Hitachi, Ltd. | Integrated Report 2016

Our ESG Approach29

Message from Outside Directors

Hitachi’s Central Research Laboratory
twice. The majority of its research efforts
have business potential, and I look forward
to seeing the commercialization of these
R&D results at an early stage.

Globalization of Management
Hitachi has strengths in advanced technologies and in the broad scope of its businessfields, and the Company is rolling out initiatives in the Social Innovation Business ona global scale. The members of the Boardof Directors have visited major offices andPhilip Yeo

facilities in India, the United States, andthe United Kingdom. In addition, we
participated in the Hitachi Social Innovation
Forum 2015, which was held in Las Vegas,
Nevada. Working together with customers

Impressions of Hitachi’s Corporate

value through sustainable growth and to be

and partners, Hitachi provides a wide range

Governancea corporation in which all employees canof technologies and solutions globally.

work in a comfortable, secure environment.

Based on my experience at these events, it

In my view, Hitachi’s corporate governanceis clear that Hitachi enjoys a wide range ofis excellent. I joined the Board of Directorsof Hitachi as an outside director in 2012.

business opportunities.
Changes for Hitachi

Currently, outside directors account for 9 of
the 13 directors. In addition, 5 directors are

To accelerate the Social Innovation

goal is to derive more than 55% of its rev-from outside of Japan. I am most impressed

Business, from fiscal 2016 Hitachi made aenue from overseas markets in fiscal 2018.

that Hitachi is one of the few leading

major shift to a new system that emphasizes

Here the diversity of its human capital talent

corporations in Japan in the promotion offront businesses, which will implement

pool is key. It will be necessary to enhancediversity. In terms of their experience andmarketing while maintaining close contact

the capabilities of individual employees

cultures, the directors have a wide range ofwith customers. In addition, the Company

while effectively utilizing human resource

backgrounds and offer diverse opinions.

has clarified its market-in approach. For

rotations across Japan and overseas markets.

There have been many opportunities forexample, the President & CEO and other

These efforts should include the active

me to learn, and I believe that meetings ofexecutives will take a lead role in stepping

utilization of overseas global talent in

the Board of Directors are conducted in a

up sales and marketing initiatives. That

postings at Hitachi headquarters in Japan.

manner that is highly meaningful.

approach is also clear at meetings of theMoreover, global markets are currently

Board of Directors. Outside directors havecharacterized by increasing uncertainty. In

the close communication between the

been included in opportunities to meet withaddition to strengthening services anddirectors and the executive officers, who

local customers and partners. These haveproducts, Hitachi must take additional

communicate freely and openly. At meetings

included meetings of the Board of Directors

steps to improve profitability, such asof the Board of Directors, there are detailedin Delhi, India, in 2012; Washington, D.C.,

reducing costs through further diversifica-business briefings by each Business Unit

United States, in 2013; and London,tion of its procurement of parts and com-

CEO and executive officers. In response,

United Kingdom, in 2015. These meetings

ponents. Customers are managing theiroutside directors offer a broad range ofwere highly significant opportunities.

operating expenditures within limited bud-

Another distinctive feature of Hitachi is30

Hitachi is accelerating reforms to promote
globalization of management. The Company’s

opinions and views from their independent

Hitachi also implements a market-in

viewpoints. The President & CEO openly

approach in regard to R&D, which will beup the global provision of solutions andwelcomes the comments of the outside

the source of sustainable growth in theservices that help customers resolve these

directors and works to reflect those com-future. A new organizational system thatchallenges. I believe that this will provide

ments in management. The executives of

supports front operations has already been

opportunities to create new businesses andHitachi are aiming to increase shareholder

placed into operation. I have visitedlead to future growth.

gets, and accordingly Hitachi needs to step

Hitachi, Ltd. | Integrated Report 2016

But with great strengths like these, thechallenges can also seem not a few.
Maintaining margin growth with a
340,000-person workforce is no small feat.
Hitachi has a wealth of talented, innovative
human resources around the world, but it
will be necessary for each individual to further enhance and leverage his or her skills.
No matter how a company reduces waste
and increases efficiency, it is a continuous
theme that the company must keep constantits efforts to overcome the competition. In
this difficult environment, Hitachi needs tolearn how to make quicker management
decisions or completely change if theCompany wants to lead rather than follow.

Louise Pentland

Expectations for Hitachi
Hitachi’s Meeting of the Board

the Board itself has broadened to become

Hitachi needs to focus on steadily deliveringof Directors

more diverse in culture and experience.

on goals in the 2018 Mid-term Management

One example is the increase in the number

Plan while increasing the speed of decision

I became an outside director of Hitachi inof outside directors who are not Japanese.

making and changing risks and challenges

June 2015, and my overall evaluation of

There is a good degree of debate and mul-into opportunities.

our corporate governance is that it is very

tiple points of views from the diversity on

good. At Hitachi, executive officers aggres-the Board, which includes these directors

continue to occur and could sometimes

sively incorporate the opinions of thewith different backgrounds.

affect the business of Hitachi. It will be

Board of Directors into management activi-

Maintaining a focus on the next three toAlso, there are geopolitical changes thatnecessary to focus not only on geopolitical

ties. Hitachi has demonstrated a consistent,

five years and seeking to ensure Hitachirisks but also on cultural risks. In preparation

forward-looking approach that aims forremains competitive are the most important

for these risks, Hitachi needs to further

further progress. Many Japanese compa-

themes that the Company is dealing with.

strengthen its cost competitiveness. To

nies have problems with rapid decision

If the management policies and organiza-

expand operations while reducing risk, itmaking, but one of Hitachi’s distinctive

tional reforms that have been discussed inwill be necessary to utilize overseas humanstrengths is the extremely fast pace of its

meetings of the Board of Directors over the

resources, who have abundant knowledge ofmanagement. For example, when I ask apast few years take firm hold, and Hitachi

local markets, for top management positions,question about a particular issue at a meet-moves forward on that basis, then I believe

as in the case of British executive Mr.

ing, the answer to that question is always

that the Company is certain to be successful.

Alistair Dormer, who was appointed as theprovided at the next meeting. The

CEO of the Railway Systems Business Unit.

Company does not simply listen to theopinions of outside directors. They have a

As a legal specialist with experience in
Hitachi’s Strengths and Challenges

clear focus on actually incorporating thosethe management of global corporations, I
will do my utmost to contribute to Hitachi.

opinions into actions and drawing on them

Hitachi has numerous strengths and thoseThrough meetings of the Board of Directors,

in management activities.

that are always top of mind for me are the

I would like to utilize my knowledge in a

global reach of the Company, the diversifi-

wide range of fields, such as corporate

many diverse industries. This means thecation of industries, the highly talented

culture, organizational reform, and cost

Company needs a board with a diverseand skilled workforce, and the longevity of

reductions, in Hitachi’s management.

makeup to enable both the skills andthe talent pool within Hitachi as well as the

specialized focus that are needed to govern

leadership, including the Chairman of theover a company like Hitachi. In that regard,

Board and the President & CEO.

Hitachi has a global business involved in31Corporate Governance

Hitachi and its listed subsidiaries are companies with
Nominating Committee, etc., under the Companies Act ofJapan. By demarcating responsibilities for management
oversight and those for the execution of business operations, Hitachi is working to create a framework for quick
business operation, while making management highly
transparent.
In addition, Hitachi is executing business strategies
formulated to enable the Group to demonstrate its collective strengths. Moreover, some of Hitachi’s Directors andExecutive Officers serve concurrently as Directors andExecutive Officers at Group companies, thereby strengthening integrated management of the Group and improving

management oversight of Group companies. In theseways, Hitachi is working to increase corporate value.
Starting in June 2015, the Japan’s Corporate Governance
Code applies to companies listed on domestic stock
exchanges in Japan. Hitachi agrees with the basic approachof the Code, which is that the Code’s appropriate implementation will contribute to the development and success ofcompanies, investors and the Japanese economy as a wholethrough individual companies’ self-motivated actions so as
to achieve sustainable growth and increase corporate value
over the medium-to-long term. Moving forward, Hitachi
will work to further strengthen corporate governance.

