HITACHI RAIL

Modern Slavery Report 2023

H I TAC H I R A I L . C O M

MODERN SL AVERY REPORT 2023

HITACHI RAIL

Hitachi Rail Ltd (Hitachi Rail) is the holding company of the Hitachi Railway Systems Business Unit ofHitachi, Ltd. Hitachi Rail is committed to supporting and respecting human rights, including the abolitionof modern slavery and all forms of forced or compulsory labour, wherever it does business.
We are committed to acting ethically and with integrity in all ourbusiness dealings and relationships and minimising the risk ofslavery or human trafficking in our business and supply chains.
We engage with our workforce to help them understand what
modern slavery is, how to recognise it, and how to act on risk
indicators of these issues.
This is Hitachi Rail’s seventh statement made pursuant to section
54 of the Modern Slavery Act 2015. This statement sets out the
key activities we have undertaken since 1 April 2022 to deliveron our commitments.

OUR BUSINESS
Hitachi Rail is a fully integrated, global provider of rail
solutions across rolling stock, signalling, operations, service& maintenance, digital technology and turnkey solutions.
Our mission is to contribute to society through the continuous
development of superior rail transport solutions. We are proud of
our global achievements, from our world-famous ‘bullet trains’,
to our signalling solutions and turnkey projects, state-of-the-art
traffic management and digital solutions. Drawing on the wider
Hitachi Group’s market-leading technology and researchand-development capabilities, we strive for industry leading
innovations and solutions that can deliver value for customers andsustainable railway systems that benefit wider society.

SNAPSHOT FROM THE LAST 12 MONTHS
f Further strengthened the expertise and resourcing of
our compliance function under the supervision of the
Chief Compliance Officer, including the appointment ofdedicated senior compliance managers for anti-bribery
and anti-corruption, compliance operations, whistleblowing
and investigations.
f Adopted the Hitachi Group Code of Ethics and BusinessConduct (2023) (Code of Ethics), which replaces theprevious Hitachi Rail Code of Ethics (2020). The new Codeof Ethics further emphasises Hitachi Rail’s commitment
to the abolition of slavery and all forms of forced orcompulsory labour and details our commitment to caring forour communities.
f Continued to ensure that our global workforce undertakes
mandatory training regarding the Code of Ethics.
f Translated our Supplier Code of Conduct into the Italian
language and updated relevant buying documents.
f Deployed our first tranche of bespoke Modern Slavery
training to our global workforce.
f Deployed training between November 2022 and January2023 to our internal buyers and category managers
regarding the registration with and use of EcoVadis, which
is a tool that allows Hitachi Rail to benchmark and risk score
suppliers against a range of sustainability and human rights
criteria. Approximately 57% of our buying community
attended such training.

f Invited over 1600 suppliers to attend engagement sessions
where suppliers were provided with an overview of our
expectations for supplier behaviours and encouraged theuse of EcoVadis.
f Launched an online platform in February 2023 called
Jaggaer for supplier onboarding, which includes a risk
model for compliance due diligence checks whereby
country and industry human rights risks, including
labour-related scores from EcoVadis, are assessed.
Jaggaer is integrated with our invoicing and payment
systems and includes documented acceptance by our
suppliers of our Supplier Code of Conduct as part of theonboarding process.
f Continued our engagement with key stakeholders regarding
modern slavery and human trafficking including Responsible
Sourcing, Worst Forms of Child Labour, Business & Human
Rights Working Groups and the Global Child Forum.
f Drafted and commenced internal stakeholder engagement
regarding a new Hitachi Rail Modern Slavery Policy.

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MODERN SL AVERY REPORT 2023

HITACHI RAILOUR STAFFOUR CODES AND POLICIESOur operations in the UK include a rolling stock manufacturing
facility at Newton Aycliffe, County Durham. Our fleets aremaintained and serviced at a number of train maintenancecentres located around the UK, including those based in
Doncaster, Bristol, London and Edinburgh. We employ 2659
direct employees, of which 33 are part-time. This includes 2513
permanent roles and 124 fixed term roles. We employ anadditional 581 contractors and 6 expat staff. We ensure that all
employees are able to demonstrate their eligibility to work in the
UK and require all contractors and agency staff to undertake thesame before starting work with Hitachi Rail.

