Hitachi Sustainability Report 2020
Fiscal 2019 Results

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

01

C O N T ENT S

02 Introduction
02 Editorial Policy
03 Hitachi Group Profile

05 Management
06 CEO s Message
07 Executive Officer s Message
08 Corporate Credo
08 Hitachi Group Identity

09 Sustainability Management

09 The 2021 Mid-term Management Planand Sustainability
10 Sustainability Strategy Promotion
Structure
12 Contribution to the SDGs (Sustainable
Development Goals)

15 Engagement and Initiatives

15 Stakeholder Engagement
17 Main Initiatives and Groups in Which
Hitachi Is Involved
18 International Standardization Activities
19 Main Groups in Which Hitachi Participates

20 External Assessments and Awards

22 Environmental
23 Environmental
25 Advancing Our Environmental Visionand Long-Term Environmental Targets

25 The Environmental Vision and Hitachi
Environmental Innovation 2050
26 Environmental Action Plan

28 Environmental Governance
28 Framework for Promoting

Environmental Governance

29 Environmental Management System

33 Achieving a Decarbonized Society

33 Efforts to Achieve a Decarbonized Society
34 Contributing to a Decarbonized Society
Through the Decarbonization Business36 Contributing to a Decarbonized Society
at Business Sites (Factories and Offices)
40 Climate-related Financial Information
Disclosure (Based on TCFD
Recommendations)45 Achieving a Resource Efficient Society
45 Efforts to Achieve a Resource Efficient

Society
46 Building a Water Efficient Society
49 Building a Society That Uses Resources
Efficiently

67 Social

68 Innovation Management

70 Research and Development
73 Intellectual Property

75 Human Capital

77 Global Human Capital Management
80 Talent Development
83 Diversity and Inclusion
86 Work-Life Management
89 Occupational Health and Safety
95 Freedom of Association and Collective
Bargaining

96 Human Rights

97 Respect for Human Rights Throughout
the Value Chain

123Governance
124 Corporate Governance
125 Corporate Governance

131 Compliance

132 Promoting Work Practices in Line with
International Codes of Ethics

135 Risk Management

136 Addressing Risks and Opportunities
140 Business Continuation Initiatives

141 Information Management

143 Information Security
145 Personal Information Protection
146 Online Content Management

147 Governance Data

100 Value Chain Management

102 Responsible Procurement
106 Quality and Product Safety Management
108 Customer Satisfaction

110 Community

111 Social Contribution Activities

114 Social Data

52 Achieving a Harmonized Society with

Nature52 Efforts to Achieve a Harmonized Society
with Nature

53 Managing and Reducing Chemical
Substances

55 Preserving Ecosystems

56 Environmental Data

56 GHG Emissions Throughout the Value Chain
58 Environmental Load from Operations
63 Environmental Load by Region
65 Environmental Management Data
66 Environmental Accounting

148 Assurance
148 Independent AssuranceContents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

102-45 102-46 102-50 102-51
102-52 102-56

Ed i t o r i a l Po lic y

Basic Concept
The Hitachi Sustainability Report 2020 presents our stance toward environmental (E), social (S), andgovernance (G) issues, and details the activities we undertook in relation to these in fiscal 2019.

[Key Guidelines Referred to in Preparing This Report]• GRI Standards, Global Reporting Initiative
Each section is labeled with GRI topic numbers showing which disclosure requirement it corresponds to.
• Sustainability Accounting Standards, Sustainability Accounting Standards Board• Environmental Reporting Guidelines (2012 version, 2018 version), Ministry of the Environment, Japan

Use the category tabs,
navigation icons, and linkbuttons to go directly todifferent sections of this report.

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Inasmuch as the report is a tool with which we engage with our stakeholders throughcomprehensive information disclosure, it is based on the disclosure requirements of the GRI
Sustainability Reporting Standards (GRI Standards). Additionally, in creating the report, as well as

Click to go tocorresponding website

Disclosure Systems for Financial and Non-Financial Information

Click to go tocorresponding pagereferring to the industry disclosure standards relevant to Hitachi as defined in the Sustainability
Accounting Standards Board (SASB)’s Sustainable Industry Classification System (SICS), withThe Hitachi Integrated Report discloses both financial and non-financial information about Hitachi’s

respect to climate change, we disclose a variety of information based on the proposals of the Task

value creation process. The Hitachi Sustainability Report serves as a tool for comprehensively

Force on Climate-related Financial Disclosure (TCFD).

reporting more detailed ESG-related information.
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What This Report Covers (Boundary of Reporting)
Period:The main period covered is fiscal 2019 (April 1, 2019, to March 31, 2020)
Note: Some information on activities in April 2020 and after is also included.

Companies:

Hitachi, Ltd. and its consolidated subsidiaries

Boundary of Data:

Financial data: 1,224 companies, namely Hitachi, Ltd. and 1,223 consolidated
subsidiaries and equity-method associates and joint ventures
Social data:

Boundary of data indicated under each indicator

Environmental
data:

815 companies, namely Hitachi, Ltd. and 814 consolidated
subsidiaries. However, for environmental performance data associatedwith Hitachi’s business operations, Hitachi, Ltd. and consolidated
subsidiaries whose environmental load comprises 90% of the total(based on Hitachi calculations) are included.

Reporting Cycle:

Published every year as an annual report

Date Published:

November 2020 (Previous report: October 2019)

Notes:• The data for each fiscal year are the results according to the boundary of data in that fiscal year.
• The base fiscal year data has been revised to match the boundary of data for fiscal 2019.

[Symbol Marks Used in This Report]

02

Financial Information

Non-Financial Information
Importance

Hitachi Integrated Report

1

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http://www.hitachi.
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HitachiSustainability
ReportWeb:
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http://www.hitachi.
com/sustainability/

ComprehensivenessIndependent Assurance* Technical terms, proper nouns, tables, diagrams, etc. requiring explanation

To enhance the credibility of this report, we have engaged KPMG AZSA Sustainability Co.,

[Hitachi References in This Report]
Hitachi, Ltd.: Information on or initiatives of Hitachi, Ltd.
Hitachi and the Hitachi Group: Information on or initiatives of all Group companies

Ltd. to provide assurance on environmental and social performance indicators. The
markindicates disclosed information assured in accordance with International Standard on Assurance
Engagement (ISAE) 3000 and ISAE 3410.

Contents

Introduction

Management

Contents

Introduction

Management

Go to the beginning of thecorresponding section

Introduction

Contents

Management

Environmental

SocialGovernance

Assurance

H i t a c h i G ro up Pro f ile

Company Profile

Revenue and Share by Segment (Consolidated for fiscal 2019, based on IFRS)(as of March 31, 2020)

Others
484.8 billion yen (5%）

Corporate name

Hitachi, Ltd.

