Hitachi Integrated Report 2022

Introduction

Addressing Risks and Opportunities

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Sustainability

Occupational Health and Safety

Corporate Governance

Responsibility in the Value Chain

Quality Assurance

Data

75

Business Ethics and Compliance

Addressing Risks and Opportunities
With the rapid advance of digitalization and complex developments in the political and economic landscape globally, the business environment is changing day by day. Hitachi monitors and analyzes
this business environment, conducts risk management in terms of both responding to risks that should be anticipated and opportunities for further growth in light of social issues, Hitachi’s competitive
advantage and management resources, and strives to create revenue opportunities while controlling risks.

Strengthening of the Risk Management Structure and Its Aims
In April 2022, a Risk Management Meeting that deliberates important matters related to Hitachi
management was established within the Senior Executive Committee. Chaired by the CEO with
the Chief Risk Management Officer (CRMO) as vice chair, the meeting discusses and makes
decisions on important matters relating to company-wide risks. By centrally managing the various
risks faced by Hitachi, which has operations around the world, we are working to achieve a solidmanagement foundation that is linked to our growth strategy.
Six risk-specific working groups have been set up under the Risk Management Meeting,investment risks, business risks, crisis management, compliance, group governance and regionalrisks. Each working group coordinates Group corporate functions across the organization while
conducting activities to mitigate the respective risks.

Risk Management Structure
Senior Executive Committee
Risk Management Meeting
CRMO• Formation of working groups for each risk category• Cross-utilize corporate functions

Business
Risks

CrisisManagement

ComplianceGroup
GovernanceRegional
Risks

Promotion Organization
Investment Strategy
Committee OfficeCompliance
Division

Corporate Quality
Assurance Group

Legal
Division

Safety and Health Corporate Sales & Investment Management
DivisionManagement Division Marketing Group
Risk Management Sustainability Promotion
Division
Division

Yoshihiko Kawamura
Executive Vice President and Executive Officer, CFO,
CRMO

Selecting Top Risks based on Global Risk Trends

Risk Categories / Working Groups
Investment
Risks

For example, the Business Risks Working
Group discusses risks and responses in
the global supply chain. Since control ofconsolidated management is important for
Hitachi as a group made up of more than800 companies, we must also develop
plans to disseminate and manage guidelines
and policies. This is an area the Group
Governance Working Group will discuss
going forward. Addressing regional risks
in an effort to review the roles of local
subsidiaries and achieve overall optimization
at global sites, we will ensure that Hitachi’s
assets are utilized effectively.
Initiatives about investment risks, crisis
management and compliance are introducedon the following pages.

FinanceGroup

In the Mid-term Management Plan 2024, we are utilizing knowledge from inside and outside thegroup to collect and analyze information on the external environment surrounding Hitachi andselect top risks through the Risk Management Meeting.
Specifically, we have organized major risks under classifications such as disasters, accidents
and epidemic; geopolitics and geoeconomics; economics, finance and markets; sustainability;
investment and orders for projects; and operations. We then assess and narrow down the risks
from the perspectives of the nature of risk events, expected time period, likelihood of occurrence
and seriousness when occurring, and select the top risks, such as the risk of a major natural
disaster in Japan that may significantly impact Hitachi’s business. The six working groups
consider and implement policies to respond to each of the top risks.

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Sustainability

Occupational Health and Safety

Corporate Governance

Responsibility in the Value Chain

Quality Assurance

Data

76

Business Ethics and Compliance

Addressing Investment Risks and Opportunities

Quantitative Understanding of Risks

To ascertain and appropriately respond to risks and opportunities related to investments (e.g., M&A, sale of assets, orders for projects), Hitachi has establisheda decision-making framework based on the following flowchart. Decision-making regarding individual investments (e.g., execution, business plan changes) isdelegated from the Board of Directors as the highest level body to the head office Senior Executive Committee (which generally meets twice a month) or the
relevant sector or business unit, based on the size and specifics of the matter. This facilitates flexible and appropriate decision-making. For important mattersthat fall under deliberation by the head office Senior Executive Committee, the Investment Strategy Committee working as its advisory body checks the risks,
response measures for the matter from economic value perspectives such as profitability and cash flow as well as in terms of the impact on social value andenvironmental value. Following deliberation, the Investment Strategy Committee delivers a report that includes approval or rejection recommendations to the
Senior Executive Committee, of which the CEO is also a member.
After executing an investment, Hitachi regularly monitors the achievement of business objectives and the plan while taking into account changes to the riskclimate including the external environment. By generally having monitoring performed by the relevant business units, which are accountable for profits andclosely associated with field operations, flexibility can be maintained, while the head office can still become involved depending on the importance of the matter.
For changes to business plans, business withdrawals, asset sales and other matters related to important investment targets, the head office Senior Executive
Committee engages in similar deliberations to the initial investment stage. For investment targets for which business is not proceeding as planned, a frameworkhas been established to deliberate the merits of continuing a business, including the prospects of withdrawal, in an effort to enhance capital efficiency.

