IHIE S G S TOR YB OOKAn Everlasting
Aspiration

Achieving
Sustainability

founding in 1853.

1

Achieving Sustainability

for the Earth and its inhabitants?

3

Message from the President

5

ESG Management

6

Material Issues

and develop and use products

Use the power of technology
to promote industry
and advance our country

with low CO2 emissions.

Create a World Where Nature and Technology
Work in Unity

The activities of companies influence and7

impact society and the environment in many

15 Preventing and Mitigating Disasters

Tomiji Hirano
Founder of IHI's predecessor, Ishikawajima Hirano Shipyard

a sustainable society.
Tomiji Hirano dedicated his life to pursuing thisaspiration. His spirit lives on in the unwaveringand treasured values of the IHI GroupManagement Philosophy.

Management Philosophy“Contribute to the development ofsociety through technology”

Becoming Carbon-freeways. To realize a sustainable society,companies must minimize the potential

Our aspiration is, and always will be,
to overcome social issues to achieve

What can we do to create sustainability

increase the ratio of renewable energy we use,difficult social issues and using thesolutions for society since ourContents

We can use less energy to make products,

We have been boldly addressing
power of our technology to provide

Why is now
the time for ESG?

negative impact on society andthe environment of all their corporate
activities. A corporate governance systemenables us to ensure our activities are carriedKeys to Realizing our Sustainability Goal
for the Company and Society

17 Human Rights of All Stakeholders
19 Diversity and Inclusion

out properly and effectively.

21 Securing and Maintaining Stakeholder Trust

Achieving sustainability requires every one of

22 Our Unwavering Aspiration

us to search for solutions and take action.
That is why now is the time for environmental,social, and governance (ESG) management.

“Human resources are our single
most valuable asset”

12

Message from the President

With our values rooted in ESG,
we are directing our business toward
addressing social issues andrealizing a sustainable society
Hiroshi Ide
President and Chief Executive Officer
IHI Corporation

In this era of great uncertainty,
a company willing to facedifficult challenges is a company
with opportunity

Looking back, the approaches we took were notalways ideal, since we often prioritized economic
outcomes and did not sufficiently consider the impact

Moving forwardwith our aspiration
for a better, sustainable society

management and fulfill our aspiration.

on the natural environment. Still, I believe we can learn
from the past and apply the core values we have

In November 2020, we launched an initiative called

The unprecedented challenges society has been facing

developed so that the IHI Group will play a major role in“Project Change”. The project sets becoming

The Making of IHI’s ESG Management

in recent years, including the human and economic

creating a better society.

carbon-free, preventing and mitigating disasters,

Continuing our history of change

impact of the COVID-19 pandemic and the global

and contributing to enriching the lives of all people

climate change caused by greenhouse gases, have

In this era of great uncertainty, what should we do foras the core social issues we will address while wecreated a widespread sense that society has stalledsociety? As our Management Philosophy states, weseek to create a world where nature and technology

and uncertainty about our future. Many people may be

can use our human resource assets and technologies

work in unity. Approaching these social issues as

wondering what the future will be for companies andto help people enrich their lives. We can do that withbusiness opportunities will lead to sustainable growth

ultimately, for themselves.

management that addresses social issues, gives

as a company.

greater consideration to the environment and society,
However, even with this disruption, I am optimistic andand continues earning the trust of stakeholders

The challenges society is currently facing are extremely

see the situation as an opportunity.

through ESG management. The difficult times provide

complex. One corporate group cannot solve them all.

us with a once-in-a-generation opportunity as a

However, a company that aspires to contribute more to

Throughout the 168 years since our founding, the IHI

company contributing to a sustainable society tocreating a better and sustainable society can make aGroup has encountered innumerable problems andcreate infrastructure for safe, secure, and enrichingdifference. I want the Group to move ahead by sharing

challenges; and we have directly and passionately

everyday lives.

our aspiration with our employees and all stakeholders

confronted each one to find a solution.

3

making a concerted effort to carry out our new ESG

Since my appointment as company president in April
2020, I have met with numerous employees fromacross the IHI Group. I have been answering questions
and responding to their concerns, while also explaining
the direction we need to take as a company.
Engaging directly with employees provides
perspective to a sense of crisis that comes with change
and enables them to take appropriate action. This isessential to continuing our history of change. I lookforward to communicating with more employees.

and with new business partners. The IHI Group is

4

IHI Group ESG Management

IHI Group Material Issues

The IHI Group is seeking to create a world where nature and technology work in unity—a sustainable
world where technology protects society from extreme environmental events and people live andflourish in a safe and secure environment. We will use our business to tackle social issues, create social
value, and raise our corporate value.

The IHI Group has identified material issues to be prioritized to achievesustainable growth as a company and realize a sustainable society.