Incorporated

February 1, 1920 (founded in 1910)

Head office

1-6-6 Marunouchi, Chiyoda-ku, Tokyo, Japan

Representative

Toshiaki Higashihara, President and CEO

Capital458.79 billion yen

Number of employees

31,442 (unconsolidated basis)301,056 (consolidated basis)

Number of consolidated subsidiaries(including variable interest entities)

814 (Japan: 173, outside Japan: 641)

Number of equity-method associates
and joint ventures

409

Hitachi Chemical*1
631.4 billion yen (7%）

Hitachi Construction
Machinery
931.3 billion yen (10%）

201-1

102-7

8,767.2 billion yen (down 8%, year on year)

Adjusted operating income

7.5% (down 0.5 percentage points)

EBIT*1

183.6 billion yen (down 64%)

Net income attributable to Hitachi, Ltd. stockholders

87.5 billion yen (down 61%)

ROIC*2

9.4% (up 0.9 percentage points)

Capital expenditure399.6 billion yen (down 4%)

R&D expenditure

293.7 billion yen (down 9%)(billion yen)(billion yen)
1,200

7.6

8,000
6,000
4,000

9,480.6

9,368.6

6.3
172.1

6.4

8,767.2

8.0

Revenue (left scale)

2015

800
600
400

222.5
87.5

2,000
0

1,000

7.5

362.9

231.2

2016

2017

2018

Net income attributable to Hitachi, Ltd. stockholders (right scale)

2019

Mobility
1,144.4 billion yen (12%）

Note: Revenue by segment includes intersegment transactions.
*1 Deconsolidated in April 2020.
*2 Became a wholly-owned subsidiary in May 2020.

Europe924.4 billion yen (10%)
17,850 employees

Asia

1,767.5 billion yen (20%)
86,787 employees

Revenue, Adjusted Operating Income Ratio, and Net Income

9,162.2

Industry840.7 billion yen (9%）

Revenue and Share by Region (Consolidated for fiscal 2019, based on IFRS)*1 EBIT: Income from continuing operations before income tax, less interest income, plus interest charges.
*2 ROIC: Return on invested capital. Calculated as follows: ROIC = (NOPAT + Equity method gain/loss) ÷ Invested capital × 100. NOPAT (Net
operating profit after tax) = Adjusted operating income × (1 – Tax burden). Invested capital = Interest-bearing debts + Capital.
Note: Hitachi’s consolidated financial statement is prepared based on the International Financial Reporting Standards (IFRS).

10,034.3

8,767.2 billion yen

Smart Life
1,472.9 billion yen (15%）

Revenue

10,000

Energy399.2 billion yen (4%）

Consolidated Revenue

Hitachi High-Tech*2
694.6 billion yen (7%）

Consolidated Financial Highlights for Fiscal 2019,
Based on the International Financial Reporting Standards (IFRS)

12,000IT2,099.4 billion yen (22%）

Hitachi Metals
881.4 billion yen (9%）

200
(FY)

Adjusted operating income ratio (%)

0

Other Areas

443.1 billion yen (5%)
12,285 employees

Revenue by Region
Japan:
4,529.0 billion yen
Outside Japan:
4,238.1 billion yen

North America

1,102.9 billion yen (13%)
22,034 employeesJapan

4,529.0 billion yen (52%)
162,100 employees

Hitachi Sustainability Report 202003

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Group Profile

Hitachi High-Tech

Key Business Segments[Main Products and Services]

102-2

102-6

102-10203-1

IT[Main Products and Services]

Systems integration, consulting, control systems, cloud services, software, IT products (storage,
servers), ATMs
[Consolidated Subsidiaries]
Hitachi Information & Telecommunication Engineering, Ltd., Hitachi-Omron Terminal Solutions, Corp.,
Hitachi Solutions, Ltd., Hitachi Systems, Ltd., Hitachi Computer Products (America), Inc., Hitachi
Global Digital Holdings Corporation, Hitachi Payment Services Private Limited, Hitachi Vantara LLC

Energy[Main Products and Services]

Energy solutions (nuclear, renewable energy, thermal, power grids)[Consolidated Subsidiaries]

Hitachi-GE Nuclear Energy, Ltd., Hitachi Plant Construction, Ltd., Hitachi Power Solutions Co., Ltd.

Industry[Main Products and Services]

Industrial systems, water and environmental systems, industrial machinery[Consolidated Subsidiaries]

Hitachi Industrial Equipment Systems Co., Ltd., Hitachi Industrial Products, Ltd., Hitachi Industry& Control Solutions, Ltd., Hitachi Plant Services Co., Ltd., JR Technology Group, LLC, Sullair US
Purchaser, Inc.
Note: Sullair US Purchaser, Inc. changed its name to Hitachi Industrial Holdings Americas, Inc. on April 1, 2020.

Mobility[Main Products and Services]

Elevators, escalators, railway systems[Consolidated Subsidiaries]

Hitachi Building Systems Co., Ltd., Hitachi Elevator (China) Co., Ltd., Hitachi Rail Europe, Ltd.

Smart Life
[Main Products and Services]Medial electronics, Smart Life & Ecofriendly systems (refrigerators, washing machines, room air
conditioners, air-conditioning equipment), automotive systems (powertrain systems, chassis
systems, advanced driver assistance systems)[Consolidated Subsidiaries]

Hitachi Automotive Systems, Ltd., Hitachi Global Life Solutions, Inc., Hitachi Automotive Systems
Americas, Inc., Hitachi Consumer Products (Thailand), Ltd.

Medical and life science products, analytical equipment, semiconductor processing equipment,
manufacturing and inspection equipment, advanced industrial products
Note: Hitachi High-Tech Corporation became a wholly-owned subsidiary of Hitachi, Ltd. on May 20, 2020. As a result, the Hitachi High-Techsegment was merged into the Smart Life segment.

Hitachi Construction Machinery[Main Products and Services]

Hydraulic excavators, wheel loaders, mining machinery, maintenance and services, construction
solutions, mine management systems

Hitachi Metals[Main Products and Services]

Specialty steel products, functional components and equipment, magnetic materials and powerelectronics materials, wires, cables and related products

Hitachi Chemical[Main Products and Services]

Functional materials (electronics materials, printed wiring boards materials, electronics
components), advanced components and systems (mobility components, energy storage
devices, life science-related products)
Note: Hitachi Chemical Company, Ltd. ceased to be an affiliate of Hitachi, Ltd. through a share transfer on April 20, 2020. As a result, theHitachi Chemical segment was abolished.

