A Business Foundation that
Supports Sustainable Growth

Mobility solutions
Each year, we provide safe, secure, comfortableand environmentally friendly railway services to a

Addressing Risks and Opportunities

65

Climate-Related

Promoting Information Security

68

Information Disclosure

76

Occupational Health and Safety, Employee Health70

Corporate Governance78

Value Chain Responsibilities

71

Management System

84

Compliance73

Quality Assurance

74

total of 18.5 billion people throughout the world.

Addressing Risks and Opportunities
Risks and Opportunities
Hitachi’s 2021 Mid-term Management Plan, beginning in fiscal 2019, focuses on expanding our business while making the best use of theCompany’s competitive advantages. In particular, we target investment for growth in select, focused areas over the three years through fiscal
2021 of ¥2.0–¥2.5 trillion, compared to investment of about ¥500 billion in the three years through fiscal 2018. We believe taking advantage of
growth business opportunities and implementing aggressive management requires a solid risk management system.
Hitachi established the Investment Strategy Committee to strengthen investment risk management in 2017 and continues to work to better understandrisk and take appropriate action. The Company in the same year established the Executive Sustainability Committee to focus on the company’s policies
in regard to social and environmental issues. Our efforts in this area also included a move to identify issues that could be seen as business opportunities,
as well as the negative effects on society and the environment from our business activities and the measures Hitachi is taking to address them.

Risk Management System
The business environment is changing day by day, impacted by the continued advance of information and communications technology, as
exemplified by IoT, and geopolitical risks arising from complex shifts in political and economic conditions around the world. Hitachi aims to create
new revenue opportunities while controlling risk. To do this, we maintain a clear understanding and analysis of the operating environment, taking into
account social issues as well as our competitive advantages and management resources, and conduct risk management with an eye toward themany risks the Company should be prepared for as well as opportunities for growth.
Decision by Board of Directors, President

Senior Executive Committee
Offering of opinions

Understanding of risks andopportunities

Major risk factors

External risks

Risk management aimed atstrengthening business

Political

Internal risks• Investment Strategy Committee
reviews investments and large-scaleorders• Quantitative understanding of risk
assets and related initiatives• Qualitative understanding of
geopolitical risks and related
initiatives

Economic

Risk management aimed
at ensuring sustainability

Changes toindustrial
structure• Technological innovation• Portfolio• Quality, compliance
Operating• Project management
environment• Securing humanresources, etc.

• The Executive Sustainability
Committee, the Sustainability
Promotion Meeting, and the
Eco-Management Meeting focus onunderstanding and responding torisks impacting society and theenvironment, including climatechange and issues related tohuman rights.

Legal

Risk management to ensure business continuity
Information security

Occupational
health and safety

Business Continuity Plan
(BCP)

• Promoting information security
governance*• Promoting collaborative creation
by fostering a security ecosystem• Rebuilding a culture of safety,
establishing a safe workplace• Prevention and countermeasures
for work-related accidents• Establish and maintain BCP system
as a disaster/hazard countermeasure

P.68

P.70

P.71 Procurement BCPs
• Formulate BCPs at major Hitachi
facilities

Compliance

Quality Assurance• Entrench awareness ofregulations related to businesspractices through the Hitachi
Global Compliance Program• Implementation of quality assurance
activities from the perspectives oforganization and management,
technology, and human resources inevery process—from planning anddevelopment to design,
manufacturing, delivery, andmaintenance.

P.73

See Sustainability Report 2019https://www.hitachi.com/sustainability/
download/index.html

P.74* Information security governance works in support of corporate governance by building and maintaining an organization’s internal control mechanisms related to information security.

65

A Business Foundation that Supports Sustainable Growth

Understanding and Responding to Quantitative Risk

The Flow of Quantitative Risk Assessment

In regard to quantitative risk, assumed maximum risk (value at risk) isManagement strategy

calculated using statistical methods based on the type of asset held.
More specifically, value at risk measures the maximum expected loss

Reflected inbased on price movements over a specified period of time
Executive level(observation period) at a given confidence level for a defined period oftime moving forward. Visualizing the strength of a company’s balance

Periodic reporting

sheet and whether that company has the potential for growth,
including by focusing on whether the maximum expected loss isGroup risk capacity

within the range of net assets or whether there is room to invest in
growth, limits the likelihood that opportunities for growth will beComparison with risk tolerance

missed, while continued monitoring ensures that risks do not exceed
Amount of risk in the groupmanagement capabilities.
Moreover, analyzing risk by country and sector, while also taking

Quantify using statistical methods

into account future trends, allows a quantitative understanding of theconcentration of risks in a given country or sector relative to
profitability.

Credit risk

Business
investment risk

Country risk

Risks, including
business assets

Risk identification and analysis
Financial and non-financial data from within the group and informationfrom outside organizations

Understanding and Responding to Qualitative Risk

Amid such a drastic change in the business environment, companies

In regard to qualitative risk, including geopolitical risk, we maintain amust have a clear understanding of opportunities and risks and takefocus on the global political and economic situation by taking

appropriate measures if they are to achieve sustainable growth overadvantage of research from external organizations, and use thisthe long term.

information to analyze the potential risks and opportunities for Hitachi

Hitachi is able to gain a clear understanding of sustainability-related

so that we may take action to improve our corporate value. In addition,risks, and accordingly take appropriate action, thanks to the efforts of

the Investment Strategy Committee examines investment projects andthe Executive Sustainability Committee and other related committees.

large orders, taking into account qualitative factors in addition to

We remain actively engaged in promoting our own sustainable growthquantitative factors such as those listed below.

while contributing to the realization of a sustainable society by seeking

・Related technological innovations and competitive conditions

out business opportunities contributing to the resolution of important

・Hitachi’s past performance in the business
・Trends and market conditions, including prices and costs
・Business performance from ordering parties and their transaction

domestic and overseas issues, including those relevant to the UN
Sustainable Development Goals (SDGs) and Society 5.0.
https://www.hitachi.com/sustainability/

history with Hitachi, etc.
・Contractual rights and obligations (transaction terms, reasons anddetails for damages and penalties)
・Local laws and labor practices in countries in which the business
operates

Understanding and Responding to Risks andOpportunities Related to Sustainability
Social and environmental issues, including climate change, resource
depletion, the curtailment of business activity due to significant
disasters, and social instability due to growing inequality, are having asubstantial impact on corporate value creation and business models.

66

Hitachi Integrated Report 2019

Risk Factors
We conduct business on a global scale across a broad range ofbusiness areas and utilize sophisticated, specialized technologies tocarry out our operations. Therefore, we are exposed to a wide range ofrisks related to our operations. The following risks are based on theassumptions we consider reasonable as of the date this report wasissued.
For more information on business risks and other risks, please refer
to our 150th Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/index.html

Major Risks and Opportunities
Major risk factors
Fluctuations in productsupply and demand,exchange rates andresource prices;
insufficient raw materials,
components
Rapid technologicalinnovation

Details on risks and opportunities

Company actions• Price fluctuations, including for products, exchange rate impact andexcess inventory• Exchange rate impact and price fluctuations, including for raw materials
and components• Impact from significant disasters on supply chain• Building close relationships with multiple suppliers• Ensuring an appropriate response to changes in demand in each region bypromoting a local production and local consumption model for products andservices• Heightening resistance to business interruption risks by formulating BCPs atdomestic and major overseas facilities

Risks

Risks
• Decreased competitiveness if development of cutting-edge technology,
or application to product/service does not progress as expected• Reduction or elimination of existing market due to technological innovation
Opportunities• Development of advanced technology leads to new business opportunities

Securing humanresources

Risks• Impact on new hires and worker retention due to increased competition
to hire and retain the highly skilled workers
Opportunities• Growth opportunities on the recruitment and retention of highly skilledworkers that share the Hitachi vision

Occupational healthand safety

M&A, investment in
new projects, etc.

Risks
• Impact on business due to inability to create healthy, safe and secure
work environments

Risks• M&A aimed at strengthening the Social Innovation Business, investment
in new projects, R&D investment/capex, failure related to insufficient
project management in large-scale orders
Opportunities• Building a foundation for growth through the acquisition of new
management resources

Geopolitical risks

Risks• Impact on Hitachi’s overseas businesses due to global political, economic
and social trends

Tighter laws andregulations

Compliance

Risks• Tighter laws and regulations in regard to investment, exports, and customs
dutiesExample: The effects on business activities from the introduction of newlaws and regulations related to the protection of personal data, such as
the General Data Protection Regulation (GDPR) in Europe
Risks• Reduced trust and a decline in corporate value as a result of corporate
behavior that deviates from social norms and violates laws, including
relating to bribery and anti-competitive activities

Product quality andresponsibility

Risks• Reduced trust and claims for damages due to defects or a deteriorationin product and service quality as a result of the increased complexity/
sophistication of products or services, or the diversification of production
sites or suppliers

P.71 Engaging in Responsible Procurement• Promoting open innovation through industry-academia-government cooperation• Bolstering the digital workforce• Strengthen Lumada• Fostering an innovation ecosystem through the above
P.38 Accelerate Innovation
P.48 Strengthen Lumada• Securing the highly skilled global workers using a global common standard for
personnel• Securing and training the highly skilled workers through in-house educational
systems, include Hitachi Academy, and Hitachi University, the group’s global
common learning management system
P.42 Accelerate Innovation• Establishing a global occupational health and safety system that includes
lessons learned from global operations, entrenchment of global norms, andthe sharing of success stories
P.70 Occupational health and safety, worker health• Implementing phase-gate management in each business unit (BU), analysis
and discussion of market trends, strategies, acquisition prices, and the postmerger integration process at Investment Strategy Committee, Senior
Executive Committee, Board of Directors, and Audit Committee
P.18 Independent Director Dialogue
P.78 Corporate Governance• Regularly updating our understanding of global political and economic trends,
analyzing the impact on our business, and swiftly implementing countermeasures
on a groupwide basis• Operating of personal information protection systems in line with Hitachi’s
personal information protection policy• Identifying businesses subject to GDPR, assessing risk, implementing
appropriate safety management measures in line with those risks,
implementing worker training
P.68 Promoting Information Security• Implementing groupwide compliance programs and establishing the highest
values in the Codes of Conduct• Strengthening measures to prevent bribery and violation of competition laws
P.73 Compliance• Strengthening the quality assurance system• Activities aimed at preventing accidents• Activities aimed at ensuring compliance with laws and regulations related totechnology• Intensive risk assessment• Implementing measures to handle product accidents• Conducting quality and reliability-related training
P.74 Quality Assurance

