Hitachi Integrated Report 2022

CEO Message

Introduction

Whatʼs Hitachi

The Story of Collaborative Value Creation with Stakeholders

Materiality

Value Creation

Business Strategies

The Value Creation Process

Sustainability

Mid-term Management Plan 2024

Data18Financial Strategies

CFO Message

Corporate Governance
Human Resources Strategies

Materiality
Towards a Sustainable Society: Hitachi’s Materiality
Hitachi practices sustainable management, which positions sustainability as the core of its
business strategy, and is working toward realizing a sustainable society through the Social
Innovation Business.
In the Mid-term Management Plan 2024, we declared our new aspiration of “supporting people’squality of life with data and technology that fosters a sustainable society.” While some of the nine
planetary boundaries have already been exceeded, Hitachi is aware of each one and works toprotect the planet and maintain society. Hitachi aims to solve social challenges to realize a futurethat balances protection of the planet and people’s individual wellbeing.

The materiality analysis process
With a comprehensive understanding of social issues, Hitachi has identified six material topics
and 15 sub-material topics based on an analysis of risks and opportunities from sustainability
perspectives as well as feedback from stakeholders.
Based on these material topics, Hitachi will monitor measures as well as discuss the progressof, and new initiatives for, each materiality at the Senior Executive Committee and the Board ofDirectors.
Further, Hitachi’s materiality was developed based on backcasting from 2050 and input fromstakeholder dialogue in Japan and Europe, based on the Strategic Focus Area disclosed in theHitachi Integrated Report 2021 published last year.
Comprehensive understanding of social issues
STEPSTEP

12• Identifying social issues from the SDGs, GRI standards, SASB standards, ESG external
evaluation items, etc.

Ranking issues by priority from Hitachi’s point of view
• Identifying innovation areas where Hitachi should contribute based on backcasting from 2050
• Analyzing risks and opportunities

Ranking issues by priority from stakeholders’ point of view
STEPSTEP

34• Evaluating material topics based on assessments and comments from investors, NGOs,and ESG evaluation organizations• Evaluation through dialogue with investors, NGOs, and sustainability experts

Identifying Materiality

Materiality

Environment
Contributing to decarbonization
and resource circulation

Resilience
Contributing to the maintenanceand rapid recovery of social
infrastructure

Safety & Security
Contributing to safe and securesociety-building

Quality of Life
Contributing to physicaland mental wellness and aprosperous life

Business with
Integrity
Adhering to ethical standards
as well as respect humanrights

Diversity, Equity andInclusion (DEI)
Contributing to a society where
everyone can shine

Our aspirations
As a climate change innovator, Hitachi will contribute to therealization of a carbon neutral society with Hitachi’s superior greentechnologies, by providing value to customers in all businesssegments. We will also promote resource efficiency toward thetransition to a circular economy.
Hitachi helps people live safely by contributing to the rapid recoveryof supply chains and the maintenance of social infrastructure byproviding system solutions that can respond immediately to risks,such as natural disasters, pandemics, and cyberattacks.
Hitachi contributes to the realization of comfortable and active
lifestyles for people by providing solutions in the building, mobility,and security fields that support urban development for safe andsecure living.
Hitachi is harnessing our healthcare and digital technologies to help
more people develop bonds and enjoy healthier, more prosperous
lives. We will also continue to pursue the happiness and wellbeing of
our employees, as we believe that their happiness and wellbeing is
the ground on which Hitachi’s future will flourish even more fully.
As a Group responsible for social infrastructure around the world,
Hitachi will manage its business with honesty and integrity, trusted
by society, respect human rights, and provide a safe workplace. We
will reflect a system of ethical and responsible business conduct,
including respect for human rights, in our business activities anddecision-making standards, working together with our employees,
collaborative partners and communities throughout the supply chain.
Hitachi has a place for everyone, welcoming differences incolleagues’ background, age, gender, sexuality, family status,disability, race, nationality, ethnicity, and religion.
At Hitachi, we treat everyone fairly, recognizing differences toallow everyone to perform at their full potential.
We respect and value these and other differences because only
through them we can understand our markets, create better
ideas and drive innovation.

Hitachi Integrated Report 2022

CEO Message

Whatʼs Hitachi

Introduction

The Story of Collaborative Value Creation with Stakeholders

Value Creation

Materiality

Business Strategies

The Value Creation Process

Sustainability

Mid-term Management Plan 2024

Data19Financial Strategies

CFO Message

Corporate Governance
Human Resources Strategies

15 Sub-Material Topics and Targets
Material topics

Sub-material topics

TargetCarbon neutrality through the value chain• FY2030: Achieve carbon neutrality in business sites (factories and offices)• FY2050: Achieve carbon neutrality through the value chain

Environment

Contributing to CO2 reduction through business• FY2024: 100 million metric tons/year

Contributing todecarbonization and resource
circulation

Transition to a circular economy• FY2024: Full application Eco-Design for new product development• FY2030: Zero*2 waste to landfill1 from manufacturing sites

Effective use of water• Reduction rate in water use per unit (compared to FY2010)
FY2024: 24%, FY2050: 50%

Decarbonization

Resource circulation

Harmonize with nature

Minimize impact on natural capitalStrengthening supply
chainsBuild flexible supply chains capable of responding to disasters and risks

Maintaining social
infrastructure

Resilience and sophistication of maintenancethrough DX of social infrastructure• Contribute to stable energy supply through substation management
Approx. 1.9 billion people*3

Safety & Security

Safe and secure urban
environments

Safe and comfortable transportation• A total of 15 billion people use railway services annually*3

Contributing to safe andsecure society-building

Ensuring cyber security

Secure cybersecurity for social infrastructure and business systems

Connected andprosperous society

Increase healthy life expectancy and wellbeing• Blood tests and other physical exams: 20 billion tests/year*3

Build a trustful relationship with others• Users of happiness service (10 thousand in FY2022 → 90 thousand in FY2024)

Employee happiness

More flexible working styles to increase
engagement• Employee engagement score (FY2021: 65.0% → FY2024: 68.0%)

Business ethics andcompliance

Encourage employees to apply ethicalstandards in day-to-day work.

