Introduction
Materiality

Mid-term Management Plan 2024

Value Creation

Transformation

Corporate Initiatives for Sustainability GrowthBusiness Strategies

Human Resources Strategy

Financial Strategy

Governance
CFO Message

DataHitachi Integrated Report 2023

Sector Strategies

Corporate Initiatives for Sustainability Growth Digital Strategy
Hitachi is pushing forward with its Social Innovation Business, which solves social issues together with customers by leveraging IT x OT x Products. Lumada
is the name of methodologies, solutions
and use cases that promotes the Social Innovation Business by leveraging digital technology. Hitachi will create new value by quickly achieving DX for customers through Lumada. Aiming to expand
the Lumada business revenues to 2,650 billion yen during the Mid-term Management Plan 2024, Hitachi will work to expand the Lumada business while training and strengthening digital talent andacquiring assets in North America, a growth area.

Lumada’s Customer Co-creation Framework
To further accelerate the Lumada business, multiple sectors and business units in each global
region will work together as One Hitachi based on customers co-creation framework to enhance
our competitive advantages. Lumada’s customer co-creation framework is a method for therealization of circular businesses that increase the value provided to customers while continuously
executing a cycle that starts with understanding our customer management challenges (PLAN:
upper right quadrant), developing and implementing solutions with IT x OT x Products (BUILD:lower right quadrant), operation (OPERATE: lower left quadrant), and maintenance (MAINTAIN:
upper left quadrant) by using data and technology. With the acquisition of GlobalLogic, which
possesses design thinking and digital engineering capabilities able to capture customer andsocial issues and incorporate them into agile solutions, we will continuously and rapidly executethe four-quadrant cycle within Hitachi’s business footprint to accelerate growth (click here forcases of Lumada co-creation).

MAINTAINManaged services

Digital engineering

PLAN

Understand our customers’
management challenges
Design Thinking

Predictive MaintenanceOperate, maintain, andassess for the next step

AI tools / Methodologies /Customer cases / Solutions

Develop solutions
with IT/OT/ProductsDigital Twin

Remote / Automation

Implement
solutions
OPERATE

Connected products

System integration

BUILDHitachi Digital—Driving the Lumada Business GloballyIn April 2022, we established Hitachi Digital in Silicon Valley in the United States as a control
tower for the acceleration of the global development of Lumada. Hitachi Digital leads theformulation and execution of digital strategies to expand the Lumada business globally. In fiscal
2022, the first year of its establishment, Hitachi Digital crossed the boundaries between business
units and carried out various activities to accelerate the integration of IT x OT x Products. One
representative initiative was the establishment of the Decision & Advisory Board in June 2022.
The Board consists of the CEOs of Hitachi Energy, Hitachi Rail, GlobalLogic, and Hitachi
Vantara and the heads of the business units of the DSS sector, etc. It leads regular discussionof digital strategies to promote the development and execution of digital strategies across theHitachi Group, and approximately 20 projects had been launched as of February 2023. Anotherinitiative was “Hitachi Digital Summit 2022,” which was held for the first time in October 2022.
To accelerate customer co-creation as One Hitachi, 127 executives and leaders of the HitachiGroup from across the world gathered in the United States to energetically discuss issues andexchange opinions. In addition, Hitachi Digital CEO Jun Taniguchi led the team of Chief Lumada
Business Officers (CLBOs) who have been assigned in each business field and they took
responsibility for the expanding Lumada businessin each field and cooperated with each other. As aresult, we achieved Lumada business revenues ofapproximately 2 trillion yen in fiscal 2022, exceeding
the initial plan.
Thanks to its leadership creating synergies throughout
the group, Hitachi Digital launched 13 new businessesin fiscal 2022 alone, and the expansion of the Lumada
business as One Hitachi is progressing steadily.
From left: Gajen Kandiah, CEO of Hitachi Vantara, Nitesh Banga,
CEO of GlobalLogic, Jun Taniguchi, CEO of Hitachi Digital23

Introduction
Materiality

Value Creation

Mid-term Management Plan 2024

Transformation

Corporate Initiatives for Sustainability GrowthBusiness Strategies

Human Resources Strategy

Financial Strategy

Governance
CFO Message

DataHitachi Integrated Report 2023

Sector Strategies

Corporate Initiatives for Sustainability Growth Green Strategy

Green Strategy (Sustainability Report)

A Green Strategy for Sustainable Growth
Hitachi has developed a green strategy that comprises the two pillars of “GX for CORE” and “GX for GROWTH” as it aims to become a Climate Change Innovator.
Promoting GX for CORE and GX for GROWTH in tandem will accelerate the deepening of technology and know-how, allowing Hitachi to continuously improvethe environmental value that it offers. Steadily executing this green strategy will accelerate the Hitachi Group’s green transformation (GX) and help contribute to
the GX of customers across a range of sectors and to the GX of society as a whole.