Initiatives to Strengthen Corporate Governance
1. Realizing quick, highly transparent management

2. Accelerating global management, strengthening oversight function

Transition to a Company with Committee System(currently a Company with Nominating Committee, etc.)

Increased number of outside directors including
non-Japanese directors; outside directors became majority(June 2003~)(June 2012~)

Major Aims

Major Aims

•	Make management highly transparent by demarcating responsi-•	Reflect global, diverse viewpoints in management, further

bilities for management oversight and those for the execution ofbusiness operations

strengthen oversight function
Composition of Board of Directors

Composition of Each Committee (June 2016)

June 2011 (13 elected)

June 2016 (13 elected)

Nominating Committee: Determines director candidates

Audit Committee: Audits execution of Directors and Executive Officers

Compensation Committee: Determines remuneration for Directors and Executive Officers

Outside directors

49Inside directors(non-executive)

7

2

Inside directors(serving concurrently as
executive officers)22

Non-Japanese directors

Chairman (Outside Director)

Outside Director

Female directors

Inside Director

3. Appropriate implementation of the Corporate Governance Code

Implementing all of the principles of the Corporate Governance CodeAnalysis and Evaluation of the Effectiveness of the Board of Directors•	The Board of Directors analyzed and evaluated its effectiveness in fiscal year ended March 31, 2016, based on each director’s evaluations in regard
to such matters as the composition of the Board of Directors, the decision-making process, contributions, and operational and support systems.
•	The results of the evaluation were that the Board of Directors has diversity in its composition and, targeting growth in corporate value over the
medium-to-long term, conducts active discussions, centered on matters related to management strategies, such as mid-term management plans.
The evaluation concluded that the Board of Directors is functioning effectively overall.

32

Hitachi, Ltd. | Integrated Report 2016

Corporate Government Framework
Accounting Auditors

Report

Audit

General Meeting of
Shareholders
Appointment

Senior Executive Committee
Appointment /Oversight

ReportPresident & CEO

Board of Directors
Executive Vice Presidents andExecutive Officers / Senior Vice
Presidents and Executive Officers

Nominating Committee
Audit

Compensation Committee
Internal
Auditing
OfficeAudit Committee

Executive
Department
in charge

Executive
Department
in charge

Department
in charge

Department
in charge

ReportAudit

Board of Directors
The Board of Directors approves basic management policy for the

March 31, 2016, and the attendance rate of Directors at these

Hitachi Group and supervises the execution of the duties ofmeetings was 100%. To assist with the duties of the Board of

executive officers and directors in order to sustainably enhance

Directors and each committee, staffs who are not subject tocorporate value and shareholders’ common interests. The basic

orders and instructions of Executive Officers are assigned.

management policy includes the medium-term management plan
and annual budget compilation. The Board of Directors focuses

Attendance at meetings of the Board of Directors by eachon strategic issues related to the basic management policy as

outside director in the fiscal year ended March 31, 2016

well as other items to be resolved that are provided in laws,

Name

Attendance

Nobuo Katsumata

8 out of 8 days

Cynthia Carroll

8 out of 8 days

Sadayuki Sakakibara

8 out of 8 days

George Buckley

8 out of 8 days

Louise Pentland

7 out of 7 days

mittees—the Nominating Committee, the Audit Committee, andHarufumi Mochizuki

8 out of 8 days

the Compensation Committee—with outside Directors account-

Philip Yeo

8 out of 8 days

Hiroaki Yoshihara

8 out of 8 days

regulations, the Articles of Incorporation, and Board of Directors
Regulations. As of June 22, 2016, the Board of Directors wasmade up of 13 Directors, and two of them concurrently serve as
Executive Officers. Hitachi aims to reinforce the oversight function of the Board of Directors, of which nine outside Directors,
including non-Japanese, account for the majority, reflecting theirglobal and diverse viewpoints.
Within the Board of Directors, there are three statutory com-

ing for the majority of members of each committee. The Board of
Directors meetings were held 8 days during the fiscal year ended33

Corporate GovernanceFurthermore, Hitachi formulated and published Corporate• His or her immediate family member is, or has been within the

Governance Guidelines outlining the framework of corporate

last three years, an executive director or an executive officer, ofgovernance, such as the function and composition of the Boardof Directors, qualifications for Directors, and criteria for assessing
the independence of outside Directors.

the Company or any of its subsidiaries;• He or she is currently an executive director, an executive officer or an employee of a company that has made payments to,or received payments from, the Company for property or ser-

Corporate Governance Guidelines of Hitachi, Ltd.

vices in an amount which, in any of the last three fiscal years,

http://www.hitachi.com/IR-e/corporate/governance/guidelines.html

exceeds 2% of any of the companies’ consolidated grossrevenues;

Qualification for the outside Directors and• He or she has received during any of the last three fiscal years

criteria for the independency

more than ¥10 million in direct compensation for his or her ser-In regard to the election of an outside Director, the Company’s

vice as a specialist in law, accounting or tax, or as a consultant

Nominating Committee considers the following criteria for inde-from the Company, other than director compensations; orpendence. In addition, the Committee also considers whether the• He or she serves as an executive officer or director of a not-for-outside Director has outstanding character and insight andprofit organization, and the Company’s discretionary

whether the Outside Director has worked in a leadership position

charitable contributions to the organization in any of the lastin such fields as business, law, administration, accounting or edu-

three fiscal years are more than ¥10 million and 2% of thatcation or has experience at policy-making levels.

organization’s annual gross revenues.

In regard to the independence of an outside Director, theCompany considers an outside director to be independent if
none of the following items are applicable.

34

Name

Reasons for appointment

Baba Kalyani

Mr. Kalyani was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising theexecution of duties by Executive Officers and others from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight as the top executive of a major global company.

Cynthia Carroll

Ms. Carroll was selected as an outside director, since she was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising theexecution of duties by Executive Officers and others from an independent perspective as well as reflecting her global viewpoint to the Company’s Board of
Directors based on her rich experience and insight as the top executive of major global companies.

Sadayuki Sakakibara

Mr. Sakakibara was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising
the execution of duties by Executive Officers and others from an independent perspective based on his rich experience and insight as the top executive of a major
global company.

George Buckley

Mr. Buckley was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising theexecution of duties by Executive Officers and others from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight as the top executive of major global companies.

Louise Pentland

Ms. Pentland was selected as an outside director, since she was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising
the execution of duties by Executive Officers and others from an independent perspective as well as reflecting her global viewpoint to the Company’s Board of
Directors based on deep insight into corporate legal matters and corporate governance gained through her rich experience as the chief legal officer of major
global companies.

Harufumi Mochizuki

Mr. Mochizuki was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising
the execution of duties by Executive Officers and others from an independent perspective based on his rich experience and insight in the area of public administration, etc.

Takatoshi Yamamoto

Mr. Yamamoto was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising
the execution of duties by Executive Officers and others from an independent perspective based on a broad range of insight in business and management gained
through his experience in the area of corporate analysis and global corporate management.

Philip Yeo

Mr. Yeo was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising the execution of duties by Executive Officers and others from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of Directors
based on his broad experience and insight in such areas as public administration.

Hiroaki Yoshihara

Mr. Yoshihara was selected as an outside director, since he was expected to reinforce the functional aspects of the Company’s Board of Directors by supervising
the execution of duties by Executive Officers and others from an independent perspective as well as reflecting his global viewpoint to the Company’s Board of
Directors based on his rich experience and insight in the area of global corporate management and accounting.

Hitachi, Ltd. | Integrated Report 2016

(1) Nominating Committee

Director and Executive Officer Compensation

The Nominating Committee has the authority to determine par-The Company’s Compensation Committee sets forth the policy

ticular proposals submitted to the general meeting of sharehold-on the determination of the amount of compensation, etc. ofers for the election and dismissal of Directors. The Nominatingeach Director and Executive Officer pursuant to applicable provi-

Committee consists of four Directors, three of whom are outside

sions of the Companies Act. Compensation will be commensu-

Directors.

rate with the ability required of, and the responsibilities to be

The Nominating Committee meetings were held 6 days during

borne by, the Company’s Directors and Executive Officers,

the fiscal year ended March 31, 2016.

taking into consideration compensation packages at other(2) Audit Committee

companies.

