Management

Introduction

Social Innovation

Environmental

SocialManagement

Sustainability Management

CEO’s Message

Mid-term Management Plan 2024 and Sustainability

Governance

Assurance

Hitachi Sustainability Report 2023

011

Chief Sustainability Officer’s Message
Hitachi Group Identity

Sustainability Management
	Mid-term Management Plan 2024 andSustainability
Materiality
Framework for Promoting Sustainability Strategy

Towards Sustainable Societies—Mid-term Management Plan 2024
Approach

Strategy

Targets

In accordance with Hitachi’s Mission to “contribute to society

Vision Targets of Mid-term Management Plan 2024

through the development of superior, original technology and

Hitachi continues to grow across diverse industries and solve

issues through its business, while respecting planetaryproducts,” we pursue our Social Innovation Business leverag-social issues through the three global trends of Digital, Green,boundaries and realizing wellbeing for all individuals. We willing core strengths in IT (Information Technology) × OT

and Connective as change drivers.

further evolve our Social Innovation Business driven by three

Engagement and Initiatives(Operational Technology) × Products, and Lumada* to help

External Assessments and Awards

build sustainable societies.

Hitachi aims to resolve the increasingly complex social

The environment is reaching limits on a global scale as

growth drivers: Digital, Green, and Innovation, and contributethe thresholds of several of the nine planetary boundaries

to solve social issues. We will also grow Lumada globally as

have already been crossed. Also, wellbeing (physical, mental,

a customer co-creation framework, accelerating expansion

recent years, it is essential that we conduct management

and social) is a growing global issue, therefore it is significant

through four cross-organizational functions: Green, Digital,from a long-term perspective and maximize Hitachi’s diversethat we focus both on planetary boundaries and wellbeing.

Innovation, and Global M&S.

1

To respond to the increasingly complex global issues ofmanagement resources to achieve further evolution in ourSocial Innovation Business.
Hitachi has responded by imagining the future—what theSupporting quality of life with data and technology that foster a sustainable society

earth, society, and people will look like and what Hitachi will

Growthact like in 2050. Based on the future, in April 2022, we backcasted to formulate the Mid-term Management Plan 2024

ion for So
reat
cie
-C
ty
o
C

which clarified what Hitachi should do now and what Hitachi
should achieve over the medium- to long term.
*1 Lumada: Solutions, services, and technologies that leverage Hitachi’s digitaltechnology and are offered to customers to accelerate the digitization ofcustomers’ businesses.

Mid-term Management Plan 2024

Planetary
Boundaries
Protect the earth while
maintaining social
infrastructure

Society
Progress of the Mid-term Management Plan 2024

Green

Wellbeing

DigitalA society where every
individual is comfortable
and active

Innovation

PeopleIntroduction

Management

Management

Social Innovation

Environmental

SocialGovernanceContributing to the SDGs
ApproachCEO’s Message

Hitachi’s Social Innovation Business aims to create sustainable

examined the relationship between the opportunities and risks

Chief Sustainability Officer’s Message

societies by solving global social and environmental issues asassociated with the SDGs and our businesses to identify 13

Hitachi Group Identity

defined by the SDGs, and we consider the business to be agoals as Hitachi priority SDGs issues: five goals through which

Sustainability Management

source of sustainable growth for us. We strive to create social,

we make particularly significant impacts through our key busi-

environmental, and economic value through our Social

nesses and six goals through which we particularly contribute

Innovation Business, reduce negative social and environmental

in the course of our corporate activities.

	Mid-term Management Plan 2024 andSustainability
Materiality
Framework for Promoting Sustainability Strategy
Engagement and Initiatives

impacts and seek a deeper understanding of business risks

Through our active involvement across a broad range ofarising from social and environmental changes to ensure busi-

business fields, we believe we can contribute extensively toness continuity and greater resilience.

the achievement of SDGs beyond the 13 goals identified, andBased on our Mid-term Management Plan 2024, we

we will strive to contribute to the achievement of all 17 SDGs.