IHI Sustainability Goal

Create a world where nature and technology work in unity

Materialize
fulfilling lifestyles

Resolvingsocial issues
Becomecarbon-freePrevent
andmitigate disasters

Our ESG management considers the following to be material issues for our objectives:
implementing global climate change countermeasures, respecting the human rights ofpeople involved in our business operations, maintaining a diverse and inclusive
workforce as a driving force of value creation, and securing stakeholder trust withearnest corporate management.

Material Issues

Climate change

Human rights

Human rights

Diversity and inclusion

Diversity and inclusion

Securing and maintaining stakeholder trust

Securing and maintaining stakeholder trust
Management Philosophy“Contribute to the development of society through technology”“Human resources are our single most valuable asset”

5

6

Creating a World
Where Nature and Technology Work in Unity
The IHI Group is seeking to create a world where nature and technology work in unity through addressing
social issues in three main areas by becoming carbon-free, preventing and mitigating disasters, andenriching lives of all people. We are doing our part to enable flourishing societies while taking steps to halt
global climate change through mitigation by reducing our greenhouse gas (GHG) emissions, and throughadaptation by preparing for the impact to reduce the negative effects from climate change.

Tackling Climate Change: Becoming Carbon-free

Initiatives to Achieve Carbon-neutral Business Operations
We are seeking to make our business activities
carbon-neutral by actively introducing our products,
systems, and other new technologies to reduce CO2
emissions from our production operations and by
converting to fuels with low or zero CO2 emissions.

We are also promoting the use of renewable energy.
We are actively partnering with suppliers withenvironmentally friendly operations and working toachieve carbon neutrality throughout the value chain.

CO2 Emission Reduction Initiatives
The IHI Group has pledged to make its complete value chain carbon-neutral by 2050. We aim to be carbon-neutral in our
processes overall by reducing the direct and indirect (Scope 1 and 2) GHG emissions from our business activities as well as
Scope 3 emissions from the upstream and downstream processes in our value chain. We have categorized initiatives using our
products and services into the two actions of “transition” for our existing technologies and “transformation” primarily throughnew technologies.

Scope 3 Category 1 (Purchased goods and services)
Promoting CSR Procurement*
Procurement• Actively partner with environmentally sound suppliers• Introduce products designed to be environmentally friendly

IHI Carbon-neutral 2050

*CSR procurement is obtaining the materials and equipment needed for our operations based on the corerequirements of quality, cost, and delivery and with full consideration of human rights, occupational health andsafety, the environment, and information management.

Our 2050 goal to achieve carbon neutrality
throughout the entire value chain
CO2 Emission Reduction Initiatives

254,000
t-CO2

Scope 1

Initiatives to Become Carbon-neutral

Procurement

Business
operations

Production• Energy saving : Replace aging equipment,
introduce power-saving andhigh-efficiency equipment

Fuel conversion
Use of renewable energy

Products
and services

Transformation

7• Introduce equipment
to capture CO2 fromexhaust emissions• Use carbon credits

Lighten and electrify products
Utilize renewable energy

Introduce new technologies• Renewable energy : Introduce renewable energy
equipment, purchaserenewable energy

Balance CO2
emissions andabsorption• Power consumption optimization :Introduce an energy management system

Enhance efficiency of current power plants

Transition• Fuel conversion : Convert to low-carbon andnon-fossil fuel sources

Scope 2 (Indirect Emissions)

Scope 2

Improve current technologies• Electrification : Convert from fuel-based toelectric equipment

Partner with eco-friendly businesses
Pioneer the adoption of new technologies, including forin-house products and systems

Production

Scope 1 (Direct Emissions)

Use hydrogen and ammonia

Statusin 2019

Carbon-neutral
in 2050(Balanced Emissions
and Absorption)

Recycle carbon

8Creating a World Where Nature and Technology Work in Unity

The Ammonia Value Chain

Spotlight

Using Ammonia as Fuel and Constructing an Ammonia Value Chain

Ammonia, NH3, is a chemical compound composed of one nitrogen atom and three hydrogen atoms. Since burningammonia does not produce CO2 emissions, it is promising as a next-generation fuel source to help mitigate climatechange. The IHI Group is cultivating its combustion technologies for thermal power generation to develop power
generation technology using ammonia as a fuel. In addition, we are currently engaging in a demonstration project*
aimed at developing vessels equipped with domestically produced ammonia-fuel engines. We are also preparing theinfrastructure for more widespread use of ammonia as a fuel by constructing a complete ammonia value chain fromproduction to consumption.