The Audit Committee has the authority to audit the execution ofCompensation for Directors will consist of a monthly remuner-

duties of Directors and Executive Officers and to determine on

ation and a year-end allowance. Monthly remuneration will be

proposals submitted to the general meeting of shareholders for

decided by adjusting basic remuneration that reflect full-time or

the election and dismissal of accounting auditors. The Audit

part-time status, committee membership and position, travel

Committee consists of five Directors, including three outsidefrom place of residence, etc. Year-end allowance will be a pre-Directors and one standing Audit Committee members.

determined amount equivalent to about 20% of the Director’s

The Audit Committee meetings were held 16 days during theannual income based on monthly remuneration, although thisfiscal year ended March 31, 2016.

amount may be reduced depending on financial results. A(3) Compensation Committee

Director concurrently serving as an Executive Officer will not be

The Compensation Committee has the authority to determine

paid compensation as a Director.

remuneration policies for Directors and Executive Officers andCompensation for Executive Officers will consist of a monthly

remuneration for individuals based on them. The Compensation

remuneration, a performance-linked component and a medium

Committee consists of four Directors, three of whom are outside

and long-term incentive compensation. The higher position

Directors.

Executive Officers hold, the higher proportion of variable pay

The Compensation Committee meetings were held 9 days
during the fiscal year ended March 31, 2016.

(the sum of performance-linked component and medium andlong-term incentive compensation, except monthly remuneration as fixed pay) will be set to the total annual compensation.

Composition of the Board of Directors and Each Committee
NumberOutsideof persons Directors Directors Chairman

Monthly remuneration will be decided by adjusting a basic
amount to reflect the results of an assessment. The basic
amount is set in accordance with the relevant position.

Board of Directors

13

9*

4 Inside Director

Nominating Committee

43

1 Outside Director

basic amount to reflect financial results and individual perfor-

Audit Committee

5

3

2 Outside Director

mance. The basic amount is set within the range of about 25 toCompensation Committee

43

1 Outside Director

35% of the total annual compensation of each Executive Officer* In regard to the outside directors, Hitachi has notified all outside Directors as independent directors to each of the stock exchanges in Japan where the Company is listed.

Executive Officers

Performance-linked component will be decided by adjusting a

in accordance with the relevant position. Medium and long-term
incentive compensation* will be stock options as stock-based
compensation with share price conditions (stock acquisitionrights with the strike price of ¥1), the number of which to be

Executive Officers decide on matters delegated to them by the

granted will be determined within the range of about 10 to 40%

Board of Directors and execute Hitachi’s business affairs withinof the total annual compensation of each Executive Officer inthe scope of assignments determined by the Board of Directors.

accordance with the relevant position. As for expatriates, cash

As of August 1, 2016, Hitachi had 34 Executive Officers.

award based on the value of the Company’s share price with the

Senior Executive Committee
The Senior Executive Committee is a council to ensure thatPresident deliberately decides on important managerial matters,
which may affect the business of Hitachi or the Hitachi Group,
through discussing from diverse viewpoints. This committee consists of eight members as of June 22, 2016: President & CEO, four
Executive Vice President and Executive Officers and three SeniorVice President and Executive Officers.

similar conditions will be substituted for the stock options.
* It was decided at the Compensation Committee meeting held on May 13, 2016 thatmedium and long-term incentive compensation will be introduced as a component of
the compensation from the fiscal year commencing on April 1, 2016.

The compensation structure for Directors and Executive
Officers was re-examined starting with compensation for the
fiscal year ended March 31, 2009, and the retirement allowance
was abolished.
35

Corporate GovernanceCompensation for Directors and Executive Officers for the fiscal year ended March 31, 2016, is as follows:
Amount of compensation
Total amount of each type (Millions of yen)
Total amount of compensation,etc. (Millions of yen)

CategoryMonthly
remuneration

Year-end allowance andperformance-linked component

Number of persons

Directors (excluding outside Directors)

117*1

105*1

12

3*2

Outside Directors

280

265

14

8

Executive Officers

1,763

1,275

487

28

Total

2,161

1,647

514

39

*1 T he amount of compensation to Directors (excluding outside Directors) includes the monthly remuneration for one Director, who retired due to expiration of his term of office at theclose of the 146th Annual General Meeting of Shareholders held on June 25, 2015.
*2 The number of Directors indicated excludes two Directors who concurrently serve as Executive Officers.

In addition, Directors or Executive Officers whose compensation from Hitachi and its subsidiaries is not less than ¥100 million andthe amount of their compensation are as follows:
Total amount of each type (Millions of yen)
Total amount ofcompensation, etc.
(Millions of yen)Monthly
remuneration

Performance-linked
component

Basicremuneration

Incentive

Name

Company

Category

Short-termLong-term

Hiroaki Nakanishi

Hitachi, Ltd. (The Company)

Executive Officer*3

161

115

46

—

—

—

—

Toshiaki Higashihara

Hitachi, Ltd. (The Company)

Executive Officer*

136

97

39

—

—

—

—

Alistair Dormer*4

Hitachi Rail Europe Ltd.
(Consolidated subsidiary)*5

Executive Chairman
and CEO

161

—

—

70

61

28

—

John Domme*

Hitachi Information &Telecommunication Systems
Global Holding Corporation(Consolidated subsidiary)*5

Chairman of
the Board and CEO

900

—

—

144

185

558

12

4

3

Others*6*3 Although concurrently serving as Director, Messrs. Hiroaki Nakanishi and Toshiaki Higashihara do not receive compensation as Director.
*4 A lthough concurrently served as Executive Officer of the Company for the fiscal year ended March 31, 2016, Messrs. Alistair Dormer and John Domme did not receive compensation as
Executive Officer of the Company.
*5 T he basic remuneration paid in Sterling pounds and US dollars is converted into yen using average exchange rate for each quarter of the fiscal year ended March 31, 2016. The othercompensations paid in Sterling pounds and US dollars are converted into yen using average exchange rate for the fiscal year ended March 31, 2016.
*6 The “Others” column represents the amount of fringe benefits.

Internal Control over Financial Reporting36

To ensure the reliability of the financial reporting for the Group

reporting, Hitachi is advancing the establishment of systems for

as a whole, the Hitachi Group has documented control proce-objective assessment at each business unit and major Groupdures, from company-level controls to process-level controls, incompany. The J-SOX Committee’s office summarizes the assess-accordance with policies determined by the J-SOX Committee. In

ment results of each company to confirm the effectiveness ofregard to assessment of the internal control over financial

internal control on a Group-wide, consolidated basis.

Hitachi, Ltd. | Integrated Report 2016

Hitachi Group Internal Control Assessment Framework (As of April 1, 2016)
Financial Services
AgencyHitachi, Ltd. President and CFO
Internal
ControlReportReportReportReportJ-SOX Committee
J-SOX Committee’s Office

Audit Committee
Collaboration

Independent
Auditors

ReportBusiness Units andMajor Group Companies

Internal Auditing
OfficeReportExternal
Audit

Subsidiary Companies

Accountability
In accordance with its disclosure policy, Hitachi is implementing

Information for shareholders and investors

the fair and appropriate disclosure of such information as man-

http://www.hitachi.com/IR-e/agement strategies and financial information. In addition, Hitachi
is aggressively conducting dialogues through such means as
meetings with shareholders and investors, investor relations (IR)events, and the general meeting of shareholders.