Climate change/
significant disasters

Risks• Impact on business activities due to measures in line with the tighteningof international regulations to curb greenhouse gas emissions and thedepletion of energy and resources• Impact on business activities, from production to sales, due to significant
disaster affecting major Hitachi facilities in Japan or overseas
Opportunities• Expansion in the decarbonization business through offering climatechange-related solutions

Information security

Risks• Computer viruses or other factors adversely impacting information systems
Opportunities• Expansion in revenue opportunities through increased demand for
information security measures• Strengthening measures aimed at achieving the CO2 reduction targets in the
Hitachi Environmental Innovation 2050
• Enacting measures in line with an analysis of Hitachi risks and opportunities
based on climate-related scenarios• Formulating BCPs to strengthen our ability to respond to business disruption risks
P.71 Responsibilities in the Value Chain
P.46 Environmental Vision and the Decarbonization Business
P.76 Climate-Related Information Disclosure (based on TCFD recommendations)• Promoting cybersecurity strategies through risk management and value
creation
P.68 Promoting Information Security
P.54 Story of Value Creation in the IT Sector

67

A Business Foundation that Supports Sustainable Growth

Promoting Information Security
Information Security Policies
Connectivity is increasing as internet of things (IoT) technology develops, giving rise to new value. At the same time, increasingly intricate
cyberattacks that previously targeted IT systems are widening their target range to include IoT and operational technology (OT). Managing
information security risks is one of the most critical issues for companies that aim to minimize the risk of business disruption caused by factors
such as leaks of information or operational stoppages.
Under these conditions, Hitachi is expanding its Social Innovation Business while practicing information security governance from thestandpoint that efforts aimed at strengthening cyber security measures are a key management issue in terms of both value creation and risk
management.

Information Security Framework

Specific measures aimed at preventing information leaks include PC

Previously at Hitachi, Ltd., the CIO , assumed responsibility for, andencryption, access control and ID management through theauthority over, the implementation and application of information

establishment of an authentication infrastructure and the creation of

security and personal privacy protection measures. The CIO was also

multi-layered (entrance and exit) cyberattack defense measures.

*1

responsible for the formulation of information tactics in line withmanagement strategies, as well as IT investment policy. However, we

We also review and investigate the information security status of
suppliers based on our internal standards.

appointed a new CISO*2 in October 2017 in an effort to strengthen andconsolidate information security governance throughout the Hitachi

Protecting Personal Information

Group. The CISO promotes information security for all of Hitachi’s

Hitachi, Ltd., has established a personal information protection

products and internal facilities. The CISO also serves as chairperson ofmanagement system based on its own Personal Information

the Information Security Committee, which determines policies andProtection Policy. Furthermore, Hitachi, Ltd. and 42 other Hitachimeasures related to information security and informs all Hitachi Group

Group companies* in Japan have received Privacy Mark accreditation

business sites and companies. Subsequently, these policies andand are working to safeguard personal information.

measures are implemented in the workplace by information security

As shown by the EU’s enforcement of the General Data Protection

officers.

Regulation (GDPR) in May 2018, consumer privacy laws and*1 CIO: Chief information officer*2 CISO: Chief information security officer

regulations are evolving on a global basis. Hitachi’s GDPR initiatives
include identifying which operations are impacted by GDPR, evaluating
risks, implementing safety management in response to these risks andInformation Security Management

providing relevant training to all employees.

Information Security Management*As of March 31, 2019

We have established Global Information Security Administration Rules
that conform to the international ISO/IEC 27001 standard and areglobally promoting an ongoing information security management

Information Security Audits

system to strengthen our information security management.

Information security audits are independently carried out by thePreviously, these relevant policies had been distributed from the parent

information security chief auditor, who is appointed by the president

company in Japan to Group companies worldwide. However, starting

and CEO of Hitachi, Ltd. Hitachi Group companies in Japan conduct

in fiscal 2019, we have begun to further augment our security globally

audits in the same way as Hitachi, Ltd., which reviews all results. For

by stationing information security experts in the Americas, Europe,

Hitachi Group companies outside Japan, we use a “common global

Southeast Asia and China.

self-check” approach. These audits and self-checks are conductedannually at all departments and Group companies.

Security Monitoring
At Hitachi, the SOC*1 monitors security 24/7, so cyberattacks can be

Information Security Education

detected and countermeasures initiated right away. The CSIRT*2

Hitachi holds annual e-learning programs concerning informationcollects and develops security-related data and manages response to

security and personal information protection for all directors,

any security incidents.

employees and temporary employees. We also offer varied educational*1 SOC: Security Operation Center*2 CSIRT: Computer Security Incident Response Teamcourses on information security with different goals tailored to specifictarget audiences. In 2012, we began simulation training to educate

Preventing Leaks of Confidential Information

employees about e-mail phishing and other targeted malicious

Hitachi, Ltd., pays careful attention to the handling of confidential

cyberattacks.

information to prevent leaks and other related incidents.

68

Hitachi Integrated Report 2019

Fostering a Security Ecosystem aimed at Raising Cyber Security Resilience
Fostering a Security Ecosystem as a New Security Strategy
Recently, cyberattack techniques are becoming more sophisticated than ever before. Cyberattacks are also increasing in number and their range of targets
is steadily expanding. Hitachi has launched a new strategy for responding these threats. This strategy involves the construction of a security ecosystem.
The word “ecosystem” describes a state in which plants, animals and the environments in which they live depend on each other to maintainand preserve their own ecologies. As we applied this way of thinking to security, we came to the conclusion that mutual cooperation between
departments, even if their operations do not appear to be related, with the common goal of conducting security activities will ultimately enable
the maintenance and expansion of business activities throughout all of our organizations.

"Connection" [ Tsu-Na-Ga-Ru] within the Security Ecosystem
1. Between Things
In Japan, Society 5.0*1 has been established as an ideal future society for which we should all aim. Once attained, this society will create newvalue and resolve social issues through a variety of connections. To make Society 5.0 and these connections a reality, our environment will
become one in which things such as devices and systems connect with each other, as represented by the IoT.
In May 2017, Hitachi was infected by WannaCry ransomware*2. This infection was the result of testing equipment that was not maintainedwith an “awareness regarding the necessity of security countermeasures” and had an impact on all Hitachi locations worldwide. Although we
had already been applying security countermeasures to internal IT environments, this incident taught us about the additional need for security
countermeasures in production and manufacturing areas that had previously been insular.
Under these conditions, Hitachi has launched comprehensive global cybersecurity countermeasures (formulated principles and guidelines
specific to each environment, etc.) that will cover all types of environments as a wide range of things develop interconnectivity.
2. Between People and Organizations
Moving forward, all corporate business units must mutually cooperate to connect things that had previously been separate while also ensuring
security. To support this goal, we are regulating adherence to countermeasures and are holding seminars and workshops targeting communicationthat transcends organizational and positional barriers. These efforts help us promote activities that connect people and organizations by reignitingawareness regarding individual roles and intensifying cooperation between employees working in the same environments.
3. Within Society
These connections will not be confined to Hitachi. We believe in the

Foster a security ecosystem throughout society

necessity of forming communities in which industry, academia andgovernment working to promote cybersecurity transcend established

Within companies andacross industries

frameworks to share important data, such as information regarding

Foster a security ecosystemthat encompasses all ofsociety

Graduate schools,
universities, technicalschools, etc.

threats and issues faced when implementing countermeasures.
Accordingly, Hitachi has proactively launched activities aimed at

Industry

Academia

relating society. Examples of these activities include companies andorganizations applying the expertise they acquire from theaforementioned communities to their own security management
cycles and further expansion of data sharing.

Government

Aiming to Raise Security Resilience throughout Society
In pursuit of Society 5.0 and to raise cybersecurity resilience*3, Hitachi

Ministries and agencies, ISAC and CSIRT communities, etc.

will promote to foster a security ecosystem that encompasses society in
its entirety, enabling people to live more safely and securely. We will
construct this ecosystem through cooperation within the corporate
world, as well as collaboration with industry, academia and government.

Aiming to raise cybersecurity resilience*1 Society 5.0: According to the Cabinet Office website, Society 5.0 is a society centered on people that simultaneously supports economic development and the resolution of social issues through the high-level merging of cyber space (virtual space) with the real world (real space).
*2 Ransomware: A type of computer virus that places certain limits on computer systems following infection and demands monetary or other compensation in exchange for their removal*3 Resilience: The ability of organizations to adapt to complex and changing environments (from JIS Q 22300, an industrial standard released by the Japanese Standards Association)

69

A Business Foundation that Supports Sustainable Growth

Occupational Health and Safety, Employee HealthCreating Safe and Secure Work Environments
As a corporate group with a globally developing business, we must deal with the management issue of creating healthy, safe and secure work
environments at each and every work site. Hitachi believes that its organizational culture, which prioritizes safety, is an important foundation for
creating corporate value and is working to establish a global health and safety system.