Worldwide ammonia production amounted to roughly 200
million tons in 2019. The vast majority of ammonia, however,is consumed locally, as only about 20 million tons were tradedon global markets. This means that if the major Japaneseelectric power companies were to adopt 20% co-firing at theircoal-fired power plants, they would need some 20 million tonsof ammonia1) annually.
Ammonia is currently widely used as a raw material for
fertilizers and chemical products, but the volume is relatively

small. When the power generation industry begins increasing
ammonia consumption, a full infrastructure will be needed
not just for mass production but also for transport andstorage, much like the distribution network for LNG.
The IHI Group will be involved in various processes in
the ammonia value chain from production to use, including
developing carbon-free manufacturing technologies andengineering and constructing liquid ammonia receiving sites.
1) Source: FY2020 Annual Report on Energy (Energy White Paper 2021)*1 CCS: Carbon dioxide Capture & Storage*2 EOR: Enhanced Oil Recovery

Constructing the Ammonia Value Chain

Carbon Dioxide-free Power Generation Using Ammonia

Produce

Transport and Storage

Use

While transitioning to carbon neutrality, we will reduce our CO2 emissions by co-firing ammonia and fossil fuels.
Our ultimate objective is to exclusively use ammonia as a fuel source for thermal power and gas turbine power
generation with zero CO2 emissions.
Blue ammonia
Natural gas

From Co-firing to 100% Ammonia

World'sFirst

Demonstration project fora full-scale ammonia co-firing
power plant

Ammoniasynthesis

In June 2021, we launched a four-year demonstration project at
a large-scale commercial thermal power generation plant todevelop co-firing technology for coal and ammonia. Subsidized
by the New Energy and Industrial Technology Development
Organization (NEDO) and implemented in collaboration with
JERA, the project is aiming to achieve an ammonia co-firing
rate of 20% at Unit 4 of JERA’s Hekinan Thermal Power Station(power generation capacity: 1GW) in fiscal 2024.

NH3

NH3

BunkeringBk iterminal

Transportation

Receivingterminal

Electrolysis

Feasibility Study with CS Energy for
Carbon-free Hydrogen Productionand Sale in Australia

JERA Hekinan Thermal Power Station, site of the test project in Hekinan,
Aichi Prefecture (Image courtesy of JERA)

Stable combustion attained at
70% liquid ammonia co-firing ratio

Green Ammonia Business Studyin Tasmania
IHI, Marubeni Corporation, and the major
Australian energy company Woodside
Energy are studying the potential toproduce green ammonia in the Bell Bay
region in Tasmania, Australia. The study
is exploring technologies, projecteddemand in the Japanese and Asianmarkets, and other aspects of the green
ammonia supply chain.

IHI is collaborating with CS Energy, astate-owned electric power company inQueensland, Australia, on a feasibility
study for the Kogan Hydrogen
Demonstration Project to produce andsell carbon-free hydrogen produced at
the solar power facilities on land adjoining
the Kogan Creek Power Station.

Feasibility Study to Assess Technology for
Ammonia Co-firing at Coal Power Stations
and Construct a Carbon-free Ammonia
Supply Chain in Malaysia

The IHI Group is participating in a project commissioned by
NEDO to develop technology for a 2,000-kilowatt-class gas
turbine that directly sprays liquid ammonia into the combustor
for co-firing with natural gas. In March 2021, the project
achieved the world’s first stable combustion with a co-firing ratioof 70% liquid ammonia on a calorific basis. The project is aiming
to commercialize a fully ammonia-fired gas turbine by 2025.
2,000-kilowatt-class gas turbine co-firing liquid ammonia and natural gas at
IHI Yokohama Works

Electricity

NH3
NH

Green ammonia
RenewableenergyWorld'sFirst

Balanced supply & demand

CCS*1/EOR*2

IHI is engaging with Petronas Gas &New Energy, subsidiary of thestate-owned Petroliam Nasional Bhd(PETRONAS), and TNB Power
Generation, subsidiary of the country’s
biggest electricity utility Tenaga
Nasional Berhad, to study the feasibilityof an ammonia supply chain in
Malaysia. The study is scheduled to becompleted in February 2022.

Ammonia co-firing in power station
to reduce CO2 emissions

NH3

Ammonia production
HydrogenGas turbines

Industry

Fertilizer

Rawmaterial

IHI and Idemitsu to Explore Establishing
Joint Ammonia Supply Chain Using
the Idemitsu Tokuyama Complex
IHI and Idemitsu Kosan Co., Ltd. are
examining repurposing the storage
facilities and petrochemical equipmentof the Idemitsu Kosan Tokuyama Plant as
an ammonia import terminal and testing
the potential for ammonia co-firing in theplant’s naphtha cracking furnace.

Development of Receiving andStorage Terminal for a Large-scale
Ammonia Supply Chain
IHI is advancing development ofammonia receiving terminals with theaim of scaling up to the size of LNG
terminals by around 2025.