Others[Main Products and Services]
Optical disk drives, property management[Consolidated Subsidiaries]

Hitachi-LG Data Storage, Inc., Hitachi Life, Ltd., Hitachi Urban Investment, Ltd.,*1 Hitachi
America, Ltd., Hitachi Asia Ltd., Hitachi (China) Ltd., Hitachi Europe Ltd., Hitachi India Pvt. Ltd.*2*1 Hitachi Urban Investment, Ltd. merged with Hitachi Life, Ltd. and changed its name to Hitachi Real Estate Partners, Ltd. on April 1, 2020.
*2 Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the Hitachi Group’s regional
supervising companies for the Americas, Asia, China, Europe and India respectively, and sell the Hitachi Group’s products.
Note: Consolidated subsidiaries are listed as of March 31, 2020.

Hitachi Sustainability Report 202004

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

05

Management
CONTENTS

06 CEO s Message
07 Executive Officer s Message
08 Corporate Credo
08 Hitachi Group Identity

09 Sustainability Management

09 The 2021 Mid-term Management Planand Sustainability
10 Sustainability Strategy Promotion
Structure
12 Contribution to the SDGs (Sustainable
Development Goals)

15 Engagement and Initiatives

15 Stakeholder Engagement
17 Main Initiatives and Groups in Which
Hitachi Is Involved
18 International Standardization Activities
19 Main Groups in Which Hitachi Participates

20 External Assessments and Awards

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Meeting Society’s Challenges Through the Social Innovation Business with an Open,
Vigorous Mind, Considering the Needs and Feelings of Others
As COVID-19 cases continue to rise around the world, my thoughts go out to all those

Our most prized source of problem-solving prowess is the mindset of our employees.

who have suffered from its symptoms and those who have lost loved ones. I also wish to

This was the impetus for holding a “Make a Difference!” idea contest, where employees

applaud the courage and dedication of medical professionals and other essential workers

were challenged to devise new ways of responding to the crisis caused by COVID-19 andwho have put their own lives at risk to be of service to others.

thereby deepen their awareness of their links with society and its values. Some of the
proposals have already been implemented, and others will follow. In advancing our

including our customers, partners, and employees and their families. Our operations havebusiness in these uncertain times, we will actively engage with our employees, highlighting

been sustained by employees who are encouraged to work from home whenever possible

the importance of the social, environmental, and economic value central to the Sustainable

to prevent the spread of infection. We are now seeking ways to adapt to the “newDevelopment Goals (SDGs). As digitalization progresses, people are increasingly seeking

normal” by transitioning to shifts based on remote work for a wide range of job

out “sharing” rather than “ownership,” leading to a new set of values built on a sharing

categories and promoting workstyles that are aligned with employees’ type of work andeconomy. In such a society, it becomes all the more important to have a deeprole. One unique initiative to promote employee communication has been an experiment

understanding of other people. Enhancing our resilience, then, will require each and every

enabling closer online contact using an application that measures happiness levels. Our

employee to relate to society’s issues as their own, consider the needs and feelings of

support measures for COVID-19 to date include provision of free medical equipment andothers, and vigorously spearhead changes in advancing the Social Innovation Business.

supplies, donations by executives and employees, loans through nonprofit organizations,Of the many challenges confronting society, addressing climate change and otherand support for infectious diseases research. Hitachi will continue to direct its resources

environmental issues is Hitachi’s top priority. As the first step toward becoming a leader

to tackling the global challenge of COVID-19.

in creating environmental value and spearheading a decarbonized society, we announced

The 2021 Mid-term Management Plan announced in fiscal 2019 outlines Hitachi’s

our commitment this year to achieve carbon neutrality at Hitachi Group business sites bystrategy for achieving a sustainable world as a global leader in the Social Innovation

fiscal 2030. The knowhow we accumulate will also be offered as solutions to ourBusiness through improvements in social, environmental, and economic value as well as

customers in advancing our activities toward this goal.

contributions to people’s quality of life and enhanced customer value. COVID-19 has

Over the past 110 years since its founding, Hitachi has grown by addressing thehighlighted the challenges confronting society and Hitachi, but the goals we have set out

challenges confronting society. We will continue to offer solutions to such challenges

in the management plan remain unchanged. As employees shift increasingly to remotethrough close dialogue with our stakeholders.

work and the digitalization of our economy accelerates through contactless technologies
and automated production, we will contribute to addressing society’s challenges throughour Social Innovation Business.

06
102-14C E O ’s Me ssag e

We at Hitachi are committed to prioritizing the health and safety of all our stakeholders,

Hitachi Sustainability Report 2020

Toshiaki Higashihara
President & CEO
Hitachi, Ltd.

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

102-14Ex e c u t i v e O ff icer’s Mes s age

Leading the Transformation Toward Sustainable Lifestyles
The many social issues that the coronavirus pandemic has brought to the fore have

Our third initiative has been to promote the visualization of social and environmental

prompted us to rethink the ways Hitachi should help meet those challenges. We havevalue. To help build a sustainable society through our Social Innovation Business, our 2021

given renewed thought to how we can be of benefit to society and what we must do to

Mid-term Management Plan calls for the enhancement of social, environmental, andfulfill our mission. We need to do more than simply adapt to the “new normal” of living

economic value for our customers through solutions in five sectors, namely, IT, energy,

with COVID-19 but accelerate a shift to employment policies that enable our valuableindustry, mobility, and smart life. In fiscal 2019, we reexamined our businesses to identify

human capital to achieve their full potential, such as through telecommuting and skills-

how they could best help achieve the SDGs. Through quantification and other means, webased hiring, as well as by embracing diversity and inclusion. Our efforts to achieve atried as much as possible to visualize the social and environmental value each businesshuman-friendly Society 5.0*1 and to lead the transformation toward more sustainable

was generating. We also focused our efforts on ascertaining our businesses’ social andlifestyles will be focused on our Social Innovation Business, aimed at enhancing social,environmental impact, both positive and negative. This information will allow us to offer

environmental, and economic value.

solutions that are more sustainable and to provide even greater social, environmental, andWe have implemented three major sustainability-related initiatives during fiscal 2019
through the first half of fiscal 2020.

economic value for our customers.
The 2030 timeline for achieving the SDGs is only a decade away. As the officer

The first was to step up our efforts to disclose non-financial information, holding our first

responsible for sustainability and government & external relations, I remain keenly aware of

ESG Briefing in fiscal 2019. After President and CEO Toshiaki Higashihara gave an overview

the importance of multi-stakeholder capitalism,*2 working closely with the governments ofof the course Hitachi is taking in his opening remarks, an independent director and executive

many countries and actively promoting dialogue with stakeholders in the social sector to

officers provided details regarding our governance measures, strategy for human capital, andachieve our goal of a decarbonized, digital society.

environmental initiatives. We will be upgrading both the quality and quantity of our ESG
disclosures going forward as well as continually strengthening our initiatives in these areas.
The second was in the area of climate change. Until now our efforts have focused onachieving our long-term environmental targets called Hitachi Environmental Innovation

Adhering to our foundational Corporate Credo of contributing to society through thedevelopment of superior, original technologies and products, our 300,000 employees
around the world will continue striving to build a sustainable and human-centered world as
envisioned by Society 5.0.

