Compliance

We carry out our business not only in full compliance with legal requirements but also in ways thatensure socially responsible conduct. Spreading understanding of this among all Hitachi employees is afundamental management issue. As economic activity becomes increasingly borderless, there is a
growing need for steps to eradicate bribery, corruption, and other illegal behavior while taking into
consideration the characteristics of the countries and regions where we operate.
As a global company, we have put in place and expanded a coherent compliance structure acrossthe entire Hitachi Group.

Sharing Codes of Conduct and ComplianceApproaches Throughout the Group
Ensuring Awareness of the Hitachi Group Codesof Conduct
Hitachi, Ltd. is a pioneer in developing business ethics. Thecompany formulated the Hitachi, Ltd. Standards of Corporate
Conduct in 1983, followed by the Hitachi Group Codes ofConduct in 2010 that the entire Group pledges to uphold.
The Hitachi Group Codes of Conduct are available in 21
languages and shared among Hitachi Group employees
throughout the world. In addition, an e-learning tool has been
made available in Japanese and nine other languages, suchas English and Chinese, showing appropriate behavior andpresenting specific examples for use.
In April 2018, we revised the Hitachi Group Codes ofConduct based on our philosophy that corporate activities
should meet the needs of the times, such as the SDGs,
toward a sustainable society, human rights and building awork environment, and various types of crisis management.
Hitachi Group Codes of Conduct
http://www.hitachi.com/corporate/about/conduct/index.html

Enhancing Our Compliance Framework
In 2016, Hitachi reviewed compliance regulations andguidelines that had been set independently relating to such
issues as competition law and the prevention of transactions
with antisocial groups as well as bribery and corruption.
These compliance regulations and guidelines have beenreorganized into the Hitachi Global Compliance Program as a
newly integrated system of rules under the Hitachi Group
Codes of Conduct.
To implement this program, we have appointed a senior
executive as the head of risk management for the entire
Hitachi Group, to supervise management-level risk management
executives from business units and key Group companies.
Under this system, policies and measures are shared throughthe Compliance Management Conference, composed ofthese risk management executives. Each executive is
assisted by a compliance manager who implements practicalsupport measures.

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Compliance heads have been appointed in 11 regions to
support Group companies outside Japan, with responsibility
for implementing education and sharing information as well as
arranging consultation services with outside attorneys andother experts.
The internal audit section regularly conducts Group-wide
reviews to verify compliance status across Group operations.
Composed of outside experts, the Advisory Committee
has also been created to provide new compliance insights forproactive implementation within the Group.

Compliance Whistleblowing System
Hitachi has instituted a Group-wide whistleblowing system
under which reports go directly to the Company’s ComplianceDepartment or to an outside attorney. This system can beused not only by Hitachi employees, but also by temporary
staff and business partners. Fiscal 2017 saw 360 reports
throughout the Group. In each case, the relevant facts wereinvestigated thoroughly and the results were provided towhoever made the initial report. Appropriate measures weretaken, including remedial action where necessary. Goingforward, we will continue to maintain and review the system,
prioritizing the protection of whistleblowers.
In addition, we have implemented the Channel to theBoard of Directors system to allow employees to directly
report problems anonymously to Hitachi directors in cases
where they see any illegality or extreme inappropriateness inbusiness conduct by management.

Prevention of Antisocial Transactions
To prevent any such relationships, our commitment never toengage in any kind of transactions with organized crimegroups and other antisocial forces is laid out clearly in theHitachi Group Codes of Conduct. As part of this policystance, we insert antisocial force rejection clauses in ourcontracts with suppliers and business partners and conduct
regular compliance checks. In addition, we try to eliminate any
approaches from antisocial forces in partnership with thepolice and other external specialist institutions.