Ammonia transportation

Hydrogen

Boilers

Usage in local
coal-fired boilers

Hydrogen (by-product) Petrochemicals
Electrolysis

Renewable energy
Fossil(solar power,
resourceshydropower)(natural gas)

Petrochemicalfactory* Subsidized by NEDO and launched in December 2021, the project to develop ships that run on domestically produced ammonia-fuel engines is a collaboration of
NYK Line, Japan Engine Corporation, IHI Power Systems, Nihon Shipyard, and the Nippon Kaiji Kyokai.

910Creating a World Where Nature and Technology Work in Unity

TECHNOLOGY FOR THE FUTURE
Technology in Unity with Nature #1

Using Recycled Carbon as an Energy Source
The IHI Group prevents the release of CO2 into the atmospherewith carbon capture, utilization, and storage (CCUS) technologythat captures and separates CO2 emitted from thermal power
plants and other facilities. The captured CO2 can be mixed witha catalyst and carbon-free hydrogen produced using surplus
electricity generated from renewable energy to makemethane (CH4) fuel or olefins, used to make plastic.
Our plan to achieve carbon neutrality in the fuel andfeedstock operations is to continue lowering the cost of capturing

CO2, making carbon capture technology widely available, andacquiring catalyst technology and developing processes forsynthesizing fuels and chemical feedstock. We will also acquirenext-generation water electrolysis technology to producehydrogen, and co-electrolysis technology of water and CO2 to
produce valuable substances as we build a business to supply
electrolysis and valuable resource conversion equipment. In
addition, we are advancing toward practical application oftechnology that directly captures CO2 from the atmosphere.

A carbon-free energy resource from water and air
Creating the fuel of the future with water and air using solar and wind power.
Water and air can be converted into clean fuel, such as in the form of ammonia
that is available anytime and anywhere.
IHI is creating a future
where digging resources out of the ground will be a thing of the past.

Carbon Recycling Roadmap
Carbon capture
technology

Oxyfuel combustion Australia Callide ProjectChemical absorption technique Australia PICA Project

Co-production of H2 and carbon from fossil fuelApplication to various processes

Direct use
of CO2

Power, steel, cement

Fossil fuelSolar, electricity
Reactor

H2
CarbonCO2 Reduction Volume

Agricultural use
Industrial use

BECCS: Bio Energy CCS
Biomass production and use

BiofuelPalm oil mill waste

Algae biofuel

Electrolytic hydrogen production

CO2 mineralization

CaptureCO2

Water electrolysis
Soma IHI Green Energy Center(Renewable energy local production
and consumption)

Catalysis

CO
H2

Gasification
TIGAR®

Fuel, chemical feedstock

100% carbon-free power
generation with hydrogenand ammonia

Artificial photosynthesis
Technology using
recaptured carbon

2020

IHI Action Plan

DAC:
Direct Air
CaptureConversion to valuables

Syngas production(gasification, electrolysis)
Feedstock

Biomass power generation,
gasification and chemical absorption

100% stable ammonia
combustion technology
Power plants
Ships

2030

Target for 2050

Technology Needed

Industrial
furnaces

2050• Use only non-combustible ammonia
as fuelRenewable Energy Use and the Energy Management System• Produce ammonia at low cost fromrenewable energy

Low cost (70% lower)
green ammonia
manufacturing technology
Water electrolysis andnew synthesis technology

The production of solar power, wind power, and other renewableenergy fluctuates depending on the weather and time of day.
Energy management systems that store surplus electricity instorage batteries for later use when demand arises and that
produce hydrogen and steam as alternative energy sources
are important technologies for achieving optimal energy use.

The IHI Group is developing a smart community projectin Soma, Fukushima Prefecture, that will maximize use of
local renewable energy. Group subsidiary, IHI Terrasun
Solutions, Inc., is building an energy management service
business in North America to enable clients to make effective
use of renewable energy.

Low-cost synthesis technology
Produce fuel and raw
materials without the useof underground resources

Local
consumer

Renewable energy

Storage

Solar power

Zero reverse
flow togeneral powertransmission anddistribution system

Local use of
surplus power

Fuel cell

Hydrogen

Fuel cell power generation
during a disaster

Water
electrolysis,storage

Hydrogen
supplyHeat
Vaporization,
storage

Heat
supplyConversion and storageby other energy carriers• Use electricity to readily synthesize
carbon-containing materials incommon items

Sewage sludge drying
Biofuel production

Energy management for local power consumption

11• Use catalysts to produce basic
chemical feedstock from CO2 andhydrogen at low cost

CO2

H2 O

Reduce CO2from power
generation
to zeroUse CO2
as aresource(similar to current fossil resources)

for basic chemical feedstock,such as methane and olefin
CO2 capture technology,
synthetic catalysts, reactor technology

Smart Community Business Model

Achieve a world that canprosper without relying
on fossil resources andreduces atmospheric
CO2 concentration

NH3
Daily
necessities

Ammonia
power
generation

Next-generationelectric power
direct synthesis technology
Highly efficient
co-electrolysis technology

Fossilresources

Energy Storage Management System provided by IHI Terrasun Solutions, Inc.

