Introduction

GovernanceManagement

Social Innovation

Environmental

SocialGovernance

Hitachi Sustainability Report 2023

Assurance

142

Business Ethics and ComplianceCorporate GovernanceBusiness Ethics and Compliance
Executive Summary
Business Ethics and Compliance
Risk Management

Basic Concept
With the globalization of the economy, overarching regulations and differences in governmental and economic frameworks, the importance of building a culture based on ethics, honesty andintegrity are key. Hitachi believes that business ethics and compliance are the foundation of our Company, and we engage in fair, transparent, and honest management. We are committed tocreating an open environment in which employees perform at their best and in which every employee feels safe in acting ethically. In this way, we work together to create environments where
everyone is empowered to speak up and to perform at the highest standards.

Information Security
Governance Data
Topic

Overview

Targets, KPIs, and Results

The Hitachi Group Code of Ethics and Business Conduct spell out decision-making procedures andBusiness
Ethics andComplianceactions for all Hitachi Group executives and employees. To promote compliance, the Hitachi Group
Chief Compliance Officer (CCO) leads the One Hitachi Compliance Program, a program for global

Assessment Score on Ethical Culture and Ethics
FY2023 Target: Standard score of 60 points or higher

compliance initiatives. Specifically, we conduct training to foster a culture of corporate ethics and(out of 100)

compliance, pursuing risk assessment within the company and among business partners. We are

Achieved a score of 76.5

also expanding the Hitachi Global Compliance Hotline (grievance mechanism) globally.
Anti-Bribery
andAnti-Corruption

Hitachi has made it clear that we will not tolerate any bribery, kickbacks, or other corrupt behavior by employees or business partners, or any conduct that violates

Tax
Compliance

To respond to tax risks associated with the globalization of our business, Hitachi conducts appropriate tax governance throughout the Group by identifying tax risks

the anti-bribery laws and regulations of countries and regions that have become increasingly strict in recent years, including the U.S. Foreign Corrupt Practices Act(FCPA). We conduct various anti-bribery and anti-corruption initiatives, including internal education for our employees.

on a quarterly basis under the management of the CFO.

Introduction

GovernanceCorporate GovernanceBusiness Ethics and Compliance
Executive Summary

Business Ethics and Compliance
Risk Management
Information Security
Governance DataManagement

Social Innovation

Environmental

SocialGovernance

Hitachi Sustainability Report 2023

Assurance

143

Business Ethics and Compliance
Doing Business Ethically, Honestly andTransparently
Approach

GRI 2-26/3-3

The Hitachi Group Code of Ethics and Business Conduct
https://www.hitachi.com/corporate/about/conduct/pdf/conduct_e.pdf

Under the leadership of the Chief Compliance Officer (CCO),

https://www.hitachi.com/procurement/csr/EN_HG_SPG.pdf

who oversees overall business ethics and compliance, Hitachi

ance are the foundation of the company, and we promote fair,
open environments in which every employee acts ethically andmaximizes performance. In addition to ensuring compliancewith laws and regulations, we encourage an understanding of

GRI 2-13/2-24/3-3

Structure

Hitachi Group Sustainable Procurement Guidelines

The Hitachi Group believes that business ethics and complitransparent, and honest management. We strive to create

Ethics and Compliance Structure

conducts the One Hitachi Compliance Program to strengthen

Compliance With the Hitachi Group Code of
Ethics and Business Conduct
PolicyGRI 2-23/3-3

business ethics and compliance throughout the Group. In
addition, the CCO reports important compliance mattersregularly to the members of the Audit Committee, which consists solely of non-executive directors of the Board. In addi-

the Hitachi Group Code of Ethics and Business Conduct,

All employees who complete the annual business ethics andtion, we established Regional Compliance Managers in Japan,

various rules, and other regulations, not only among employ-compliance training via e-learning pledge to comply with theAsia-Pacific (APAC), Europe, the Middle East and Africa

ees, but also among business partners. We promote a culturegroup-wide Hitachi Group Code of Ethics and Business(EMEA), North America, India, and South America to supportof speaking up to ensure appropriate reporting and action in

Conduct (the “Code”).

regional business units (BUs), Group companies, and otherthe unlikely event of a violation or suspected violation of laws

The Code defines the basis for decisions and actions

entities to meet global and local compliance and regulatory

and regulations or the Hitachi Group Code of Ethics andacross a range of matters, including business ethics, conflicts

requirements. Regional Compliance Managers also play a role

Business Conduct.

of interest, fair and free competition, sustainability, humanin facilitating collaboration across the Group.