Hitachi Rail’s commitment to prevent modern slavery and humantrafficking in our business and supply chains is underpinned byappropriate policies that are regularly reviewed and updated toreflect our evolving business.
The recently updated Code of Ethics applies to all members of
our governance and control bodies, executives, workforce andsupply chain. The Code of Ethics reflects our commitment to,amongst other things:
f Abolition of slavery and all forms of forced orcompulsory labour;f Freedom of association;f Equal pay for equal work;f Equality at work;f Just and favourable remuneration;f Non-discrimination; andf Protection for the organisation of and participation incollective bargaining.
Hitachi Rail also requires our suppliers to comply with the Hitachi
Rail Supplier Code of Conduct (2021) (the Supplier Codeof Conduct), where we expressly preclude the use of forced,
bonded, indentured, involuntary or exploitative labour, slavery
and human trafficking in our supplier chains. The Supplier Codeof Conduct was developed to reflect our commitment to the 10
Principles of the United Nations Global Compact.
Since our last statement, Hitachi Rail has also:

OUR SUPPLY CHAIN
Our supply chain comprises other Hitachi Group companies aswell as external third-party suppliers. During the reporting period,
Hitachi Rail has directly engaged:
f 17 suppliers from within the Hitachi Group from Japan,
Italy, United Kingdom, Switzerland, Germany andVietnam; andf 1060 external suppliers globally. Approximately 85%of these suppliers are based within the United Kingdom.
The balance operates or has a manufacturing footprint inAustralia, Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Japan, Netherlands, Spain, Sweden,
Switzerland, the United States, Czech Republic, Poland
and India.

f Updated our Whistleblowing & Speak-Up Policy (2023)
that promotes a “speak-up” culture whereby anyone canreport, in good faith, actual or suspected violations or
breaches of laws, regulations, our Code of Ethics, or ourpolicies and emphasises that Hitachi does not tolerate
retaliation against whistleblowers;
f Published an internal Compliance Programme Manual(2023) that describes how we prevent, detect and respondto compliance risks and misconduct, and promote a cultureof ethical conduct; andf Drafted and commenced stakeholder engagement
regarding the publication of a Modern Slavery Policy thatsets out our expectations for the conduct of workforce
and contractors to help eliminate slavery and all forms offorced or compulsory labour. We aim to ensure this Policy is
published before the end of this reporting period.

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HITACHI RAIL

DUE DILIGENCE FOR MODERNSLAVERY AND HUMAN TRAFFICKING
Hitachi Rail has identified the following materials and services
procured by our business during the reporting period as giving
rise to the highest risk of modern slavery and human trafficking:f Manufacturing;f Construction;f Transportation and storage; andf Water supply - sewerage, waste management andremediation activities.
Hitachi Rail supplements the above with the following relevantinternal policies and manuals that are subject to continuous
review and improvement:f Human Rights Policy (2022) that reflects our commitment
to comply with the Universal Declaration of Human Rights
when conducting business;
f Environmental Policy (2022), Quality Policy (2022),
Product Safety Policy (2022) and Health and Safety
Policy (2022) that set our commitment to provide safe,
effective, quality and fit for purpose systems, products andservices to customers, in compliance with good practice,applicable international and national standards and alllegal obligations;f Social Accountability Manual (2022) that reiterates HitachiRail’s commitment to the highest standards of ethics andsustainable development by respecting and implementing
the principles of Standard SA8000 (Social Accountability)
for human rights and workers’ rights;
f Corporate Social Responsibility Governance Manual(2022) that sets out our strategic objectives in relation
to Corporate Social Responsibility (CSR) and identifies
the roles and responsibilities of our Social Performance
Team and CSR & Sustainability Committee in supporting
the application of the United Nations Global Compact toour business;f Integrated Risk Management Framework Manual(2021) that describes our integrated risk management(IRM) framework, which provides assurance on IRM
activities through the organisation, both at enterprise andproject level;f Other written employment practices and procedures that
ensure fair recruitment and treatment of our workforce.
Hitachi Rail continues to make our policies available to our
workforce through publication on our internal document
management system. We regularly review and update
our policies.