Major information disclosure publications

Financial results / Quarterly financial results

In the fiscal year ended March 31, 2016, we held quarterly

Annual securities reports / Quarterly reports

financial results briefings and corporate strategy meetings on our

Business reports / Interim business reports

progress with the 2015 Mid-term Management Plan. Following on
from the fiscal year ended March 31, 2015, we hosted Hitachi IR
Day 2015, where senior management explained their businessAnnual report
Hitachi Group sustainability reports

strategies and management policies under the Plan. Feedback frominstitutional investors and analysts was positive. Their comments
included, “I was struck by the Company-wide efforts to generatecash flows,” and “This was a valuable once-a-year opportunity to
update our understanding of the Company’s various businesses—
one that I very much hope will continue.”
We also conducted tours of the Nakajo Division of Hitachi
Industrial Equipment Systems and Hitachi Consumer Products(Thailand), a consumer electronics production site, to deepen
understanding of our product businesses, in addition to conducting about 740 one-on-one meetings with institutional investors
and analysts worldwide. Members of senior management visit
institutional investors in North America, Europe, and Asia twicea year to explain corporate management policies and businessdirections. We are doing our best to share IR feedback in-houseand reflect this in management and operations.
We also post briefing materials and business performance aswell as stock price trend charts in a timely manner on our IR
website. We aim to continuously enhance our information disclosure. In the fiscal year ended March 31, 2016, we introduced a
new responsive design on our website for improved browsing
convenience from smartphones and tablets.
37

Risk Management

Changes to our operating environment from such factors as the globalization of the economy and advances in andspread of information and communications technology (ICT) not only lead to the expansion of business opportunities
but also to the diversification of risks to our operations.
We have built a diverse risk management system under which we carry out risk analysis to accurately gauge ongoing
economic and social changes and use the insights gained to take preventive measures and ensure a rapid response toissues that may arise unexpectedly.

Reinforcement of Risk Management System

Creating BCPs* in Key Operations Worldwide

The entire Hitachi Group is reinforcing its risk management

Given the close relation of our business to social infrastructure,system to address increasingly globalized and complexed risks.

we are enhancing our BCPs to ensure that the impact of risks

Under Hitachi, Ltd.’s head of risk management, each businessdoes not disrupt our business and thereby significantly affectoperation assigns an executive handling risk management tosociety. In December 2006, we issued the Hitachi Groupmanage risks mainly concerned with compliance, export control,

Guidelines for Developing Business Continuity Plans in Japanese.

disasters, and crime, and to respond adequately in coordination

In fiscal 2010 these were translated into English and Chinese foramong the entire Group. Furthermore, Hitachi is building a

distribution to all Hitachi Group companies worldwide to ensurecomprehensive risk management system that contains standards

our response readiness for large disasters and other risks.

and procedures to objectively evaluate different risks that may
affect business.

When the Great East Japan Earthquake struck in March 2011,
our BCPs enabled quick responses and swift decision making.
However, issues emerged including identification of secondary

Risk Management System
Risk Management Groupand other suppliers, cloud storage and multiplexing of production information, and the need to secure alternate transportationand fuel sources.

• Compliance

Based on the lessons learned from this disaster, in October• Export Control

2011 we released and distributed new BCP guidelines for depart-• Crisis Management and BCP

mental implementation to further improve our BCPs. Hitachi• Internal Audits, etc.

Group operations in Japan completed their preparation andreview of BCPs, based on applicability to their operations, by theend of fiscal 2011. BCPs for large earthquakes and novel strains
of influenza have been prepared for 49 Hitachi, Ltd. businessStandards and systems for evaluating business and other risks

sites and 96 Group companies.
On top of these efforts, since fiscal 1998, Hitachi, Ltd. has
held annual earthquake drills simulating a major seismic event at

Comprehensive risk management system at the management level

key operations in Japan. In November 2015, Hitachi Automotive
Systems held coordinated drills at its head office and businesssites in the cities of Sawa, Atsugi, and Fukushima, where managers in charge of their divisions confirmed the action plans inemergency situations based on BCPs.
In fiscal 2013, Hitachi appointed personnel in charge of riskresponse policies at its main overseas bases and around 300
companies prepared BCPs with the goal of completing them for
key operations by the end of fiscal 2013. These BCPs are aimed atstrengthening our ability to respond to business risks, including
large disasters, novel strains of influenza, political instability, andsocial disruption, as well as acts of terrorism. Moving forward,
we intend to further expand the scope of our BCPs.
* BCP: Business Continuity Plan

38

Hitachi, Ltd. | Integrated Report 2016

Improving Safety for Employees Sent toDangerous Regions(1)	Precautionary measures and prompt security responses

Responding to the hostage incident in Algeria in January 2013,

measures based on vulnerability and risk analyses. We alsothen President Hiroaki Nakanishi reinforced his policy in February

have an emergency manual for security breaches, based on

2013 of ensuring the safety of employees sent outside Japan.

the assumption that these are inevitable, and not just possible.

We classify assets to be secured and take safeguarding

Survey missions of in-house and outside experts are now sent
beforehand to areas at high risk of war, terrorism, and other threats.
Even after employees are dispatched to such areas, we conduct(2)	Promoting stronger ethical and security awareness among
data users

additional local surveys every six months as a means of confirming

We have prepared a program tailored to Hitachi’s various

the effectiveness of our safety policies. In fiscal 2014, survey

personnel levels and are working to raise the prevailing sense of

missions were sent to several countries in Africa and the Middle

ethics and security awareness through Group-wide e-learning.

East. In addition, we have introduced a range of safety measures

We are also conducting audits to identify and address problems

in the light of recent terrorist incidents involving Japanese andearly on.

other nationals, including providing timely alerts to employees.
These and other steps underscore our commitment to ensuring
the safety of our employees working around the globe.
Hitachi is also contributing to safety measures at otherJapanese corporations operating outside Japan. To help enhance

Basic Approach to Information Security Governance
Clearly designate assets to be protected• Evaluate information assets and conduct risk analysis

collaboration between the private and public sectors in this area,
Hitachi executives participated in the Council for Public-Private
Cooperation for Overseas Safety organized by Japan’s Ministry of

Improve user literacy

Foreign Affairs, and in June 2014 Hitachi took part in a public-• Supply security
education materials• Educate managers
and staff

private kidnap incident preparatory training exercise.
* Incident in January 2013 in which an armed terrorist group attacked a natural gas
refining plant in Algeria. There were more than 30 victims, including 10 Japanese.

Implement preventive
techniques
Information
assets to beprotected• Widely implementadministrative
measures• Deploy technologicalprocesses

Promoting Information Security
The Information Security Committee, chaired by the Chief
Information Security Officer, determines our information security
policies and procedures. The Information Security Promotion
Council and other bodies convey decisions internally and to othercompanies in the Hitachi Group. Information security officers at
business sites and companies ensure that these decisions are

Establish information security system• Develop rules (security policy)• Create managerial framework• Establish audit and follow-up system• Ensure solid feedback through extensive PDCA
cycles for prevention and accident response

implemented in the workplace.
The Hitachi Group emphasizes two points in information
security and personal information protection:

39

Compliance

We carry out our business not only in full compliance with legal requirements but also in ways that ensure socially
responsible conduct. Spreading understanding of this among all Hitachi employees is a fundamental management issue.
As economic activity becomes increasingly borderless, there is a growing need for steps to eradicate bribery, corruption,and other illegal behavior in accordance with conditions in the countries and regions where we have operations. As a
global company, we are implementing a consistent compliance structure across the entire Hitachi Group.

Enhancing Our Compliance Framework

Compliance Reporting System

To comprehensively implement our compliance framework, we

Hitachi has instituted a Group-wide whistleblowing system tohave appointed a senior executive as the head of risk manage-

prevent illegal and unethical behavior, to promptly address infrac-ment for the entire Hitachi Group. Every in-house company andtions, and to enhance our ability to self-regulate. In this system,

key Group company also has an executive handling risk manage-reports go directly to the Compliance Department at Hitachi orment, assisted by a compliance manager (CM). We are also sup-to an outside attorney. This system can be used not only byporting regional Group companies and have appointed

employees within the Hitachi Group, who are able to reportcompliance heads in 11 regions globally.

issues through in-house channels, but also by former employees,

Under this system, policies and measures are shared throughthe Compliance Management Conference, composed of risk

temporary staff, and suppliers.
In addition, we have implemented the Channel to the Board ofmanagement executives from in-house companies and key

Directors system to allow employees to directly report problems

Group companies. In addition, all CMs meet regularly at theanonymously to Hitachi directors. The facts related to all reports

Hitachi Group Compliance Conference to provide information on

are subject to thorough investigation and checking, and people

compliance and to confirm implementation of required actions.