The Hitachi Group Identity embodies our mission, therights, respect for diversity and individuality, and community

Hitachi Founding Spirit, and the Hitachi Group Vision. We

involvement. In March 2023, we performed a complete revi-

believe this Identity is an important part of the Hitachi Groupsion of the content to be more broadly responsive to theBoard of Directors

commitment to business ethics and compliance. Through the

expectations of a changing global social environment. The

Audit Committee Members

One Hitachi Compliance Program, which aims to strengthen

Audit Committee members received a report regarding thecompliance throughout the Group and organization globally,

revisions of the Code.

Hitachi fosters a corporate culture in which every employee

The Code has been prepared in more than 20 languages.

understands what is expected of them and acts with integrity

The Japanese and English versions are published on theand fairness.

Hitachi, Ltd. website, and other languages are available on the

Further, we ensure business ethics and complianceintranet servers of Hitachi, Ltd. and other Group companies tothroughout the value chain through the Hitachi Group

ensure familiarity and practice by all executive officers,

Sustainable Procurement Guidelines, which serves as a code

employees, and relevant stakeholders. The Complianceof conduct for procurement partners to follow in understanding

Division leads an annual review of the Code to ensure effec-

Hitachi’s commitment to compliance with laws, regulations,tiveness and to reflect legislative and regulatory updates, as

and ethical standards, as well as our commitment to respect

well as changes in social conditions.

for human rights.

Note: Hitachi normally refers to suppliers (including suppliers, vendors or providers) as procurement partners who build business together on an equal footing.

Regular Reports to the
Audit Committee Members

Chief Compliance Officer (CCO)
BUs, Group Companies
Heads of Ethics andCompliance

Support by
RegionRegional ComplianceManagers
Japan
APAC

Compliance Managers

EMEA andNorth America
India

Persons in Charge ofComplianceSouth America

Introduction

GovernanceCorporate GovernanceBusiness Ethics and Compliance
Executive Summary

Business Ethics and Compliance
Risk Management
Information Security
Governance DataManagement

Social Innovation

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2023

144

Ethics and Compliance Risk Assessments

More than 1,200 selected Heads of Ethics and Compliance,

culture. We established a KPI based on the results of anCompliance Managers, and Persons in Charge of Compli-

awareness survey on corporate ethics and compliance com-ance and others from Hitachi Group BUs and Group compa-

missioned to Ethisphere, a U.S. research institute specializing

nies around the globe work to streamline business ethics

in global corporate ethics. Our target is to achieve a standard

To date, Hitachi conducts a comprehensive business ethics

standards to drive the efficiency and effectiveness of the One

score of 60 points or higher (100-point scale) in the first year,

and compliance risk assessment, including anti-bribery,

Hitachi Compliance Program.

improving each year thereafter. We achieved a score of 76.5 inanti-corruption, and competition law compliance, for all

The Heads of Ethics and Compliance, Compliancethe first survey, conducted in June 2023, and we intend toGroup companies every three years. This assessment verifies

Managers, and Persons in Charge of Compliance and others

continue to make improvements under the One Hitachi Com-the effectiveness of measures taken to manage and correctat each BU and Group company are key stakeholders inpliance Program.

significant risks, and we take appropriate corrective actions

promoting ethics awareness among management andActivities

GRI 205-1/205-2

when matters requiring improvement are identified. As of theemployees. They coach colleagues through ethical dilemmas,

Business Ethics and Compliance Training

beginning of fiscal 2023, each of the Regional Compliance

raise concerns and potential risks to their Legal Division or

Hitachi conducts annual business ethics and complianceManagers are responsible to strengthen cooperation with

Hitachi, Ltd. global compliance office and conduct investiga-

training for all employees (including temporary and part-timeGroup companies in their countries and regions of responsi-

tions when appropriate.

workers) based on the Hitachi Group Code of Ethics and Busi-bility. Each Regional Compliance Manager also provides

ness Conduct and internal rules. Participants in the e-learning

support to enhance risk identification and mitigation at each

Compliance Managers, and Persons in Charge of Complianceprogram pledge to comply with the Hitachi Group Code ofGroup company.

and others, the Compliance Division provides updates on

Ethics and Business Conduct and other relevant standards

ethics and compliance initiatives, trends, and additional

during the training.