Our Basic Policy and Promotion Framework

We had already introduced the Hitachi Group Key Safety

underlining the Hitachi Group Health and Safety Policy, which is shared

Management Designation System, which promotes the improvementby all Hitachi Group companies around the world. Employees workof safety measures and reinforcement of safety activities at Hitachi

together to create safe, secure work environments that aim to beGroup companies and business sites that have experienced serious

accident-free.

work-related accidents. Under the leadership of top executives, theseIn April 2019, aiming to become an organization whose employees

companies and business sites take on both management-driven andspontaneously promote safety activities with the direct participation ofbottom-up initiatives to formulate specific plans, and the progress ofmanagement, Hitachi, Ltd. established the Safety Management

these plans is monitored by safety officers, who also lead initiatives to

Division, which reports directly to the president on matters of safety

prevent recurrence.

management. This division will hold an annual Safety Strategy

Additionally, because the risk of accident is higher for workers not yet

Congress, attended by safety officers from each Group company andaccustomed to their work or environment, employees and temporary

representatives from each division. The congress will set budgets andworkers receive individual health and safety training and on-the-job

objectives for company-wide safety strategy and review the structuraltraining before work begins, to help prevent accidents by ensuring thatsituation of the Hitachi Group’s safety management systems, making

they understand work procedures and dangers. At the same time, onthem an opportunity for top management to share its own

occasions of business restructuring, we share the details of the healthcommitment to safety as the highest priority.

and safety management frameworks and initiatives of the organizations

Furthermore, we hold a monthly “The Safety Strategy Promotion

to be merged in advance, and, paying all due respect for the safety

Council”, attended by safety department managers from each

cultures on both sides, ensure that safety is always preserved duringbusiness unit and Group company. This meeting provides an

the execution of a smooth business launch.

opportunity for us to examine the promotional frameworks for safety

In Japan, a health and safety commission—composed of businessactivities and education in each division alongside standards to beowners, labor union officials, and employees—is convened atshared across the Group.

each business site every month to discuss and share information

Since 2012, the Hitachi Group Health and Safety Portal System has

related to such issues as work-related accident cause analysis andallowed every Hitachi Group company in Japan to track thecountermeasures and health and safety activities in light of the situation

occupational health and safety performance of the entire Hitachi

regarding employees who have taken sick leave.

Group. When a work-related accident occurs in Japan, depending on

This initiative allowed us to achieve zero fatal work-related accidents

its level, the results of analysis on its causes and examples ofworldwide in 2018, but we have not yet eliminated accidentscountermeasures are registered in the system and shared with thealtogether. Taking an honest view of our present situation, we areentire Group as part of the knowledge base. Know-how gained in thiscontinuously striving to improve our safety management system,

way is used globally. By analyzing from many angles the detailed

making use of external consultants to bring in objective, third-party

information about accidents gathered in the system, similar accidents

perspectives, improving our ability to determine the cause of

can be prevented.

accidents, and reviewing our risk assessments.

Initiatives for Preventing Work-related Accidents
Based on the policy above, to prevent work-related accidents among
our roughly 300,000 Group employees worldwide, we set and apply
our own safety standards to be observed at manufacturing sitesaround the globe, where the risks of work-related accidents are high,as well as advancing health and safety measures tailored to theoperations of individual companies. In particular, since theestablishment in April 2019 of the Safety Management Division, we
have worked to improve our safety measures in terms of both policy,
by examining and improving our risk assessment frameworks, and70

technology, by using IT and digital technology to prevent accidents.

Ensuring the health and safety of all employees is the basic principle

Hitachi Integrated Report 2019

Hitachi Group’s Global Safety Figures (Occurrence rate*2)
Region
North America
South and Central America
EuropeIndia
China
Asia (excluding India and China)
Oceania
AfricaOverseas total
Japan
Global total

2016
27.65
2.33
10.70
2.07
1.59
5.43
39.07
17.26
7.76
1.57
3.95

2017
24.33
1.62
10.82
1.44
1.53
4.41
24.41
9.93
7.42
1.85
4.22

2018
27.96
0.44
6.08
1.44
1.46
3.34
21.94
11.76
7.43
1.64
4.20

* Occurrence rate is the rate of workplace accidents per 1,000 directly contracted employees resulting in fatality
or work-time loss of one day or more.

Value Chain Responsibilities
Achieving a Sustainable Value Chain
We are deeply involved in social infrastructures in areas where risks can affect society as a whole. We acknowledge our responsibility tominimize the impact of such risks. Also, the global expansion of our value chain means that we come into direct contact with diverse work
environments, business customs and practices in a variety of countries and regions. Accordingly, we need to make a conscious effort toconduct business in a manner that respects the human rights of all people involved. Furthermore, we are reinforcing business continuity plans(BCPs) and tightening our information security to ensure a stable supply of our products and services and to prevent threats to our networks
that could severely disrupt business operations.
We also recognize that human rights are an important management priority. We work to ensure respect for the human rights of all of our
stakeholders, including employees and individuals throughout our supply chain, in all countries and regions in which we conduct business. At
the same time, we are quickly implementing and promoting detailed CSR production policies at all Group companies, as we procure
products and services from suppliers and partners in a variety of countries and regions around the globe.

Procurement BCPs Policies and Framework

Framework

To minimize heavily impact from disasters, the procurement divisions

CSR supply chain management and green procurement policies andin business units and key Group companies have createdinitiatives are discussed within Hitachi’s Value Chain Integration Division,

procurement BCPs that (1) standardize and use generic parts to makewhich is headed by the chief procurement officer (CPO) and reports

procurement as flexible as possible; (2) cultivate multiple suppliers;

directly to the president of Hitachi, Ltd. Policies and initiatives adopted(3) distribute production across several locations; (4) budget inventory

after this discussion are shared throughout the Group through the Hitachi

strategically; and (5) consider substitute products.

Group CSR/BCP Procurement Committee, which includes members

To see whether or not procurement BCPs would be effective, we
held desktop exercises to discuss in a group what should be done

from business units and CSR/BCP Procurement Committees at key
Group companies.

during and after a disaster, making further improvements as a result.
In fiscal 2018, all major Group business sites with production lines

Implementation of CSR Monitoring (Self-Checks)(approximately 210 sites in total) took steps to maintain andTo monitor how well Hitachi’s CSR supply chain management

strengthen the procurement BCPs they had created by the previous

philosophy has been adopted by our suppliers, since fiscal 2007 we

fiscal year, thereby contributing to the continuation of Hitachi’s global

have asked key suppliers to conduct CSR Monitoring (self-checks)

operations.

using the JEITA Supply Chain CSR Deployment Guidebook anddetailed checklists. After collecting and analyzing the results, we

CSR Procurement Policies and Framework
Creating and Sharing Procurement Policies
We base our procurement activities on the Hitachi Guidelines for
Procurement Activities, while sharing global supply chain issues within theGroup. All Group companies follow these guidelines. The guidelines werecreated in line with the United Nations Global Compact and include theelimination of discrimination in employment and occupation, the rejectionof all forms of child and forced labor, and environmental protection
activities.To ensure that the Hitachi Group CSR Procurement Guidelines’
provisions are strictly followed, we distribute to the approximately 30,000
suppliers of Hitachi business units and Group companies, from whom werequest acknowledgment of suppliers’ understanding in writing. Tier 1
suppliers are further asked to confirm that tier 2 suppliers also follow theprovisions in the guidelines. To procure parts and materials manufactured
with reduced environmental impact, so that suppliers help to protect theenvironment, we led the industry in developing Green Procurement
Guidelines. These define our basic position on procuring parts andproducts that do not have a negative impact on the global environment,
as well as our requirements of suppliers, so that we can work together topromote green procurement.

provide feedback for the business operations related to the suppliers,
and then work with those involved in the operations to resolve issues
related to the suppliers. In fiscal 2018 we asked 345 suppliers insideand outside Japan to conduct CSR monitoring (self-checks) andreceived survey replies from them.

Implementation of CSR Audits
Since July 2012, Hitachi, Ltd. has been auditing the manufacturingbases of its and Group companies’ suppliers in China and the restof Asia.
In fiscal 2018, we conducted CSR and environment audits of 24
suppliers in China. For these audits, we engaged external evaluatorssuch as the experienced CSR auditing company Intertek Certification.*
No major infringements were found at the suppliers audited, butsome small areas needing improvement were noted. The relevant
suppliers were requested to submit improvement action plans, andHitachi, Ltd., together with Group companies, will work with andadvise the suppliers until they complete the planned improvements.
* Intertek Certification: With a presence in over 100 countries across the globe, the Intertek Group provides awide array of certification services in every industrial field.

71

A Business Foundation that Supports Sustainable Growth

Human Rights Due Diligence in Procurement

Response to the Conflict Minerals Issue

Basic Policy

Hitachi released a Conflict Minerals Procurement Policy in September

Hitachi believes that respecting human rights is our responsibility as a2013. Our Request to Our Suppliers, based on this policy, is publishedglobal company and indispensable in conducting business. To thison our website as a clear statement of our position.

end, in May 2013 we formulated the Hitachi Group Human Rights

Based on these policies, each Hitachi business unit and Group

Policy. In this policy, we clarify our understanding of human rights ascompany investigate its use of conflict minerals and reports the results

being, at a minimum, those outlined in the International Bill of Humanto customers when requested.

Rights and the International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work. This policy shapes

Hitachi Group Conflict Minerals Procurement Policy:

Hitachi’s approach to meeting the responsibility to respect human

https://www.hitachi.com/procurement/csr/csr/index.html

rights, including implementing human rights due diligence * in line with
the UN Guiding Principles on Business and Human Rights, providing
appropriate education to employees, adhering to laws and regulations
in all the regions and countries where we operate, and seeking ways tohonor the principles of international human rights when faced withconflicts between internationally recognized human rights standards
and national laws.
* Human rights due diligence: An ongoing process to identify and assess potential and actual human rights
negative impacts, take appropriate action to prevent or mitigate potential impacts, track the effectiveness ofactions to address impacts and communicating externally.

Hitachi Group Codes of Conduct
https://www.hitachi.com/about/corporate/conduct/index.html
Hitachi Group Human Rights Policy
https://www.hitachi.com/sustainability/renew/pdf/human_rights_
policy.pdf

Starting in fiscal 2015, the Hitachi Group Procurement Division began
implementing human rights due diligence based on the Hitachi Group
Human Rights Policy. In fiscal 2017, we incorporated the results ofhuman rights due diligence into the revision of our CSR procurement
guidelines for suppliers while also thoroughly revising the questions on
the check sheet used in supplier CSR monitoring (self-checks), tobetter grasp the issues.
Addressing the Risks of Child and Forced Labor
The Hitachi Group Codes of Conduct clearly express Hitachi’s firm
stance against the use of child labor or forced labor along our supply
chain. Hitachi’s CSR procurement guidelines for suppliers also clearly
forbid the use of child labor or forced labor, as part of our efforts toraise awareness all along the supply chain.
In fiscal 2018 we assessed the risks of forced labor at about 100
offices of Hitachi Group companies located in seven Southeast Asian
countries (Indonesia, Malaysia, Myanmar, the Philippines, Singapore,
Thailand, and Vietnam). The assessment was conducted with thecooperation of Verité Southeast Asia (VSEA), an internationally active
nonprofit organization, using a checklist for suppliers revised in fiscal
2017 based on the Responsible Business Alliance (RBA) Code of
Conduct, formerly the Electronic Industry Citizenship Coalition (EICC).