who have identified themselves in the reports are informed of

The Advisory Committee, consisting of outside experts, con-the investigation results. We make every effort to appropriately

venes regularly to exchange views on the state of compliance ini-deal with situations, including taking remedial action wheretiatives. The insights provided by committee members are utilized

necessary.

to improve policies and actions.
The internal audit section regularly conducts Group-wide

Thorough Export Controls

reviews to verify that each area of compliance is being appropri-

For basic export control policies, we adopt the Hitachi Standards

ately operated. In cases where the reviews identify necessaryof Corporate Conduct, which state: “We shall help maintainimprovements, corrective measures are swiftly implemented.

international peace and security through compliance with traderelated laws and regulations.” We established the Corporate
Regulations concerning Security Export Control based on thispolicy in 1987. We carry out strict export control practices in linewith relevant laws and regulations, screening all goods and technologies intended for export against such factors as destination
countries and regions as well as intended end use and end users.
We provide guidance and educational support to Hitachi Group
companies to ensure that all Group companies follow the same
export control policies. In fiscal 2015, we held workshops forGroup companies in the United States, South Korea, and India
providing practical training on export control. During this periodan e-learning program in Japanese, English, and Chinese—Export
Controls of the Hitachi Group (Introductory Course)—was introduced and taken by around 113,000 employees at Group companies worldwide.

40

Hitachi, Ltd. | Integrated Report 2016

Measures to Prevent Bribery andCorrupt Practices

awareness of compliance issues, including publicizing messages

To deal with global bribery and corruption risks, in fiscal 2013 wefrom top executives, developing company regulations, conduct-referred to the US Foreign Corrupt Practices Act Resource Guide*

ing regular audits, and providing education and training toand other documents to develop various corruption risk scenarios.

employees based on a compliance manual. In fiscal 2015, we

These were used as the basis for a survey conducted at Hitachi

held group education sessions on the Antimonopoly Law forGroup companies outside Japan. By analyzing the survey results,

1,263 participants, including all Hitachi sales managers. We also

we identified several companies at risk from corruption. We arereleased an e-learning program on the fundamentals for compli-

monitoring and working with those companies with the goal ofance with competition laws and implemented it at Hitachi Group

reducing corruption worldwide.

companies globally.

In 2015 we also created a set of revised rules regarding
prevention of bribery and corrupt practices, which were globally
adopted by Hitachi Group companies.
That same year we released a global version of an e-learning

We are working to prevent further violations and to broaden

Through these initiatives we will continue working to improveand enhance our compliance framework.

Implementing Thorough Tax Complianceprogram regarding the fundamentals of preventing bribery andIn January 2016, we established a set of tax-related regulations

corrupt practices to be utilized among Group companies

with which the entire Group must comply. In connection withworldwide.

the globalization of our business, we are implementing risk

* T he US Foreign Corrupt Practices Act consists of antibribery provisions regarding foreign
government officials and transparent accounting provisions within the Securities
Exchange Act. Enforced by the Department of Justice, it prohibits bribes to foreign
government officials. Transparent accounting, enforced by the Securities and Exchange
Commission, requires companies to show transactions fairly and accurately in theiraccounting records and to maintain effective internal control over accounting.

Preventing Violations of Fair Competition Laws
Hitachi engages in business based on the principles of conformance with the law and business ethics and fair and disciplinedcompetition.
However, Hitachi, Ltd. was found to have impaired the fairnessof a public bid in fiscal 2002 and was penalized in September 2006,
October 2008, and March 2009 for violating the Japanese
Antimonopoly Law. In November 2012, a subsidiary dealing in
automotive components was penalized by the Japan Fair Trade
Commission for violating the Antimonopoly Law. In September
2013, the same company was prosecuted by the US Departmentof Justice for violating American antitrust laws, resulting in a plea
bargain, and in January 2016 the company reached a settlement with
the European Commission for a violation of EU competition laws.

­management for taxation that focuses in particular on the points
listed below.
(1) G roup companies strictly comply with all relevant laws andimplement tax management when pursuing their businessactivities, bearing in mind such international tax-compliancestandards as the Transfer Pricing Guidelines for Multinational
Enterprises and Tax Administrations of the Organisation for
Economic Co-operation and Development (OECD), as well asthat body’s Action Plan on Base Erosion and Profit Shifting(BEPS).
(2) Group companies effectively, continually, and proactively
manage tax-related issues as socially responsible organizations, while maintaining Hitachi brand value and seeking tomaximize shareholder value.
(3) G roup companies build sincere and positive relations of trustwith the tax authorities in the regions where the companies
do business, and strive to maintain and develop thoserelations.

41

Achieving a Fair and Equitable
Work Environment

A Strategy for Growing Together
with Our Global Human Capital

Hitachi has a human resource strategy that emphasizes theconcept of “decent work.” This concept has taken on
increased importance globally as a standard for labor
practices, with the International Labour Organization, forexample, positioning the concept as an important objectiveof its activities. Companies are expected to ensure decent
work through policies appropriate to their businesses.

The Hitachi Group, with a combined workforce of around
340,000 people engaged together in business activities incountries and regions around the world, is promoting a
global human capital management strategy. We are fostering human capital through a diverse array of initiatives, suchas hiring and promoting to management positions nonJapanese personnel, drafting measures to share values andpromote mutual understanding, and formulating programs
to develop human capital capable of meeting the needs ofglobal operations.

Hitachi’s Thinking on Decent Work

Advancing Global Human Capital

Human resources are key to Hitachi’s ability to adapt to rapid

Our Group-wide global human capital management strategysocial and environmental change and continue providing new

optimizes both human resources and organizational performancevalue to customers. Diversity and inclusion are crucial to ourin pursuit of Hitachi’s goal of becoming a major global player.
One example of our initiatives is the Global Human Capital

strategy, and throughout the Hitachi Group we promote HR
management practices that maximize the strength we can draw

Database covering all Hitachi Group employees, excluding factoryfrom a diverse, highly engaged workforce transcending national

workers outside Japan. This database enables us to fully ascertain

and corporate boundaries. Our globally shared leadership devel-

the status of worldwide Group human capital and to assess

opment program fosters leaders who champion our Social

macro management data, such as the allocation of human

Innovation Business around the world, while a range of otherresources. We have also built a global grading system that applies

training programs help employees obtain the knowledge andto all managers in the Hitachi Group worldwide, using it as askills they need to provide innovative solutions to our customers.

common platform for job evaluations throughout the entire

Hitachi also views it as crucial to create a work environment inGroup and as a common standard for assessing the value of

which each employee can engage meaningfully in productive

management duties.
In addition, we introduced a performance management

work. As part of efforts in this area, we have unified performance review standards worldwide in a highly transparent andsystem at Hitachi, Ltd. and at some Group companies worldwide

fair system for evaluating each employee’s achievements. We

to link the operational business goals and individual skills, withhave also enacted safety policies that apply across the entire

the aim of mutual sustained improvement and growth of both

Hitachi Group, and continue striving globally to create work-businesses and individuals. This system will be expanded toplaces that offer safety and peace of mind to those who work

include more companies. With an eye to supporting the advance-

there. Other initiatives aim to make it easier to achieve work-life

ment of employees as our global operations expand, we arebalance, reduce work hours, and promote healthy lifestyles

introducing common global hiring systems to secure talented

among employees. Additionally, we conduct an annual survey of

personnel, boost efficiency, and reduce hiring costs.

employee engagement levels across the Group, using the results
as the basis for further improvement in management practices.