12

Creating a World Where Nature and Technology Work in Unity

TECHNOLOGY FOR THE FUTURE
Technology in Unity with Nature #2

Lighten Products, Electrify, and Convert Fuel for Transport Systems

Mobility Supported by Air

We are advancing several initiatives to also make our transport sector operations carbon neutral.

Air Transportation Systems
The aviation industry is seeking to reduce CO2 emissions tomake air transportation more environmentally friendly. In thisdirection, the International Air Transport Association in October
2021 the International Air Transport Association resolved thatthe global air transport industry will aim to achieve net-zerocarbon emissions by 2050. The IHI Group is working to reduce

aircraft CO2 emissions in various ways, such as by improving
transport efficiency and engineering parts made fromcomposite materials that will lighten aircraft engines. We arealso designing electrification technology for aircrafts, adapting
fossil-free jet fuel and hydrogen fuel, and innovating othertechnologies for the future.

2020

2050

A standard fan spins at 1,000 rpm
an IHI motor of about the same size spins at 100,000 rpm
and generates more power than over 100 fans.
Supporting the rotating shaft is not oil or metal, but air.
The ultra-high-speed rotationthat air makes possible will transform the future of mobility.

Achieving Higher Mobility Efficiency

Improve engine efficiency, reduce weight

Innovate aviation
technologies

Air cooling of
high-power electronic
devices for increased
efficiency and reduced
environmental burdenElectrify systems
Sustainable Aviation Fuel (biofuel and other fuels)

SAF and hydrogen fuelAircraft and Engine System Electrification
MEA (More Electric Aircraft)
Autonomous air-coolingsystemRam air heat exchanger
abolished by fuel cooling
integration

IHI Action Plan

Ceramic matrix composites (CMCs)
Carbon fiber reinforced plastics(CFRP)

Technology Needed

Metering-integrated
fuel-feeding
electriﬁcation*Under joint research in the JAXA
En-Core Project (2018–2023)

Aircraft, engine, SAF

MEE (More Electric Engine)• Reduce aircraft energy loss

Automobiles
The transition to electrification is progressing rapidly in theautomobile industry. As the industry shifts to electric vehicles,
the IHI Group will secure market share by adapting its current
turbochargers to hybrid vehicles. As the move toward fullelectrification gains momentum, we will develop business forour electric-assist turbochargers for luxury vehicles andelectric turbochargers for fuel cell commercial vehicles.

How Electric Turbocharges Add Power to Fuel Cell Vehicles

Internal Configuration of an Electric Turbocharger

Weight reduction and composite
material structural technologies

Innovative engine materials andstructural technologies• Adapt to SAF and optimize
operating conditions

Heat exchanger

Conversion to renewable energy

Advanced gas turbine
and fuel control

Compressed
airCompressed air
Air

Air

Electric power
Water

Motor unit

Drive motor
Inverter

13

Electrify aircraft andengine systems

Electrify aircraft
and engine systems
Pneumatic pressure
Hydraulic pressure

Electricity

Total management of air conditioning,cooling, and aerodynamics
TurbineHydrogen tank

Energy recovery
turbineCooled airCompressor

2H2+O2
2H2O+4e-

Fuel cell stack

Contribute to carbon-neutral
aircrafts by improving engine,
structure and system efficiency,
reducing weight, andadapting to SAF

Realize high-efficiency engines
and lightweight structures• Enhance aircraft engine
efficiency

Compressed air
Electric turbocharger

Fuel cell

Target for 2050

Engine embedded
electric machine

Low-pressure High-pressure
turbine vane turbine vane*

Fan case

H2

Air (oxygen) supply
to fuel cells andrecovery of energy
from exhaust

Hydrogen-fueled aircraft

Lighter and Heat-resistant Aircraft Components

Fan bladeHighly efficient in-cabin
air conditioning andpressurization, and air
energy recovery duringexternal ventilation

Exhaustair• Electrify aircraft system to improve
efficiency and performance• Achieve optimal and total
management of energy and power

Development and adoption ofelectrified aircraft and engine systems

Electric
turbocharger

14Creating a World Where Nature and Technology Work in Unity

TECHNOLOGY FOR THE FUTURE
Technology in Unity with Nature #3

Climate Change: Preventing and Mitigating Disasters
The IHI Group is helping to realize safe, secure, andcomfortable communities by improving infrastructure to be
more economical and disaster resilient, and by constructing
systems that combine infrastructure with disaster anddamage prediction to achieve zero human suffering.
We are building on our strength in advanced
maintenance technologies for bridges and otherinfrastructure. By adding sensing and monitoring technologies
and developing preventive diagnosis technology, we are
expanding our business to provide timely and appropriate
infrastructure maintenance. We will shorten the lead times forconstruction projects and automate construction processes