2050, which includes a CO 2 reduction target of 80% throughout the value chain by fiscal
2050 (compared to fiscal 2010). To move more vigorously toward these goals, we
introduced an internal carbon pricing system in fiscal 2019 and announced our aim ofattaining carbon neutrality for in-house manufacturing by fiscal 2030. We are working withour customers, partners, and other stakeholders to achieve a decarbonized society.

07*1 Society 5.0: A proposal for a new super-smart, human-centric society from the Japanese government. It aims to achieve both
economic development and the resolution of social issues through the closer integration of cyberspace (virtual reality) and thephysical universe. The moniker denotes the next stage in human evolution from the hunter-gatherer (Society 1.0), agrarian(Society 2.0), industrial (Society 3.0), and information (Society 4.0) societies.
*2 Multi-stakeholder capitalism: A concept aimed at achieving sustainable growth with the interests of many different stakeholders in mind, rather than focusing on shareholder profits.

Hitoshi Ito
Vice President and Executive Officer
Hitachi, Ltd.

Contents

Introduction

Management

Environmental

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Assurance

Hitachi Sustainability Report 2020

08

C or p or ate Credo
Hitachi Group Identity
Approach102-16
Hitachi’s Mission is to contribute to society through the development of superior, original technology
and products. This Mission has been carefully passed on to generations of employees andHitachi Group Codes of Conduct

Hitachi Group Identity

stakeholders throughout our 110-year history. Our Values reflect the Hitachi Founding Spirit ofHarmony, Sincerity and Pioneering Spirit, which was shaped by the achievements of our predecessors
in the company as they worked hard to fulfill the Mission. Our Vision was created based on our Mission
and Values. It is an expression of what Hitachi Group aims to become in the future as it advances in its
next stage of growth. Our Mission, Values and Vision combine to form the Hitachi Group Identity.
Based on the Hitachi Group Identity, and continuously considering the next generation, we

The mission that Hitachi
aspires to fulfill in society

MISSION

The values crucial to
the Hitachi Group inaccomplishing its mission

VALUES

Contribute to society through the development ofsuperior, original technology and products.

promote corporate activities with a view to the medium and long term informed by sensitivity to theneeds of a changing society. The Mid-term Management Plan is our action plan to realize the HitachiGroup Vision; by integrating our management and sustainability strategies, we seek to enhance the

Hitachi Founding Spirit:

Harmony, Sincerity, Pioneering Spirit

effectiveness of this approach.
The implementation of the plan is a way for us to fulfill our responsibilities as a good corporate
citizen through robust, diverse governance; the Pioneering Spirit and strong ethical stance of ouremployees; and operations that help address social issues. We operate and pursue our activities inline with the Hitachi Group Codes of Conduct, the guidelines for ethical behavior and decision-

What the Hitachi Groupaims to becomein the future

VISION

Hitachi delivers innovations that answer
society’s challenges. With our talented
team and proven experience in global
markets, we can inspire the world.

making shared by all executives and employees of the Hitachi Group.

Solidifying the Hitachi Group Identity

Employee Engagement

Hitachi promotes brand education through training tools and courses based on the idea that social issues

increasing social, environmental, and economic value were selected from various regions for the Grandcan be solved if each and every one of its employees understands and embodies the Hitachi Group

Prix, including “Making the Sea Beautiful Again! Water Infrastructure Business in Papua New Guinea” andIdentity.

“Using AI in Providing Smart Building Solutions in Singapore.” The Grand Prix–winning projects were

One way we promote understanding of and familiarity with the Hitachi Group Identity and the Hitachi

recognized at the Global Awards Ceremony and shared with all employees through our intranet.

Brand is through the annual Inspiration of the Year Global Award, which recognize remarkable activities that

“Hitachi Group Identity Movie—I am Hitachi,” a movie featuring the Grand Prix–winning projects, wascontribute to enhancing the value of the Hitachi Brand by demonstrating the Hitachi Group Identity. In fiscal

unveiled on our website, allowing a wide range of people inside and outside the Group to see how Hitachi

2019, the award saw 211 applications from Hitachi Group employees around the world. Projects thatGroup employees around the world are endeavoring to improve people’s quality of life every day while

represented the practice of the Hitachi Group Identity and contributed to a sustainable society byholding the Hitachi Group Identity close to their heart.

Hitachi Group Identity
http://www.hitachi.com/corporate/about/identity/index.html
Hitachi Group Identity Movie—I am Hitachi
http://www.hitachi.com/corporate/about/identity/i_am_hitachi/index.html

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Introduction

Management

Environmental

SocialGovernance

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Hitachi Sustainability Report 2020

S u s t a i n ability Ma na g emen t
The 2021 Mid-term Management Plan and Sustainability

Hitachi practices sustainable management, placing sustainability at the center of our business strategy

kinds of value simultaneously, we will expand our Social Innovation Business through collaborative creation

and—in our 2021 Mid-term Management Plan ending in fiscal 2021—setting ourselves the goal ofwith our partners around the world by providing Lumada, a solution that accelerates digital innovation, as acontributing to the realization of a sustainable world as a global leader of Social Innovation Business. To thatcyber-physical system allowing the cyber and physical spaces to interact.

end, our 2021 Mid-term Management Plan identifies five sectors where we can increase social,

We continue to pursue the 2021 Mid-term Management Plan, further merging sustainability andenvironmental, and economic value simultaneously as well as enhance our customers’ corporate value andbusiness to contribute to the resolution of social issues through initiatives like Society 5.0 andpeople’s quality of life: IT, energy, industry, mobility, and smart life. Additionally, in order to increase the three

Sustainability Development Goals (SDGs).

