also aims to achieve net-zero in the GHG emissions including those generated by its supply chain (Scope 3) by 2050.
SoftBank Corp., the Company’s parent company, submitted a commitment letter to the Science Based Targets initiative (SBTi) to have its GHG emission reduction target certified by the SBTi as scientifically based. As a member of the SoftBank Group, the LY Corporation Group is also committed to achieving net zero.

Note: Please click here for more information on the capital structure of LY Corporation.

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Introduction of Renewable Energy

LY Corporation has introduced RE100-compliant effectively renewable energy to its Shirakawa Data Center in May 2021 and Kitakyushu Data Center in August 2021.
ZOZO, Inc. (“ZOZO”) introduced electricity derived from renewable energy sources in its head office and ZOZOBASE, its logistics center. Currently, more than 90% of ZOZO's electricity consumption is from renewable energy sources. (September 2023)

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Data Center Initiatives

Most of the servers necessary to operate LY Corporation's internet business are managed by its own facilities. The Company works to improve the efficiency of energy use by continuously replacing facilities and making new capital investments. In addition to the introduction of effectively renewable energy and solar panels, the Company implements measures to combat global warming using the latest technologies, including the installation of air conditioning systems that use outside air at its own facilities, Shirakawa Data Center and Kitakyushu Data Center.

In addition, in FY2023, the Company received approval from Japan’s Ministry of Economy, Trade and Industry for the “Business Adaptation Plan for Reducing Environmental Impact of Energy Use (Tax Credit for Promoting Investment toward Carbon Neutrality),” which aims to support and accelerate investments leading to decarbonization by the private sector. By expanding an environmentally friendly next-generation data center with energy-efficient facilities that can handle multi-big data, the Company will strive to provide added value such as improved quality and stable supply of advertising services and commerce services, while reducing the burden on the environment.

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Migration to the US Data Center

The US subsidiary of LY Corporation, Actapio, Inc. (former YJ America, Inc.) constructed a new data center in Washington State with approximately 1600 racks. It started operations in April 2019. The data center is located in Washington State, where hydraulic power generation is prevalent, and uses 100% renewable energy for its operation. Actapio, Inc. started operation of LY Corporation’s (then Yahoo Japan’s) first data center outside of Japan (200 racks) in December 2014 in Washington State. With the construction of this new data center larger in scale, the renewable energy ratio in LY Corporation's facilities has increased even further.

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Electricity in the Offices

In addition to reducing the use of electricity in its offices through a new work style based on remote work, LY Corporation promotes the use of renewable energy through the use of Green Power Certificates and other means since FY2021.

Commuting by Bicycle

LY Corporation allows employees to commute by bicycle if they wish to do so. The objective is to reduce GHG emissions generated by commuting, while improving employee health and relieving commuting stress in accordance with their lifestyles.

Measures to Improve Delivery Efficiency

In the delivery of products for online shopping, there is a need to not only reduce GHG emissions to address climate change issues, but also to address the so called "2024 problem" of driver shortages and the drivers’ workloads in Japan. The LY Corporation Group is aware of the nexus of these climate change and human rights issues in the ESG social domain, and is working to improve delivery efficiency so that they can be solved together.

Together with its suppliers, ASKUL Corporation (“ASKUL”) conducted demonstration experiments on joint transportation to the same destinations. As a result, ASKUL was able to improve transportation efficiency by consolidating transportation vehicles through joint transportation and combining the loads. With its delivery partners, ZOZO has improved loading efficiency by transporting products in bulk to the relationship centers of the delivery partners in each area where the products are then individually packaged. These efforts to improve transportation and loading efficiency throughout the supply chain have led to a reduction in GHG emissions.