Two-month Rain Forecast Preparation

so we can provide earlier care for aging infrastructure andsufficiently respond to the growing maintenance demandamid a shortage of skilled workers. We also aim to minimize
the human impact and economic loss from extreme weather
events by predicting disasters and controlling local
infrastructure using meteorological information and disasterevent data collected from sensors. In addition, we will offer
products and services that contribute to disaster recovery andassist people return to their normal lives as quickly as possible.
We are working to establish communities withdual-purpose infrastructure that is resilient in emergencies andconvenient in normal times.

Lead time is essential to mitigating the impact of disasters.
Longer forecast projections provide more time to take preventive measures.
IHI is monitoring weather using satellite data and AI
to become the forerunner in predicting future weather conditions.

Creating a Resilient Social Infrastructure• Equipment monitoring
Detect and repair
abnormalities

Normalcircumstances

Preparations• Earthquake-resistantinfrastructure andvibration control devices• Flood control and snow
removal equipment facilities(dams, weirs, snow plows,stormwater storage pipes)

Disaster Prevention and Mitigation System Before disaster • Disaster prediction
Meteorologicalinformation

River monitoring

Environmental
information

Infrastructure, water gate,
and dam monitoring

Public data

Disaster prediction

Operations in eventof disaster(warnings andevacuation advisories)

IHI Action Plan
Recovery andrestoration

Technology Needed

Target for 2050

• Damage assessments• Provisional restoration
and repair enhancements

Smarter, more
pliable infrastructure• Minimize life cycle cost

Integrated Hydraulic Control
Flood damage can be minimized through integrated operation of dams, water gates, drainage pump stations, and other upstream
and downstream river management facilities.

• Maximize the use of natural capital

Infrastructure deterioration prediction
and preventive maintenance

Flood control systems
in watershed zones• Reduce disaster risk through laborsaving and semi-automation• Increase the added value ofdisaster prevention infrastructure

Combine digital twin
technology using sensing andanalysis of the naturalenvironment with smart andpliable infrastructure to help
build a resilient society andenhance the lives of all people

Dual- and multi-use disasterprevention infrastructure• Provide reliable and highly
accurate disaster risk prediction

Application of digital twinsin nature and society forreal-world feedback
Nature sensing and analysis,risk management and control• Reliably and accurately identify andpredict natural phenomena• Manage and control risk ofdamage from natural phenomena• Restore and conserve the earth
environment, such as forests

15

Highly detailed, ultra-long-term
weather forecastingSociety
Understanding

Adaptation

Disaster
forecasting using
natural digital twins

Precisionengineering anduse based
on forecasts

NatureForest water cycle sensing andmanagement, satellite-based
CO2 absorption measurement

16

Keys to Realizing our Sustainability Goal

Human Rights of All Stakeholders
We are using our value chain to protect against and reduce the negative impacts of our business activities on
our stakeholders and rights-holders* as part of our efforts to enrich the lives of all people.
*People or groups whose human rights could be affected by corporate activities

Human Rights Initiatives

Important Human Rights Issues and Actions
We also enforce the IHI Group Procurement Policy to fulfill
our responsibility and work with our business partners for CSR
procurement in our supply chain that gives due consideration tohuman rights, labor conditions, occupational health and safety,
the environment, and information management.
The IHI Group Human Rights Policy is guiding our efforts
to promote diversity and respect for the individual withmeasures to ensure fair hiring and working conditions, equal
opportunity, and a harassment-free workplace. With ourbusiness partners, we implement human rights initiatives toprevent potential human rights issues from arising in any ofour business activities.

The Basic Code of Conduct for the IHI Group reflects ourManagement Philosophy and outlines what we should do to
be aware of global issues and to meet the expectations of all
stakeholders. In accordance with the Basic Code of Conduct
for the IHI Group, we established the IHI Group Human Rights
Policy in December 2020. We are conducting human rights
awareness activities following international standards to fulfill
our responsibility to respect the human rights of all byfostering a respectful corporate culture and promoting humanrights throughout our business activities.

Human Rights Initiatives(Overview)
Basic Code of Conduct for the IHI GroupWe conduct human rights due diligence to identify and assess
risks related to human rights and to verify and improve theresults of our measures.
The first step in this process is to select human rights
issues that are material and pertinent to the IHI Group. This will
be based on the results of analysis and evaluations conductedwith external experts, vital human rights issues in the
manufacturing industry, internal monitoring, and international
trends related to human rights issues. We conduct humanrights impact assessment surveys with IHI Group employees
and suppliers who are our high priority rights-holders to identify,
prevent, and reduce human rights risks in our business activities.