Enhancing Three Kinds of Value with Solutions in Five Sectors

Solutions Contributing to Enhanced Social/Environmental Value in Five Sectors
SectorImproving quality of life and adding value for customers
Social value

Environmental
value

Economic
value

Increasing social, environmental, and economic value throughbusiness and technology solutions in five sectors

Social/Environmental Value Being CreatedContributing to India’s economic development byIT

expanding payment services to over 400 million
peopleEnergyManaging 25% of the world’s substations andproviding stable energy to around 1.8 billion people

Providing a safe and secure water environment toIndustry

70 million users per day by providing water supply
and sewerage systems

Mobility
solutions

Smart life
solutions

Industrysolutions

EnergysolutionsITsolutions

Providing railway services that are safe, secure,
Mobilitypleasant, and environmentally conscious to 18.5 billion
passengers per year
Contributing to improvements in people’s quality ofSmart Life

Product

Product

Product

Product

Product

life by performing 20 billion blood tests and otherdiagnostic tests per year

Relevant SDGs

Social Innovation Business ▶
http://social-innovation.hitachi/en/
2021 Mid-term Management Plan ▶
http://www.hitachi.com/IR-e/library/presentation/webcast/190510.html

09Contents

Introduction

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Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Sustainability Management

Sustainability Strategy Promotion Structure102-19 102-20 102-21 102-26 102-27 102-30 102-31 102-32 102-33 102-34 102-46 103-3
Hitachi, Ltd.’s Executive Sustainability Committee comprises President and CEO Toshiaki Higashihara andSustainability Strategy Promotion Structureother members of the Senior Executive Committee, along with the CEOs of every business unit. The
committee discusses and reaches decisions on important policies and measures related to sustainability,
shares progress and results, and finds ways to connect these to further improvements and new initiatives.
Sustainability Promotion Meetings attended by sustainability strategy promotion officers from business

Executive Sustainability Committee• Chair: President & CEO

units (business promotion division head–class), also established under the committee, formulate long-term• Members: Senior Executive Committee members, business unit CEOs, Hitachi, Ltd. division heads

corporate strategies focusing on ESG (environmental, social, and governance) to promote specific• Key roles: Discuss and decide on sustainability strategy at management/BU/department levels

measures for advancing sustainability, including contribution to achieving the SDGs.
To review and discuss CSR initiatives, CSR Manager Meetings are regularly held by CSR and social

headquarters outside Japan to share common directions and promote environmental initiatives.
Additionally, the Sustainability Promotion Division holds regular dialogue with stakeholders in each regionin cooperation with regional headquarters. Through such dialogue, we endeavor to grasp global social
issues promptly, extensively, and deeply, incorporating them into the issues our management deals with. At
the same time, this dialogue lets us safeguard our corporate responsibility in a global society and makecontinued efforts to improve as we strive to achieve sustainable management and a sustainable society.
We have adopted a committee system to separate the responsibilities for management oversight from theexecution of business operations. Under this system, the Audit Committee conducts an audit ofsustainability-related operations once a year. Reports on sustainability-related material issues are made to
the committee by Hitachi executive officers.

Eco-Management
Meetings• Members: Environmental
promotion division heads at
BUs and key Group
companies• Key roles: Discuss andimplement concretemeasures to achieve longterm environmental targets insustainability strategy

Group company C

Environmental Meetings are also held regularly, allowing environmental initiative officers from regional

Group company B

Group companies, work together with Sustainability Promotion Meetings. Global and Regional

Group company A

Management Meetings, whose members are environmental promotion officers from business units and• Members: Businesspromotion division heads at
BUs and key Group
companies• Key roles: Discuss andimplement specific measures
for sustainability strategy

Business unit C

To discuss and implement specific measures to achieve long-term environmental targets, Eco-

Sustainability
Promotion Meetings

Business unit B

Americas, Europe, China, Southeast Asia, India, and Australia are also held regularly.

Business unit A

contribution officers from business units and Group companies. Global and Regional CSR Meetings for the

Secretariat
Sustainability
Promotion
Division

Regional
HQs

Stakeholder Dialogues ▶

10

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 202011

Sustainability Management

Executive Sustainability Committee Meetings
Hitachi’s Executive Sustainability Committee meets twice a year to discuss and reach decisions on

Identifying Social Impacts with Respect toGoals to Contribute to Through Business
Activities ▶

Key ESG-Related KPIs

important policies and measures related to sustainability, share progress and results, and find ways to

KPIconnect these to further improvements and new initiatives.
In fiscal 2019, the Executive Sustainability Committee held meetings in April and December. At the April
confirmed that creating social, environmental, and economic value as part of our management strategy

20% or higher

FY 2030

50%

FY 205080%

FY 202120% or higher

FY 2030100%(carbon neutral)

FY 2050(Maintain 100%)

FY 202126% or higher

FY 205050%

FY 202112% or higher

FY 2050

50%

30,000FY 202137,000P. 81

Approx.1,000

FY 2021

3,000

P. 81

306

FY 2021

350

P. 72

Ratio of female executive andcorporate officers

5.0%

FY 2020

10%

P. 84

Ratio of non-Japanese executive andcorporate officers

8.8%

FY 2020

10%P.84

Number of female managers in Japan700

FY 2020800(twice the number atthe end of fiscal 2012)

P. 84

19%

At the December meeting, in order to create social, environmental, and economic value, the committee
considered and made decisions on visualization and evaluation methods for social and environmental
impacts as well as important policies and measures related to the environment, including our response to
climate change.

Environmental

would be pursued, and, alongside quantitative and qualitative evaluation of the social and environmental
value to be created by each business, considered specific initiatives toward increasing environmental value.

Setting Key ESG-Related KPIs
As part of promoting sustainability, we have established KPIs for key ESG challenges, and promote activities
to help achieve them.
In May 2020, we unveiled a new KPI: to achieve carbon neutrality in our places of business (factories andenvironmental, and economic value called for by the 2021 Mid-term Management Plan and clarified the
direction of the entire company. Environmental and human capital strategy were explained by the executive

Socialbeginning of the briefing, President and CEO Toshiaki Higashihara explained the improvement in social,

26%

Reduction rate of waste and valuables
generation per unit in Hitachi Group(base: FY 2010)14%

Top-class AI talent

In September 2019, we held our first ESG Briefing at which we explained our environmental strategy,

17%

Reduction rate of water use per unit in
Hitachi Group (base: FY 2010)

Data scientists

ESG Briefing
human capital strategy, and governance initiatives to institutional investors, analysts, and the media. At theBusiness sites (factories and offices)
Reduction rate of total CO 2 emissions(base: FY 2010)

Digital talent

offices) by fiscal 2030.

Relevant
Page

TargetFY 2021

Products and services
Reduction rate of CO2 emissions per unit
(base: FY 2010)

meeting, in preparation for the May launch of the 2021 Mid-term Management Plan, the committee

Result in
FY 2019

officers responsible for these areas, while governance was explained by an independent director.