72

Hitachi Integrated Report 2019

Compliance
Thorough Compliance
As the economy becomes more global and corporate activities become more borderless, business activities spanning across countries and regions withdifferent administrative and economic systems, trading practices and values are picking up. Globally shared initiatives and guidance are increasingly
important in terms of conducting proper international business and preparing for all types of risks that could potentially hinder business activities.
Hitachi promotes business globalization in accordance with "Basics and Ethics," and has established its own set of rules concerning important business practices,such as preventing bribery, ensuring fair competition and establishing tax compliance, that are compliant with widely recognized and approved international
standards. We are also working to ensure thorough awareness and practice of these rules throughout the entire Group. We will respond appropriately to thedemands of society while reviewing and updating these rules as needed based on an awareness that required corporate behavior and interpretations of standards
and regulations continue to evolve due to ongoing global discussion concerning compliance.

Our Basic Policy and Promotion System

Compliance Reporting System

We established the Hitachi Group Codes of Conduct as a standard of

Hitachi, Ltd. has instituted a Compliance Reporting System allowing

behavior for the entire Group and have translated them from Japanese

reports to be made to the compliance section or directly to external

into 13 different languages, including English and Chinese, sharing

lawyers to prevent illegal and unethical behavior, to promptly address

them with employees throughout the world. Hitachi also works to

infractions, and to enhance our ability to self-regulate. This system canfoster a sound corporate culture in terms of awareness of corporate

be used not only by employees within the Hitachi Group but also by

ethics and compliance and conducts related employee surveys

temporary staff and business partners, such as suppliers andthroughout the Group annually.

distributors. In fiscal 2018, we received 462 reports from all GroupIn 2016, Hitachi reconstituted its rules and guidelines related tocompanies in Japan and around the world. In addition, we havematters such as compliance with competition law and the prevention of

implemented the Channel to the Board of Directors system to allow alltransactions with antisocial groups, corruption and bribery, repackaging

Hitachi, Ltd. employees to directly report problems anonymously orthem into the Hitachi Global Compliance Program (HGCP), a system ofunder their real names to Hitachi directors in cases where they see any

regulations falling under the Hitachi Group Codes of Conduct. We areillegality or extreme inappropriateness in business conduct by division

seamlessly implementing these rules at all business sites within Japan.

heads, executive officers, or other management personnel.

Strengthening Our Global Compliance Framework

Response to Technical Intern Training Program Issues

To implement the HGCP, we have appointed a senior executive as the

In 2018, the Organization for Technical Intern Training conductedhead of risk management for the entire Hitachi Group, to supervise

on-site inspections at Hitachi, Ltd. and 10 Group companies. These

management-level risk management executives from business units andinspections identified violations of the Act on Proper Technical Intern

key Group companies. Under this system, policies and measures are

Training and Protection of Technical Intern Trainees, and the relevant

shared through the Compliance Management Conference, composed ofcompanies were provided with recommendations for improvement

these risk management executives. Each executive is assisted by aregarding intern training. Additionally, in September 2019, Hitachi, Ltd.

compliance manager who implements practical support measures.

received an order for improvement from Immigration Services Agency

We also support Group companies outside Japan and have appointedof Japan and Ministry of Health, Labour and Welfare, regarding thecompliance heads in 11 regions, responsible for implementing education

construction of its systems for carrying out proper technical internand sharing information as well as arranging consultation services withtraining according to authorized plans. Companies that received

outside attorneys.

recommendations or orders for improvement have already taken

Issues in the promotion of compliance measures are clarified throughcorrective measures. We have taken strict measures to ensure that noindividual dialogue with business units and key Group companies, whilefurther violations will take place throughout the entire Group, such as

the internal audit section regularly conducts Group-wide reviews to verify

constructing Group-wide policies, guidelines, and check systems forthat each area of compliance is being appropriately operated. In cases

technical intern training, and we continue to strive to carry out

where these reviews identify necessary improvements, corrective

appropriate technical intern training in accordance with relevant lawsmeasures are swiftly implemented.

and the aims of the Technical Intern Training Program.

Hitachi, Ltd. also convenes an Advisory Committee of outside experts togain new insights into compliance and apply them proactively in its own
efforts.

73

A Business Foundation that Supports Sustainable Growth

Primary Initiatives

Eliminating violations of competition laws is among our top priorities

Policies for Preventing Bribery and Corrupt Practices

for regaining trust, and so Hitachi will continue its efforts to prevent thePreventing bribery and corrupt practices is a big challenge for arecurrence of any such incident.

company today. In 2008 Hitachi established rules against bribery andcorruption for the HGCP along with guidelines indicating specificTax Compliance Initiatives

spending thresholds for entertainment, gifts, and other arrangements

To ensure risk management for taxation in response to globalization,

provided to public officials. We have striven to ensure strict compliance

Hitachi follows relevant tax-related regulations applicable to the Group

with these rules. In 2016 we introduced a policy banning facilitation

as a whole as well as rules for transfer pricing management. We also

payments, which had not been explicitly regulated, along with revisions

manage transfer pricing in accordance with the OECD Transfer Pricing

including clarification of due diligence procedures for business

Guidelines and the laws and regulations on transfer pricing in eachpartners.

country or region where Group companies are located.

Preventing Violations of Competition Law

Violations of Laws and Regulations

Hitachi engages in business based on the principles of conformance

In fiscal 2018, there were no incidents in which Hitachi violated or waswith the law and business ethics and fair and open competition, while

penalized under laws or regulations regarding bribery or corrupt

at the same time ensuring that we comply with the HGCP’s rules

practices and competition.

concerning competition law and other related business standards andguidelines. In 2017, to enhance awareness of ethical principles andpractices globally, we created a global version of our standards
regarding contact with competitors based on the standards originallyprepared for use in Japan. We have been providing a collection of casestudies for workplace discussion to Group companies since 2012, andin 2018 we added case studies about competition law in threelanguages, Japanese, English, and Chinese, to raise employee
awareness.

Quality Assurance
Thorough Implementation of Quality Assurance
Providing products and services that our customers can use with confidence, along with meeting the requirements and quality standards of our customers inorder to achieve this, are important values shared by all our employees and codified in the Hitachi Group Codes of Conduct. To ensure that quality andreliability are maintained, we are strengthening our quality assurance activities from the perspectives of organization and management, technology, andhuman resources in every process—from planning and development to design, manufacturing, delivery, and maintenance.

Quality Assurance Initiatives
Maintaining the values of “Harmony”, “Sincerity”, and “Pioneering Spirit“that comprise the Hitachi Founding Spirit, as well as adhering to“Basics and Ethics” and “Putting Right and Wrong before Profits andbut also thoroughly discussing the process, framework, and motivating
factors leading up to occurrence, along with ways to prevent
reoccurrence, in order to improve our product reliability and customer
satisfaction.

Losses”, we place great emphasis on “Sincerity” in quality assurance
activities as part of earning trust in our products.

74

Framework for Quality Assurance

One integral aspect of this is our unique and longstanding practice of

To ensure full control over quality governance, we have separated theochibo hiroi which means “gleaning” in English and involves learning

quality assurance division from the manufacturing division in every

from failure to further develop our technologies. When an incident

business unit (BU) and Group company, creating a framework foroccurs, our executive officers take the lead in examining things from

activity in which our customers’ safety and trust are the top priorities.

the customer’s perspective, not only investigating the technical causes

Since fiscal 2018, in order to strengthen this framework further, we

Hitachi Integrated Report 2019

have reinforced the report lines from BU and Group company quality

Quality and Reliability Education

assurance divisions to the quality assurance division at our head office,

We conduct field-specific technical lectures for engineers engaged in

independent from all business divisions, establishing systems for closemonozukuri craftsmanship at a range of levels from beginner toinformation sharing between the two. We have also strengthened

expert.

governance by giving greater authority to the quality assurance divisionat our head office.

Each business unit also conducts specialized technical courses
regarding manufacturing, quality assurance, and maintenance attheir quality assurance training centers.

Accident Prevention Activities
Under our approach of making prevention the duty of quality

Global Quality Assurance Personnel Training in Asia

assurance, we are working beyond recurrence prevention and striving

We undertake personnel training as part of maintaining Hitachi’s

towards preventing accidents from occurring in the first place.

global quality standards. In China and Thailand, where many of the

Closely following the changes in a range of business activities, weGroup’s manufacturing sites are concentrated, we organize

anticipate quality issues on the horizon across the entire Group andeducational seminars aimed at improving our quality management

plan our quality activities accordingly.

technology. We also host conferences for quality assurance

As a part of these activities, we aim to increase trust in our embedded
software even further by bringing the software development

managers to raise quality awareness regarding Hitachi’s monozukuri
craftsmanship, and to share information and best practices.

capabilities and expertise in strengthening trust of our solutions
divisions to our product divisions (embedded software development
divisions).
Furthermore, we are promoting the digitalization of test andinspection data and working to construct processes for acquiring,assessing and reporting on this data without manual intervention.
Complying with Technical Laws
We have created guidelines for assessment of technical laws andquality assurance systems, sharing them throughout the Group. The
guidelines include information on the two themes of (1) clarifying
product-specific laws (the product-specific laws map) and(2) regulatory compliance activities and continuous improvement ofprocesses, based on our product compliance management system.
Thorough Risk Assessment
We conduct product safety risk assessment as well as testing worstcase scenarios—for example, deliberately setting a fire inside a
consumer appliance to confirm that the fire will not spread outside it.
Handling Product Accidents
When a product accident occurs, the division responsible acts swiftly
to resolve the problem and ensure absolute safety from thecustomer’s perspective. For an especially severe accident, we reportto government agencies in line with legal requirements and publish theincident information on our website and through other channels. At
the same time, we promptly submit a status report to top
management, ensuring fast and appropriate action at all companies
across the Group.
When we determine that retroactive action is necessary, we notify
customers via newspaper advertising and websites in order to carryout the necessary repair or replacement program.