Hitachi Rail identifies, assesses, controls and monitors the risk ofmodern slavery and human trafficking in these industries, and our
supply chain more generally, through our supplier due diligence.
Core activities include:f Supplier mapping: Mapping direct supply chain andbusiness relationships to measure and identify areas
where there is potential or indirect risk for modern slavery
using published data from sources such as Transparency
International’s Corruption Index, The Global Slavery
Index, ITUC Global Rights Index, International Labour
Organisation (ILO), and Trafficking in Persons Report,
Freedom House and various World Bank World
Governance Indicators that specifically focus on Corruption,
Government Effectiveness and Rule of Law Indicators.
f Hitachi Rail Assessment & Screening: Initial desktop
assessment of all suppliers for, anti-money laundering,anti-bribery and corruption, adverse media, sanctions,watchlists and politically exposed persons. Prospective
suppliers are required to agree to adhere to the Supplier
Code of Conduct and complete the Hitachi Rail screening
questionnaire that includes information to understand the
supplier’s compliance with regulatory requirements and bestpractices. This screening is repeated on a periodic basis.
As noted above, this process has been automated andharmonised under the online platform, Jaggaer, since thelast reporting period.
f CSR & Sustainability Risk Assessment: In December 2021,
we launched an internal programme to enhance visibilityof supply chain risks in the corporate social responsibility(CSR) and sustainability space, partnering with EcoVadis,
a global leader in business sustainability ratings. We haveuploaded and risk-assessed our supply base using the
EcoVadis IQ platform which has enabled us to create a CSR& Sustainability risk profile for our suppliers against 4 key
criteria: Environment, Labour & Human Rights, Ethics andSustainable Procurement. The risk assessment was updated
in 2022 and now represents 95% of our total annual third
party spend, being approximately 6,800 suppliers (up03MODERN SL AVERY REPORT 2023

from approximately 50% in the last reporting period) andprovides critical insights on the inherent risk profile of our
suppliers in terms of the industries they work in and thecountries in which they operate. We have also actively
invited suppliers, based on risk and supplier materiality,
to register in the EcoVadis ratings platform, providing
more detailed visibility of their CSR and sustainability
performance. We now have approximately 759 direct
suppliers registered with EcoVadis ratings (up fromapproximately 500 direct suppliers in the last reporting
period) and continue to engage with suppliers and promote
the EcoVadis tool. Through the EcoVadis tool, registeredsuppliers have access to the EcoVadis Academy training
which includes e-learning courses on Child Labour, Forced
Labour & Human Trafficking topics.
f Site Visits and External Audits: We organise and undertake
supplier visits and audits for quality & assurance and health& safety in accordance with Hitachi Rail internal policies
and procedures. We also organise social audits of suppliers
that have been identified as giving rise to human rights
concerns, including modern slavery.

HITACHI RAIL

f Internal Audit: We have a framework in place for all current
procurement processes. These are all tested internally andexternally through rigorous audits that look at complianceand the application and adherence to processes. Where
there is a non-conformity report or recommendation, webuild them into the process development.
f Whistleblowing & Speak-Up: Hitachi Rail provides various
speak-up channels for any person, internal or external to
our business, seeking to report a concern regarding actualor suspected misconduct that may be a violation or breachof any applicable law or regulation, our Code of Ethics,
or any of our policies. Our speak-up channels include
managers, members of our Human Resources or Legal &Compliance functions, and our dedicated 24-7 Hitachi
Global Compliance Hotline, which provides for online or
telephonic reporting. Hitachi Rail additionally provides
for specific email addresses for supervisory bodies andother eligible recipients as speak-up channels, as requiredby certain local laws and regulations where we operate.
As noted above, Hitachi Rail does not tolerate retaliation
against whistleblowers.