External Assessments and Awards

Business Strategy

Corporate Commitment

Assurance

Hitachi Sustainability Report 2023

012

Management
CEO’s Message
Chief Sustainability Officer’s Message
Hitachi Group Identity

Sustainability Management
Mid-term Management Plan 2024 andSustainability	Materiality
Framework for Promoting Sustainability Strategy
Engagement and Initiatives
External Assessments and Awards

Introduction

Management

Materiality

GRI 2-4/2-14/2-16

Social Innovation

Environmental

SocialGovernance

Assurance

Toward a Sustainable Society: Hitachi’s Materiality
Approach

Strategysustainability as the core of its business strategy, and is working toward realizing a sustainable society through the Social
Innovation Business.
In the Mid-term Management Plan 2024, we declared ouraspiration of “supporting people’s quality of life with data andtechnology that fosters a sustainable society.” While some of
the nine planetary boundaries have already been exceeded,
Hitachi is aware of each one and works to protect the planet
and maintain society. Hitachi aims to solve social challenges
to realize a future that balances protection of the planet and

STI

GRI 3-1
Company-wide
performance

Materiality analysis process
STEP1

Comprehensive understanding ofsocial issues

STEP2

Ranking issues by priority from
Hitachi’s point of view

STEP3

Ranking issues by priority from astakeholders’ point of view

STEP4

Identifying Materiality

Planetary boundaries

The materiality analysis process

Individual
evaluation
Sustainability targets included
in individual targets

After amendment
STI
Company-wide
performance

Divisional
performance<Performance indexes>
E.g., revenues, Lumada business revenues,
Adj. EBITA Margin, EPS, core FCF

Materiality analysis process
https://www.hitachi.com/sustainability/materiality/

Reflecting Sustainability Targets in Executive
Compensation Evaluation
SystemDivisional
performance<Performance indexes>
E.g., revenues, adjusted operating income,
EBIT, income before taxes, net income,
operating income ratio

people’s individual wellbeing.
https://social-innovation.hitachi/en/article/planetary-boundaries/

GRI 2-19

Individual
evaluation

Sustainability

New evaluations based on
our Materiality “Environment”“Business with Integrity” and “Quality of Life”
based on the sustainability strategy

Quality of Life, each linked to sub-materiality topics targets
listed below.
Going forward, Hitachi will enhance link of compensationand the growth of the company, cultivating a growth mindset

With a comprehensive understanding of social issues, Hitachi

In fiscal 2023, Hitachi amended the executive compensation

has identified six material topics and 15 sub-material topics

system to further accelerate growth as a global company, andbased on an analysis of risks and opportunities from a sus-

to further strengthen links between increases in corporate

Materiality targets linked to executive compensation

tainability perspectives as well as feedback from stakeholders.

value and compensation. The revised executive compensation

Materiality

Based on these material topics, Hitachi is monitoring

system is more closely linked to the Mid-term Management

measures as well as discussing the progress, and new initiatives for each materiality at the Senior Executive Committee
and the Board of Directors.

013

Before amendment

Targets

Hitachi practices sustainable management, which positions

Hitachi Sustainability Report 2023

and strive to achieve global growth as One Hitachi.

Environment[Decarbonization]• Carbon neutrality through the value chain• Contributing to CO2 reduction through business[Resource circulation]• Effective use of water

Business with
Integrity[Occupational safety]• Creating a safe working environment without accidents

Quality of Life

[Employee happiness]• More flexible working styles to increase engagement

Plan 2024 and incorporates sustainability targets.
Specifically, sustainability evaluations that had been used as
an index for individual short-term incentive compensation (STI)
are now treated separately and account for a ratio of 20%.
In addition, an additional grant of shares equivalent to
10% of the standard amount of medium- to long-term incentive compensation (LTI) will be granted if the sustainability
targets are achieved.
Sustainability evaluation in STI will be aligned to materiality
topics including Environment, Business with Integrity andSub-material topics target

P.141 Compensation to Executive Officers

Introduction

Management
CEO’s Message
Chief Sustainability Officer’s Message
Hitachi Group Identity

Management

Social Innovation

15 Sub-Material Topics and Targets
Materiality

	Materiality
Framework for Promoting Sustainability Strategy

External Assessments and Awards

Resilience
Contributing to the maintenance and rapid
recovery of social infrastructure

Safety & Security
Contributing to safe and securesociety-building

Quality of Life
Contributing to physical and mental wellness
and a prosperous life