Hitachi calculates expected maximum risks (Value at Risk)
assumed by statistical methods according to the type of
assets held on the group’s consolidated balance sheet.
We avoid missing out on growth opportunities by visualizing thecapacity for growth investment, etc., considering consolidated
net assets and other factors. We also engage in monitoringand hold discussions through the Risk Management Meeting
to ensure that risks are not excessively unbalanced compared
to Hitachi’s consolidated financial strength.
We also quantitatively analyze and understand the state ofrisks and profitability on a regional and per-sector basis.

Conceptual Diagram of the Decision-Making Flow
When an investment is executed
Resolution by the
Board of Directors(particularly important matters)

Board of Directors

After an investment is executed

Chairperson: CRMO

Approval by the CEO(important matters)

ReportHead OfficeSenior Executive Committee

A committee whose members
are from related corporate
divisions such as the
Finance Group
Clarifies the risk factors
for a proposed matter,
identifies important discussion
points, and issues a report that
includes approval or rejection

Approval by the BU
CEO or executive officer
in charge of the sector

Business Unit (BU)
Senior Executive Committee

Business withdrawal,
sale or continuation

Investment Strategy
Committee
ReportHead OfficeSenior Executive Committee

Decision by the BU
to withdraw from, divestiture orcontinue with the business
Conflicts withspecified conditions

Monitoring by thehead office

Monitoring by the BU

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Sustainability

Occupational Health and Safety

Responsibility in the Value Chain

Based on the selected top risks, the Crisis Management Working
Group promotes the development of response measures,
including crisis management structures, for each risk. By making
preparations under normal conditions, we have put systems inplace to respond swiftly in the event a risk does materialize.

The Compliance Working Group is made up of members fromthe Compliance Division, Sustainability Promotion Division,
Corporate Quality Assurance Group and Safety and HealthManagement Division.
For major compliance-related risks falling under business ethics
and compliance, environmental compliance, quality compliance,and health and safety (fatal and serious incidents, etc.),
information on the measures implemented by each department
under regular conditions (development of regulations, training,monitoring, audits, etc.) and the response methods implemented
in the event of an emergency (communication with internal andexternal stakeholders including top management when a majorrisk has materialized, etc.) are linked and shared amongst
member of the Working Group as management methods forthe different risk areas. By pursuing a greater level of global
collaboration, we will strive to raise the level of risk managementin each field and mitigate various risks.

SeverityCompliance Initiatives

Potential risks

Management of top risks
Crisis Management
Working Group
Response when acrisis occurs• Establishment of a task force• Consolidation and centralizationof information• Initial response, implementationof abatement measures

Various risks

Responding to risks
other than top risks• Ongoing monitoring• Consideration of including arisk in top risks

Preparations under normal conditions• Preparing response and operational steps based on crisis
scenarios• Conducting drills, revising procedures, responding to issues• Reconfirming business continuity plans

Quality Assurance

Data

77

Business Ethics and Compliance

Safety-First Risk Management

Crisis Management Initiatives

Occurrenceof crisis

Corporate GovernanceCompliance
Division

Sustainability Promotion
Division

Business Ethics
and Compliance

Environmental Compliance
Information Sharing

Consideration of Preventive Measuresand Early Response
Enhancement of Collaboration

Safety and Health Management
Division

Corporate Quality AssuranceGroup

Health and Safety

Quality ComplianceThree Hitachi Group companies, namely GlobalLogic,
Hitachi Energy and Hitachi Vantara have sites in
Ukraine. The safety and health of our employees andtheir families is the highest priority for the Hitachi Group.
GlobalLogic, which has an engineering site in Ukraine,
has approximately 7,500 employees. Based on thebusiness continuity plan, top priority has been given
to the safety of the site’s employees and their families,
and measures were taken to evacuate them to safe
locations in Ukraine or out of the country. The company
is now returning to normal operations with an operating
rate of 96% and is working to maintain business
continuity while ensuring safety (as of May 31, 2022).
For additional details regarding business and other risks,
please see page 27 of the 153rd Securities Report.
https://www.hitachi.com/IR-e/library/stock/hit_sr_fy2021_4_en.pdf

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Sustainability

Occupational Health and Safety

Responding to Climate Change Risks and Opportunities

Corporate Governance

Responsibility in the Value Chain

Quality Assurance

Data

78

Business Ethics and Compliance

See page 49 of our Sustainability Report for detailed information.
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2022.pdf

Climate-related Financial Information Disclosure (Based on TCFD-based Recommendations)

In June 2018, Hitachi announced its endorsement of the recommendations by the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD). The following contains
key climate-related financial information in line with the TCFD’s recommendations.

Governance
Hitachi sees climate change and other environmental issues as important management issues.
Important matters concerning the group’s sustainability strategy, including climate change
measures, are discussed and decided on by the Senior Executive Committee and are presented
to the Board of Directors according to necessity.
Hitachi’s long-term environmental targets called Environmental Innovation 2050, which include
reducing CO2 emissions, were reviewed and approved by the Board of Directors when they were
established and revised in fiscal 2021, and then shared with the public. In addition, the Audit

Committee of independent directors conducts an audit of sustainability-related operations oncea year, and Hitachi executive officers report on climate-related issues to the committee during
the audit.
Additionally, as an external initiative, we have participated in the TCFD Consortium, which holds
discussions on efforts to link companies’ effective information disclosure and the information
they disclose with appropriate investment decisions by financial institutions and others, as a
Steering Committee member and contributed to their guidance formulation.