GX for CORE

GX for GROWTH

Accelerating the Hitachi Group’s green transformation

Contributing to the green transformation of customers and society

Major KPIs for Green Strategy Implementation

Major KPIs for Green Strategy Implementation

Carbon neutrality

Business Sites (Factories and Offices) (by FY2030)
Whole value chains (by FY2050)

Eco-design

Full application for all newly developed products (by FY2024)

Resource circulation

Zero*1 waste to landfill*2 from manufacturing sites (by FY2030)*1 Less than 0.5%

*2 Wherever this is compatible with local conditions and regulations

Decarbonization• We will introduce energy-saving equipment in production lines as well as introduce and procure
renewable energy and other initiatives. We estimate that this will allow us to exceed the CO2emission reduction target (50%) for the Mid-term Management Plan 2024 with a 64% reduction byfiscal 2024 (fiscal 2010 baseline).
• Since fiscal 2022, we have introduced the third-party evaluation platform EcoVadis* toprocurement partners, strengthening our engagement with those partners.
* A comprehensive corporate social responsibility assessment service platform. We implement evaluations that cover environment,labor & human rights, ethics, and sustainable procurement.

Resource–efficient society and harmonizing society with nature
We are conducting activities to minimize our impact on the environment.
• 357 products were identified as subject of Eco-Design (fiscal 2022).
• We achieved zero waste to landfill at 199 business sites (fiscal 2022).

We use solar power generation at a Hitachi Rail factory (Tito Scalo site, Italy)
An annual 700 MWh or more of power, which makes
up 50-60% of the plant’s total energy use, comesfrom on-site solar panels. This has allowed us to cut
325 metric tons of CO2 emissions per year.

Amount of contribution toCO2 emission reductions

100 million metric tons/year (FY2024)

Decarbonization• We contribute to the reduction of CO2 emissions of customers and society through energy
transition, electrification and automation, as well as through the use of digital solutions. As ofnow, we expect to reach 126.1 million metric tons/year as a three-year average in FY2022-2024(Mid-term Management Plan period).

Resource–efficient society• Along with well-known examples like the remanufacturing of air compressors and vacuum
cleaners using recyclable plastic, we have recently joined the trial of SEVEN-ELEVEN JAPANand validate the utilization of used EV batteries.

Trial to reduce the environmental impact of a store with SEVEN-ELEVEN JAPAN(2-chome Hikonari, Misato store)
We developed a mobile storage battery (Battery Cube) with a used EV battery to make effective
use of power generation from solar panels installed at the store. We expect energy management
combined with in-store energy-saving equipment and air conditioning to reduce purchased powerby about 60% and CO2 emissions by about 70% compared with fiscal 2013.

24Introduction
Materiality

Mid-term Management Plan 2024

Value Creation

Transformation

Corporate Initiatives for Sustainability GrowthBusiness Strategies

Human Resources Strategy

Financial Strategy

Governance
CFO Message

Hitachi Integrated Report 2023

DataSector Strategies

Corporate Initiatives for Sustainability Growth Innovation Strategy

R&D and IP Strategies Briefing

Achieving Sustainable Growth through the Development of Enabling Technology

Open innovation hub “Kyōsō-no-Mori”

Strengthening investment
in corporate venturing

Increasing investment to develop
enabling technologies (R&D expenditure)
Deconsolidated business(total of Hitachi Astemo,Hitachi Construction Machinery, Hitachi Metals)
Continuing consolidated business316.2 billion yen

300.0 billion yen

256.0% ofbillion yen
221.0
revenuebillion yen
+0.4%
% of
revenue% of
3.3%
revenue
2.9%

FY2022

FY2023Cumulative fund size (Billions of yen)

Our goal is to achieve the sustainable growth of business by firmly supporting co-creation capabilities as
One Hitachi for each sector by developing enabling technologies that realize “innovation that addresses thereal issues facing society” and drives “innovation that transforms the customer experience.”
Concretely, we are developing future Lumada solutions by taking a backcasting approach in R&D focusing
on technology trends.
Furthermore, we are supporting co-creation with customers in each sector
through NEXPERIENCE, Hitachi’s original co-creation methodology. In addition, we are looking to solve
society’s and our customers’ challenges by incorporating leadingedge technologies such as generative AI and future technologies for
Hitachi’s growth through start-up investments by Hitachi Ventures.
We protect our enabling technology looking at technology trends andanalyses of the competitive IP landscape to strategically build “valuedriven” intellectual property portfolios based on customer benefit
that our customers seek. We also provide global support to expand
Lumada solutions in each sector by acquiring the patents needed todevelop Lumada solutions for customers and the relevant market.

