A Business Foundation that Supports Sustainable Growth

Climate-Related Information Disclosure (based on TCFD
In June 2018, Hitachi announced its endorsement of the Task Force onmedium term (through fiscal 2030), and long term (through fiscal

Climate-related Financial Disclosures (TCFD). The TCFD, established2050), according to when the risks may materialize.

by the Financial Stability Board (FSB), published its final report on
information disclosure in June 2017 noting that investors needed moreclarity in corporate disclosures on climate-related risks and(1) Risks related to the transition to a low-carbon economy (mainly 2°C scenario)
Category

Major risks

Policy andlegal

Increased businesscosts from theintroduction ofcarbon taxes, fuel/Short to longenergy consumption term
taxes, emissions
trading systems, andother measures

Avoid or mitigate
increases in businesscosts, such as fromcarbon taxes, by further
enhancing production
and transport efficiency
and promoting the useof non- or low-carbon
energy sources

Technology

Loss of sales
opportunities due todelays in technology
development forproducts andservices

Contribute to reducing CO2emissions by developing
and marketing innovative
products and services thatlead to the achievement oflong-term environmental
targets and expanding thedecarbonization business

opportunities and governance measures. The following contains key
climate-related information in line with the TCFD’s recommendations.

Governance
Hitachi sees climate change and other environmental issues as

Time span

important management issues. In September 2016, after discussions
at the Board of Directors, we established and announced long-term
environmental targets called Hitachi Environmental Innovation 2050
containing CO2 reduction targets for 2030 and 2050 that are in linewith our Environmental Vision defining the goals of environmental

Medium tolong term

Main initiatives

management from a broader perspective.
In April 2017, we established the Executive Sustainability Committee,
chaired by the president and CEO and staffed by other top executives,as the highest-ranking body to discuss and reach decisions on the(2) Risks related to the physical impacts of climate change (4°C scenario)
Category

Major risks

Acute andchronic

Climate-relatedrisks to business
continuity, including
increased severityof typhoons, floods, Short to longand droughts (acute termrisks) as well as rising
sea level and chronicheat waves (chronicrisks)Group’s sustainability strategy in accordance with our management andbusiness strategies. Members meet twice a year to discuss material
environment-related policies and measures, including those in response
to climate change, to share progress reports and achievements, and toset the course for further improvements and new initiatives.
We have adopted a committee system to separate theresponsibilities for management oversight from the execution ofTime span

Main initiativesTake into account thepossibility of flood damage
when deciding on thelocation or equipmentlayout of a new plant.
Measures tailored to
the water risks of eachmanufacturing site will bestrengthened in the future
based on the results ofa water risk assessment
now being conducted.

business operations. Under this system, the Audit Committee ofindependent directors conducts an audit of sustainability-related

CO2 emissions during the use of our products and services by ouroperations once a year. Reports on climate-related material issues arecustomers account for 90% of total emissions in our value chain. This

made to the committee by Hitachi executive officers.

represents a business opportunity for us in the short, medium, andlong-term, since developing and providing products and services thatStrategy
Wishing to fulfill our responsibilities as a global company in achieving aemit zero or very little CO2 during their use can satisfy customer needs
and also help address social issues.

low-carbon society and taking note of the total CO2 reductions
required globally, we have set in our long-term environmental targets
called Hitachi Environmental Innovation 2050 CO2 reduction targets for

Climate-related opportunities
Category

Major opportunities

Main initiatives

Products/services andmarkets

Increased market
value and revenue
from expanded salesof products andservices with innovativetechnology that cancontribute to themitigation and adaptationof climate change

Expand the decarbonization business,develop and market products andservices that contribute to a lowcarbon society, and promote thedevelopment of innovative devices andmaterials that contribute to reducing
the environmental burden

the entire value chain of 50% by fiscal 2030 and 80% by fiscal 2050,
compared to fiscal 2010.
Our 2021 Mid-term Management Plan, meanwhile, calls for reducing
CO2 emissions throughout the value chain by more than 20% by fiscal
2021, compared to fiscal 2010.