Strategy
We are responding to climate change by fulfilling our responsibilities as a global company byhelping to achieve a decarbonized society and established long-term environmental targets
called Hitachi Environmental Innovation 2050―as a transition plan to a decarbonized society―in fiscal 2016 under our Environmental Vision.
Moreover, in order to help limit the global temperature rise to 1.5°C as recommended in theIntergovernmental Panel on Climate Change (IPCC) Global Warming of 1.5°C report, in fiscal
2020 we announced a new and more aggressive target to achieve carbon neutrality at Hitachi
factories and offices by fiscal 2030. Then in fiscal 2021 we also announced that we would seek
to achieve carbon neutrality in our value chain by fiscal 2050.

Climate-related Risks
Climate-related business risks are considered based on TCFD classifications for a number ofscenarios, such as (1) risks related to the transition to a decarbonized economy mainly occurringon the way to the 1.5°C scenario*, and (2) risks related to the physical impact of climate changethat would materialize if the 4°C scenario* was reached due to global CO2 emission reduction
targets not being met. In considering climate change risks and opportunities, our assessments
are categorized according to time span, namely short term (three years from fiscal 2022 to fiscal
2024), medium term (up to fiscal 2030), and long term (up to fiscal 2050).
* The scenarios for rising temperature referenced include the Fifth Assessment Report (released in 2014) and theSpecial Report on Global Warming of 1.5°C (released in 2018), both from the Intergovernmental Panel on Climate
Change (IPCC). The 1.5°C scenario is a scenario under which, at the end of the 21st century, the increase in global
temperatures from preindustrial levels is kept below 1.5°C. The 4°C scenario is a scenario under which global
temperatures rise approximately 4°C compared to preindustrial levels.

Climate-related Opportunities
To achieve the CO2 reduction targets set forth in our long-term environmental targets and Midterm Management Plan 2024, it is important not only to decarbonize our business sites (factories
and offices) but also to reduce CO2 emissions from the use of products and services sold, which
account for a large portion of emissions in the entire value chain. Developing and providing
products and services that emit zero or very little CO2 during their use will help meet society’s
demands for reduced emissions. This represents a business opportunity for us in the short,medium, and long term and constitutes a major pillar of the Social Innovation Business that weare promoting as a management strategy.

Risks and Opportunities for Individual Businesses based on Climate Change–
related Scenarios, and Hitachi’s Response
Hitachi operates a broad array of businesses with each business having its own set of risks andopportunities. We therefore selected businesses that have a relatively high likelihood of being
affected by climate change and conducted scenario analyses on them and considered thebusiness environment and our response under the 1.5°C and 4°C scenarios. Based on a review,Hitachi did not find any significant climate change–related risks that were difficult to respond to.
Hitachi believes that we can adapt to a decarbonized society by switching the electricity usedin many businesses to non-fossil-fuel–derived energy. We will closely monitor market trends andwill develop businesses flexibly and strategically.

Hitachi Integrated Report 2022

Introduction

Addressing Risks and Opportunities

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Sustainability

Occupational Health and Safety

Corporate Governance

Responsibility in the Value Chain

Data

Quality Assurance

79

Business Ethics and Compliance

The Business Environment and Responses under the 1.5°C and 4°C Scenarios (excerpts)
Target businesses

The businessenvironment
under the 1.5°C
scenario

The businessenvironment
under the 4°C
scenario

Responses tofuture businessrisks(Business
opportunities)

Railway systems

Power generation and power grids

IT systems

Industrial equipment

Automotive systems

Business environment
Global demand for transport systems that
emit less CO2 per distance covered will growwith tighter CO2 emission regulations in eachcountry and region.

Business environment
Global demand for electricity generated fromrenewable energy, nuclear power, and othernon-fossil sources will grow with tighter CO2
emission regulations in each country andregion. Power networks will increasingly
accommodate natural energy produced
through distributed generation.

Business environment
Demand for energy-saving, high-efficiency IT
solutions will grow with tighter CO2 emission
regulations in each country and region. There
will also be increased demand for data centersand data analysis systems to accommodate
the expansion of financial services such as
investments and loans for decarbonization
businesses, green bond issues, and datautilization businesses.

Business environment
Global demand for energy-saving industrial
equipment will grow with tighter CO2 emission
regulations in each country and region.

Business environment
Electric vehicles will rapidly spread with tighter
laws and regulations on fuel efficiency andenvironmental standards, and increases infossil fuel prices. Markets for alternative nonfossil technologies like hydrogen and biofuel
vehicles will expand. The number of countries
and regions with near zero sales of internal
combustion engine vehicles will increase.

Business environment
Demand for electric-powered transport will
gradually increase even without tighter energy
regulations. Damage from typhoons, floods,
and other natural disasters caused by climatechange will rise sharply.

Business environment
The cost competitiveness of non-fossil energy
will increase, and demand for renewable,
nuclear, and other non-fossil energy will
increase as the expansion of energy
consumption pushes up the price of fossil
fuels. Natural disasters caused by climatechange will rise sharply.

Business environment
Demand for new, high-efficiency technology
will expand as multiplex IT systems in
response to natural disaster BCPs will resultin increased energy consumption. Demand
will also grow for social and public systems to
reduce damage from natural disasters.