80

HV
Fund 360

HV
Fund 240200

HV
Fund 1FY2019FY2021

FY2023Innovation Addressing the Real Issues in Society

Innovation That Transforms Customer Experience

Intellectual Property Strategy Supporting Innovation

We are capturing the issues and changes in society tobackcast and drive innovation in the markets and businesses
that can benefit from Lumada solutions.
In relation to an “environmentally neutral society,” a “society
with a 100-year active life span,” and the “co-evolution ofdigital technologies, people and society” – challenges thatneed to be resolved by 2050—we will work toward solution
for our customers’ future challenges through start-up
investment and joint research with leading research institutes
and universities. For example, for “co-evolution of digitaltechnologies, people and society,” we are supporting human
intellectual activities with generative AI and driving innovation
to increase the efficiency of such activities, having also
created the third “HV Fund.”We are supporting business growth as we facilitate
innovative co-creation with customers in all sectors with theaim of solving customers’ management challenges. By using
NEXPERIENCE, which systematizes know-how cultivated by
Hitachi designers and researchers to solve societal issues,
we envision our customers’ future growth together bycatching “signs” of changes in society and in our customers.
Cooperating with each sector, we will develop digital
services that transform customer experience. Moreover, weare leveraging open innovation hubs such as the Lumada
Innovation Hub Tokyoand Kyōsō-no-Mori
to achieve
co-creation with customers globally and support theexpansion of Lumada businesses.

Our business growth strategies are supported by developing
and implementing global value-driven intellectual property
strategies and portfolios. Under the leadership of our Chief
Intellectual Property Officer, we are enhancing our global IPactivities to include acquired and overseas group companies,
to support and accelerate group innovation through, forexample, globally sharing insights from intellectual property
activities around the world. The expansion of Lumada
businesses is supported by facilitating the use of group IP
portfolios among the group businesses.
We are also strategically building intellectual property portfolios
in cooperation with business divisions under group strategies.
For example, for future Lumada solutions created throughbackcasting R&D, we develop the appropriate intellectual
property portfolio to strategically protect relevant IP including
applying for world wide patents and other measures to protect
confidential and proprietary technologies.

25

Introduction
Materiality

Value Creation

Mid-term Management Plan 2024

Transformation

Corporate Initiatives for Sustainability GrowthBusiness Strategies

Human Resources Strategy

Governance

Financial Strategy

CFO Message

DataHitachi Integrated Report 2023

Sector Strategies

Corporate Initiatives for Sustainability Growth Global Marketing & Sales Strategy
Global Marketing & Sales leads growth-driving activities to deliver Hitachi’s Social Innovation Business development in global markets by bringingtogether the combined capabilities of the Hitachi Group for global customers. Collaborating closely with Hitachi regional headquarters and business
units so this approach is realized within the Mid-term Management Plan 2024, the function focuses on seven key areas of marketing and sales
development, six prioritized growth market segments and partnership development with strategic group customers. It prioritizes a customer-centric
approach to growth – responding to and anticipating future customer demand.
Co-creation Account Management

Regions

Global Marketing & Sales

Masahiko Hasegawa,SVP, CMOJohn Fyfe,
CMO in charge of Global
M&S Transformation

Hitachi’s Two Growth Models Led
by Global Marketing & Sales
Model 1
• Selecting key global accounts presenting immediate
opportunity across the Hitachi Group and a strategic fit
to our social innovation goals.
• Planning and execution of group account management
for strategic partnership development and co-creation(Lumada) opportunities.
Model 2
• Identifying and pursuing new business opportunities throughgroup level market segment prioritization and developmentof segment-specific market solutions from Hitachi’s portfolio.
Six Prioritized Growth Market Segments

Tech

Financial and Insurance

Facility Management andSmart Spaces

Mobility(New) Energy

MiningJAPANAmericas

EMEA

CHINA

APAC

Masahiko Hasegawa,SVP, CMO

Hicham Abdessamad,
Chairman and CEO ofHitachi America

Brice Koch,
Andrew Barr,
Chairman of the Board VP, President ofof Hitachi Europe
Hitachi Europe

Atsuhiko Aketa,
VP, Chairman ofHitachi China

Kojin Nakakita,

Marketing and Sales Transformation –7 Priorities and Ambition
1Segment strategy & domain expertise2

Solution / Product offering

3

Customer experience4

Account management

5

M&S people / Talent management

6Performance management

7

CRM and tools

Case study

VP, Chairman of Hitachi Asia
and Chairman of Hitachi India

Helping Build a Sustainable Smart City

Hitachi is working in collaboration with NEOM, a giga-projectin Saudi Arabia and a key contributor to the Kingdom’s Vision
2030 plan, with the goal of delivering a world-first sustainablesmart city, fully powered by renewable energy. Hitachi recently
signed an agreement with NEOM’s energy and water company,
ENOWA and Saudi Electricity Company to provide three HVDC
projects for a total power capacity of nine gigawatts in supportof clean energy provision.
Ongoing engagements areunder way to expand the collaboration to meet NEOM’s vastsustainable development needs across mobility, manufacturing
and energy and deploy Hitachi’s digital capabilities to create
seamless links between applications and services.

26