• Achieve a score of at least 60 (out of 100) in FY2022, the first year of resultsfrom Ethical Culture & Perceptions Assessment, improving it every year

Business withIntegrity

Respect for human rights

Promote human rights due diligence and strengthen monitoring of procurement partners for responsible procurement,
including human rights

Adhering to ethical standards
as well as respect humanrights

Occupational safety

Creating a safe working environment without
accidents

Safe and secure products
and services

Ensure products and services safety while putting customers firstResilience
Contributing to themaintenance and rapid
recovery of social infrastructure

Quality of Life
Contributing to physicaland mental wellness and aprosperous life

Diversity, Equity andInclusion (DEI)
Contributing to a society
where everyone can shine

Diverse organization that
fosters innovation

Contribution to a diverse
and equitable society*1 Wherever this is compatible with local conditions and regulations• Zero fatal accidents

Strengthen diversity in management• Ratio of female and non-Japanese executive and corporate officers(30% in FY2030)

Acquiring and developing digital talent• FY2021: 67,000 persons → FY2024: 98,000 persons

Empower DEI of society through community
relationship programs• Support young generations in Asia through the Hitachi Young Leaders
InitiativeA total of 405 students participating (as of end of July 2022)*2 Less than 0.5%

*3 FY2021 results

Relevant SDGs

Hitachi Integrated Report 2022

CEO Message

Introduction

Whatʼs Hitachi

The Story of Collaborative Value Creation with Stakeholders

Materiality

Value Creation

The Value Creation Process

Importance for stakeholders

HigherHitachi has mapped the 15 sub-material topics in terms of importance for Hitachi and itsstakeholders. The level of importance to Hitachi is defined as the gap between our goals andour current initiatives.

● Business ethics
and compliance（▲）●Respect for ●Decarbonization
human rights （■■■▲）（▲）●Diverse organization ●Employee● Connected andthat fosters innovation happiness●Harmonize
prosperous（■■■▲）（■■■▲）
with naturesociety（■■）●Resource（■）
circulation●Safe and secure（■■■）
urban environment（■■）● Occupational● Maintaining socialsafety（▲）
infrastructure（■■）● Ensuring cybersecurity（■■▲）●Strengthening● Contributing to a diverse
supply chains（■■）
and equitable society（▲）● Safe and secure productsand services（■■■▲）HighGrowth driver

HigherImportance for Hitachi■Green ■Digital ■Innovation● Environment ● Resilience ● Safety & Security ● Quality of Life
● Diversity, Equity and Inclusion

Business Strategies

Foundation of societal trust ▲Sustainability

Mid-term Management Plan 2024

Corporate Governance
Human Resources Strategies

Data20Financial Strategies

CFO Message

Stakeholder dialogue about the materiality
We held a stakeholder dialogue with on the theme of materiality in Japan and Europe infiscal 2021. We received feedback on Hitachi’s proposed materiality and measures foreach materiality from disclosure experts, leading sustainability companies, the EuropeanCommission, NGOs, international organizations, and institutional investors. In Europe, we
divided the dialogue into a planet session and a people session, with Hitachi explaining
its measures for the environment, human capital, and respecting human rights, while
participants gave suggestions for new perspectives and improvements.
Principal comments from stakeholders• Hitachi should indicate the direction society wants Hitachi to move along or the goalsthat Hitachi itself has.
• When it comes to diversity and inclusion, it would be better to include “equity” andmake it “diversity, equity, and inclusion.”• For the circular economy, the approach shouldn’t just be to reduce materials and waste
but also to think about new business models.
• With human rights and decent work, Hitachi should go beyond conventional monitoring,audit, and other compliance approaches to engage with all aspects of supply chainsthrough partnerships with external stakeholders.

● Business with Integrity

Sustainability Strategy Promotion StructureUnder the leadership of Lorena Dellagiovanna, the Chief Sustainability Officer newly appointed
on April 1, 2022, Hitachi is promoting its sustainability strategy including green strategy. We
have created the Sustainability Promotion Meeting, which consists of the Chief Sustainability
Officer, the heads of business promotion departments at business units (BUs) and majorgroup companies, and sustainability officers at regional headquarters, to deliberate on key
sustainability measures and monitor progress towards targets. Deliberations and decisions

regarding important matters to achieve the Mid-term Management Plan are made by the Senior
Executive Committee, which is then discussed further by the Board of Directors.
With regard to important themes like carbon neutrality, the circular economy, human rights
due diligence (HRDD), and DEI, individual committees consisting of responsible staff at BUs
and major group companies work to promote sustainability throughout the Hitachi Group bydiscussing measures and sharing information.