Business environment
Typhoons, floods, and other natural disasters
caused by climate change will rise sharply.

Business environment
Fuel efficiency laws and regulations will remainlax globally, and internal combustion engine
vehicles will remain a major mode of transport.
The modal shift will be slow, as conventional
automobiles and motorcycles will remain
predominant. Typhoons, floods, and othernatural disasters caused by climate change
will rise sharply.

Responses to business risks under the
1.5°C and 4°C scenarios
Continue to strengthen the railway businessas global demand for railways will increase
under either scenario.

Responses to business risks under the
1.5°C and 4°C scenarios
Continue to enhance the response to relevantmarkets in view of expected higher demand
for non-fossil energy under either scenario.

Responses to business risks under the
1.5°C and 4°C scenarios
Continue to develop innovative digitaltechnologies, nurture necessary humancapital, and enhance digital service solutions
that generate new value in view of the
expected growth in demand for digital services
and the subsequent market expansion undereither scenario.

Responses to business risks under the
1.5°C and 4°C scenarios
Under either scenario, continue developing
energy-saving, high-efficiency products thatuse IoT technology. Focus particularly on
connected products with communication
features. Miniaturized, high-efficiency, low-loss
products can also help reduce CO2 emissions.

Responses to business risks under the
1.5°C scenario
Promote R&D of electrification technology
and other alternative technologies to enhance
the response to new markets such as electricvehicles.

Notes:
1 This table is a partial extract. Please check the Hitachi Sustainability Report 2022 for more details including risks and opportunities under each scenario and financial information.
2 These scenario analyses are not future projections, but an approach used to consider Hitachiʼs climate change resilience. Future outcomes may differ from each scenario.

Risk Management

Metrics and Targets

Hitachi evaluates and manages climate-related risks for each business
unit and group company as part of a process of assessing risks andopportunities. The results of these evaluations are summarized by the
Hitachi Sustainability Promotion Division, after which the Senior Executive
Committee, and if necessary, the Board of Directors, deliberates the risks
and opportunities perceived as being particularly important for the groupas a whole to make decisions.

Hitachi defines its medium- and long-term metrics and targets in Hitachi Environmental Innovation 2050 and implements
detailed management of short-term metrics and targets in its Environmental Action Plan, which is updated every three years.
Metrics for climate change mitigation and adaptation use total CO2 emissions and the reduction rate in CO2 emissions perunit. Hitachi also sets and manages a metric of its contributions to CO2 reductions, which help achieve a comprehensively
decarbonized society. Hitachi promotes efforts to reduce CO2 emissions at its own business sites (factories and offices)using such as the Hitachi Internal Carbon Pricing (HICP) system, which that incentivizes capital expenditures that contributeto the reduction of CO2 emissions.
Additionally, to accelerate the creation of environmental value to achieve long-term environmental targets, in fiscal 2021
Hitachi introduced the executive officer compensation scheme incorporating assessments that take environmental value
into account. Hitachi also plans to spend approximately 500 billion yen as an R&D investment to create green value throughthe switching of energy sources, vehicle electrification, and so on over the next three years from now to fiscal 2024.

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Promoting Information Security
Hitachi places “Ensuring cyber security” as one of the sub material topics under our material
topic of “Safety and Security.” To minimize information leaks due to incidents such as cyberattacks and risks that would interfere with business continuity such as operational shutdowns,
Hitachi addresses information security from the perspectives of both value creation and risk
management. Hitachi has established an Information Security Policy based on cyber security risk
management, which is promoted under a structure where the Information Security Committee,
chaired by the Chief Information Security Officer (CISO), determines action policies and various
measures regarding information security and the protection of personal information.

Information Security Management
Hitachi has established the rules for information security in compliance with the ISO/IEC 27001
international standard and furthermore enhanced our rules with US government standard SP800171. In light of the recent severe cyber attacks, the rules have been rolled out globally by Hitachi,Ltd., and the headquarters of each group company. Support through regional headquarters and theuse of shared security services are also actively promoted. Policies and various measures determinedby the Information Security Committee are thoroughly enforced at each workplace through theInformation Security Promotion Council and other bodies. While Hitachi promotes new working styles
through telework, due to the threat posed by the risk of vulnerabilities in the security awareness of
employees, Hitachi has been conducting employee-focused awareness raising activities in addition
to IT measures since fiscal 2020.
In addition, to detect global cyber attacks early on and respond to them swiftly, we conduct 24/7
security monitoring through a Security Operation Center (SOC), and employ an Incident Response
Team (IRT) that collects and spreads threat information, and responds to incidents. To deal with cyberattacks that are becoming more sophisticated year after year, we have stepped up cyber monitoring
efforts, such as the installation of Endpoint Detection and Response (EDR) systems to monitor theoperation of equipment, and the implementation of monitoring to protect authentication systems.

Preventing Information Leaks
Hitachi employs device encryption, thin clients, electronic document access control and revocation
software, ID management and access control through the development of authentication
infrastructure, email and website filtering systems and other measures. We have also strengthened
various IT measures including multi-layered defense against cyber attacks such as targeted emails.
Additionally, to prevent information leaks from procurement partners, Hitachi checks and audits thestatus of information security measures at its procurement sources based on its own standards
for information security requirements. Hitachi also provides procurement partners with businessinformation inspection tools installed in information equipment and security training materials, andasks that business information stored on personally owned information equipment be checked forand deleted.