» In our Modern Slavery Statement for 2021 we firstadvised that a human rights issue was raised following
the publication of a report by the Australian Strategic
Policy Institute (ASPI). This report focuses on thepotential forced enrolment of Uyghur people in the
supply chains of major international companies. The
report mentions one of Hitachi Rail’s suppliers.
» Following the publication of the ASPI report, Hitachi
Rail undertook an in-depth review of potential forced
labour issues in the supplier referenced, includinginternal interviews, document reviews and three third
party audits.
» The scope of the audits included in-person checks at
the supplier’s premises in January 2021, March 2022
and July 2023, reviewing key documentation andinterviewing management and front-line workers.
Based on the scope and methodology of the review,the documentation and information received from the
supplier and external audits organised, no instancesof forced or compulsory labour were identified at theplants that supply Hitachi Rail. Hitachi Rail will continue
to monitor this specific case and assess potential humanrights issues in its supply-chains generally.

f Compliance: We have a dedicated compliance team, led
by our Chief Compliance Officer. The compliance teamis supported by all functions over the business, but inparticular Internal Audit, Legal, Finance, Human Resources,
Procurement and Sales.
f Contracts: Hitachi Rail binds suppliers to comply with allapplicable laws, including the Modern Slavery Act 2015,
and our Supplier Code of Conduct.

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MODERN SL AVERY REPORT 2023

HITACHI RAIL

KPIS

TRAINING
Raising awareness and building expertise is another processused by Hitachi Rail to manage human rights risks. Hitachi
Rail ensures that all new members of our workforce undertake
mandatory annual training on our Code of Ethics (translated
into 15 languages) within three months of joining. This training isrefreshed annually for our whole workforce. The training explains
how to spot and report potential or actual breaches of the Codeof Ethics, including in relation to human rights, and details theconsequences for failing to comply with the Code of Ethics.
Since our last Modern Slavery Statement, we have deployedbespoke Modern Slavery e-learning to our workforce globallythat helps them identify potential instances of Modern Slavery in
our business and supply chain, and explains our procedures forpreventing and reporting the same. Over half of our workforce
with access to eLearning have completed the training to date,
and we are targeting 100% completion as soon as possible but
no later than 31 March 2024.

Goal

StatusEnsure 100% of new members of the workforce
have completed Code of Ethics training within 3months of new employee start date

Achieved

Ensure that 100% of existing workforce
have undertaken refresher Code of Ethics
training annually

Achieved

Ensure 100% of workforce with access toeLearning have completed Modern Slavery
training by 31 March 2024

On track

Publish Hitachi Rail Modern Slavery Policy by
31 March 2024

On track

Develop an engagement strategy for suppliers
that EcoVadis has identified as having a “high”
or “very high” inherent sustainability risk profile
to register and complete the sustainability
assessment with EcoVadis by 31 March 2024

On track

Make EcoVadis training and refresher training
available to 100% of buying community on an
ongoing basis

Achieved

Continue to ensure that anti-slavery clauses andcompliance with the Supplier Code of Conduct
are embedded into all high-risk contracts

Achieved

Screen suppliers through EcoVadis and theInternational Trade Union Confederation,
including in respect of child labour, forced
labour, human trafficking and workers rights

Achieved

Ensure that every identified instance of modern
slavery and labour exploitation is addressed

Achieved

This statement was approved by the Hitachi Rail Ltd Board of
Directors on 11 September 2023.

We actively work with our procurement teams and management
to identify gaps in individual and role training as part of the wider
due diligence activities and responsible sourcing programme.
EFFECTIVENESS AND FURTHER STEPS
We continue to monitor the effectiveness of our processes toensure that we source responsibly, trade ethically and prevent
human trafficking within our business and supply chain. Thissection outlines key performance indicators (KPIs) to help
measure progress against our goals.

Giuseppe Marino
Group CEO05