Business with Integrity
Adhering to ethical standards as well as
respect human rights

Diversity, Equity and Inclusion (DEI)
Contributing to a society where everyone canshine

Hitachi helps people live safely by contributing
to the rapid recovery of supply chains and themaintenance of social infrastructure by providing system solutions that can respond immediately to risks, such as natural disasters,
pandemics, and cyberattacks.
Hitachi contributes to the realization of comfortable and active lifestyles for people by providing
solutions in the building, mobility, and security
fields that support urban development for safe
and secure living.
Hitachi is harnessing our healthcare and digitaltechnologies to help more people develop
bonds and enjoy healthier, more prosperous
lives. We will also continue to pursue thehappiness and wellbeing of our employees, as
we believe that their happiness and wellbeingis the ground on which Hitachi’s future will
flourish even more fully.
As a Group responsible for social infrastructurearound the world, Hitachi will manage its
business with honesty and integrity, trusted bysociety, respect human rights and provide asafe workplace. We will reflect a system of
ethical and responsible business conduct,
including respect for human rights, in ourbusiness activities and decision-making
standards, working together with our employees, collaborative partners and communities
throughout the supply chain.
Hitachi has a place for everyone, welcoming
differences in colleagues’ background, age,gender, sexuality, family status, disability, race,
nationality, ethnicity, and religion. At Hitachi, we
treat everyone fairly, recognizing differences toallow everyone to perform at their full potential.
We respect and value these and other differences because only through them we canunderstand our markets, create better ideas
and drive innovation.

Governance

Assurance

Hitachi Sustainability Report 2023

014

GRI 3-2/3-3

Sub-material topics Targets/KPIs

Decarbonization
As a climate change innovator, Hitachi willcontribute to the realization of a carbon neutral
society with Hitachi's superior green technologies, by providing value to customers in all
business segments. We will also promoteresource efficiency toward the transition to acircular economy.

Mid-term Management Plan 2024 andSustainability

Social

Our aspirations

Environment
Contributing to decarbonization and resource
circulation

Sustainability Management

Engagement and Initiatives

Environmental

Resource circulation

Carbon neutrality through the value chain
Targets/KPIs • FY2030: Achieve carbon neutrality in business sites (factories and offices)• FY2050: Achieve carbon neutrality through the value chain
Contributing to CO2 reduction through business
Target/KPI • FY2024: 100 million metric tons of CO2 avoided emissions per year
Transition to a circular economy
Targets/KPIs • FY2024: Full application Eco-Design for all newly developed products• FY2030: Zero*2 waste to landfill*3 from manufacturing sites
Effective use of water
Target/KPI • Reduction rate in water use per unit (compared to FY2010)
FY2024: 24%, FY2050: 50%

Harmonize with nature

Minimize impact on natural capitalStrengthening supply
chainsBuild flexible supply chains capable of responding to disasters and risks

Maintaining social
infrastructure

Resilience and sophistication of maintenance through DX of social infrastructure
Business Case Contribute to stable energy supply through substation management to approx.
1.9 billion people*4

Safe and secure urban
environments

Safe and comfortable transportation
Business Case Contributed to a total of 15 billion people annually through railway services*4

Ensuring cyber security

Secure cybersecurity for social infrastructure and business systems

Connected andprosperous society

Employee happinessBusiness ethics andcompliance

Respect for humanrightsOccupational safety
Safe and secure
products and services
Diverse organizationthat fosters innovation

Contribution to adiverse and equitablesociety

FY2022 Progress
40% of total CO2 reduction rate at factories andoffices (compared to FY2010)
126.1 million metric tons per year*1 of CO2 avoided
emissions357 products identified as subject of Eco-Design
199 sites (58%) achieved zero waste to landfill
27% reduction in water use per unit
Sustainability Report 2023
P.55–57

Sustainability Report 2023
P.22–24

Increase healthy life expectancy and wellbeing
Business Case Blood tests and other physical exams: 20 billion tests/year*4
Build a trustful relationship with others
Target/KPI • Users of happiness service: 90 thousand in FY2024

10.0 thousand users of happiness service

More flexible working styles to increase engagement
Target/KPI • Employee engagement (positive response rate): FY2024 71.0%*5

69.5% employee engagement (positive response rate)