The LY Corporation Group also provides users with more options that improve delivery efficiency. “Otoku Designated Delivery” (Value-Added Designated Delivery Services) in Yahoo! JAPAN Shopping enables users to receive PayPay Points by selecting this shipping method when ordering items that do not need to be received immediately, thereby decentralizing and equalizing shipping and delivery operations. In the demonstration test of this service, 51% of the users who placed orders chose this service, indicating that its demand was higher than expected and that the service was effective. In addition, the Group reduces redeliveries by offering a variety of delivery methods, such as pickup at convenience stores, use of home delivery lockers and through package drop service. ZOZO also introduces an "Order Consolidation" feature that enables customers to combine multiple orders into a single delivery.

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Provision of Recycling-Oriented Services

The LY Corporation Group is expanding its efforts to decarbonize through services, including an e-commerce reuse business and the sale of environmentally friendly products such as low-carbon products. For more information please visit the following website.

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Yahoo! JAPAN Regional Carbon Neutrality Promotion Project

Under the Act on Promotion of Global Warming Countermeasures in Japan, local governments are now required to prepare action plans to address global warming, and an increasing number of local governments are planning and setting their own targets.
LY Corporation, as part of its efforts to promote a carbon neutral society in Japan, accepts applications from local governments for local development projects that promote carbon neutrality, and supports such initiatives by making donations through the enterprise hometown tax donation program^*1. In FY2022, the Company donated approximately JPY200 million to 10 municipalities. These donations support various activities such as forest and ocean CO₂ absorption and promotion of resource recycling.

In addition, the Company’s follow-up after the adoption was also highly evaluated, and in FY2021 it received the Minister’s Award on Enterprise Hometown Tax Donation Program from Japan’s Cabinet Office. Not limiting itself to its own initiatives, the Company is also engaged in activities aimed at decarbonizing Japan, such as holding events to introduce case studies to local governments and companies.

*1 Enterprise hometown tax donation program is a tax program in Japan that allows corporations to receive a tax credit for corporate-related taxes when they donate to the "Machi-Hito-Shigoto-Seisaku Donation Utilization Project," a regional development initiative conducted by local governments that have been approved by Japan's Cabinet Office for their regional revitalization plans.

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Issuance of Green Bonds

With the aim of accelerating its carbon neutral initiatives, LY Corporation (then Z Holdings Corporation) issued green bonds (JPY 20.0 billion) in FY2021 as a means of raising funds for projects that contribute to solving environmental issues. This was the first issuance of green bonds in Japan’s internet sector. The funds procured from the issuance of this green bond is allocated to expenditures for constructing, refurbishing, acquiring and operating energy-efficient data centers, as well as to the procurement of renewable energy-based electricity to be used at data centers.

Allocation Reporting and Impact Reporting

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Sustainability Linked Loan

LY Corporation (then Z Holdings Corporation) signed and executed a syndicated sustainability linked loan for a total amount of JPY20.0 billion. "Use of renewable energy sources in at least 80% of the electricity used by the LY Corporation (then Z Holdings) Group" was set as the sustainability performance target (“SPT”) for this loan, which is linked to ESG strategies. The interest rate of the loan will change according to the achievement level of the target, and the amount equivalent to the interest rate change is planned to be donated to environmental protection organizations and others.

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Investment in Renewable Energy

In order to promote the conversion to electricity derived from renewable energy sources for the electricity it uses, LY Corporation incorporates this initiative into its medium-term management plan, secures budgets, and systematically promotes the conversion to renewable energy every year.

In FY2021, LY Corporation (then Z Holdings Corporation) issued a JPY20 billion green bond, and the fund is used to update and expand data center facilities to increase the efficiency of energy consumption. Around JPY2.0 billion is allocated to the introduction of renewable energy, mainly for electricity used in data centers.

Executive Remuneration

As a remuneration incentive for the executives' contribution to the improvement in business performance and corporate value, the Company sets a sustainability evaluation of ±5% to the cash bonuses. Achievement in the environmental area is included in the sustainability evaluation, and the performance on GHG emissions reduction greatly affects the sustainability evaluation. The progress and evaluation of the two largest policies, LY Corporation's "2025 Carbon Neutrality Declaration" and the LY Corporation Group's "2030 Carbon Neutrality Declaration" are checked every year and are evaluated as performance in the environmental area.

