Societal Performance
Companies are increasingly being called upon to create a business framework to advance CSR initiatives
covering not only their own in-house activities but also their value chain.
Hitachi aims to continue fulfilling its social responsibilities throughout the value chain. We thus takemeticulous care in ensuring the compliance, ethical conduct, and fairness of our own activities and those of ourbusiness partners. We also seek to offer safe and rewarding workplaces for all employees based on the belief
that enabling them to fully realize their potential is the source of our sustainable growth.

Supply Chain Management
As a company that procures products and services from suppliers in regions and countries around the world,
we are reviewing our own CSR standards, and auditing and cooperating with the CSR initiatives of oursuppliers. Hitachi is also taking the lead in responding to the issue of conflict minerals by scrutinizing thecountries where raw materials are mined in order to prevent infringements on human rights by countries
engaged in conflict. Keeping abreast of global trends, we will continue to share and strengthen on a Groupwide basis our commitment to fulfilling our social responsibilities throughout the supply chain.

Creating and Sharing Procurement Policies
Our basic procurement policy is contained in the Hitachi
Guidelines for Procurement Activities, drafted in line with
the United Nations Global Compact and which call for theelimination of discrimination in employment andoccupation, the rejection of all forms of child and forcedlabor, and environmental protection activities. Suppliers are
selected strictly in accordance with the guidelines.
In fiscal 2016, we released the Hitachi Group CSR
Procurement Guidelines, a full revision of the 2009 HitachiGroup Supply Chain CSR Deployment Guidebook. Thisrevision incorporates the provisions of the HitachiGroup Codes of Conduct and also makes references toversion 5.1 of the Electronic Industry Citizenship Coalition(EICC) Code of Conduct, promulgated in January 2016. We
distribute the Guidelines to the approximately 30,000
suppliers of Hitachi business units and Group companies,
from whom we request acknowledgment of suppliers’
understanding in writing.

CSR Supply Chain Management Framework
CSR supply chain management and green procurement
policies and initiatives are discussed within Hitachi’s
Value Chain Integration Division, which is headed by thechief procurement officer (CPO) and reports directly tothe president of Hitachi, Ltd. Policies and initiatives
adopted by the division are shared throughout the Group
via the Hitachi Group CSR Green Procurement
Committee, which includes members from business units
and key Group companies.
In fiscal 2011, we appointed procurement officers tooversee local procurement in China, the rest of Asia,
Europe, and the Americas. We are expanding our suppliersin emerging nations while also strengthening our responseto CSR-related risks expected to arise from the global
expansion of our supply chain.
In fiscal 2015, we introduced a new initiative to provide
information directly to suppliers in a face-to-face format.
The January 2017 CSR and green procurement seminar
held in Shenzhen for Hitachi Group partners in China wasattended by 45 people from 32 companies.
74

Hitachi, Ltd. Integrated Report 2017

Supply Chain Management Organizational Structure
President
Development of CSR/green
procurement policy

Value Chain Integration Division
Procurement office conferences

Conferences for procurement managers

CPO Joint Committee(every two months)

Hitachi Group CSR
Green Procurement
Committee (biannual)Group procurement
strategy conference(biannual)

Regional procurement
conferences (China/Asia/India: biannual; Europe/Americas: annual)

Target price conference(biannual)

Implementation by
all procurement members
Business unit procurement members

Major Group company
procurement members

understanding of the challenges our suppliers face.
Starting in fiscal 2017, we will be asking our suppliers toconduct CSR Monitoring using the updated checklists.
CSR Monitoring (Self-Check) Results
FYSuppliersin JapanSuppliers
outside Japan

Checklistscollected

2012574198

2013

5545100

2014

0200200

2015

0218218

2016

198118316Total*

310

724

1,034

CEO Message

To monitor how well Hitachi’s CSR supply chain
management philosophy has been adopted by oursuppliers, since fiscal 2007 we have asked key suppliers toconduct CSR Monitoring (self-checks) using the JEITA
Supply Chain CSR Deployment Guidebook and detailed
checklists, and in fiscal 2016 we collected checklists from316 suppliers inside and outside Japan.
After analyzing the results, we provide feedback for thebusiness operations related to the suppliers, and then workwith those involved in the operations to resolve supplierrelated issues.
Alongside the revisions made to the Hitachi Group CSR
Procurement Guidelines, the checklists have also been fully
updated to allow us to obtain a more detailed

Our Business Model

Implementation of CSR Monitoring (Self-Checks)* Total also includes self-check results from fiscal 2011.

Implementation of CSR Audits
No major infringements were found at the 20 Asian
suppliers audited in fiscal 2016, but some small areas
needing improvement were noted, such as overtime work
exceeding stipulated rules (19 suppliers), failure to conductperiodic inspections of machinery and equipment (6), andinsufficient management of hazardous waste (9). We havemandated that suppliers affected by these issues submit
improvement action plans and will be working with andadvising them until they complete the planned improvements.

Strategic Focus

Since July 2012, the Hitachi Group Procurement Division
has been auditing the manufacturing bases of suppliers in
China and the rest of Asia. Our audits are based on theinternational SA8000 certification standard developed bySocial Accountability International (SAI), an American CSR
evaluation institution, and are conducted by an EICCrecognized auditor, who checks suppliers’ CSR initiatives
from such perspectives as labor and human rights, healthand safety, the environment, and ethics.

Human Rights Due Diligence in Procurement

Management & GovernanceValue Creationcompanies and the CSR division of Hitachi Asia. The
working group has evaluated human rights risks within thesupply chain, set priorities, and considered measures forreducing risks.
In fiscal 2016, we published the revised Hitachi GroupCSR Procurement Guidelines based on results obtainedfrom activities in fiscal 2015 as well as input from a rangeof sources and perspectives, including Hitachi Europe Ltd.,
Hitachi (China), Ltd., and outside experts.

Response to the Conflict Minerals Issue
Each Hitachi Group company is investigating and responding to the issue of conflict minerals in line with our customers’
requests based on Hitachi’s conflict mineral policy.

Hitachi, Ltd. Integrated Report 201775

Performance

Starting in fiscal 2015, the Hitachi Group Procurement
Division began implementing human rights due diligencebased on the Hitachi Group Human Rights Policy. With theconsulting assistance of the nonprofit organization Shift,
we have created a working group centered on theprocurement and CSR divisions at Hitachi, Ltd.—which
serve as the corporate divisions overseeing activities
throughout the Group—and also including the procurement
and CSR divisions of two in-house and four Group