In regular meetings with Heads of Ethics and Compliance,

resources to support them as they fulfill the responsibilities of
their role.

TargetActivities

Hitachi develops and implements strategy and initiatives todrive an ethical culture throughout Hitachi’s 800-plus Group
companies. This approach is part of Hitachi’s effort to provide
all employees with guidelines and resources that ensure they
understand and do what is right, make ethical decisions, andsupport compliance with company policies, procedures, andlegal requirements.

TargetHitachi maintains a reputational due diligence program includ-

Achievements in Fiscal 2022

Cultivating a Culture of Ethics andCompliance

Materiality

At Hitachi, we encourage employees to apply high ethicalstandards in their day-to-day work as we improve our ethicalDue Diligence on Third Parties

Our fiscal 2022 training course covered business ethics,
bribery and corruption, gifts, travel and entertainment,anti-money laundering laws, fraud, fair competition,
information owned by others, data protection, conflictsof interest, reporting and non-retaliation, and the Hitachi
Global Compliance Hotline. This training encouraged
higher levels of compliance awareness in the Group.
The participation rate was 95.1% globally. In addition,
we conduct data analysis on the level of understanding
among training participants by region and job category,as well as the time required for training via e-learning,for use in identifying areas of risk or need for additional
training. Hitachi, Ltd. also conducted live training for
new employees, and additional compliance training for
mid-career hires and newly-­appointed managers toensure a complete understanding of the Hitachi Group
Code of Ethics and Business Conduct.

ing the introduction of a third-party management system toidentify reputational risks associated with bribery, corruption
and other factors related to potential business partners withwhom Hitachi plans to begin business. This program assists
in preventing Hitachi from engaging with parties that haveacted or are likely to act in a manner inconsistent with
Hitachi’s ethical culture.
We also conduct an annual screening of business partners with whom we have already conducted transactions tocheck for any concerns that may have arisen in the interim.

Introduction

GovernanceManagement

Social Innovation

Strengthening our Speak-up Culture

Environmental

GovernanceSocialPhone numbers for the Hitachi Global Compliance Hotline

Assurance

Hitachi Sustainability Report 2023

145

investigation is needed, appropriate investigative personnel

are available for all employees and other stakeholders toare assigned. For concerns that are substantiated, disciplinary

speak to a representative in their native language. The phoneactions may be taken. Discipline comes in many forms from

Hitachi believes that a speak-up/listen-up culture—wherelines are staffed by specially trained third-party representa-

warnings to suspensions to termination.

employees are encouraged to raise concerns and feeltives, with translators in more than 50 languages. Web-based

The Chief Compliance Officer reports to, and receives

Executive Summary­confident that they can do so without fear of retaliation—isreporting is also available. We store data supplied in a reportnecessary instructions from, members of the Audit Committee

Business Ethics and Complianceessential to the early detection and prevention of breaches ofon secure servers maintained by the third party who adminis-

on a quarterly basis regarding the number of cases reported,

ethical and regulatory expectations. We are committed toters the hotline.

trends, etc. Serious incidents of noncompliance are immedi-GRI 2-25/2-26

ApproachCorporate GovernanceBusiness Ethics and Compliance

Risk Management
Information Security
Governance Data

ensuring our employees feel safe to speak up, to share alle-

To address and resolve contacts to the Hitachi Global

gations and to challenge how business is conducted without

Compliance Hotline efficiently, we assign inquiries to an inves-

fear of retaliation.

tigator who is a subject matter expert.

When an employee discovers a violation or suspectedviolation of laws, regulations, or the Code, or when employees

the relevant department (Human Resources, Compliance andIn fiscal 2022, we received 1,276 reports from all Group
companies worldwide.

After a confidential review of the concern, the investigator
determines which reports require an investigation. If an

have questions about business activities in general, we encourage employees to consult or report the matter to their leaders,

ately reported to the Chief Compliance Officer.