Encourage employees to apply ethical standards in day-to-day work.
Target/KPI • Achieve a score of at least 60 (out of 100) in FY2023*6, the first year of resultsfrom Ethical Culture & Perceptions Assessment, improving it every year
Promote human rights due diligence and strengthen monitoring of procurement partners forresponsible procurement, including human rights
Targets/KPIs	• FY2023: Conduct human rights risk assessments for all BUs (10 BUs) and majorGroup companies• FY2024: Respond to human rights risks
Creating a safe working environment without accidents
Target/KPI • Zero fatal accidents

Achieved a score of 76.5 (Conducted assessment inJune 2023)

Conducted human rights risk assessments forcertain Group companies

5 fatal accidents

Ensure products and services safety while putting customers first

Sustainability Report 2023
P.115–117

Strengthen diversity in management
Target/KPI • Ratio of female and non-Japanese executive and corporate officers: FY2030 30%
respectively

11% of female and 20% of non-Japanese executive
and corporate officers*7

Acquiring and developing digital talent
Target/KPI • FY2024: 97,000 persons*8

83,000 persons

Empower DEI of society through community relationship programs
Target/KPI• Nurture and empower next-generation talentParticipants in Hitachi Young Leaders Initiative
30 people 405 people cumulative*9Participants in Hitachi High-Tech science education
support activities
62,487 people 367,362 people cumulative*10*1: Mid-term Management Plan 2024 three-year average *2: Less than 0.5% *3: Wherever this is compatible with local conditions and regulations *4: FY2022 results *5: Target has been raised since we achieved the initial target/KPI*6: Base year has been changed from FY2022 to FY2023 *7: Included assignment as of April 1, 2023 *8: Hitachi Astemo is excluded *9: Cumulative total since 1996 *10: Cumulative total since 1990

Introduction

Management
CEO’s Message
Chief Sustainability Officer’s Message
Hitachi Group Identity

Sustainability Management
Mid-term Management Plan 2024 andSustainability
Materiality	Framework for Promoting Sustainability
Strategy
Engagement and Initiatives
External Assessments and Awards

Management

Social Innovation

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2023

015

Framework for Promoting Sustainability Strategy
Establish a System to Promote Sustainability
GRI 2-12/2-13/2-14/2-16/2-24

Structure

Hitachi pursues sustainability initiatives across the group under

Individual sustainability themes such as carbon neutrality, circular economy, human rights due diligence (HRDD), diversity, equity,

the leadership of Chief Sustainability Officer, Lorena Dellagiovanna.

and inclusion (DEI), occupational safety and health, supply chains, quality assurance, etc. are promoted by meeting bodies consist-

In April 2022, Hitachi established the Growth Strategy

ing of responsible staff at BUs and principal Group companies as part of cross-organizational activities in the Hitachi Group, who

Meeting, Risk Management Meeting, and Human Resource
Strategy Meeting to deliberate on the following important
issues within the Senior Executive Committee that discusses

discuss measures and share information across the entire Group.
Since fiscal 2022, we hold the Sustainability Promotion Meetings chaired by the Chief Sustainability Officer to discuss and share
information on important measures related to sustainability across the group, aiming to deepen sustainable management further.

important topics in Hitachi’s corporate management.
Growth Strategy Meeting: Matters related to management strategies
for the growth of the Hitachi Group
Risk Management Meeting: Matters necessary for the proper
management of risk in the Hitachi Group
Human Capital Strategy Meeting: Matters necessary for establishing organization and culture, and securing and developing humancapital for the growth of the Hitachi Group

Framework for promoting sustainability strategy
Board of Directors
Senior Executive Committee
Growth Strategy Meeting

Human Resource
Strategy Meeting

The Growth Strategy Meeting discusses and decides on matters

Risk Management Meeting

Sustainability
Promotion Meeting

related to the Hitachi Group’s management strategy and accelerates the formulation of strategies necessary for its growth.
The Risk Management Meeting discusses and decides onimportant matters related to group-wide risks, and aims torealize a solid management foundation in coordination withEnvironmental

Social

Eco-Management Meeting

growth strategies through a centralized and cross-sectional
understanding of risks.
The Human Resource Strategy Meeting discusses anddecides on matters necessary to foster the Hitachi Group’s
organization and culture as well as to secure and develop
human resources, thereby supporting its further growth throughCircular Economy (CE)

Carbon Neutrality (CN)Eco-Management
3R Promotion
Project Meeting

Eco-Management
CN2030 Promotion
Project Meetingthe enhancement of human capital.
After discussions at these meeting bodies, important sustainability issues are deliberated on by the Senior Executive
Committee to make decisions, and are submitted to the Boardof Directors for further discussions as necessary.