Non-Japanese Employees (Hitachi, Ltd.)
People

509

500

446

400

340
300

239

257

200

100

0

42

2011

2012

2013

2014

2015

(FY)

Hitachi, Ltd. | Integrated Report 2016

Global Recruiting and Globalizing
Human Capital

Future Initiatives for Career Development

As a means of opening up global markets, we have been acceler-

individual and organizational performance. We create value built

ating the globalization of human capital in Japan through three

on employees’ individuality and personal aspirations by imple-

initiatives: (1) recruiting personnel in Japan who can promote

menting Hitachi’s Global Performance Management (GPM)

global operations, (2) providing more young Japanese employees

grounded in diversity and the individual. We are also committedwith experience outside Japan, and (3) comprehensively imple-

to supporting career development by fostering communication

menting globally unified management training.

and mutual understanding between employees and their organi-In pursuit of becoming a major global player, we are prioritizing

With an eye on the globalization of our business, we are com-zations based on programs encouraging individual employees tomitted to hiring activities that secure the right personnel. In prin-take greater control of developing their own careers. In these

ciple, we categorize all employees graduating from universities

ways, we provide the resources and tools that enable a wide

and technical colleges as global business personnel who can con-range of people to work together with enthusiasm.

tribute to driving our global operations. Our priority for employing global business personnel is to attract people who are eager

Conducting a Global Employee Survey

to build their foreign language skills and relish the challenge ofSince fiscal 2013, we have been conducting the annual global

working in different cultures, social settings, and work

employee survey, Hitachi Insights, as a way of measuring

environments.

employee engagement.* In September 2015, the survey wasadministered for the third time. Around 210,000 employees

Career Development Support

worldwide were sent the survey in one of 13 different languages,

There are differences among individual employees with regard toand roughly 170,000 responses were received. For the second

what they find fulfilling in their lives and careers. Bearing this inconsecutive year, the results in all 13 categories improved com-mind, Hitachi has developed a broad range of career develop-

pared to the previous fiscal year’s results. The year-on-year

ment support that focuses on employees’“internal careers,”

improvements were the outcome of the in-house departments

namely, their individual values and views on the significance andand organizations examining the results and implementing

meaning of their work. In addition to ensuring that these individ-

improvements, in line with the PDCA (plan, do, check, act)uals can fulfill their potential and maximize their creativity, ourapproach. We intend to continue making improvements.

aim is also to link that individual growth to the positive outcomes

Overall, among the 13 categories, Hitachi scored well as inand growth of the organization, thereby enhancing our corpo-

previous surveys in “pride in your company” and “your supervi-

rate value. Along with promoting self-understanding and foster-

sor’s management,” but less well for the category “resources anding strong individuals with the independence and autonomy

support.” This suggests that employees are proud to be part of aneeded to think and act for themselves, we also are providing

company that is aiming to grow along with society through its

support to create a framework for the organization to benefit

Social Innovation Business, but that many employees felt thatfrom the engagement and motivation of individual employees

Hitachi can do better on the level of staffing as well as informa-and to enhance mutual understanding as a way of fostering thetion and resource tools. In addition, in fiscal 2015 we expanded

teamwork needed to enhance organizational strength andthe range of an initiative begun in the previous fiscal year to

performance.

directly send the survey results to section and department heads
so that they can confirm the survey results and communicate
with their team members, with the aim of promoting concrete
initiatives. In fiscal 2016, in line with our Mid-term Management
Plan, the content of the survey will be revised, along with providing support to in-house workplaces to continually implement the
PDCA cycle, as a way to further enhance the level of engagement
within Hitachi as a whole.
* Hitachi uses the term “engagement” to refer to employees’ understanding of theCompany’s strategies and policies, as well as their job satisfaction and desire to takeactions on their own initiative to bring about results.

43

Promoting Diversity and Inclusion

Hitachi believes that building a corporate culture that fully draws on the diversity of human capital, in terms of gender,
age, and values, not only offers employees an opportunity to approach their work with enthusiasm but also contributes
to enhancing competitiveness through the provision of solutions that incorporate diverse perspectives. In recent years,
with the growing interest among stakeholders for personnel policies enabling flexible work styles, we are taking a proactive stance toward implementing this approach. We are also establishing key performance indicators to help expand
career options for female employees.
With the strong commitment of top management, we aim to promote diversity as part of our management strategy
and become a company that makes full use of our diverse human capital.

Diversity and Inclusion

Hitachi and 20 Group companies jointly operate the Advisory

Diversity is the wellspring of our innovation and our growth engine.

Committee and the Diversity Development Council to accelerate

Hitachi regards personal differences—gender, nationality, work

awareness across Hitachi as a whole, including support for diverse

history, age, sexual orientation, and philosophy—as facets of peo-

human resources and work-life management. The Advisory

ple’s individuality. By respecting our employees’ individualities andCommittee ensures follow-through on our diversity management

positioning them as an advantage, Hitachi frames its diversity andpolicy, while the Diversity Development Council discusses specificinclusion as conducive to both the individual’s and the Company’s

activities and shares best practices. Both meet every six months.

sustainable growth. With strong teamwork and broad experience

Group companies and business groups/sites have also set up
their own diversity-promotion organizations and projects, such as

in the global market, we will meet our customers’ needs.
Since the 1990s, we have been at the social forefront, support-

those to help develop women’s careers, in order to enhance ini-

ing women and other members of our multifaceted workforce.

tiatives geared to the challenges faced by individual workplaces.

This includes setting up systems to help balance work with child

We also hold regular meetings to exchange opinions on diversity

and nursing care. Entering Phase 3 of our diversity managementwith labor unions.

roadmap, we are embracing diversity as a management strategy

In Europe, too, we are accelerating the pace of our diversity

under the initiative slogan “Diversity for the Next 100.” This means

and inclusion initiatives on the basis of establishing the D&I

creating an environment where women and other members ofSteering Committee in January 2016. The committee, which con-our varied workforce can use their skills in leadership and busi-

venes every quarter, is made up of executives from the sevenness management.

main Hitachi Group companies in Europe, including Hitachi
Europe Ltd., Hitachi Rail Europe Ltd., and Hitachi Data Systems

Development Structure of Diversity Management

Corporation. The three main areas addressed are “the creation of

The Diversity Development Project, launched in fiscal 2006 undera diversity and inclusion framework,” “career development,” andthe president’s direct control, was replaced in fiscal 2009 with the“communication.” Members are assigned to each area and lively

Diversity & Inclusion Development Center, which currently operates

discussions are held in order to formulate and implement plans tounder the direct supervision of the Human Capital Group.

promote diversity and inclusion.

Roadmap for Developing Diversity Management

Phase 3: Diversity promoted as a management strategy

2012Phase 2: From “women” to “diversity”“Diversity for the Next 100” launched2009

Phase 1: Support for Women’s Career Advancement

Diversity & Inclusion Development Center set up

2000
FF Plan*

2006
Diversity Promotion Project FF Plan II

Support balance between work and nursing care, etc.

Enhance Hitachi Group partnerships

Strengthen senior management commitment

Reduce overtime/Review work styles

Promote time- and location-free work

Promote diversity awareness/Reform work environment
Support work-life balance; support women’s career advancement

Strengthen women’s career development

Introduce, expand support systems for work-life management

1990

2000

2006

2009

2012

2015

* The Gender-Free and Family-Friendly (FF) Plan is an initiative to create a better work environment by supporting efforts to balance work and family life and supporting women in the workplace.

44

Hitachi, Ltd. | Integrated Report 2016

Promoting Occupational Health and Safety

As a corporate group that engages in multinational business activities, building safe, healthy, and hygienic workplaceenvironments at business sites around the world is a Group-wide management task for Hitachi. This means that we mustbe sure to take into careful consideration the social conditions and workplace environment of each country and region.
Hitachi has thoroughly implemented measures for occupational health and safety since its founding. Currently, we
are advancing a global occupational health and safety system based on the concept of decent work while also drawing
on the lessons and knowledge gained at workplaces in Japan.

Fundamental Idea for Occupational
Health and Safety

Framework for Promoting Health and Safety

Ensuring the health and safety of all employees is the basic prin-

tions for advancing our Social Innovation business. We promote a

ciple underlining the Hitachi Group Health and Safety Policy. This

range of Group-wide occupational health and safety activities

policy is shared by all Hitachi Group companies around thethat include preventing workplace accidents by setting andworld. Employees work together to create safe, secure work envi-

applying minimum safety standards to be observed by Groupronments that aim to be accident free.

manufacturers around the globe and by taking into consideration

Hitachi views occupational health and safety as vital precondi-

the specific conditions at each company. We respond quickly
when an accident occurs, using incidents to make improvements

Hitachi Group Health and Safety Policy

and boost our levels of health and safety management.
In accordance with Japanese law, a health and safety

Principle­commission—composed of company representatives, labor union“Health and Safety Comes First.”

officials, and employees—is organized at each business site andPolicies

is convened every month to discuss and share information related

In accordance with our mission, “Contribute to society

to such issues as workplace accident causes and countermea-

through the development of superior, original technology

sures, the situation regarding employees who have taken sickand products,” the Hitachi Group will endeavor to ensure

leave, and other points of concern.

safe and healthy workplaces under the principle of “Healthand Safety Always Comes First.”