Important Human Rights Issues

Actions•Prohibit forced labor•Conduct a human rights impact assessment•Prohibit child labor•Strengthen supply chain management•Provide equal opportunity•Provide education and training•Prohibit discrimination and harassment•Construct a global human rights risk management system•Provide healthy and safe workplaces•Publicly disclose information on the status of initiatives•Respect worker basic rights

IHI Group Human Rights Policy
Support and Respect for International Human Rights Standards
Promote Diversity

Promote CSR Procurement (IHI Group Procurement Policy)

Respect Diversity and Individuality

Throughout the Supply Chain

Provide equal opportunity

Initiatives

Prohibit discriminationand harassment

Prohibit forced labor

Prohibit child labor

Supporting Individual Initiative

Provide healthy and safe workplaces

Respect worker basic rights

Provide education and training

Daily Internal Monitoring
and Improvements

Audits andImprovements

Internal reporting
system

Employee-awarenesssurveys

Consultation services

360-degree feedback

Human Rights Due Diligence*
P

A

Business partner surveys
and improvements

D

C

Dialogue andInformation
Disclosure

Integrated Report

Sustainability Data Book

External website

Local community activities

Respect for human rights is integral to the IHI Group’s Management
Philosophy of “Contribute to the development of society throughtechnology” and “Human resources are our single most valuable asset.”
Our business activities connect with not only our customers,
business partners, and shareholders, but also with our employees andlocal and international communities. As a company, it is our duty to beaware that we are conducting business activities with a vast number ofpeople and that our business has an impact on society. Furthermore, as amember of society, it is our responsibility to maintain a clear perspective
on human rights.
We will create work environments where employees feel emotionallysafe in the workplace and recognize they are doing meaningful.
We will also foster a corporate culture where employees areencouraged to speak out against discrimination, harassment, and otherhuman rights violations.

* An overall process of conducting risk assessments and evaluations to improve the effectiveness of the IHI Group’s commitment to human rights

17

18

Keys to Realizing our Sustainability Goal

Diversity and Inclusion
Welcoming diversity and accurately understanding and responding to changes in the social environment are
essential to a sustainable society. Our commitment to this is reflected in the two main themes of ourmanagement strategy: “seeking the ideal relationship of the individual and the organization” and “diversity
and inclusion.”

Seeking the Ideal Relationship of the Individual and the Organization
Japanese companies have generally provided a balance
where employees receive long-term employment and aguaranteed salary, and where the company assigns theirduties and creates the work environments and employment
conditions. While this relationship between the individual andthe organization may allow employees to fulfill their assigned
duties, it makes it difficult to accommodate the type of
flexibility needed to respond to the rapid changes in our worldthat are happening today.

Diversity as a Driver for Value Creation

The IHI Group’s ability to continue existing as a company
in society depends on every employee understanding ourcorporate mission and management philosophy of“contributing to the development of society” and our goal to“create a world where nature and technology work in unity”.
We believe that key elements to attaining sustaining growth
are to align the organization and our employees andultimately to maintain a relationship where we contribute toeach other’s growth.

A Network of Interacting Stakeholders• Continuously andconsistently exemplify thecompany’s goal for
stakeholders of all ourbusiness activities and link
the actions of all employees
to that goal
• Attract diverse stakeholders
and human resources;
respect different
perspectives, values, skills,
and backgrounds; constantly
create an environment
where individuals can fulfill
their potential

19

The IHI Group cannot solve social issues and create asustainable society on its own, and it is becoming more
important than ever that we further strengthen thecooperation and collaboration throughout the network.
The IHI Group uses its network to identify social issues
and apply its businesses to finding solutions. These efforts
by the Group provide social value to stakeholders andenhance our corporate value.

Diversity and inclusion that respects and accepts thedifferences of individuals increases employee motivationand engagement. This is a fundamental value that will
enable the IHI Group to continue growing and pursuingbusiness opportunities as we address social issues.
The IHI Group is creating an environment where humanShareholders,
Investors

Expectations for
Our Human Resources
Seeking the Ideal Relationship of the
Human
Individual and the Organization
resources
Clarification of key requirements
for human resources and companies

Consumers

Governments

Communities

resources with various backgrounds, distinct experiences,and original perspectives can play an active role. We will
also expand the human resources structure to provide
employees various opportunities to acquire broader
perspectives and experience.

Work environments
where diverse
individuals play
an active role

Business
partners

Customers

Companies

Before we can address the social issues that are arisingwith our changing times, we must obtain human resources
with flexible ideas, and have an organization with the flexibility
to convert those ideas into businesses. Creating anenvironment that respects diversity will make that possible
and will be a driving force for cultivating the corporate value
needed to realize a sustainable society.