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Carbon Offsetting

For some unavoidable emissions that remain after eliminating GHG emissions from its business activities, the Company will implement carbon offsetting using carbon credits such as J-Credits. The Company will aim to achieve its carbon neutrality target by combining these measures with more substantive reduction activities.

The Company also aims to enhance the environmental value of carbon offsets by promoting mitigation and adaptation measures with the carbon credit creators. Mitigation measures include measures for sustainable CO2 reduction and absorption, and adaptation measures include co-creation of measures for climate change (e.g., disaster prevention) and conservation of natural capital (e.g., biodiversity and water resources) in credit-certified areas.

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Target for Adaptation to Climate Change

Initiatives Related to Adaptation to Climate Change

Relocation of LY Corporation's Kochi Center

The Kochi Center, which is the center for customer service, was formerly located 0.6 meters above sea level, and was expected to be inundated by a tsunami in the event of a Nankai Trough earthquake, which has a very high probability of occurring within the next 30 years. From a medium- to long-term perspective, there were also concerns about the effects of sea level rise caused by climate change.
Therefore, in September 2022, LY Corporation relocated the Kochi Center to a location 16.7 meters above sea level in Konan City, Kochi Prefecture, so that the employees could continue to work safely and also to reduce the risk of business continuity.

Collaborations with Local Governments and Related Organizations through Services

In response to natural disasters, which are becoming more severe and frequent as a result of climate change, the LY Corporation Group is working to prevent and mitigate disasters through its services in cooperation with local governments and related organizations, and is also focusing on post-disaster reconstruction support. For more information, please refer to the following link.

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Realization of Sustainable Supply Chains

Initiatives to Realize Sustainable Supply Chains

The LY Corporation Group carries out procurement activities based on its Basic Policy on Procurement, which places emphasis on "fairness," "security," and "consideration of human rights" among others. In respecting the environment, the Group has provided a section titled "Environmental Conservation" in the Basic Policy on Procurement, which addresses both climate change and natural capital issues by procuring goods and services that have low environmental impacts. It has also included "Consideration for the Environment" in its evaluation criteria for its business partners and suppliers, through which it assesses whether clients actively give consideration to environmental issues.
Furthermore, in the procurement activities through the procurement division, the Company ensures that the division enters into a business agreement that stipulates compliance with the Basic Policy on Procurement with its clients before carrying out business.
The LY Corporation Group believes that it is necessary to consider not only climate change and natural capital in the environmental area of ESG, but also human rights in the social area, and to consider the nexus of each in order to realize a sustainable supply chain.

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Third-Party Verification

Third-Party Verification of Greenhouse Gas, Energy, Water and Industrial waste disposal

In order to ensure high reliability of its reported environmental data, the LY Corporation Group (then Z Holdings Group), along with its parent company SoftBank Corp., underwent third-party verifications by the Japan Quality Assurance Organization, for objective evaluation of their environmental data.
The Japan Quality Assurance Organization conducted verification in accordance with "ISO 14064-3" for GHG emissions and with "ISAE3000" for Energy consumption, Renewable energy usage rate, Water consumption and Water Intensity, and Amount of industrial waste disposal. The verification was conducted to a limited level of assurance and quantitative materiality was set at 5 percent each of the total emissions, consumption and amount of disposal in the Reports. For more information, please refer to the following link.
Based on the procedures described above, nothing has come to our attention that caused us to believe that the statement of the information regarding the LY Corporation Group (the former Z Holdings Group)'s FY2022 GHG emissions from Scope 1, 2 and 3, Energy consumption, Renewable energy usage rate, Water consumption and Water Intensity, and Amount of industrial waste disposal in the Reports, is not materially correct, or has not been prepared in accordance with the Rules.
Going forward, the LY Corporation Group will expand the scope of activities and organizations to be covered by verification.

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