Sustainability

Occupational Health and Safety

Corporate Governance

Responsibility in the Value Chain

Quality Assurance

Data

80

Business Ethics and Compliance

See page 184 of our Sustainability Report for detailed information.
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2022.pdf

Education on Information Security
Hitachi conducts e-learning on information security and personal information protection for
all officers and employees each year. In fiscal 2021, roughly 35,000 employees underwent
the training (at Hitachi, Ltd.), achieving a 100% participation rate (excluding those who could
not take the training due to leaves of absence, etc.). Hitachi prepares and promotes a wide
range of educational programs for different subjects and purposes. Training on targeted email
attacks and similar incidents includes actually sending simulated attack emails to employees
as “simulated target attack email drills” designed to raise sensitivity to security through theexperience of receiving such messages.

Thorough Information Security Audits and Inspections
Hitachi’s information security is implemented in accordance with the information security
management system PDCA cycle. Audits of personal information protection and information
security are conducted for all group companies and divisions yearly. A chief auditor appointed
by Hitachi’s CEO conducts audits from an independent standpoint to ensure the impartiality andindependence of auditors. Domestic group companies (169 companies*) conduct equivalent
audits to Hitachi, Ltd., while self-checks consistent with global standards are promoted atoverseas group companies. In addition, as workplace self-inspections, all divisions of Hitachi
conduct checks of personal information protection and information security operation each year.
In conjunction with these activities, each month checks are performed to confirm the operationof personal information protection measures with respect to 740 tasks that involve handling
important personal information (as of March 2022) as a way to regularly monitor the status ofthese activities. In addition, a dedicated team performs on-site assessments periodically andchecks vulnerabilities quarterly on the servers or other equipment that are exposed to the public.
The team works to mitigate security risks by checking for deviations from self-checks.
*Including voluntary submission from partners.

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Occupational Health and Safety

Establishing the Occupational Health and Safety Management System
The Hitachi Group Health and Safety Leaders Meeting is held and attended by health and safety
officers from each group company and representatives from each division. The members set
plans and objectives for Groupwide health and safety strategies, review ongoing measures toimprove occupational health and safety management system, and share the commitment fromtop management to make protecting the health and safety of employees their top priority. The
Audit Committee also audits the results of group health and safety activities, plans, and policies
every year. For critical health and safety issues, the status of occupational health and safety
management is reported at least once a year to the Senior Executive Committee and at meetingsof group company presidents.
In fiscal 2021, the Hitachi Group established Safety and Health Management Division that is
responsible for promotion of occupational health and safety within the group and is overseeing a
global management system. Under the division, the Hitachi Group has been continually working
to improve our health and safety management system in collaboration with health and safety
officers from each group company and representatives from each division.

Initiatives for Preventing Work-related Accidents
We have set goals of “zero fatal accidents and having lost-time accidents across group sites
worldwide compared to 2018” by fiscal 2021 but were unable to meet the goals. In the lightof this, we have set a new goal of “zero fatal accidents and halving the global accident ratecompared to 2021” by fiscal 2024. In fiscal 2021, we promoted the effective utilization of risk
assessments, the building and operation of a global health and safety management system,
training to promote autonomous health and safety practices, and improvement measuresutilizing IT and digital technologies. In addition, in the event of a fatal accident occurs at an
overseas group company, a safety assessment is conducted by a third-party organization, andimprovements are made such as strengthening the system, reviewing action plans, and raisingsafety awareness.
Although the total number of occupational accidents is declining, there are issues to work onsuch as improvement of the risky work environment and enforcement of the safety management

Corporate Governance

Responsibility in the Value Chain

81

Data

Quality Assurance

Business Ethics and Compliance

See page 111 of our Sustainability Report for detailed information.
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2022.pdf

Occupational Health and Safety
Hitachi places “Occupational safety” as one of the sub material topics under our material topic of“Business with Integrity.” “Health and Safety Always Comes First” is the basic principle underlining
the Hitachi Group Health and Safety Policy which is shared by all Hitachi Group companies, andreflects our commitment to develop a safe, secure, comfortable and healthy workplace free from
accidents. We share the belief that all work-related injuries and ill health can be prevented, andthat we are responsible for our own safety and health. We engage in practices to protect ourhealth and safety and endeavor to build a culture that promotes mutual awareness.

Sustainability

system including contractors and subcontractors. To address this, we are working to formulate
guidelines for safety management system common to the Hitachi Group and comprehensive
safety management evaluation methods that include contractors.

Initiatives to Improve Employee Health
Since the wellbeing of employees is essential to the sustainable growth of the Hitachi Group,
we are making every effort to develop workplace environments in which employees can worksafely without worrying about their physical and mental health. In fiscal 2020, new questions
about wellbeing were added to the Global Employee Survey that is conducted annually, and thequestions were expanded in fiscal 2021.
Additionally, in Japan we have steadily implemented hygiene and health measures, strengthened
mental health support in line with changes in working styles, and made thorough efforts toprevent lifestyle-related disease. In the medium to long term, we will carry out initiatives based on
a common hygiene policy after grasping the actual situations of occupational health measuresand identifying issues globally.