P. 25

P. 25

P. 25

P. 25

ESG Briefing ▶
https://www.hitachi.com/IR-e/library/presentation/webcast/190924.html

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Sustainability Management

Contribution to the SDGs (Sustainable Development Goals)
The SDGs and Hitachi’s Social Innovation BusinessApproach102-11
We consider the SDGs an important initiative for realizing a sustainable society and improving

By proactively responding to social issues, Hitachi contributes tothe achievement of all SDGs through its responsible corporate conduct
and its Social Innovation Business.

people’s quality of life through solving global social and environmental issues. We have significantly
contributed to achieving the SDGs through our Social Innovation Business, which also serves as a

Corporate Commitment

source of sustainable growth for us.
Accordingly, through the provision of innovative solutions and products in our Social Innovation
Business, we will strive to create social, environmental, and economic value as part of ourmanagement strategy. We will also strive to reduce negative social and environmental impacts
resulting from our business and seek a deeper understanding of business risks arising from socialand environmental changes to ensure greater robustness against them.

Hitachi’s Priority SDG Issues

Business Strategy

PolicyAt the Executive Sustainability Committee meetings chaired by President and CEO Toshiaki
Higashihara, the committee members considered the 17 SDGs and the opportunities and risks they
represented. After this, they identified 5 Goals where we can make a particularly significant impact
through our key businesses, and 6 Goals that we can contribute to through our entire corporate
activities. We view the latter 6 Goals as relevant to our entire business and management strategies,
making an impact on corporate sustainability.
Because we are active in a broad range of business fields, we believe we can contributeextensively to the achievement of the SDGs other than the 11 Goals identified. Understanding that all
SDGs are mutually related, we will endeavor to contribute to the achievement of all 17 SDGs both
directly and indirectly.

Hitachi contributes to the achievementof all SDGs both directly and indirectly
through its business activities.

Hitachi Sustainability Report 202012

Contents

Management

Introduction

Environmental

SocialGovernance

Assurance

Sustainability Management

Road Map for Achieving the SDGs

Goals

Activities

FY 2017

FY 2018

FY 2019

FY 2020

Phases 1 and 2

Phase 3Phase 3Phase 4

Understandsustainability andthe SDGs, clarify
how key businesses
are linked to the
SDGs

Incorporate
sustainability
perspectives inour management
strategy

Explore new
businesspossibilities
based on the
motives of solvingsocial issues

Seek to createbusinesses basedon the motives ofsolving social
issuesDeveloping a sustainable society as defined by the SDGs will lead to sustainable growth for
Hitachi, too. We believe that we are providing value not only to the companies and consumers thatare our direct customers but also to society more broadly. This is the essence of our Social
Innovation Business. The products and services that we provide are all closely linked to social
sustainability. We aim to be a global leader in sustainability through our efforts to help achieve theSDGs.
Achievements in FY 2019

In fiscal 2019, we launched an initiative exploring ways to build a framework for assessing social andenvironmental impacts brought about by business activities, in order to make our efforts to createsocial and environmental value closely linked to the SDGs more appealing to our customers andsociety in a concrete manner—one of the goals included in the 2021 Mid-term Management Plan.
Using key businesses outlined in the 2021 Mid-term Management Plan as examples, we havedeveloped an impact evaluation methodology for social and environmental value that can be used
across the entire Group, and are now working to establish an impact evaluation framework. To
determine the guidelines for the methodology, a series of discussions were held at meetings of theworking group made up of staff from corporate divisions of the Hitachi Group. The guidelines also
reflect feedback through exchanges of opinions with stakeholders in Europe and other regions thatlead in impact evaluation initiatives, as well as discussions with business units and Group companies.
Each business unit used the guidelines to assess the impacts of the social and environmental value
created through business activities and develop business plans for fiscal 2020 based on the impacts.
Going forward, we will further improve the guidelines so that they can also be used for exploring new
business possibilities and evaluating the impact of existing businesses. This approach will enable us tograsp the positive and negative social and environmental impacts of our business activities and offer
more sustainable businesses to our customers. In this way, we will realize the three kinds of value
outlined in the 2021 Mid-term Management Plan.

• Increase
understanding throughsustainability
messages from theCEO, symposiums,
workshops,
newsletters, etc.
• Work with planning
divisions and otherrelevant departments
at business units and
key Group companies
to clarify how theirbusinesses are linked
to the SDGs in terms ofbusiness opportunities
and risks.

• Incorporate the visionof Hitachi’s futurebusiness and growthoriginating fromachieving the SDGs
and sustainability(solving social issues)in the 2021 Mid-termManagement Planbusiness strategy,
based on theknowledge thatrealizing a sustainable
society will makesustainable growth
possible for Hitachi.

• Promote management
focusing on social,environmental, andeconomic value.
• Explore building aframework forassessing the impact of
non-financial value
created by the five
focus sectors set out inthe 2021 Mid-termManagement Plan.

• Expand application toconsideration of new
businesses and impact
evaluation for existing
businesses.
• Promote establishmentof a collaborative systemwith sales divisions toenhance sustainability.

The measures will be taken in collaboration with business units, major Group companies,
corporate-related departments, and global sites (regional strategies).

Hitachi Sustainability Report 202013

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Sustainability Management

Identifying Social Impacts with Respect to Goals toContribute to Through Business Activities

Activities

102-47103-1

In fiscal 2019 Hitachi urged business units and Group companies to promote visualization of socialand environmental impacts in order to create the social, environmental, and economic value called

Identifying Social Impacts: One Example (Cashless Payment Services in Developing
Countries Such as India)
Contributing to
the achievementof SDGs

1.4: “By 2030 ensure that all men and women, particularly the poorand the vulnerable, have equal rights to economic resources, as wellas access to basic services, ownership, and control over land andother forms of property, inheritance, natural resources, appropriate
new technology, and financial services including microfinance”

for in the 2021 Mid-term Management Plan.
Specifically, after choosing their key businesses, each business unit and Group company selected

Providing cashless payment services in developing countries

the relevant items from the “List of Social and Environmental Impacts,” and sorted them by positive

To Society

a logic model.

Impact on society

This helped to visualize what kind of impacts Hitachi and its customers have on society, enablingthem to maximize positive impacts while minimizing negative impacts.
In fiscal 2020 we are promoting efforts to create social and environmental value by expanding theapplication of qualitative and quantitative assessment of impacts visualized using these logic
models.

Value created/Risks and countermeasuresand negative. They then identified the stakeholders involved in each impact, and summarized them in

To Customers
Impact on
stakeholders, suchas customers ofcustomers

To Business
Impact on
direct customers• Providing cashless payment services for developing countries in Asia.
India: Providing payment services via ATMs and POS. By providing
payment services at 41,000 ATM machines, 16,000 CRM machines,
and 1.1 million POS terminals, we contribute to the economic
development of 1.3 billion people.