In fiscal 2011, we introduced the Hitachi Group Key Safety
Management Designation System. This initiative tracks key safety
management improvements at Hitachi Group companies andTo accomplish this, we will:business sites in Japan that have experienced serious work acci-

1. C ontinually be involved in health and safety activities indents. Under the leadership of top executives, these companies

order to prevent work-related injuries and sickness by des-and business sites take on management-driven and bottom-up

ignating the health and safety of employees as manage-

initiatives to formulate and promote specific improvement plans.

ment’s top priority.

We are also reshaping the Group’s safety management frame-

2. Comply with the local laws and regulations in each company regarding health and safety.

work and introducing targeted safety measures, including extensive investigations of the cause of serious accidents, reviews of

3. Develop a safe and comfortable work environment byrisks to reduce potential accidents, and engagement of third par-encouraging employees to maintain their own health andties with a high level of health and safety expertise to diagnosetaking a proactive stance on health and safety activities insafety issues.

the workplace.

In fiscal 2015, we became able to grasp our safety manage-

4. Require an understanding of Hitachi’s principle and thement level overseas through the application of safety statistics

promotion of health and safety awareness from all busi-

and minimum standards. Moving forward, we aim to continually

ness partners of the Hitachi Group.

make improvements to further raise the level of safety.

5. Contribute to the creation of a safe and pleasant society
by emphasizing activities that make health and safety a
top priority in all of Hitachi’s business activities.
Revised November 201345

Respect for Human Rights Throughout the Value Chain

Hitachi respects international human rights norms in every country and region and strives to continuously and thoroughly
implement those norms. Along with putting into practice the Hitachi Group Human Rights Policy and other guiding
principles, we are implementing educational activities targeting company executives and employees at each Group
company on an ongoing basis. At the same time, company executives are taking the lead in analyzing potential risks
within the business process and creating an organization in which human rights infringements do not occur.
We also have been putting in place a system for implementing human rights due diligence from the perspective ofpreventing any involvement with human rights violations, and in fiscal 2015 we expanded the system to include our
supply chain.

Human Rights Initiatives

officer in charge of human capital chairs this body, whose members

In May 2013, we adopted the Hitachi Group Human Rights Policy

include representatives from sales, procurement, human capital,

to supplement the Hitachi Group Codes of Conduct, drawn up in

CSR, and other corporate units. Hitachi is improving its Group-wide

fiscal 2010. In this policy, we clarify our understanding of human

human rights awareness based on the guidelines discussed andrights as being, at a minimum, those outlined in the International

written by the Corporate Human Rights Promotion Committee.

Bill of Human Rights and the International Labour Organization’s

Information from deliverations is shared with all employees

Declaration on Fundamental Principles and Rights at Work. This

through business units and business site committees, led by busi-

policy shapes Hitachi’s approach to meeting the responsibility toness unit presidents and division heads. Business units provide con-respect human rights, including implementing human rights due

sultation services through which employees can seek consultation

diligence*1 in line with the UN Guiding Principles on Business andon issues such as sexual harassment and are working to ensure

Human Rights,*2 providing appropriate education to employees,that those coming forward are treated with respect and dignity.

adhering to national laws and regulations in all the regions andIn a practice launched in fiscal 2014, we distribute a humancountries where we operate, and seeking ways to honor therights message by Representative Executive Officer, President, andprinciples of international human rights when faced with conflicts

CEO Toshiaki Higashihara every year on December 10, Humanbetween internationally recognized human rights standards andRights Day. In fiscal 2015, approximately 148,000 executives andnational laws.

employees at Hitachi, Ltd. and Group companies in and outside

In fiscal 2014, Hitachi added the perspective of Business andJapan received an e-mail message regarding global trends in

Human Rights to its existing structures and policies and developed

human rights, Hitachi’s human rights policy and activities, anda guidance on human rights due diligence that explains proce-the importance of individual employees respecting human rights

dures for everyday business practices. Based on this guidance, inin their work.

fiscal 2015 we initiated human rights due diligence in procurement, assessing and prioritizing human rights risks in the supply
chain and considering measures to reduce these risks.
*1 Human rights due diligence: An ongoing process to identify and assess potential andactual human rights impacts, integrate findings, and take appropriate action to preventor mitigate potential impacts or to provide for or cooperate in remediation of actual
impacts. The processes also cover tracking the effectiveness of actions to address
impacts and communicating externally.
*2 UN Guiding Principles on Business and Human Rights: Included in the March 2011
Report of the Special Representative of the Secretary-General on the issue of humanrights and transnational corporations and other business enterprises, John Ruggie(A/HRC/17/31).

Hitachi Group Codes of Conduct

Hitachi, Ltd. Framework for Promoting Respect for
Human Rights
Corporate Human Rights Promotion Committee
Chairperson
Members

Executive officer in charge of human capital
Personnel in charge of corporate divisions such as
sales, procurement, human capital, and CSR

Business Unit and Business Site Committee
Chairperson

Business unit presidents anddivision heads

Members

Division managers

http://www.hitachi.com/corporate/about/conduct/index.html
Business Unit and Business Site Committee

Hitachi Group Human Rights Policy
http://www.hitachi.com/csr/renew/pdf/human_rights_policy.pdf

Framework for Human Rights
Hitachi, Ltd. established the Corporate Human Rights Promotion
Committee in fiscal 1981 to gauge the impact of business activities
on stakeholders’ human rights and to deliberate on mechanisms
and policies for preventing human rights violations. The executive
46

Chairperson

Business unit presidents anddivision heads

Members

Division managers

Business Unit and Business Site Committee
Chairperson

Business unit presidents anddivision heads

Members

Division managers

Hitachi, Ltd. | Integrated Report 2016Engaging in Responsible
Procurement
As a company that procures products and services from suppliers in regions and countries around the world, Hitachi wasquick to introduce policies on CSR and green procurement.
Moreover, Hitachi has taken the lead in responding to theissue of conflict minerals, which has been the focus of public
interest in recent years, by scrutinizing the countries where
raw materials are mined in order to prevent the infringements on human rights by countries engaged in conflict.

Raising Human Rights Awareness Among
Executives and Employees

CSR Supply Chain Management Framework

Hitachi conducts regular group training and seminars and uses

likelihood of supply chain risks creating management problems, andvideos to educate employees in each business unit and Group

we are working hard to identify and mitigate these risks beforehand

company. The target is for each employee to attend these sessions

as much as possible. We established a CSR/Ecological Procurement

at least once every three years (equivalent to a yearly participation

Promotion Center within the Hitachi headquarters in fiscal 2011.

rate of 33.3%). In fiscal 2015, the participation rate came to 71.8%

We have also established the Hitachi Group CSR Green Procurementat Hitachi, Ltd. and 46.0% among Group companies. We also

Committee, which includes committee members from in-houseoffer an e-learning program on business and human rights,

and key Group companies. This completes a framework that will

launched in June 2013; as of March 2015, approximately 187,000

enable our CSR supply chain management and green procurement

Group employees in Japan and elsewhere had taken the pro-philosophy and initiatives to be shared throughout the Group.

gram. Using educational materials developed in line with theGiven the global reach of Hitachi’s business, there is a growing

In order to share the philosophy of Hitachi among our suppliers,

Hitachi Group Human Rights Policy, adopted in May 2013, thein fiscal 2015 we also introduced a new initiative to provide sup-program aims to ensure that employees understand Hitachi’spliers directly with information in a face-to-face format, in addi-

human rights policy and act accordingly. The training is provided

tion to the information shared on the Hitachi website as well as

to all employees once every three years on average, taking into

our CSR monitoring, CSR audits, and other measures. The first ofaccount human rights trends worldwide.