Hitachi Global Compliance Hotline
https://secure.ethicspoint.eu/domain/media/en/gui/109107/index.html
P.103 Hitachi Global Compliance Hotline

Reporting and Monitoring Structure

Legal), or to the Hitachi Global Compliance Hotline.
Audit Committee Members
Hitachi Global
Compliance
HotlineHitachi Global Compliance Hotline(Whistleblower System)
SystemActivities

ReportGRI 2-25/2-26/2-27

Supervise

Chief Compliance Officer (CCO)The Hitachi Global Compliance Hotline is a reporting system
operated by a third-party organization and is available

Report24/7/365 to Hitachi Group employees, business partners

Supervise

Report(including procurement partners and contractors), and allother stakeholders. To ensure that no one is treated unfairly,

AnswerCompliance Divisions

anonymous reporting is permitted when legal, and all information received is kept strictly confidential except as neces-

Whistleblowerssary to conduct an investigation.
Consultation and reporting are available by phone oronline for all matters involving possible misconduct, including
violations of laws and regulations, violations of the HitachiGroup Code of Ethics and Business Conduct, and humanrights violations, including harassment.

Note: Hitachi normally refers to suppliers (including suppliers, vendors or providers) as procurement partners who build business together on an equal footing.

Investigations
Responses
Statistics Analysis

Introduction

GovernanceManagement

Social Innovation

Environmental

SocialGovernance146

Hitachi Sustainability Report 2023

Assurance

Details of Fiscal 2022 Consultations and Reports

Categories

Corporate GovernanceBusiness Ethics and Compliance1
HR issues (labor management,
travel expenses,
commuting costs, etc.)2Harassment

3
Financial

4
Procurement

5
Competition law

6
Bribery

7
Other

Total

Executive Summary

Americas

87

125

4

6

1

5

115

343

Business Ethics and Compliance

Europe(including CIS)

63

52

4

4

0

3

76

202

Middle East andNorth Africa

13

15

1

0

0

2

28

59

Sub-Sahara

1

1

0

2

0

0

0

4

APAC
(excluding Japan)

47

55

9

13

1

19

96

240

Japan

83

209

16

4

0

2

114

428

Total

294

457

34

29

2

31

429

1,276

Risk Management
Information Security
Governance Data

Areas where
whistleblowing
cases occurred

Anti-Bribery and Anti-Corruption
PolicyActivities

number of times that entertainment, gifts, and other arrangeGRI 205-2

Hitachi has made it clear that we will not tolerate any bribery,
kickbacks, or other corrupt behavior by employees or busi-

ments may be provided to public officials. We also have poli-

Fiscal 2022 Initiatives

cies banning facilitation payments and requiring due diligenceIn fiscal 2022, Hitachi began building a system forprocedures for business partners.

­conducting Due Diligence and creating Due Diligence

In addition, as an effort to manage the risk of corrupt prac-

reports using a new platform from an external service

ness partners, or any conduct that violates the anti-bribery

tices, we established and implemented procedures forprovider and assigning several Due Diligence analysts

laws and regulations of countries and regions, including the

pre-screening of (1) the provision and acceptance of gifts,

from inside the company to an internal global compli-

U.S. Foreign Corrupt Practices Act (FCPA).

entertainment, and travel expenses; (2) the selection of busi-

ance team. The goal of this system is to improve andWe established the Hitachi Group Code of Ethics andness partners; (3) donations and political contributions; and (4)standardize business partner screening, as well as toBusiness Conduct, the Hitachi Group Anti-Bribery and Anti-business acquisitions, joint ventures, and other forms of invest-

create and maintain records, when initiating or renewing

Corruption Policy, and rules and guidelines related to thement and financing for each transaction type. In doing so, wetransactions with business partners globally.

provision and acceptance of gifts, entertainment, and travel

take into account the risk of corrupt practices by country/

expenses; donations and political contributions; conflicts ofregion in the screening procedures according to the score ofinterest; and business partner screening procedures. Under

the Corruption Perceptions Index (CPI) published annually bythese policies, when providing or accepting entertainment orTransparency International and other relevant factors.