Improving citizens’ QoL (quality of life) by diversifying
financial service infrastructure• By expanding cashless payments, we reduce crime (e.g., theft, purse
snatching, robberies), which is a social problem especially in developing
countries.
• By expanding payment infrastructure and providing day-to-day digital
payments, we promote more agility and efficiency in economic activity to
improve citizens’ QoL.

Creating new businesses by combining data with payments• By combining data about the flow of money in payments and flow ofgoods in sales channels, we can create new businesses by analyzing thevalue-chain data connecting individuals to banks. This strengthens
existing businesses as a value-added service.

Business creating impact
Name of key businessBusiness overview

Cashless payment services indeveloping countries such as
India• India: ATM and POS payment services. Acquiring business and data
linkage business via JV with large national bank SBI.

Hitachi Sustainability Report 202014

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

En g a ge ment a nd Initiati v es
Stakeholder Engagement
Hitachi’s Approach to Engagement

Approach

Hitachi promotes its Social Innovation Business with efforts to perceive the social issues in eachvalue of human capital—indispensable management resources for conducting business—and placecountry or region, followed by collaborative creation with customers, national and local governments,

importance on direct dialogue between employees and senior management. Partly in recognition of theacademic and research institutes, and other stakeholders to resolve them. We strive to enhance thegrowing interest in ESG investment, we are also active in dialogue with shareholders and investors.

Stakeholders

Main Roles

Main Divisions

Means of Communication

Pages

Customers

Creation of better products and services,
response to complaints, appropriate disclosureof information on products
and services

Quality Assurance
Sales

Customer satisfaction activities
MarketingWebsiteAdvertising activities“Global Brand Campaign” (14 locations)
Holding Hitachi Social Innovation Forum (4 locations)

Quality and Product Safety Management
Information Management
Customer Satisfaction

pp. 106–107
pp. 141–146
pp. 108–109

Shareholders and Investors

Timely and proper information disclosure,obtaining of fair recognition and support from
capital markets, reflection of shareholder andinvestor viewpoints in corporate management

Public Relations
and IR

Financial results briefings (quarterly)
General shareholders’ meetings (annual)
Hitachi IR Day event (annual), one-on-one meetings with institutional
investors and analysts (about 790 meetings/year)
IR tools: Integrated Report, business reports, etc.
Information disclosure on website for stakeholders and investors

Stakeholder Engagement

pp. 15–16

Suppliers

Building of fair and sound business relations,smooth information sharing toward better
partnerships

Procurement

Procurement activities
CSR procurement seminars (59 companies/year)
CSR monitoring (201 companies/year)
CSR audits (19 companies/year)

Responsible Procurement
Respect for Human Rights Throughout
the Value Chain

pp. 102–105

Employees

Proper treatment, promotion of occupational
health and safety of human capital

Public Relations
Human Capital

Intranet, in-house newsletters
Training
Town hall meetings between senior management and employees(president and CEO: 18 meetings/year, executive vice presidents:
28 meetings/year)
Employee survey (annual)“Make a Difference!” idea contest (annual)

Stakeholder Engagement
Diversity and Inclusion
Occupational Health and Safety

pp. 15–16
pp. 83–85
pp. 89–94

National and Local Governments, Industrial
Associations

Compliance with domestic and foreign laws andregulations, policy recommendations, participation in industry-governmentacademia collaborative projects

Government &External Relations

Academic research for policy recommendations to internationalorganizations and national governments, lobbying activities
Policy council participation (Japan)
Participation in business and industry associations (Japan)

Stakeholder Engagement
Main Initiatives and Groups in Which Hitachi
Is Involved
Main Groups in Which Hitachi Participates

pp. 15–16
p. 17

Local Communities

Fulfillment of responsibilities as corporate
citizen, involvement in local communities

Social Contribution
All Business Divisions

Contribution to local communities through businessParticipation in volunteer activities

Social Contribution Activities

pp. 111–113

Academic Associations andResearch Institutions

Promotion of technological innovations,participation in industry-governmentacademia collaborative projects

Research andDevelopment

Open innovation (joint research)Innovation Management

pp. 68–74

NGOs and NPOs

Incorporation of diverse public opinions,promotion of stakeholder-focusedmanagement, social contribution throughnonprofit activities

Sustainability
Promotion

Stakeholder dialogues (3 times/year)
Dialogue through collaboration

Stakeholder Engagement
Social Contribution Activities

pp. 15–16
pp. 111–113

Global Environment

Realization of a decarbonized society,a resource efficient society, a harmonizedsociety with nature

Environment
All Business Divisions

Stakeholder dialogues (annual)

Environmental

pp. 22–66

pp. 97–99

p. 19

Global Human Capital Management
Work-Life Management
Freedom of Association and Collective Bargaining

pp. 77–79
pp. 86–88
p. 95

Hitachi Sustainability Report 202015

Contents

Introduction

Management

Environmental

Engagement and Initiatives

Promoting Engagement

Structure

The outcomes of communication with stakeholders are shared with respective divisions andactively utilized as valuable insights into our business. Public interest is growing in how
corporations are taking in stakeholders’ voices to improve their businesses, and we will continue
to globally develop and promote ways of capitalizing on the opinions of the members of society
with whom we engage in our business activities.

Stakeholder Dialogues

Activities

Hitachi organizes stakeholder dialogues in countries and regions around the world to invite opinions
on social challenges from stakeholders representing specialized knowledge platforms and ensurethat their insights are reflected in the business activities conducted at each of Hitachi’s global
businesses and business units.

Theme

Venue

BU/Group company

Measuring impacts of the Social Innovation
Business

Brussels,
Belgium

Hitachi Europe

IoT SDGs:
What Can the Digital Transformation and IoT
Achieve for Agenda 2030?

Brussels,
Belgium

Hitachi Corporate
Office, Europe

Role of business in furthering the SDGs
agenda of India:
e-Education and Urban Transportation

New Delhi,
India

Hitachi India

SocialGovernance

Assurance

Hitachi Sustainability Report 202016

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Engagement and Initiatives

Main Initiatives and Groups in Which Hitachi Is Involved
Activities

102-11 102-12
Based on its Corporate Credo, which is to “contribute to society through the development ofcorporation, Hitachi actively participates in international initiatives addressing social issues on asuperior, original technology and products,” Hitachi has advanced its Social Innovation Business inglobal scale.

order to help realize a sustainable society. As part of this, to play its proper role as a global

Initiative or Group

Logo

Activities

United Nations Global Compact

Officially became a participant in 2009.
Joined workshops organized by the Global Compact Network Japan on six different
topics, including supply chain management, ESG, and SDGs, in fiscal 2019.

World Business Council for Sustainable Development(WBCSD)

Became a member in 1995.