75

A Business Foundation that Supports Sustainable Growth

Climate-Related Information Disclosure (based on TCFD
In June 2018, Hitachi announced its endorsement of the Task Force on

medium term (through fiscal 2030), and long term (through fiscal

Climate-related Financial Disclosures (TCFD). The TCFD, established2050), according to when the risks may materialize.

by the Financial Stability Board (FSB), published its final report on
information disclosure in June 2017 noting that investors needed moreclarity in corporate disclosures on climate-related risks and(1) Risks related to the transition to a low-carbon economy (mainly 2°C scenario)
Category

Major risks

Policy andlegal

Increased businesscosts from theintroduction ofcarbon taxes, fuel/Short to longenergy consumption term
taxes, emissions
trading systems, andother measures

Avoid or mitigate
increases in businesscosts, such as fromcarbon taxes, by further
enhancing production
and transport efficiency
and promoting the useof non- or low-carbon
energy sources

Technology

Loss of sales
opportunities due todelays in technology
development for
products andservices

Contribute to reducing CO2
emissions by developing
and marketing innovative
products and services thatlead to the achievement oflong-term environmental
targets and expanding thedecarbonization business

opportunities and governance measures. The following contains key
climate-related information in line with the TCFD’s recommendations.

Governance
Hitachi sees climate change and other environmental issues as

Time span

important management issues. In September 2016, after discussions
at the Board of Directors, we established and announced long-term
environmental targets called Hitachi Environmental Innovation 2050
containing CO2 reduction targets for 2030 and 2050 that are in linewith our Environmental Vision defining the goals of environmental

Medium tolong term

Main initiatives

management from a broader perspective.
In April 2017, we established the Executive Sustainability Committee,
chaired by the president and CEO and staffed by other top executives,as the highest-ranking body to discuss and reach decisions on the(2) Risks related to the physical impacts of climate change (4°C scenario)
Category

Major risks

Acute andchronic

Climate-relatedrisks to business
continuity, including
increased severityof typhoons, floods, Short to longand droughts (acute termrisks) as well as rising
sea level and chronicheat waves (chronicrisks)

Group’s sustainability strategy in accordance with our management andbusiness strategies. Members meet twice a year to discuss material
environment-related policies and measures, including those in response
to climate change, to share progress reports and achievements, and to
set the course for further improvements and new initiatives.
We have adopted a committee system to separate theresponsibilities for management oversight from the execution ofTime span

Main initiatives
Take into account thepossibility of flood damage
when deciding on thelocation or equipmentlayout of a new plant.
Measures tailored to
the water risks of eachmanufacturing site will bestrengthened in the future
based on the results ofa water risk assessment
now being conducted.

business operations. Under this system, the Audit Committee of
independent directors conducts an audit of sustainability-related

CO2 emissions during the use of our products and services by ouroperations once a year. Reports on climate-related material issues arecustomers account for 90% of total emissions in our value chain. This

made to the committee by Hitachi executive officers.

represents a business opportunity for us in the short, medium, andlong-term, since developing and providing products and services that

Strategy
Wishing to fulfill our responsibilities as a global company in achieving aemit zero or very little CO2 during their use can satisfy customer needs
and also help address social issues.

low-carbon society and taking note of the total CO2 reductions
required globally, we have set in our long-term environmental targets
called Hitachi Environmental Innovation 2050 CO2 reduction targets for

Climate-related opportunities
Category

Major opportunities

Main initiatives

Products/
services andmarkets

Increased market
value and revenue
from expanded salesof products andservices with innovativetechnology that cancontribute to themitigation and adaptationof climate change

Expand the decarbonization business,develop and market products andservices that contribute to a lowcarbon society, and promote thedevelopment of innovative devices andmaterials that contribute to reducing
the environmental burden

the entire value chain of 50% by fiscal 2030 and 80% by fiscal 2050,
compared to fiscal 2010.
Our 2021 Mid-term Management Plan, meanwhile, calls for reducing
CO2 emissions throughout the value chain by more than 20% by fiscal
2021, compared to fiscal 2010.

Climate-Related Risks and Opportunities
As for climate-related risks, we have followed TCFD classification inconsidering (1) risks related to the transition to a low-carbon economy
in the 2°C scenario and (2) risks related to the physical impacts ofclimate change in the 4°C scenario, which assumes that efforts to
reduce global CO2 emissions have failed. Risks are categorized into
short term (over the next three years from fiscal 2019 to 2021),

76

Hitachi Integrated Report 2019recommendations)
Responding to the Business Risks and Opportunities of Climate Scenarios
We are examining the impact of the 2°C and 4°C scenarios for five businesses that have a relatively high likelihood of being affected by climate change.
Strategies for 2°C/4°C Scenarios Based on TCFD Recommendations (abridged)
Target businesses

Responses to futurebusiness risks andopportunities

Railway systems

Automotive systems

Enhance response to
new markets, such as forContinue to strengthen
electric vehicles, under thethe railway business, as
2°C scenario, and also
global demand for railways
to existing technologies
will increase under either
like internal combustion
scenarioengines under the 4°C
scenario

Our Social Innovation Business contributes to improving people’s

Water systems

Power generation andpower grids

IT systems

Strengthen provision ofseawater desalination
facilities and other water
generation systems in
response to increased
water demand fromglobal economic growth,urbanization, andpopulation growth undereither scenarioContinue to enhance
responses to relevantmarkets in view of
expected higher demand
for non-fossil energy
under either scenarioContinue to develop
innovative digitaltechnologies and enhance
digital service solutions
that generate new value inview of expected market
expansion under either
scenario

Sustainability Report since fiscal 2013.

quality of life and enhancing the value of our business customers.

Total CO2 emissions can fluctuate greatly due to the restructuring of

Utilizing our strengths in OT and IT as well as in energy technologies,

our operations, but given the nature of our business, some 90% of ourwe seek to help users of our products and services to reduce their CO2

emissions come from the use of sold products in Scope 3. Among ouremissions. Because we pay close attention to market trends andproducts and services featuring equivalent value, therefore, we give

develop our business flexibly and strategically, we believe we have highpriority to providing customers and society with those that emit lessclimate resilience in the medium to long term under either the 2°C or

CO2. At the same time, we will seek to further reduce CO2 emissions

4°C scenario.

during production.

Risk Management
The Hitachi Group is engaged in many different businesses, with eachhaving its own set of risks and opportunities. The impact of thosepertaining to climate change is evaluated for each business unit andGroup company in accordance with the Environmental Action Plan,
updated every three years. The results are tabulated by the
Sustainability Promotion Division of Hitachi, Ltd., and their importanceis checked at Sustainability Promotion Meetings. Those risks andopportunities perceived as being particularly important for the Group
as a whole are deliberated by the Executive Sustainability Committee,
chaired by the president and CEO of Hitachi, Ltd.

Metrics and Targets
Our environmental activities are managed through the Environmental
Action Plan, for which the indicators and targets are updated every
three years, including those to measure and manage climate-relatedrisks and opportunities.
The 2021 Mid-term Management Plan cites a reduction target of atleast 20% for CO2 emissions across our value chain by fiscal 2021
compared to fiscal 2010. To achieve this goal, targets for eachbusiness unit and Group company were established in line with the2021 Environmental Action Plan, and progress is being monitored on aGroup wide basis. Total greenhouse gas emissions (Scope 1, Scope 2,
and Scope 3) across the value chain are calculated based on GHG
Protocol standards and have been published in the HitachiThis section on “Climate-Related Information Disclosure (based on
TCFD recommendations)” has been abridged due to spaceconsiderations. For a full discussion of our initiatives, refer to the
Hitachi Sustainability Report 2019.
https://www.hitachi.com/sustainability/download/index.html

77

A Business Foundation that Supports Sustainable Growth

Corporate Governance
Hitachi is a company with nominating committee, etc. under theGovernance Guidelines as a set of enhancing principles and as a

Companies Act of Japan. In June 2003, we changed our organizationalframework for corporate governance that includes criteria fordesign, separating the oversight of management from execution ofdetermining the roles and composition of the Board of Directors,

management. By demarcating responsibilities for management oversightdirector appropriateness and the independence of independentand those for the execution of business operations, Hitachi is working

directors.
Hitachi agrees with the basic approach of the Code, which is that theto create a framework for nimble operations, while making

Code's appropriate implementation will contribute to the development

management highly transparent.
In June 2012, we ensured that 7 of the 13 members of our Board ofand success of companies, investors and the Japanese economy as a

Directors were independent directors*, and that some of thesewhole through individual companies' self-motivated actions, so as toindependent directors were non-Japanese. These changes will help us

achieve sustainable growth and increase corporate value over theto establish management that reflects diverse global perspectives andmedium- to long-term. Moving forward, Hitachi will work to further

strengthen our supervisory functions.

strengthen corporate governance.

Starting in June 2015, Corporate Governance Code of Japan (the“Code”) was applied to companies listed on Japanese stock
exchanges. In 2012, Hitachi formulated and published Corporate* The “Independent Directors” are the directors who fulfill the qualification requirements to be outside directors
as provided for the Companies Act of Japan and also meet the independence criteria defined by the Company
and those provided by Japanese stock exchanges where the Company is listed.

2019
Acceleration of Social Innovation Businessacross 5 Growth Fields

Start of application of
Corporate Governance CodeDevelopment of Stewardship Code

2016

2015

Representative vice presidents were placed in
5 sectors

Enhancement of Dissemination of Information
about Medium- to Long-term Sustainable Growth2014

Publication of an integrated report

Development of Guidelines forStrengthening Governance2012

Development of Corporate Governance
Guidelines

Acceleration of Global Management
Enforcementof revisedCompanies Act

2006

2010

• Independent directors including foreign directors wereincreased• Independent directors comprised the majority of directors

Enhancement of Interactions with
Capital Markets

2003

Hitachi IR Day (briefing on business strategy by division) was
launched• Clarification of commitment of top management of thebusiness units to the capital markets

Demarcation of Management Oversightand Execution

1999

Shifted to a company with committees(currently a company
with nominating committee, etc.)• To increase management speed and improve managementtransparency

Introduction of Objective Perspective
Management Advisory Committees• Practical advice from experts in Japan and overseas

78

Hitachi Integrated Report 2019

History of Hitachi’s corporate governance reformImplementing All of the Principles of the Corporate Governance CodeWe are implementing all of the principles of the Corporate Governance Code.