The basis of our export control policy is the statement in theHitachi Group Codes of Conduct that: “We will help maintaininternational peace and security through compliance with allapplicable laws and regulations concerning import and export,and will operate appropriately based on internal rules andprocedures.” We instituted the Corporate Regulations
concerning Security Export Controls based on this policy
to ensure strict export controls are maintained throughout
the Hitachi Group, including all domestic and overseas
Group companies.
At present, we host training sessions and workshops onexport controls for all domestic and overseas Group companies,in addition to the annual implementation of an e-learning
program in Japanese, English, and Chinese.

Measures to Prevent Bribery and Corrupt Practices
In 2008, Hitachi established rules against bribery and corruption
for the Hitachi Global Compliance Program, along with guidelines
delineating specific spending thresholds for entertainment,gifts, and other arrangements. In 2016, we introduced arevised policy to explicitly forbid any facilitation payments forroutine governmental action, and to clarify due diligenceprocedures for business partners. To ensure awareness ofthese rules and policies, we developed a global e-learning
program on preventing bribery and corrupt practices, making it
available in nine languages—including Japanese, English, andChinese—for use by Group companies worldwide.
As the risks of bribery and corruption vary according tothe nature of the business, the industry sector, the region ofbusiness, the counterparty, and other conditions, since fiscal
2013 Hitachi has conducted surveys of Group companies
outside Japan (about 500 companies in fiscal 2017) concerningpotential risk scenarios relating to bribery and corruption.
In fiscal 2017, there were no incidents in which Hitachi
violated or was penalized under laws or regulations regarding
bribery or corrupt practices.

in 2016 and earlier. To prevent any recurrence, the Groupcompany involved has already appointed a compliance headin each unit to conduct regular reviews of participating businessassociations and to promote education through sharing casesof violations within and outside Japan.
Eliminating competition law violations is among our top
priorities for regaining trust. Going forward, we will continue
our efforts to prevent such incidents recurring.

Quality Assurance Initiatives
Based on the Corporate Mission of ‘contributing to society
through the development of superior, original technology andproducts,’ Hitachi’s manufacturing ethos (monozukuri) places
top priority on quality and reliability. To achieve this, we areworking to strengthen quality assurance from the standpointsof organization and management, technology, and humanresources in every process—from planning and development
to design, manufacturing, delivery, and maintenance.
From fiscal 2016, to achieve the goals of our 2018 Mid-termManagement Plan, we have been steadily working to improve
service quality and product reliability, and to reduce losses
arising from quality issues based on better quality management.

Intensive Risk Assessment
Hitachi is committed to the delivery of safe products andservices. We verify safety at every step, from development
and production to sales and maintenance, and conduct risk
assessments from a wide perspective in collaboration withrelated business units and research laboratories.

Handling Product Accidents
When a product accident occurs, the division responsible acts
swiftly to resolve the problem. For a severe accident, we report togovernment agencies in line with legal requirements and publish
the incident information on our website and through otherchannels. Our systems are designed to ensure that appropriate
action is taken swiftly at all companies throughout the Group.

Preventing Violations of Fair Competition Laws

Global Quality Assurance Personnel Training in Asia

Hitachi engages in business based on the principles ofconformance with the law and business ethics, and fair andopen competition. For this reason, the Hitachi Global
Compliance Program incorporates rules concerning competition
law as well as related business standards and guidelines. In
2017, to enhance awareness of ethical principles and practices
globally, we created a global version of our standards regarding
contact with competitors based on the standards originallyprepared for use in Japan.
Fiscal 2017 saw one incident where one of our Group
companies was sanctioned and fined by the European
Commission. This related to a cartel in the capacitor businessthat had already been identified by Japanese and US authorities

We undertake personnel training as part of maintaining
Hitachi’s global quality standards. In China and Thailand,
where many of the Group’s manufacturing sites areconcentrated, we organize educational seminars aimed atimproving our quality management technology. We also hostconferences for quality assurance managers to raise quality
awareness regarding Hitachi’s monozukuri craftsmanship, andto share information and best practices.

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Foundation for Value Creation

Thorough Export Controls