Human Rights

DEI

HRDD Execution
Managers Meeting

Global DEI Council

Occupational Healthand Safety

Quality Assurance

Health and Safety
Leaders Meeting

QA Division-Manager
Liaison Meeting

Sustainable Procurement
Sustainable Procurement ConferenceIntroduction

Management
CEO’s Message

Management

Social Innovation

Framework for Implementing the
Hitachi GX Strategy
Aiming to be a global leader in green transformation (GX),
Hitachi formulated a Green Strategy consisting of GX for
CORE and GX for GROWTH, striving to put into place a

Hitachi Group Identity

framework to execute our strategy.

Mid-term Management Plan 2024 andSustainability
Materiality	Framework for Promoting Sustainability
Strategy
Engagement and Initiatives

SocialGovernance

Assurance

Hitachi Sustainability Report 2023

016

Framework for implementing GX strategy

Chief Sustainability Officer’s Message

Sustainability Management

Environmental

Board of Directors

Senior Executive Committee

The Internal Environment Initiatives Division leads environ-

Digital Strategy

mental activities within the Hitachi Group. At the same time,

Green Strategy
Chief Sustainability Officer

Innovation Strategy

the Global Environment Business Group drives growthInternal Environment
Initiatives Division

through green businesses. And the business sectors foster
environmental contributions through their respective business

Global Environment
Business Division

fields by working together to lead green strategies throughout
the group.
Digital Systems & Services

Green Energy & Mobility

Connective Industries

External Assessments and Awards
Overview of Sustainability Related Conference Bodies
Meeting

Attendees

PurposeFrequency

Sustainability Promotion Meeting

Chief Sustainability Officer, Business promotion division heads at BUs & key
Group companies and RHQ Sustainability Officers

Deliberation, information sharing related to material sustainability initiatives

Once or twice
per year

Eco-Management Meeting

Heads of Business promotion/Environment-related/MONOZUKURI (production)/
Procurement divisions from BUs and key Group companies

Deliberation, planning, and implementation of action plans (environmental
action plans) to achieve the Hitachi environmental long-term goals

Twice per year

Eco-Management CN2030 Promotion
Project Meeting

Heads and members of Environment-related/MONOZUKURI (production)
divisions from BUs and key Group companies

Monitoring and implementation of CN action plan and discussion ofacceleration

Twice per year

Eco-Management 3R Promotion
Project Meeting

Heads and members of Environment-related/MONOZUKURI (production)
divisions from BUs and key Group companies

Promotion of actions for 3R activities toward realizing CE

Sustainable Procurement Conference

Chief Procurement Officer, heads of the procurement divisions at BUs and key
Group companies, and individuals responsible for and engaged in sustainableprocurement

Communicate the Hitachi Group sustainable procurement policies and strategies to all procurement divisions, improve knowledge and share best practices

Twice per year

HRDD Execution Managers Meeting

HRDD execution managers from BUs and key Group companies

Provide information and knowledge necessary for HRDD implementation, andshare status of implementation in BUs and key Group companies

Once or twice
per year

Global DEI Council

DEI leaders from BUs and key Group companies

Implement DEI policies, initiatives and share best practices

Once or twice
per year

Health and Safety Leaders Meeting

Individuals responsible for health and safety at BUs, key Group companies(CHRO, officer in charge of health and safety)

QA Division-Manager Liaison Meeting

Heads of the quality assurance divisions at BUs and key Group companies

Instruct and communicate occupational health and safety activity policies andmeasures, confirm progress
Share the details of important incidents related to occupational health andsafety, discuss measures to ensure the prevention of recurrence
Discuss and develop shared Hitachi Group quality improvement activity
policies and measures for products and services

Four times
per yearOnce pertwo months

Every quarter