Diverse and Actively Participating Human Resources

The IHI Group is connected to society through a vast
network of stakeholders that interact with each other. We
actively partner with employees, shareholders, customers,
business partners, local communities, and other groups
with which we share ideas and capital, creating a
coexistence and coprosperity network that goes beyond
the group and national borders.

Expectations for
Our Group

In our network, human resources are central to the effective
cooperation and collaboration of stakeholders and thecreation of value. For human resources to fulfill that role, wemust respect each employee’s individuality and values andcreate an environment that will bring out each employee’s
potential. Creating such an environment will enable the IHI
Group to organically connect diverse viewpoints, seek theideal relationship of the individual and the organization, andgenerate innovation and creation.

New work practices(“Smart Work”)• Share and seek to fulfill the
IHI Group’s purpose and goals• Respect the viewpoints andvalues of stakeholders in all
business activities• Seek new solutions byconsidering the present andfuture independently,
objectively, and openly

Opportunities forvarious experiences(second jobs, in-houseside job programs)

Global structure andsystem reinforcement

20Keys to Realizing our Sustainability Goal

Our Unwavering Aspiration

Shining New Light into the Future

Securing and Maintaining Stakeholder Trust
To use our business to solve social issues and enhance corporate value, we need a foundation to maximize
the Group’s inherent strengths and active dialogue with all our stakeholders.

Asked for his idea about how to use the newly completed Lake Biwa Canal, our founder
Tomiji Hirano said, “Build a power plant that will harness the water level of Lake Biwa tolight every house in Kyoto.”
Converting the water flow to electricity would take the energy otherwise limited to thewaterway and make it available for wider use as electricity and lighting.

Governance System

His inspiration put IHI at the forefront of electric power generation in Japan.
Committee, which is under direct supervision of the CEO, willconduct thorough discussion of basic policy and measuresrelated to sustainability. The ongoing discussion of themeasures regarding sustainability matters will be reported to
the Board of Directors, which evaluates and supervises
activities related to sustainability in our business execution
with the objective of enhancing corporate value.

To improve management efficiency and to maximize ourongoing growth and corporate value, we are making internal
decision-making more efficient by clearly delineating themanagement monitoring and supervisory functions and thebusiness execution function.
To accelerate ESG management in the company, on thebusiness execution side, the ESG Management Promotion

That innovation rejuvenated Kyoto and lit the way for cities across the country to growand prosper. It was the dawn of urban innovation.

Corporate Governance Management Structure

Delegation

Audit & Supervisory Board(Audit & Supervisory
Board Members)

Delegation

Accounting Auditor

General Meeting of Shareholders

Delegation

Management Monitoring /Supervisory Functions
Consultation

Board of Directors(Directors)

Remuneration Advisory Committee
Nomination Advisory Committee

Recommendation

Audit

ReportReportReportBusiness Execution Function

Delegation of Authority

ReportChief Executive Officer

Internal Audit
DivisionManagement Committee

Instruction
Audit

A pelton turbine
Ishikawajima Shipyard (1891)

Audit

Executive Officers

ESG Management Promotion
Committee
Risk Management Conference

Headquarters and Operations /Group Companies

Shining New Light in Our 200th Year
The Making of IHI’s ESG Management

21

Hiroshi Ide

Chieko Matsuda

President andChief Executive
Officer
IHI Corporation

Outside Director(Independent)
IHI Corporation

IHI will be marking its 200th year in 2053.

IHI Group Approach to ESG: Discussion with Stakeholders

What challenges will the world be facing at that time?

President Ide is determined to take a different approach to discussing thedirection IHI management will take with its ESG-aligned values withshareholders, investors, customers, business partners, local communities,
employees, and our wide range of stakeholders. Over the past year, we haveheld numerous discussions regarding the IHI Group’s approach to ESG with thecompany’s directors, executive officers, and new and mid-career employees.
To further the discussion about the execution of ESG management,
we plan to create a workplace that encourages employees to voice theiropinions and views with the
IHI Integrated Report 2021
aim to create an ESG
Pages 35-38
Discussion between the
management style that is
President and Outside Director
unique to the IHI Group.

Global warming, frequent natural disasters, declining populations,increasing wealth disparity…
We will be doing what we’ve always done—shining new light,
protecting people’s lives, and living in unity with nature.

22

Create a World Where
Nature and Technology Work in Unity

I H I Corporation
Corporate Communication Division
Toyosu IHI Building, 1-1, Toyosu 3-chome, Koto-ku, Tokyo 135-8710, Japan
TEL：+81-3-6204-7800 FAX：+81-3-6204-8612
Company Website https://www.ihi.co.jp/en/
90400-248-00-2202-0500SS (CM716)