these face-to-face events was held in January 2016 at a CSR and

In July 2015, moreover, 25 Hitachi, Ltd. executive officers

green procurement seminar held in Shanghai for Hitachi Groupparticipated in an officer training session on the theme of humanpartners in China. The event was attended by 15 people from 12

rights in global businesses, led by Takaji Hishiyama of the Centercompanies, primarily suppliers in eastern China. At the seminar,

for Corporate Behavior. Touching on several cases, Hishiyama dis-

Hitachi explained topics including its fundamental CSR philosophy,

cussed what the international community expects of corporations

the CSR audit situation, regulatory trends under Chinese environ-

regarding respect for human rights and how human rights risks

mental laws, and Hitachi’s related policies. Feedback from partici-translate into business risks, among other topics.

pants included a comment from one person who was “impressedby the emphasis the Company places on not only monozukuri
craftsmanship but also on fulfilling its social responsibility in arange of areas.” Another participant “gained a sense that profitability is not the sole aim and that it is important to adhere toenvironmental laws.” As reflected in the comments, the seminarserved to deepen the understanding of Hitachi initiatives related
to CSR and green procurement.
Guidelines for Procurement Activities
http://www.hitachi.com/procurement/policy/__icsFiles/afieldfile/2010/08/30/
guidelines.pdf
Procurement Policy
http://www.hitachi.com/procurement/policy/index.html

A scene from the officer training session.

CSR/Green Procurement
http://www.hitachi.com/procurement/csr/index.html
47Helping Resolve Environmental Issues Toward 2050

The world’s population, which was 7.3 billion in 2015, is projected to grow to 9.7 billion by 2050 and to 11.2 billion by 2100.*1
Global GDP is also continuing to expand—led by emerging economies—aggravating a host of environmental problems,
including global warming caused by higher CO2 emissions from fossil fuel consumption, the depletion of resources due
to increased demand, and ecosystem destruction. Global-scale efforts are being made to develop approaches that lighten
the burden on the environment so that a prosperous planet can be passed on to future generations.
Hitachi strives to achieve a more sustainable society by addressing environmental problems, which pose a major challenge for society, based on its corporate mission of contributing to society through the development of superior, originaltechnology and products.
*1 According to World Population Prospects: The 2015 Revision, published by the United Nations.

Hitachi’s Environmental Vision
As global warming, resource depletion, ecosystem destruction,and other environmental issues grow more serious, the international community is working together to tackle these problems,

Environmental Vision
Hitachi will resolve environmental issues andsuch as by adopting the Paris Agreement that includes a target

achieve both a higher quality of life and a sustainable

to keep global warming to below 2°C. From an environmental-

society through its Social Innovation Business inmanagement perspective, Hitachi, which promotes the Social

collaborative creation with its stakeholders.

Innovation Business, has established the Environmental Visionand defined the kind of society we envision in the long term incontributing to the resolution of global environmental issues.

Long-Term Environmental Targets:
Hitachi Environmental Innovation 2050
Our Environmental Vision envisions a low-carbon society; aresource efficient society; a harmonized society with nature. To
achieve such a sustainable society, we have newly established aset of long-term environmental targets called Hitachi
Environmental Innovation 2050.
To create a low-carbon society, we aim to achieve 80% reduc-Hitachi Environmental Innovation 2050
Low-Carbon Society• Achieve 50% reductions
in CO2 emissions by fiscal 2030
and 80% reductions by fiscal 2050
across the value chain(compared to fiscal 2010)

tions in CO2 emissions by fiscal 2050 across the value chain in linewith ambitious targets set in the Paris Agreement. Toward that
end, we will enhance the efficiency of our products and services,supply low-carbon energy, and develop innovative technologies
and solutions.
To achieve a resource efficient society, we will do our utmost
through our business operations, together with our customers
and society, to help build a society that uses water and other

Resource Efficient Society• Build a society that uses waterand other resources efficiently• Achieve 50% improvement in usage efficiency ofwater and other resources by fiscal 2050
(compared to fiscal 2010 in the Hitachi Group)

resources efficiently. We will also improve our usage efficiency ofwater and other resources in our business operations by 50% by
fiscal 2050.
To achieve a harmonized society with nature, we will strive tominimize Hitachi’s impact on natural capital, which bestows thebenefits of nature on humankind.

48

Harmonized Society with Nature• Minimize the impact
on natural capitalHitachi, Ltd. | Integrated Report 2016

Reducing the Environmental Burden of Our Business Operations (Fiscal 2015 Results)
The Environmental Action Plan for 2013 to 2015 encompassed many themes, such as promoting Eco-Products, reducing CO2 emissions,and using resources efficiently. Three years of improvement activities were concluded in fiscal 2015 with many positive results.
Environmental Action Plan for 2013 to 2015: Achievements
Category
Establish Environmental
Management Systems

Items
Raise the level of environmental
activities

Indicators
GPs (green points) in GREEN 21 Environmental
Activity Evaluation System

Fiscal 2015 targets
640 GPs

Fiscal 2015 results
646 GPs

Ecosystem (biodiversity)preservation

Implementation of ecosystem preservationassessment

Completion of ecosystempreservation assessment

Completed ecosystempreservation assessment

Expand Hitachi Eco-Productlineup

Percentage of Hitachi Eco-Product sales

90%

95%

Number of models in Eco-Products Select program 340 models

409 models

Build Industry’s Most
Advanced Factories andOffices

Promote Eco-Factories & Offices
Select certification

Eco-Factories & Offices Select certification

Average of at least 1 certification per in-house or Group
company

New certifications: 15
Renewed certifications: 58
Total: 73

Prevent Global Warming

Reduce energy use per unit

Reduction in energy use per unit (base: FY 2005,
global)15%

16%

Promote Eco-Products

For details about initiatives to address major indicators other than those above, please refer to the CSR section of our website.

Calculation of GHG Emissions Throughout
the Value Chain

Global Warming Countermeasuresin Factories and Offices

We calculate greenhouse gas (GHG) emissions throughout the

We are promoting ways to use energy more efficiently andentire value chain to more effectively reduce these emissions. As

reduce GHG emissions during production and transportation, inover 90% of emissions come from use of the products we haveboth manufacturing and nonmanufacturing divisions, to help

sold, we are working to reduce emissions by developing Eco-prevent global warming.

Products that meet environmentally conscious criteria throughout
their life cycle.

We are working to reduce the energy use per unit as one way
to use energy more efficiently. In fiscal 2015, we achieved a
reduction of 16% (from fiscal 2005, the base year), surpassing

GHG Emissions Throughout the Hitachi Value Chain

the target of 15%. We are systematically working to improve theProcurement of Raw Materials and Parts 3.2%

energy efficiency of individual lighting equipment and facilities by
installing high-efficiency equipment and devices, from LED light-

Use 94.6%
Transportation 0.1%
Production 2.0%

Disposal and Recycling 0.1%

ing to inverter air conditioners. In pursuit of more efficientenergy use, moreover, we are actively harnessing the control
technologies and IT systems that are our forte to conserve energy

Increasing the Ratio of Eco-Products

at our factories and offices.

We promote the development of environmentally conscious products

Reduction in Energy Use per Unit

called Eco-Products as part of our initiative to reduce the environmental burden of our products and services as much as possible.
Eco-Products must meet criteria used in the design and devel-

From base year

opment stages, when we evaluate the extent to which their envi-

16%reductionronmental burden can be reduced. Until fiscal 2015, we promoted
the development of Eco-Products by setting targets for raising the
Eco-Product sales ratio, a figure measuring Eco-Product sales
against total product sales. In fiscal 2016, we will launch new• FY2005 (base year)• FY2015

initiatives with the aim of helping to resolve environmental issues

Energy used 1,746 ML

Energy used 1,581 ML

by developing and expanding the use of products and services

Activity amount*with high environmental value.
[Key Indicators] Eco-Product Sales Ratio (Please refer to page 55.)

=100%

Activity amount= 84%* A value closely related to the emission factor numerators (environmental burden) ofenergy use from business activities (for example, production quantity, output, building
floor space, and number of employees).

[Key Indicators] CO2 Emissions (Please refer to page 55.)49