Measures to Prevent Infectious Disease
We have been vaccinating employees against hepatitis A, tetanus, cholera, etc., to support
infectious disease prevention during business travel outside Japan. In fiscal 2021, we asked that
employees always stay home if they have a fever or feel unwell relative to COVID-19. We also
urged the enforcement of preventive measures advocated by the government. The Hitachi Group
recommends that employees be vaccinated against COVID-19 from the perspective of preventing
infections and aggregation of the virus. In the workplace vaccinations implemented in Japan,
approximately 75,000 people were vaccinated, including employees and their families at some sites.

Hitachi Group Global Safety Statistics (rate of occurrence)*
100

Region
North America

80

Latin America
Europe

60

India

40

Asia

China
Oceania20

AfricaOverseas total

0

Japan

2017

2018

2019

2020

2021（Year）

Global total

(%)

2017

2018

2019

2020

2021

24.33
1.62
10.82
1.44
1.53
4.41
24.41
9.93
7.42
1.85
4.22

27.96
0.44
6.08
1.44
1.46
3.34
21.94
11.76
7.43
1.64
4.20

20.76
0.57
4.78
1.63
1.17
2.63
29.07
9.72
5.78
1.53
3.45

18.98
2.12
3.09
1.07
1.12
1.55
12.95
25.37
4.90
1.34
2.89

18.46
1.69
3.71
0.53
1.06
1.30
5.32
1.43
3.80
1.20
2.69

*Occurrence rate is the rate of workplace accidents per 1,000 directly contracted employees (including cases without lost workdays)

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Corporate Governance

Sustainability

Occupational Health and Safety

Responsibility in the Value Chain

82

Data

Quality Assurance

Business Ethics and Compliance

See page 123 and 132 of our Sustainability Report for detailed information.
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2022.pdf

Responsibility in the Value Chain
Hitachi places “Respect for human rights” as one of the sub material topics under our material
topic of “Business with Integrity.” Together with our procurement partners*1, we also promoteresponsible procurement including human rights considerations in the value chain. Additionally,
to ensure the stable supply of products and services, whenever possible we endeavor toascertain and mitigate risks in advance.

Status of Sustainable Procurement Measures*1 Hitachi normally refers to its suppliers (including vendors or providers) as “procurement partners” who build business
together on an equal footing.

*3 Sustainability monitoring in fiscal 2021 was conducted focusing on the assessment of risks related to human rights
and the environment.

Procurement
Procurement BCP and Framework

Respect for Human Rights
Human Rights Due Diligence Initiatives

We are working to enhance procurement BCPs across the group companies worldwide so thatthe occurrence of incidents*2 does not disrupt business and have a significant impact on society.

In the Hitachi Group Human Rights Policy, Hitachi commits to engaging in Human Rights Due
Diligence (HRDD), appropriately educating employees, and other activities.
Hitachi has placed the Chief Sustainability Officer in charge of groupwide human rights promotion,
while a project team established within the Hitachi, Ltd. headquarters for HRDD promotion plays acentral role in promotional activities based on interdepartmental cooperation, such as considering
HRDD promotion measures for the Hitachi Group and its procurement partners.
In addition, in fiscal 2020 we established the Hitachi Global Compliance Hotline, which consolidated
the general consultation and reporting systems for harassment and human rights issues at thebusiness sites of each business unit and group company. Going forward, Hitachi will work to makethe hotline widely known to employees.

*2 Incidents: Events that cause a disruption to business, including natural disasters such as major earthquakes

Sustainable Procurement and Framework
Hitachi instituted the Hitachi Group Global Procurement Code. It calls on group companies
and procurement partners to give due consideration to human rights, labor practices, safety,
ethics, quality, and security in the supply chain. Hitachi also established the Hitachi Group
Sustainable Procurement Guidelines and the Green Procurement Guidelines, which are a codeof conduct for procurement partners. We distribute them to approximately 30,000 procurement
partners. We also ask for compliance and continually explain the contents through sustainableprocurement seminars. Hitachi also conducts sustainability monitoring, where it evaluates andanalyzes the state of sustainability initiatives by procurement partners through surveys. In fiscal
2021, we focused on human rights and environmental risk assessment, and provided feedback
to the relevant procurement partners. Regarding the procurement of minerals, we establishedthe Hitachi Group’s Policy for a Responsible Supply Chain of Minerals, and pursue activities
consistent with international guidelines.
We established the Sustainable Procurement Conference and Sustainable Procurement Office infiscal 2021 to strengthen our sustainability activities.

Tackling Sustainable Procurement by Strengthening Global Partnerships
Hitachi has appointed procurement officers to oversee procurement activities locally in China,
the rest of Asia, Europe, and the Americas. The officers carry out activities such as sustainability
audits, sustainability monitoring, and sustainable procurement seminars for procurement
partners in their respective regions to strengthen sustainable procurement.