Analysis and Evaluation of the Effectiveness of the Board of Directors
The Company evaluates the effectiveness of its Board of Directors as a whole each year, in a continuous effort to maintain and improve its functions.

Fiscal 2018 Evaluation Process
Points of evaluation· Composition of Board of Directors: Member diversity, numbers and ratios of independent directors and insidedirectors, etc.
1. Questionnaire-based self-assessment for each · Operation of Board of Directors: Meeting frequency, discussion time, proposal selection, role of chairperson, etc.
director (February–March 2019)· Contribution: Contribution to management strategy formulation and other matters, member demonstration ofexperience and knowledge, etc.
· Status of committee activities: Composition, responsibilities and roles, collaboration with Board of Directors, etc.
· Operation supporting system: delivery of information e.g., provision of documents for the Board
2. Discussions held by independent directors(March 2019)· Independent directors held an exclusive meeting to discuss the effectiveness of the Board of Directors.

3. Discussion and review within the Board of
Directors (May 2019)· The Board of Directors holds a discussion based on the results of the questionnaire-based self-assessment anddiscussions conducted in the exclusive meeting attended by independent directors, comparing these results to thoseof the previous year and considering the statuses of related initiatives. Through this discussion the Board of Directors
analyzes and evaluates its overall effectiveness and identifies policies through which it can increase this effectiveness.

Evaluation Results and Future Initiatives
Overall evaluation in fiscal 2018

Overall evaluation in fiscal 2018

Fiscal 2018 evaluations determined that membership in our Board of Directors was sufficiently diverse. They also indicated theBoard of Directors’ overall effectiveness was satisfactory due in part to its active discussions aimed at medium- to long-term
growth in corporate value. Each director was found to have contributed his or her own knowledge to these discussions, whichwere primarily focused on points related to management strategy, including the Mid-term Management Plan.

Maintenance and improvement ofBoard of Director functions· Determine the Company’s medium- to long-term strategic direction and further contribute to the formulation of businessstrategies· Raise contribution to CEO succession planning· Conduct thorough and continuous monitoring of important matters

Future initiatives

Enhancement of support to operation of · Continue to create opportunities to share information, including independent directors visit to Group locations
the Board of Director· Apply ingenuity to improve the design and content of documents and work to consistently provide them in advance

Corporate Governance Framework
Senior Executive
Committee
General Meeting of
Shareholders

ReportAppointment

Appointment/
Oversight

President & CEO

Executive Vice Presidents andExecutive Officers/Senior Vice Presidents andExecutive Officers/Vice Presidents andExecutive Officers

Board of Directors

Nominating Committee
Audit
Compensation
Committee

Audit Committee

ReportInternal
Auditing
OfficeExecutive
Officer
Department
in charge

Executive
Officer
Department
in charge

Department
in charge

Department
in charge

Audit
Audit
ReportAccounting Auditors

79

A Business Foundation that Supports Sustainable Growth

Corporate Governance
Board of Directors(3) Compensation Committee
Summary· Independent directors comprise 8 of the 11 Board members.
· Each of the Nominating, Audit, and Compensation Committees
has been established with independent directors in the majority.
· Independent directors have extensive experience and insight ininternational business management and administration serve tostrengthen the Board’s supervisory function.

The Compensation Committee has the authority to determine
remuneration policies for directors and executive officers andremuneration for individuals (including amounts of remuneration) based onthem. The Compensation Committee consists of 4 directors, 3 of whom
are independent directors. The Compensation Committee meetings were
held on 6 days during the fiscal year ended March 31, 2019.
The Board of Directors continuously supervises succession planning for
the CEO. The CEO is appointed or dismissed in line with the proposal of
the Nominating Committee in consideration of the matters: 1) that the

The Board of Directors approves basic management policy for Hitachi

candidate has the highest personal and professional ethics, integrity,

Group and supervises the execution of the duties of executive officers andinsight, and leadership, and 2) that the candidate is believed to be the one

directors in order to sustainably enhance corporate value andmost qualified to realize sustainable enhancement of the Company’s

shareholders’ common interests. The basic management policy includes

corporate value and shareholders’ common interests, with rich experience

the Mid-term Management Plan and annual budget compilation. The

and a distinguished record in the area of corporate management.

Board of Directors focuses on strategic issues related to the basic

Furthermore, Hitachi formulated and published Corporate

management policy as well as other items to be resolved that are provided

Governance Guidelines outlining the framework of corporate

in laws, regulations, the Articles of Incorporation, and Board of Directors

governance, such as the function and composition of the Board ofRegulations. The Board of Directors was made up of 11 directors, 2 ofDirectors, qualifications for directors, criteria for assessing thewhom concurrently serve as executive officers. Hitachi aims to reinforce theindependence of independent directors, and rules on those serving

oversight function of the Board of Directors, of which 8 independent

concurrently as officers at other companies.

directors, including non-Japanese, account for the majority, reflecting theirglobal and diverse viewpoints. The term of office for directors is 1 year.
Within the Board of Directors, there are 3 statutory committees—the

Corporate Governance Guidelines of Hitachi, Ltd.
https://www.hitachi.com/IR-e/corporate/governance/guidelines.html

Nominating Committee, the Audit Committee, and the Compensation
Committee—with independent directors accounting for the majority ofmembers of each committee. The Board of Directors meetings were
held on 12 days during the fiscal year ended March 31, 2019, and theattendance rate of directors at these meetings was 96%. The
attendance rates for each independent director were as shown in the

Attendance at meetings of the Board of Directors by independent
directors in the fiscal year ended March 31, 2019
Attendance / Number of days on which the meetings were held*

Name

Board ofDirectors

Nominating
Committee

Audit
Compensation
Committee Committee

table on the right. To assist with the duties of the Board of Directors

Katsumi Ihara

100%

—

100%

100%

and each committee, staff who are not subject to orders andCynthia Carroll

100%

100%

—

—

instructions from executive officers are assigned.

Joe Harlan

100%

—

—

—

George Buckley

100%

—

—

—

Louise Pentland

100%

—

—

—

(1) Nominating Committee
The Nominating Committee has the authority to determine proposals

Harufumi Mochizuki

100%

100%

100%

100%

submitted to the general meeting of shareholders for the election and

Takatoshi Yamamoto

100%

—

100%

100%

dismissal of directors. The Nominating Committee consists of 4 directors, 3Hiroaki Yoshihara

92%

100%

100%

—

of whom are independent directors. The Nominating Committee meetings* Number of days during term of office during on which Board of Director meetings were held: 12 (9 in the casesof Mr. Ihara and Harlan)
Number of days during term of office on which Nominating Committee meetings were held: 9 (7 in the case of Mr.
Yoshihara)
Number of days during term of office on which Audit Committee meetings were held: 17 (11 in the case of Mr. Ihara)
Number of days during term of office on which Compensation Committee meetings were held: 6 (5 in the case of Mr. Ihara)
Indicates role as board or committee chairperson

were held on 9 days during the fiscal year ended March 31, 2019.
(2) Audit Committee
The Audit Committee has the authority to audit the execution of duties
of directors and executive officers and to decide on proposals
submitted to the general meeting of shareholders for the election and

80

Executive Officers

dismissal of accounting auditors. The Audit Committee consists of 5

Executive officers decide on matters delegated to them by the Board

directors, including 4 independent directors and 1 standing Audit

of Directors and execute Hitachi’s business affairs within the scope ofCommittee member. The Audit Committee meetings were held on 17

assignments determined by the Board of Directors. As of the end ofdays during the fiscal year ended March 31, 2019.

June, 2019, Hitachi has 39 executive officers.

Hitachi Integrated Report 2019

Compensation Structure

Senior Executive Committee
The Senior Executive Committee is a council to ensure that the
President deliberately decides on important managerial matters, which
may affect the business of Hitachi or the Hitachi Group, throughdiscussion from diverse viewpoints. This committee consists of 12
members as of the end of June, 2019: the President & CEO, 6
Executive Vice President and Executive Officers, 4 Senior Vice President
and Executive Officers, and 1 Vice President and Executive Officer.

(1) Directors
Compensation for Directors is basic remuneration as fixed pay. The
amount of basic remuneration is decided by adjusting a basic amount toreflect full-time or part-time status, committee membership and position,and travel from place of residence, etc. A Director concurrently serving
as an Executive Officer is not paid compensation as a Director.
(2) Executive Officers
Compensation for Executive Officers consists of basic remuneration as

Director and Executive Officer Compensation

fixed pay, and short-term incentive compensation and medium- and longterm incentive compensation as variable pay. The basic amount of each

Basic Policy

type of compensations is set based on the ratio of 1:1:1 as the standard

Compensation shall be such that it enables the Company to attract
necessary personnel to achieve an improvement in corporate value
through global business growth.

from compensation for the fiscal 2019, taking into account theCompensation shall be commensurate with roles and responsibilities of each
Directors and Executive Officers.

order to improve corporate value through the growth of global

Compensation for Directors shall be such that it enables them to exercise
functions of supervision of management effectively.

proportion of variable pay is set to the total annual compensation.

Compensation for Executive Officers shall be such that it enables them tocontribute to sustained improvement in corporate value through theexecution of business and employs an appropriate balance between shortterm performance and medium- and long-term performance.

composition of executive compensation for major global companies, inbusinesses. The higher position of Executive Officers holds, the higher
If it is found that an executive officer has been engaged in misconduct
during his/her term of office, compensation for Executive Officers that has
been already paid shall be returned to the Company (clawback provision).

The level of compensation shall be determined taking into account compensationlevels at other companies as well as economic and market trends.

Please refer to Compensation to Directors and Executive Officers

The Compensation Committee utilizes external experts to gain expert
advice and an objective viewpoint, if necessary, for considering the details
and amounts of compensation.

on P.75-80 of Annual Securities Report.
https://www.hitachi.com/IR-e/library/stock/hit_sr_fy2018_4_en.pdf

Compensation to Executive Officers (FY2019)
Total remuneration
Variable pay

Fixed pay
(Basicremuneration)

Short-term incentive compensation

Medium- and Long-term incentive compensation

The amount of short-term incentive compensation is decided within
the range of 0 to 200% of a basic amount set according to therelevant position by adjusting that amount to reflect financial results
and individual performance.

