Carbon Pricing for Net Zero - Utilizing Market Mechanism IEEJ, RIETI and EUJC Joint Webinar

Activities of Hitachi Group on climate change

Jan/27/2022
Kazunori Takahashi

Deputy General Manager, Sustainability Promotion Division
Hitachi, Ltd.
© Hitachi, Ltd. 2021. All rights reserved.

1 Hitachi ProfileFoundation

1910
1-6-1 Marunouchi, Chiyoda-ku, Tokyo,

Head officeJapan
Representative Executive Officer,

Representative

Employees

Consolidated

President & COO Keiji Kojima
350,864（FY2020）
871（FY2020）

subsidiaries
Businesscontents

Social Innovation Business thatcombines information technology (IT),operational technology (OT) andproducts© Hitachi, Ltd. 2021. All rights reserved.

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2 The 2021 Mid-term Management Plan
Aiming to realize a sustainable world as a global leader in Social Innovation Business※※ Business that realizes social innovations through solutions and services that apply Hitachi’s advanced digital technologies© Hitachi, Ltd. 2021. All rights reserved.

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3 Environmental Vision and Long-term Environmental Targets(set first in 2016, updated in 2021)

Aiming to achieve carbon neutrality by FY2050 through the value chain

Appointment of Chief Environmental Officer(CEnO), Deputy CEnO
© Hitachi, Ltd. 2021. All rights reserved.

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4 Hitachi’s activities towards a Decarbonized Society (1)CO2 and GHG emissions and breakdown through the value chain (FY2020)

Ratio of CO2 Emissions at each stage of Hitachi value chain© Hitachi, Ltd. 2021. All rights reserved.

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5 Hitachi’s activities towards a Decarbonized Society (2)https://www.hitachi.com/New/cnews/month/2021/09/210913.html© Hitachi, Ltd. 2021. All rights reserved.

56 CO2 emission reduction at business sites
Hitachi will become “CN” by 2030 in global operation (factories and offices)
1) Action--

Global best practice deployment to minimize
factory energy consumption
Pool purchasing of RE by region to minimize
cost
Minimize requirement of carbon creditpurchase2) Investment-84B¥ for 10 years

3) Incentive-

Introduction of Executive pay link toEnvironmental performance from FY2021
Strengthening of “Hitachi Internal Carbon
Pricing”, introduced from FY2019
https://www.hitachi.com/New/cnews/month/2021/02/210225/
20210225_01_env_presentation_en.pdf© Hitachi, Ltd. 2021. All rights reserved.

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7 Hitachi Internal Carbon Pricing (HICP)•

ICP is a mechanism that promotes the CO2 reduction through organizational activities by
having the organization price to its own carbon emissions and reflect them in management
decision-making.
HICP was introduced with the aim of promoting capital investment to reduce CO2 emissions
by setting a virtual price for the reduced CO2 emissions and raising the investment priority.
- Set internal carbon price- Set a policy to incorporate the effects of CO2 reduction
into capital investment decisions

Evaluate by adding cost reduction effect of energy
consumption reduction and the monetary effect of CO2
reduction through investments
Increase the priority of capital investment reducing CO2and decide investment

Renewable Energy

High-efficient equipment

Investment effect in monetary terms•

Monetaryeffect by
CO2
reduction
Cost
reductioneffect byenergyreduction

Cost
reductioneffect byenergyreduction

Beforeintroducing
HICP
framework

After
introducing
HICP
framework

Total effect at
investment
decision© Hitachi, Ltd. 2021. All rights reserved.

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9 Achievement and strengthening of Hitachi Internal Carbon Pricing
Introducing HICP from 2019
- CO2 price : ¥5000/ton-CO2 based on global CO2 price outlook- Evaluation period : capital investment payback years
2019: related investment 260M¥, reduced CO2 1356ton/year
2020: related investment 250M¥, reduced CO2 447ton/year
Setting “Hitachi Caron Neutrality 2030” at Business Sites in 2020and planning the roadmap(investment, RE purchase, etc.) to 2030
Strengthening HICP from 2021
- CO2 price : ¥14000/ton-CO2 based on CO2 price increase outlook and in-house survey- Evaluation period : equipment operating years© Hitachi, Ltd. 2021. All rights reserved.

89 Realizing a Decarbonized Society through our Business© Hitachi, Ltd. 2021. All rights reserved.

9Latest Reports
Hitachi Integrated Report 2021
https://www.hitachi.com/IR-e/library/integrated/2021/index.html

Hitachi Sustainability Report 2021
https://www.hitachi.com/sustainability/download/index.html© Hitachi, Ltd. 2021. All rights reserved.

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END
Activities of Hitachi Group on climate change

Jan/27/2022

Kazunori Takahashi
Deputy General Manager, Sustainability Promotion Division
Hitachi, Ltd.

© Hitachi, Ltd. 2021. All rights reserved.

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