FY2017(Number of companies)
FY2018FY2019FY2020

FY2021271［Human rights］2,524＊3［Environment］708＊3

Sustainability Monitoring

131

345

291

Sustainability Audits

18

24

19

27

25

Sustainability Procurement Seminar for Suppliers

65

126

59

450

359

Initiatives to Deal with Child Labor and Forced LaborIn the Hitachi Group Codes of Conduct, Hitachi has made clear its stance of never tolerating child laborand forced labor internally or in its supply chain, and we work to thoroughly disseminate this stance amongprocurement partners. In March 2020, a report from the Australian Strategic Policy Institute indicated that
one of Hitachi’s procurement partners may be involved with forced labor of Uyghur people. In response,a third-party audit based on international standards was conducted to review the procurement partner’s
management systems and employee management in particular, but no issues regarding forced labor were
found. In fiscal 2021, we made groupwide efforts to address “forced labor and violations of the rights of
migrant workers,” which is designated as a priority risk across the Hitachi Group.

Response to Technical Intern Trainee Issues
In 2018, the Organization for Technical Intern Training Groupwide issued recommendations for
improvement regarding legal violations regarding training, and in 2019 Hitachi received an order for
improvement from the Immigration Services Agency of Japan and the Ministry of Health, Labour andWelfare regarding systems for carrying out proper training. We submitted reports stating the completionof improvements to the Organization for Technical Intern Training by October 2019, and the reports
were accepted. Hitachi has developed Groupwide policies, guidelines and check systems, conducts
internal audits, and engages in other efforts to thoroughly prevent repeat occurrences of this nature.

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Quality Assurance
Hitachi places “Safe and secure products and services” as one of the sub material topics
under our material topic “Business with Integrity,” and we are committed to ensuring productand service safety while putting the customer first. As stipulated in the Hitachi Group Codesof Conduct, we aim to meet customer needs and specifications when providing products andservices. We strive to ensure quality and safety by setting independent standards as necessary,in addition to complying with all relevant laws and standards.

Hitachi’s Basic Philosophy on Quality Assurance
Embracing the Hitachi Founding Spirit of “Harmony, Sincerity, and Pioneering Spirit,” we thoroughly
adhere to the basics and the right way and espouse the values of prioritizing morality over profits,
placing great emphasis on sincerity in our quality assurance activities. Hitachi’s unique practiceof OCHIBO-HIROI (investigating the fundamental cause of incidents and completely preventing
similar incidents) is a method that advances technology by analyzing and thoroughly learningfrom failures. When an incident occurs, we not only investigate the technical causes in a product,
but also thoroughly discuss the processes, frameworks and motivating factors leading up to theincident, along with ways to prevent recurrences, in order to improve our product reliability andcustomer satisfaction.

Sustainability

Occupational Health and Safety

Corporate Governance

Responsibility in the Value Chain

Quality Assurance

Data

83

Business Ethics and Compliance

See page 137 of our Sustainability Report for detailed information.
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2022.pdf

Technical Law Compliance Activities
Hitachi promotes internal awareness of product regulations, amendment trends, andenforcement dates in each country and region. We also work to clarify product-specific laws (withour product-specific laws map) as well as promoting regulatory compliance and implementing
continuous process improvements with our product compliance management system.

Thorough Safety Design and Safety Monitoring for Products and Services
When developing products, Hitachi makes the safety of our customers’ lives, health and property
its top priority. We verify safety across every process, from development and production tosales and maintenance, and strive to ensure safety based on the prioritization of risk mitigation
informed by usage information. We also conduct risk assessments from a wide perspective incoordination with related BUs and research laboratories.

Quality and Reliability Education
Hitachi regularly provides various forms of education and training related to quality and reliability
with curricula tailored to attendees. All employees undergo e-learning courses on Hitachi’s
philosophy regarding quality, with quality assurance themes also dealt with in tiered training.
Engineers are given field-specific technical lectures at various levels.

Framework for Quality Assurance

Product Safety Response When Incidents Occur

Hitachi has separated the Quality Assurance Division from the Manufacturing Division in
every business division. We have also made them independent of their business divisions
and reinforced their reporting lines to the Quality Assurance Division at our head office,establishing systems for close information sharing between the two sides. In addition, we
have strengthened governance by giving greater authority to the Quality Assurance Division at
our head office and implemented thorough quality governance through regular internal audits.
When a serious incident occurs, once identified it is promptly reported to the top management,
including the chairperson and president, by the Quality Assurance Division of the BUs or groupcompanies concerned.

When an incident occurs, the division responsible for the product takes a central role and acts
swiftly to ensure product safety. In the case of a severe incident, a status report is issued to
top management, the relevant authorities are informed in line with legal requirements, and theincident is disclosed to customers through the website and other communication channels.
We also have a structure in place to ensure that fast and appropriate action is taken. In thecase we determine that retroactive action is necessary, we notify customers via newspaper
advertising and websites to carry out the necessary repair or replacement program.

Quality Assurance Activities

In December 2021, Hitachi Astemo announced that it had uncovered improper conduct basedon information provided by an employee regarding periodic testing on brake and suspension
components and other activities. To ensure such incidents do not occur again, Hitachi
Astemo established a new governance office to function as a headquarters and strengthenrisk management, in addition to a dedicated auditing organization in the Quality Management
Division. In December 2021, we established a special investigation committee through external
legal counsel and we are working to enact sweeping measures to prevent reoccurrences.

We promote activities to enhance quality assurance in terms of organization and management,
technology and human capital across every process—from product planning and development
to design, manufacturing, testing, delivery and maintenance services. Under our approach of
making prevention the duty of quality assurance, we are strengthening our incident prevention
activities, which go beyond recurrence prevention.