The shares of restricted stock are granted in order to propel
management from a medium- and longterm perspective and to provide
incentives to bring about a sustainable increase in enterprise value by
further promoting senior management’s shared values with shareholders
through the holding of shares during their term of office.

Individual
target-linked
component
Set according to therelevant position byadjusting that amountt o re f l e c t f i n a n c i a lresults and individual
performance.

Varies according to theevaluation of the level ofachievement of
individual target for each
Executive Officer
determined based on
his/her responsibility.

Performance-linked component
Company
performance

Division
performance

Evaluated referring toconsolidated revenues,
adjusted operating
income, EBIT, and net
income attributable to
Hitachi, Ltd. stockholders
in order to measure thelevel of achievement ofconsolidated financial
forecasts disclosed to
stakeholders, including
shareholders andinvestors.

Evaluated referring toadjusted operating
income and operating
cash flows for eachdivision, among otherindicators, to measure
the level of achievementof targets under the
Midterm Management
Plan and the annual
budgets for divisions.

The shares of restricted stock· The restriction on transfer shall be lifted if executive officers resign from all of thepositions of the Company’s executive officer, director, and corporate officer.
· With regard to one-half of granted shares of restricted stock, the number ofshares whose transfer restriction is lifted shall be determined after ex-post
evaluation in which the total shareholder return of Hitachi stock is compared to
growth rate of TOPIX. Lifting of transfer restrictions shall apply to all granted
shares if the TSR/TOPIX Growth Rate Ratio is 120% or more. Lifting of transfer
restrictions shall apply to part of granted shares if the TSR/TOPIX Growth Rate
Ratio is between 80% or more but less than 120% (*). Transfer restrictions shallnot be lifted for any shares if the TSR/TOPIX Growth Rate Ratio is less than 80%.
Shares whose transfer restrictions are not lifted shall be acquired by theCompany without consideration.
* Number of shares whose transfer restrictions are lifted= Number of granted shares × {(TSR/TOPIX Growth Rate Ratio × 1.25) - 0.5

81

A Business Foundation that Supports Sustainable Growth

Corporate GovernanceInternal Control over Financial Reporting
To ensure the reliability of its consolidated financial reporting, the Hitachi Group is establishing and implementing relevant internal controls.
We evaluate their effectiveness by adhering to standards for the evaluation of internal controls related to financial reporting that are generally
accepted as fair and reasonable.
Furthermore, we have established the J-SOX Committee with the goal of raising the effectiveness of these internal controls. This committee
evaluates internal control effectiveness and establishes frameworks designed to improve and strengthen them.
Internal Control Assessment Framework

Financial Services
AgencyHitachi, Ltd. President & CEO
Chief Financial Officer

Internal
ControlReportReportReportAudit
Committee

ReportJ-SOX Committee
J-SOX Committee Office

Cooperation

Internal Auditing
OfficeReportBusiness Units and Major Group Companies

Accounting
Auditors
External
AuditsReportSubsidiary Companies

Enhanced Collaboration through Tripartite Audits
In pursuit of sustainable growth in corporate value, Hitachi’s Audit Committee and internal audit section collaborate with third-party accounting
auditors to strengthen its “tripartite auditing,” which aims to increase the effectiveness of internal controls. Our Audit Committee takes the lead in thisregard, as the three parties communicate closely to share risk information and assessments concerning risk response while securing transparency
and ensuring appropriate checks and balances.
Improving Internal Control through a "Tripartite Audit" FunctionGoals

 1 Leveling of audit methods
2 Improving efficiency andtransparency in audit processes witha risk-based approach

Audit by the Audit Committee
based on the risk approach

Audit Committee

Assessment of content of audit

Report status of internal audit

Sharing of risk information andassessment of responses to risk

Request that internal auditors undertake
detailed audit of problems found as aresult of audit by Audit Committee

Assessment of content of audit

Report status of financial audit

Exchange opinions about audit
plans, auditors’ remuneration, risk
assessment, etc.

Report important indications related to financing

Internal audit section(Internal Audit Office)
Periodic internal audit
by office and base82

Hitachi Integrated Report 2019

Assess content
of audit

Extract problems based on
results of internal audits
and assess significance of riskof improper accounting

Accounting Auditors
Accounting audit centered on accuracy
and reliability of financial statements

Building a More Effective and Efficient Auditing Systemapproach in response to the Group’s overall financial status. Applying thisOur Audit Committee formulates audit plans in accordance with its risk-

approach, they then determine the scope and methods of the audit,

based approaches and conducts audits for each consolidated business
unit. Audit Committee members meet directly with business unit heads
before the internal audit section’s audits are carried out. Then, thesemembers inform the internal audit section about concerns and issues
related to the implementation of business strategies aimed at achieving
sustainable growth that require attention. At this time, Hitachi also verifies
matters that carry high levels of risk in terms of quality, measuring theserisks through employee awareness surveys and thorough implementationof business strategies.
Hitachi’s internal audit section performs regular internal audits at eachbusiness site and location. This section reports directly to the CEO and isindependent from organizations that are subject to its audits. The internal
audit section also formulates audit plans based on past audit records
and the most recent business circumstances. Additionally, this section
performs audits upon receiving direction from the Audit Committee,
ensuring their effectiveness.

formulate an audit plan and share opinions with the Audit Committee.
Next, based on the audit plan, they perform audits on each of the 5
growth sectors and the business units that comprise them, enabling
effective and efficient understanding of data related to Hitachi’s financedepartment and each of its business segments. If, during the auditing
process, our accounting auditors discover a degree of risk that could
impact future financial statements significantly or issues that, even ifmonetarily small, could have a large qualitative effect, they share related
information regarding these risks and issues and progress on response
from related divisions with the Audit Committee and internal audit
section. They also work to improve and raise the effectiveness of audits
by submitting “management letters” containing points of concern andimprovement suggestions through the accounting department. Recently,
they have also been working to raise the efficiency of checks on theaccuracy of numerical figures by using IT systems to investigate allcases, rather than performing test-checking through sampling.

The internal audit section at Hitachi is responsible for confirming the legality
and appropriateness of all business operations, including those related to

Dialogue with Shareholders and Investors

accounting, production management, sales, purchasing, IT systems,

Hitachi, Ltd., believes in the importance of dialogue with a wide range

compliance and personnel labor. Furthermore, employees are well versed inof stakeholders, including institutional investors and analysts, andthe ideas and policies of our management and, acting on behalf of ourconducts extensive IR activities.

management team, confirm whether operations are being carried out based

In fiscal 2018, we held quarterly results briefing sessions and aon these ideas and policies and if business strategies are being

briefing on the progress of our 2018 Mid-term Management Plan. In

implemented in a way that will efficiently lead to sustainable growth.

addition, we held the Hitachi IR Day for the ninth consecutive year. At

To further raise audit effectiveness, we implemented a “executive auditor”

this IR event, the people in charge of individual businesses explained

system in each of our 5 growth sectors (IT, Energy, Industry, Mobility, Smart

principal business strategies and management measures in line with

Life) in April 2019. We also established internal control systems which are

the Mid-term Management Plan.

headed by executive auditors who report to the vice presidents who

We also held a briefing by the R&D Division, which is the source of ourmanage each sector. Although these executive auditors do not act as legal

value creation, and members of our management team visited institutional

agents under the Companies Act, they still assume responsibility forinvestors in North America, Europe and Asia, explaining our management

governance in each sector. They also function as a reporting line forstrategies for achieving medium- to long-term growth. Including thesestatutory auditors at Hitachi subsidiaries who are legal agents under thevisits, we held some 550 one-on-one meetings for institutional investors

Companies Act and are working to improve the efficiency of our internal

and analysts in Japan and overseas. We reflect the opinions we obtain

control systems.

through these IR activities into our management and business operation

When conducting business audits, we use IT systems to expeditiously

as we strive to enhance corporate value.

search for reference information contained within materials submitted

On our website that provides information for shareholders andprior to audit in an attempt to improve efficiency. We are currently

investors, in a timely manner we post materials used in briefingbuilding a system that will allow our internal audit section to sharesessions, as well as videos of these briefings, plus graphs showing

information with professional accounting auditors using the Lumada

operating performance and our share price. We are improving theplatform’s data lake and expect it to be complete sometime in fiscal

responsiveness of our website (making browsing from smartphones

2020. When reading audit reports submitted by the internal audit section,and tablets more convenient) as part of an ongoing effort to enhance

our CEO must be able to quickly understand the issues identified bydisclosure.

these reports and make prompt judgments concerning whether
immediate action is required. In the future, our internal audit section will

Information for shareholders and investors:

continue to maintain its transparency and independence while working tohttps://www.hitachi.com/IR-e/index.html

improve audit efficiency as one member of our tripartite audit system.
Our accounting auditors perform audits that focus on the accuracy andreliability of our financial statements. First, they adopt a risk-based

Disclosure Policy:
https://www.hitachi.com/IR-e/corporate/disclosure/index.html

83

A Business Foundation that Supports Sustainable GrowthManagement System
Independent Directors* At the end of the Annual General Meeting of Shareholder held in June 2019

Katsumi Ihara

Cynthia Carroll

Joe Harlan

Share ownership: 300 shares

Share ownership: 1,000 shares

Share ownership: 300 shares

Term of office as Independent Director: 1 year

Term of office as Independent Director: 6 years

Term of office as Independent Director: 1 year

2005 Executive Deputy President, Representative Corporate Executive
Officer, Member of the Board, Sony Corporation2009 Executive Deputy President, Corporate Executive,
Sony Corporation
Executive Vice President, Representative Director,
Sony Financial Holdings Inc.
2010 President, Representative Director, Sony Financial Holdings Inc.
2011 President, Representative Director, Sony Life Insurance Co., Ltd.
2015 Chairman, Director, Sony Life Insurance Co., Ltd.
(Retired in June 2017)2016 Chairman, Director, Sony Financial Holdings Inc.
(Retired in June 2017)2018 Director, Hitachi, Ltd.

1991 General Manager, Foil Products, Alcan Inc.
1996 Managing Director, Aughinish Alumina Ltd., Alcan Inc.
1998 President, Bauxite, Alumina and Speciality Chemicals, Alcan Inc.
2002 President & CEO, Primary Metal Group, Alcan Inc.
2007 CEO, Anglo American plc. (Retired in April 2013)2013 Director, Hitachi, Ltd.