Climate-Related Risks and Opportunities
As for climate-related risks, we have followed TCFD classification inconsidering (1) risks related to the transition to a low-carbon economy
in the 2°C scenario and (2) risks related to the physical impacts ofclimate change in the 4°C scenario, which assumes that efforts toreduce global CO2 emissions have failed. Risks are categorized into
short term (over the next three years from fiscal 2019 to 2021),

76

Hitachi Integrated Report 2019recommendations)
Responding to the Business Risks and Opportunities of Climate Scenarios
We are examining the impact of the 2°C and 4°C scenarios for five businesses that have a relatively high likelihood of being affected by climate change.
Strategies for 2°C/4°C Scenarios Based on TCFD Recommendations (abridged)
Target businesses

Responses to futurebusiness risks andopportunities

Railway systems

Automotive systems

Enhance response tonew markets, such as forContinue to strengthen
electric vehicles, under thethe railway business, as
2°C scenario, and also
global demand for railways
to existing technologies
will increase under either
like internal combustion
scenarioengines under the 4°C
scenario

Our Social Innovation Business contributes to improving people’s

Water systems

Power generation andpower grids

IT systems

Strengthen provision ofseawater desalination
facilities and other water
generation systems in
response to increased
water demand fromglobal economic growth,urbanization, andpopulation growth undereither scenarioContinue to enhance
responses to relevantmarkets in view of
expected higher demand
for non-fossil energy
under either scenarioContinue to develop
innovative digitaltechnologies and enhance
digital service solutions
that generate new value inview of expected market
expansion under either
scenario

Sustainability Report since fiscal 2013.

quality of life and enhancing the value of our business customers.

Total CO2 emissions can fluctuate greatly due to the restructuring of

Utilizing our strengths in OT and IT as well as in energy technologies,

our operations, but given the nature of our business, some 90% of ourwe seek to help users of our products and services to reduce their CO2

emissions come from the use of sold products in Scope 3. Among ouremissions. Because we pay close attention to market trends andproducts and services featuring equivalent value, therefore, we give

develop our business flexibly and strategically, we believe we have highpriority to providing customers and society with those that emit lessclimate resilience in the medium to long term under either the 2°C orCO2. At the same time, we will seek to further reduce CO2 emissions

4°C scenario.

during production.

Risk Management
The Hitachi Group is engaged in many different businesses, with eachhaving its own set of risks and opportunities. The impact of thosepertaining to climate change is evaluated for each business unit andGroup company in accordance with the Environmental Action Plan,updated every three years. The results are tabulated by the
Sustainability Promotion Division of Hitachi, Ltd., and their importanceis checked at Sustainability Promotion Meetings. Those risks andopportunities perceived as being particularly important for the Group
as a whole are deliberated by the Executive Sustainability Committee,chaired by the president and CEO of Hitachi, Ltd.

Metrics and Targets
Our environmental activities are managed through the Environmental
Action Plan, for which the indicators and targets are updated every
three years, including those to measure and manage climate-relatedrisks and opportunities.
The 2021 Mid-term Management Plan cites a reduction target of atleast 20% for CO2 emissions across our value chain by fiscal 2021
compared to fiscal 2010. To achieve this goal, targets for eachbusiness unit and Group company were established in line with the2021 Environmental Action Plan, and progress is being monitored on aGroup wide basis. Total greenhouse gas emissions (Scope 1, Scope 2,and Scope 3) across the value chain are calculated based on GHG
Protocol standards and have been published in the HitachiThis section on “Climate-Related Information Disclosure (based on
TCFD recommendations)” has been abridged due to spaceconsiderations. For a full discussion of our initiatives, refer to theHitachi Sustainability Report 2019.
https://www.hitachi.com/sustainability/download/index.html

77