Reoccurrence Prevention Measures in Response to Inappropriate Conduct
Discovered by Hitachi Astemo

Hitachi Integrated Report 2022

Addressing Risks and Opportunities

Introduction

Whatʼs Hitachi

Responding to Climate Change Risks and Opportunities

Value Creation

Business Strategies

Promoting of Information Security

Business Ethics and Compliance
Hitachi places “Business ethics and compliance” as one of the sub material topics under ourmaterial topic of “Business with Integrity.” We expect our business practices to meet internationalrules and legal requirements and adhere to high standards of ethics and integrity.

Governance
The One Hitachi Compliance Program, led by the Hitachi Group Head of Ethics and Compliance,with oversight by the Audit Committee of the Hitachi, Ltd., Board of Directors, contributes to
Hitachi’s success by providing advice to managers, leaders and employees.
The Compliance Division works closely with Hitachi companies to streamline business ethics
standards to drive the program’s efficiency and effectiveness. Focusing on business ethics helps
Hitachi attract, retain and engage the best employees and select the right business partners. It
protects our reputation and relationships with stakeholders. It helps us deliver on our Mission,
Values and Vision and provides a competitive advantage for Hitachi.
Outside Hitachi, the Compliance Division regularly exchanges ideas and best practices forcompliance processes. Hitachi became a member of Ethisphere’s Business Ethics Leadership
Alliance (BELA) in October 2021. BELA is a globally recognized organization of leading
companies collaborating to share best practices in governance, risk management and ethics.

Sustainability

Occupational Health and Safety

Corporate Governance

Responsibility in the Value Chain

Quality Assurance

Data

84

Business Ethics and Compliance

See page 170 of our Sustainability Report for detailed information.
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2022.pdf- Competition Law Compliance Policy
The Hitachi Group’s Fair Competition Policy addresses interaction with competitors and ensuresawareness of points of caution related to business practices. In fiscal 2021, we revised the guidelines forpreventing cartel activity and improved the relevant forms based on the revised guidelines.

- Hitachi’s Tax Compliance Approach
The Hitachi Group ensures appropriate tax governance, established regulations governing tax-related
matters, and informed employees involved in tax management of the regulations.

Business Ethics and Compliance Training
Our annual business ethics training on the Codes and anti-bribery and anti-corruption reinforces
Hitachi’s commitment to business ethics and integrity. It keeps employees informed and updated
on our high ethical standards and obligations.
Our fiscal 2021 training course covered business ethics, bribery and corruption, gifts, travel
and entertainment, anti-money laundering laws, fraud, antisocial forces, fair competition, export
control, company assets, information owned by others, data protection, conflicts of interest,
reporting and non-retaliation and the Hitachi Global Compliance Hotline (Whistleblower system).
After completing the training, employees must certify that they will abide by the Codes andethics-related policies and protocols.

Enforcing Policies and Guidelines
The Hitachi Group Codes of Conduct and Code of Ethics and Compliance (the Codes), areavailable in 15 languages or more, and define how we conduct our business. The Codes set
standards for dealings with each other, customers, partners, and competitors. We also expect
our business partners to commit to meeting our high standards of integrity.
The One Hitachi Group Compliance Program consists of regulations and guidelines such ascompliance with the Competition law, preventing transactions with antisocial forces and money
laundering, and preventing bribery and corruption. In fiscal 2021, the Compliance Division
worked to address business ethics and compliance issues and improve policies, protocols,
systems and measures related to their implementation.

- Policies for Preventing Bribery and Corrupt Practices
The Hitachi Group’s Anti-Bribery and Anti-Corruption policy ensures that the Hitachi Group remains incompliance with all anti-bribery and anti-corruption laws. The policy details the provision or acceptanceof entertainment or gifts, donations, or provision of political contributions by officers and employees. In
addition to outlining spending limits on the value and frequency of entertainment or gifts to be provided to
public officials, these policies prohibit facilitation payments. In fiscal 2021, we set limits on the amount ofmoney spent on gifts or entertainment as part of sales activities to commercial parties and the number oftimes entertainment or gifts are provided.

Strengthening Our Speak-up Culture
Hitachi believes that a speak up/listen up culture—where employees are encouraged to raise
concerns and feel confident that they can do so without fear of retaliation—is a key to early
detection and prevention of ethical and regulatory problems. Employees may raise concerns andask questions through their managers or any other manager, Human Resources, Complianceor Legal team member or the Hitachi Global Compliance Hotline. Hitachi Group employees andother interested parties can use the Hotline to report suspected violations of law and Hitachi
policies and protocols relating to illegal or unethical conduct.
The Hitachi Group does not tolerate retaliation against an employee who cooperates with aninvestigation, raises a concern or reports suspected misconduct in good faith. Hitachi takes
claims of retaliation seriously—anyone found to have committed a retaliatory act is subject todisciplinary action.
In fiscal 2021, we received more than 1,000 reports from all group companies worldwide.

Violation of Laws and Regulations
In fiscal 2021, there were no bribery/corruption or competition law–related incidents in which
Hitachi was prosecuted or penalized by the authorities. Furthermore, Hitachi had no significant
fines or nonmonetary sanctions for non-compliance with tax laws and regulations.