gifts, or making donations or political contributions, executive
officers and employees must not exceed the scope of actions
permitted by anti-bribery laws and regulations and mustcomply with Hitachi’s internal rules. These policies indicate
specific spending limits in terms of monetary value and theIntroduction

GovernanceManagement

Social Innovation

Environmental

SocialGovernance

Hitachi Sustainability Report 2023

Assurance

147

Educational Activities for Preventing Bribery andCorrupt Practices

Educational Activities for Preventing Violations ofCompetition Law

inspecting payment details for red flags. Additionally, we

One of the major topics in the Hitachi annual business ethics

As with our anti-bribery and anti-corruption initiatives, Hitachi

and terrorist financing.

and compliance training is the prevention of bribery and corrup-

addresses compliance with competition laws as one of thetion. This training includes more specifics on gifts, travel, andmain topics in our annual business ethics and compliance

Executive Summary

entertainment from the perspective of preventing bribery andtraining. In this way, we strive to ensure that all relevant rules

Business Ethics and Compliancecorruption. In fiscal 2022, 331,525 employees received training

and operational standards are fully understood. In addition,

on anti-bribery and anti-corruption. In addition, we post Group-

we prepare standards related to global contact with competi-

wide educational materials on anti-bribery and anti-corruption

tors for overseas employees to inform them of the practicali-

The basic Hitachi export control policy is to comply withon the intranet for use by all Group companies.

ties involved.

export and import laws and regulations on a global basis to

Corporate GovernanceBusiness Ethics and Compliance

Risk Management
Information Security
Governance Data

In conjunction with the United Nations’ International Anti-

refamiliarize themselves with the Hitachi Group Code of Ethics
and Business Conduct and Hitachi Group Anti-Bribery andAnti-Corruption Policy to ensure consistent anti-corruption.
In addition, we share the latest enforcement policies of theExport Controls
Approach

Activities

maintain international peace and security, and to manage

Corruption Day on December 9, we posted an article on the
Hitachi Group employee news website, calling on employees toinclude clauses in contracts which prohibit money launderingexports appropriately in accordance with internal regulations.

Prevention of Antisocial Transactions andMoney Laundering
Approach

Activities

Hitachi, Ltd. established Corporate Regulations concerning
Security Export Control based on this policy to ensure implementation of strict export control practices in line with relevantlaws and regulations. We screen all goods and technologies

To cut off all relationships with antisocial forces, the Hitachiintended for export against such factors as destination coun-

U.S. Department of Justice on bribery, corruption, and otherGroup Policy Against Money Laundering and Antisocial

tries and regions, as well as intended end use and end users.

corporate crimes at regular meetings for Heads of Ethics andTransactions includes provisions stating that we will neverWe provide guidance and educational support for the formula-Compliance, Compliance Managers, and Persons in Charge ofengage in antisocial transactions under any circumstances,tion of regulations and the establishment of frameworks toCompliance and others at Group companies. The meetings

and will refuse any improper demands and unfair deals.

Hitachi Group companies to ensure that Group companies

are designed to expand the knowledge of Heads of Ethics andIn Japan, we insert antisocial-force rejection clauses inCompliance, Compliance Managers, and Persons in Charge ofcontracts. If we determine that a business partner belongs toCompliance and others, as well as to confirm the rationale andan antisocial force, we can promptly void the contract andAs part of our training program for all Group companies,

direction of the Hitachi Group compliance program.

end the relationship. The Hitachi Group acts decisively to

we offer courses and e-learning programs on export controls,

eliminate approaches from antisocial forces in partnershipconsisting of a basic e-learning program in 14 languages andwith external specialist institutions (the National Center foran e-learning program for practitioners in Japanese andRemoval of Criminal Organizations or the police).

English. Hitachi strives to ensure that export controls are

Fair Competition
PolicyActivities

In fiscal 2020, we revised our rules by adding provisions
for the prevention of money laundering in addition to the

Hitachi engages in business in accordance with the law andprevention of antisocial transactions. These provisions rein-with business ethics, and we practice fair and open competi-

force Hitachi’s stance and clearly establish that we will nottion. We have also established operational standards in addition

tolerate involvement with persons or organizations engaged

to the Hitachi Group Code of Ethics and Business Conductin money laundering or other illegal activities within or outside

and the Hitachi Group Fair Competition Policy. In fiscal 2021,

of Japan. Using a risk-based approach, we conduct due

we revised the guidelines for preventing cartel activity anddiligence on prospective customers and business partners,

improved the relevant forms based on the revised guidelines.

including checking against country sanctions lists andfollow the same export control policies in accordance with
relevant laws and regulations.

thoroughly enforced throughout the Group.