1999 Vice President and Chief Financial Officer, Lighting Business,
General Electric Company (USA)2001 Vice President, Corporate Financial Planning and Analysis,
3M Company (USA)2002 President and Chief Executive Officer, Sumitomo 3M Ltd.
2004 Executive Vice President, Electro and Communications Business,
3M Company (USA)2009 Executive Vice President, Consumer and Office Business,
3M Company (USA)2011 Executive Vice President, Performance Materials,
The Dow Chemical Company (USA)2012 Executive Vice President, Chemicals, Energy and Performance
Materials, The Dow Chemical Company (USA)2014 Chief Commercial Officer and Vice Chairman, Market Business,
The Dow Chemical Company (USA)2015 Vice Chairman and Chief Commercial Officer, The Dow Chemical
Company (USA) (Retired in August 2017)2018 Director, Hitachi, Ltd.

George BuckleyLouise Pentland

Harufumi Mochizuki

Share ownership: 5,300 shares

Share ownership: 700 shares

Share ownership: 2,900 shares

Term of office as Independent Director: 7 years

Term of office as Independent Director: 4 years

Term of office as Independent Director: 7 years

1993 Chief Technology Officer, Motors, Drives and Appliances,
Emerson Electric Company
1994 President, US Electrical Motors, Emerson Electric Company
1997 President, Mercury Marine Division andCorporate Vice President, Brunswick Corporation
2000 President and Chief Operating Officer, Brunswick Corporation,
Chairman and Chief Executive Officer, Brunswick Corporation2005 Chairman of the Board, President andChief Executive Officer, 3M Company
2012 Executive Chairman of the Board,
3M Company (Retired in May 2012)
Chairman, Arle Capital Partners Limited(Retired in December 2015)
Director, Hitachi, Ltd.

1997 Admitted as a Solicitor (UK)2001 Senior Legal Counsel, Nokia Networks,
Nokia Corporation2007 Vice President, Acting Chief Legal Officer andHead of IP Legal, Nokia Corporation
2008 Senior Vice President and Chief Legal Officer,
Nokia Corporation2009 Admitted to New York State Bar Association2011 Executive Vice President and Chief Legal Officer,
Nokia Corporation (Retired in May 2014)2015 General Counsel, PayPal, eBay Inc.
Director, Hitachi, Ltd.
Senior Vice President and Chief Legal Officer,
PayPal Holdings, Inc.
2016 Executive Vice President,
Chief Business Affairs and Legal Officer,
PayPal Holdings, Inc. (currently in office)

Chairman of the Board
Chair of the Nominating Committee
Chair of the Compensation Committee
2002 Director-General for Commerce and Distribution Policy,
Minister’s Secretariat,
Ministry of Economy, Trade and Industry of Japan (“METI”)
2003 Director-General, Small and Medium Enterprise Agency, METI
2006 Director-General, Agency for Natural Resources and Energy, METI
2008 Vice-Minister of Economy, Trade and Industry of Japan
2010 Special Advisor to the Cabinet of Japan(Retired in September 2011)
Senior Advisor to the Board, Nippon Life Insurance Company(Retired in April 2013)2012 Director, Hitachi, Ltd.
2013 President and Representative Director,
Tokyo Small and Medium Business Investment &Consultation Co., Ltd. (Currently in office)* The "independent directors" are the directors who fulfill the qualification requirements to be outside directors as provided for the Companies Act of Japan and also meet the independence criteria defined by the Company and those
provided by Japanese stock exchanges where the Company is listed.

84

Hitachi Integrated Report 2019

Nominating Committee
Audit Committee
Compensation Committee
Representative Executive Officer

Takatoshi Yamamoto

Hiroaki Yoshihara

Share ownership: 7,700 shares

Share ownership: 1,800 shares

Term of office as Independent Director: 3 years

Term of office as Independent Director: 5 years

1995 Managing Director, Morgan Stanley Japan Limited
1999 Managing Director and Vice Chairman,
Tokyo Branch, Morgan Stanley Japan Limited
2005 Managing Director and Vice Chairman,
UBS Securities Japan Co., Ltd.
2009 Managing Director, CASIO COMPUTER CO., LTD.
2011 Advisor, CASIO COMPUTER CO., LTD. (Retired in June 2012)2016 Director, Hitachi, Ltd.

Chair of the Audit Committee
1978 Joined Peat Marwick Mitchell & Co.
1996 National Managing Partner, the Pacific Rim Practice,
KPMG LLP
1997 The Board Member, KPMG LLP
2003 Vice Chairman and Global Managing Partner,
KPMG International (Retired in April 2007)2014 Director, Hitachi, Ltd.

Directors At the end of the Annual General Meeting of Shareholder held in June 2019

Hiroaki NakanishiToyoaki Nakamura

Toshiaki Higashihara

Share ownership: 70,600 shares

Share ownership: 16,200 shares

Share ownership: 69,900 shares1970 Joined Hitachi, Ltd.
2003 Vice President and Executive Officer
2004 Senior Vice President and Executive Officer
2005 Chairman and Chief Executive Officer,
Hitachi Global Storage Technologies, Inc.
(Retired as CEO in March 2009)2006 Executive Vice President and Executive Officer, Hitachi, Ltd.
(Retired in December 2006)
2009 Executive Vice President and Executive Officer, Hitachi, Ltd.
Chairman of the Board, Hitachi Global Storage Technologies, Inc.
(Retired in March 2010)2010 President, Hitachi, Ltd., President and Director, Hitachi, Ltd.
2014 Chairman & CEO and Director, Hitachi, Ltd.
2016 Executive Chairman and Representative Executive Officer,
Hitachi, Ltd.
2018 Executive Chairman and Executive Officer, Hitachi, Ltd.

1975 Joined Hitachi, Ltd.
2006 General Manager, Finance Department
2007 Senior Vice President and Executive Officer
Senior Vice President, Executive Officer and Director
2009 Senior Vice President and Executive Officer
2012 Executive Vice President and Executive Officer(Retired in March 2016)2016 Director

1977 Joined Hitachi, Ltd.
2007 Vice President and Executive Officer (Retired in March 2008)
2008 President, Hitachi Power Europe GmbH2010 President and Chief Executive Officer,
Hitachi Plant Technologies, Ltd.
President and Representative Director,
Hitachi Plant Technologies, Ltd.
2011 Vice President and Executive Officer, Hitachi, Ltd.
2013 Senior Vice President and Executive Officer, Hitachi, Ltd.
2014 President & COO, Hitachi, Ltd.
President & COO and Director, Hitachi, Ltd.
2016 President & CEO and Director, Hitachi, Ltd.

Each Committee is composed of the following members (chair names underlined)
Nominating Committee: Harufumi Mochizuki, Cynthia Carroll, Hiroaki Yoshihara, Hiroaki Nakanishi
Audit Committee: Hiroaki Yoshihara, Katsumi Ihara, Harufumi Mochizuki, Takatoshi Yamamoto, Toyoaki Nakamura
Compensation Committee: Harufumi Mochizuki, Katsumi Ihara, Takatoshi Yamamoto, Toshiaki Higashihara85

A Business Foundation that Supports Sustainable Growth

Executive Officers As of June 30, 2019

President & CEO

Executive Vice Presidents and Executive Officers

Toshiaki Higashihara*

Masakazu Aoki*

Keiji Kojima*

Keiichi Shiotsuka*

Hideaki Takahashi*

Overall management

Assistant to the President (businessfor industry & distribution sectors,
water & environment business, andindustrial products business)

Assistant to the President (smart life &
ecofriendly systems business, automotive
systems business, and healthcare
business) and smart life & ecofriendly
systems business

Assistant to the President (systems& services business and defense systems
business), systems & services businessand social innovation business promotion

Assistant to the President (coststructure reform and supply chain
management), cost structurereform and supply chain
management (MONOZUKURI and
quality assurance)

Senior Vice Presidents and Executive Officers

Alistair Dormer*

Toshikazu Nishino*Atsushi Oda

Yoshihiko Kawamura

Kenichi Kokubo

Assistant to the President (building
systems business, and railway systems
business)

Assistant to the President(nuclear energy business andenergy business)

Nuclear energy business andenergy business

Management strategies, investment
strategies, and strategies fornext-generation business

Regional strategies (China)

Setsuo Shibahara

Hideaki Seki

Yoshitaka Tsuda*

Hidenobu Nakahata*

Mitsuaki Nishiyama*Services & platforms business

Building systems business

Marketing & sales, regional
strategies, and social innovation
business promotion

Corporate communications,
legal matters, risk management,
corporate auditing, and human capital

Finance and corporate
pension system

Vice Presidents and Executive Officers
Keiichi Akino

Jun AbeHitoshi Ito

Kenji Urase

Ryuichi Otsuki

Marketing & sales(business for financial institutions,
government, public corporationand social infrastructure systems,
and defense systems business)

Business for industry & distribution sectors

Governments & external relations

Energy business

Investment strategies

Kohei Kodama

Norihiro Suzuki

Yoji Takeuchi

Hidetoshi Takehara

Toshiaki Tokunaga

Legal matters, risk management,
and corporate auditing

Research & development

Marketing & sales(business for industry & distributionsectors, water & environment business,building systems business, railway
systems business and healthcare
business)

Nuclear energy business

Services & platforms business

Osamu Naito

Kojin Nakakita

Katsuya Nagano

Seiichiro Nukui

Yasushi Nomura

Governments & external relations,
CSR & environmental strategy andexecutive support

Regional strategies (APAC)

Business for government,
public corporation, and social
infrastructure systems

Business for industry &distribution sectors

Information technology strategies

Andrew Barr

Kentaro Masai

Shinya Mitsudomi

Masashi Murayama

Mamoru Morita

Railway systems businessSupply chain management(MONOZUKURI and quality assurance)

Railway systems businessSupply chain management(procurement)

Management strategies

Tsugio Yamamoto

Takashi Yoda

Masaya WatanabeBusiness for financial institutions

Marketing & sales (nuclear energy
business and energy business)

Information security management and cost
structure reform

Executive Officer
Hiroaki Nakanishi
General86

Hitachi Integrated Report 2019

Note: Executive officers are listed by position and in Japanese alphabetical order within each grouping.
* Denotes executive officers who are representative executive officers.