Engaging with Climate-Related Risks and Opportunities
Hitachi sees climate change risks and opportunities as important management issues. One governancemechanism that we established to address such risks and opportunities is the Executive Sustainability
Committee, chaired by Hitachi’s President & CEO, with other top executives serving as committee
members. The committee develops business strategies to minimize risks and maximize opportunities
from climate change in line with relevant global regulations and policy trends.
In 2017, the Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial
Stability Board in response to a request from the G20 Meeting of Finance Ministers and Central Bank
Governors, published its recommendations seeking corporate disclosures of information aboutclimate-related risks and opportunities. In June 2018, Hitachi announced its endorsement of the TCFD
and is preparing its information disclosure based on its recommendations. As regards climate-relatedrisks and opportunities, Hitachi is reviewing its risks in two categories, namely, (1) risks related to thetransition to a low-carbon economy, and (2) risks related to the physical impact of climate change inaccordance with the categories outlined in the new global TCFD recommendations. In terms ofopportunities, we are positioning our contributions to the creation of a low-carbon society throughenhanced energy-saving features of our products and services as a major opportunity, and are
discussing how we can further expand it.

Risks in Transitioning to a Low-Carbon Economy

Market and Reputation

Policy and Legal

A company’s approach to climate change issues
influences stakeholders’ evaluations, and changes tomarket values, such as placing great importance on
climate change countermeasures, affects customers’
choices of products and services. This may pose arisk to business continuity. Hitachi upholds long-term
environmental targets of reducing CO 2 emissions
throughout its value chain by 50% in fiscal 2030 and 80%
in fiscal 2050 compared to fiscal 2010 levels. Measures toattain these goals include investing in new facilities andequipment with higher energy efficiency and targeting greater
efficiency in production through digitalization.

Carbon taxes, energy consumption taxes, emissions trading
systems, and other measures may be newly introduced or
further strengthened, representing risks impacting directly on
management costs in addition to those incurred in complying
with the environmental regulations and policies of countries
and regions around the world.
To mitigate such risks, we have been reducing or minimizing
cost burdens by enhancing production efficiency andintroducing energy-saving measures. In fiscal 2017, ourenergy-saving investments totaled approximately 5.4 billion
yen. Should our products fail to meet energy-efficiency
standards and regulations, we will risk losing salesopportunities. In addition to strictly complying with existing
standards and regulations, we will always endeavor to keep
abreast of trends in laws and regulations and participate in theplanning of new policies.

TechnologyTo reduce CO 2 emissions caused by the use of ourproducts and services by our customers, which make up asignificant share of emissions in the value chain, we need newtechnology to achieve further energy-saving in our products
and services.
Therefore, by applying Environmentally Conscious Design
Assessments in the design and development stages of Hitachi
products and services, we assess various environmental
aspects at each stage of the product life cycle and strive tominimize environmental impact. In addition, by combining
Hitachi’s longstanding expertise in a wide range of social
infrastructure technologies with OT (operational technology)
and IT, we can provide optimal solutions that lead to thecreation of new business opportunities.
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Risks Related to the Physical Impacts of
Climate Change
Acute and Chronic
Climate-related physical risks include acute risks, such asincreased severity of typhoons and floods, and chronic risks,
including climate patterns that may cause the sea level to riseand chronic heat waves. Hitachi has a worldwide businesspresence and believes that disasters due to weather
phenomena attributed to climate change, such as increasingly
bigger typhoons and torrential rainfall, pose a risk tobusiness continuity.
In order to minimize these risks, we take into considerationsuch factors as location and the possibility of damage
from flooding when setting up a new plant or deciding on
the deployment of equipment. We also use the HitachiGroup Guidelines for Developing Business Continuity Plans
that outline measures to be taken in times of disaster tomitigate risks.

Products, Services, and Markets

Resource Efficiency

Products and services featuring innovative, energy-saving
technology that can contribute to the mitigation andadaptation of climate change are viewed as having thepotential to increase market value and revenue. Many of ourproducts use energy, so we must enhance the efficiency ofour products and services and facilitate low carbonization inorder to contribute to resolving the issue of climate change.
To this end, we are developing ultra-efficient products andlow-carbon energy, as well as encouraging their use. We arealso promoting the development of innovative devices andmaterials that contribute to reducing the environmental
burden. In fiscal 2017, Hitachi’s total investment in R&D was
332.9 billion yen, including sizable spending to reduce theenvironmental burden.
A company’s approach to climate change issues influences
stakeholders’ evaluations and affects customers’ choice ofproducts and services. Hitachi not only meets the required
standards and regulations for the energy efficiency of its
products, but also develops and provides energy-saving
products and services that go beyond the prescribedstandards, thereby increasing opportunities to be chosen
by customers.

Hitachi is promoting the efficient use of resources by reducing
waste, recycling, and undertaking other measures. Also, forthe efficient and sustainable use of natural resources, we arepromoting efforts to minimize the amount of natural resources
we use through improvements in production processes andresource-conserving designs.

Energy Source
Hitachi proactively uses renewable energy for ourfactories and offices. In our factories, we are able toefficiently use the electricity supplied from photovoltaic
power generation facilities, despite fluctuations in theamount of power generated, by monitoring and controllingenergy usage on production lines and by using storage
batteries. Also, we are promoting the adoption of renewableenergy credits and the expanded deployment of internalcarbon pricing and the self-consumption solar power
generation. In our offices, too, we are enhancing the efficiencyof lighting and air conditioning, as well as visualizing energy
usage and optimizing the amount of energy used in thebuilding as a whole through Building and Energy Management
Systems (BEMS).* In our business operations, we create new
business opportunities, such as by actively providing
renewable energy from wind power generation systems.
* BEMS aim to optimize the internal environment of a building and its
energy efficiency.

Resilience
We have devised a plan for vital functions to be maintained
through the use of renewable energy and storage batteries if
a power outage occurs in any of Hitachi’s main factories.
In our business operations, we are providing disasterprevention solutions to help various countries and regions deal
with the rise in natural disasters. Hitachi uses sophisticated
IT developed over the years to analyze and evaluate data
pertaining to people’s daily lives, meteorological and othernatural trends, and the operation of social infrastructure, inpromoting the provision of solutions conducive to responding
to climate change.

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Foundation for Value Creation

Climate-Related Opportunities