Introduction

GovernanceManagement

Tax ComplianceApproachCorporate GovernanceBusiness Ethics and Compliance

Social Innovation

GRI 207-1/207-2/207-3/207-4

To respond to tax risks associated with the globalization ofSocialGovernanceties in various countries, Hitachi conducts appropriate tax

Business Ethics and Compliancegovernance throughout the Group by identifying tax risks on aquarterly basis under the management of the CFO.
To ensure thorough compliance with these rules, we

Hitachi Sustainability Report 2023

148

Stakeholder Collaboration and Engagementawareness of these rules and ensure that they are followed.

Hitachi continues efforts to build relationships of trust through*1 OECD (Organisation for Economic Co-operation and Development)*2 BEPS (Base Erosion and Profit Shifting)sincere responses to tax authorities and to reduce tax risks
through researching appropriate tax treatment in consultation
with external tax advisors. We also collaborate with the business community through industry associations to lobby for

Tax Compliance Initiatives
Activities

Information Security

strive to raise awareness among all employees involved in

By following the relevant tax-related rules applicable to theGovernance Data

tax management (filing and paying taxes, handling tax

Group as a whole, Hitachi manages tax risks associated withaudits, and managing tax risk) and in the handling of otherglobalization. For example, we strengthen risk management

tax-related matters.

and compliance with laws and regulations by identifying and

1. Group companies strictly comply with all relevant laws

Assurance

to ensure compliance. As stated above, we strive to raise

our business, including tax audit and litigation by tax authori-

Executive Summary

Risk Management

Environmental

viable tax reform that contributes to stronger international
competitiveness on the part of Japanese companies.

Violation of Laws and Regulations
Activities

GRI 205-3/206-1

sharing matters indicated by the tax authorities and tax-­

In fiscal 2022, we recorded no incidents in which Hitachi wasrelated legal proceedings in each country.

prosecuted or penalized by authorities for bribery, corrupt

and implement tax management when pursuing their

The results of our tax filings and tax audits in Japan arepractices, competition law or export control. Regarding tax

business activities, bearing in mind such international

reported to the CFO, and we work continuously to ensurecompliance, Hitachi acts in accordance with all applicabletax compliance standards as the Transfer Pricing

appropriate tax reporting and prevent fraud. In preparing tax

laws and regulations, and we did not record any significant

Guidelines for Multinational Enterprises and Tax

filings, we determine whether anti-tax haven legislationfines or nonmonetary sanctions for noncompliance with tax

Administrations of the Organisation for Economic

applies. When legislation applies, we reflect said rules properly

laws and regulations.

Co-operation and Development (OECD)*1, as well as

in the tax filing to ensure appropriate tax payments.

that body’s Action Plan on Base Erosion and Profit
Shifting (BEPS)*2.

Hitachi follows rules for transfer pricing management andmanages transfer pricing in accordance with the OECD

2. Group companies effectively, continually, and proac-

Transfer Pricing Guidelines and the laws and regulations on

tively manage tax-related issues in a manner befitting

transfer pricing in each country or region where Group com-their status as socially responsible organizations, main-

panies are located.

taining Hitachi brand value and seeking to maximize
shareholder value.
3. Group companies build sincere and positive relations oftrust with the tax authorities in the regions where thesecompanies do business, striving to maintain anddevelop those relations.
In accordance with these policies, we established rules ontransfer pricing management for Group companies, seeking to
identify and mitigate potential taxation risks related to transfer
pricing in transactions with foreign-affiliated parties, as well as

We paid 170.8 billion yen*1 in income taxes for the fiscal
year ended March 31, 2023 (Japan: 64%, Overseas: 36%*2 ).
*1 Refer to income taxes paid in the consolidated statements of cash flows*2 Based on the percentage in the country-by-country report submitted to tax
authorities