Task Force on Climate-related Financial Disclosures(TCFD)

Announced its support for TCFD in 2018 and disclosed climate-related information
based on the TCFD Recommendations.

Japan Climate Initiative (JCI)

Became a member in 2018.

Business for Social Responsibility (BSR)

Became a member in 2007, participating in the Human Rights Working Group(HRWG) since 2016.

Tokyo Zero-emission Innovation Bay

Participated in council, founded in 2020, as an organizer.

Hitachi Sustainability Report 202017

Contents

Management

Introduction

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020Engagement and Initiatives

International Standardization Activities
Hitachi’s Approach to International Standardization

Approach

External Assessment of Hitachi’s International Standardization Activities

Activities

To help create and expand markets as well as to accelerate our global business expansion, and to

Hitachi’s international standardization work is well regarded. In fiscal 2019, we were honored bycontribute to the SDGs through our Social Innovation Business, we are actively involved in developing

such bodies as the IEC, the IEC Activities Promotion Committee of Japan, the Japan Electronics

international standards through participation in the activities of international standards-developing

and Information Technology Industries Association (JEITA), and the Telecommunication Technology

organizations such as the International Electrotechnical Commission (IEC) and the International

Committee (TTC).

Organization for Standardization (ISO). In concrete terms, we participate in international standardization
activities in fields such as, in the environmental field, supporting the environmentally friendly design ofelectrical, electronic, and information communications systems (IEC TC 111, ISO/IEC JTC 1 SC 39,
ITU-T SG5 WP2); in the clean energy field, smart energy (IEC SyC Smart Energy) and power storage
systems (IEC TC 120); in manufacturing and technology, smart manufacturing (ISO/IEC JWG 21, IEC SyC
SM) and electronics assembly (IEC TC 91); and, in health and safety, water and sewage services (ISO TC
224) and biotechnology (ISO TC 276). Additionally, by contributing to international standardization efforts
by consortia and other bodies, and providing solutions consistent with international standards, we
support the development of sound global markets and facilitate innovation to resolve social issues.

Structure for Promoting International Standardization Activities

Hitachi Group Standardization Committee
Structure

As part of its efforts toward international standardization activities, Hitachi commits employees toserve in key positions such as technical committee chairperson and secretary at international
standardization organizations like the IEC and ISO. Additionally, the Hitachi Group Standardization
Committee was established to coordinate the efforts of all Hitachi Group companies toward

Head:
Hitachi, Ltd. executive officer
in charge of R&D

Members:
Hitachi Group representatives
in charge of international
standardization (CTOs, etc.)

international standardization. The Steering Committee*1 of this body determines priority themes andpromotes standardization activities by establishing working groups for each theme.

Steering Committee

Priority Theme 1
Working Group

Priority Theme 2
Working Group*1 Steering Committee: Headed by the executive officer overseeing R&D, this entity includes chief technology officers of Hitachi business units and
key Group companies. The committee is responsible for decisions on cross-departmental and companywide standardization projects.

Priority Theme 3
Working Group

Achievements in FY 2019

In fiscal 2019, we selected Society 5.0 as one priority theme. In concert with our global
stakeholders, we actively participated in international standardization activities which willcontribute to Society 5.0’s realization.

Hitachi Group Standardization Committee

18

Contents

Management

Introduction

Environmental

SocialGovernance

Assurance

Engagement and Initiatives

Main Groups in Which Hitachi Participates
Approach102-13
Hitachi’s Social Innovation Business is particularly intertwined with the public interest. As part ofAfrica, and the Asia–Pacific region and Japan. Dealing with governments and organizations as a unified

developing that business on a global scale, we view government institutions and related organizations

Group lets us not only seek mutual benefit with local communities but also explore new businessin Japan and other countries around the world as important partners, both as customers andopportunities for Hitachi within each country’s unique social issues and policies.

supporters. Our Government & External Relations Group leads our efforts to strengthen ties with these

In Japan, we are increasingly asked for proposals by the Japanese government. By making requests

bodies. The Group also works with the Hitachi Corporate Office in Washington DC; the Hitachi

directly as well as proposing solutions through economic organizations and industrial bodies, we help

Corporate Office, Europe; and other business locations in the Americas, Europe, the Middle East,build a better society.

Participation in Government Councils by Hitachi Executives
Council

Participant

Activities

Council on Investments for the Future (Cabinet
Secretariat）

Executive Chairman Hiroaki Nakanishi as a private
sector expert

Making proposals in areas including the use of data, open innovation, and development of human capital to realize “Society 5.0,”
Japan’s growth strategy

Committee for the Formulation of New Strategies Related to
Deploying Infrastructure Outside Japan (Cabinet Secretariat)

President and CEO Toshiaki Higashihara as a private
sector member

Making proposals on new infrastructure development measures that assume business models using digital technologies andco-creation with local partners

Industrial Structure Council/Trade Committee (METI)

President and CEO Toshiaki Higashihara as a council/
committee member

Making proposals on using data to realize a human-centric society, as envisaged for Society 5.0, from the commerce and tradeperspective

Participation in Business and Industry Associations
Group

Participant

Activities

Japan Business Federation (Keidanren)

Executive Chairman Hiroaki Nakanishi as chair

Making policy recommendations for achieving the SDGs through realizing Society 5.0 under the theme of “Society 5.0 for SDGs”
Promoting Japan-led value-creating digital transformation (DX) with close collaboration among industry, government, and academia
around the world to formulate systems and rules

Communications andInformation Network Association of Japan (CIAJ)

President and CEO Toshiaki Higashihara as a seniorsteering committee member

Promoting information and communication technology solutions that could contribute to resolving a range of social issues byexchanging views and opinions with relevant ministries and agencies

Japan Electronics and Information Technology
Industries Association (JEITA)

President and CEO Toshiaki Higashihara as vicechair

Examining and making proposals on promotion of digital technology and data use and market creation under the mission to achieve Society 5.0
Offering insights into paradigms of international legislation, agreements, and standards to develop digital trade and strengtheninternational competitivenessJapan Electrical Manufacturers’ Association (JEMA)

President and CEO Toshiaki Higashihara as vice
chair

Promoting the sustainable development of electrical manufacturing by submitting opinions on various governmental and administrative
policies and promoting product safety awareness, international standardization and compatibility evaluation, statistical researchwork, and the development of human capital for STEM fields

Japan–US Business Council

Executive Chairman Hiroaki Nakanishi as an
Executive Committee member

Exchanging opinions and proposing policies regarding various issues in Japan–US economic relations from the point of view of theentire Japan–US economic world

National Association of Manufacturers

Hitachi Corporate Office in Washington DC

Lobbying and making policy proposals, as the largest association of manufacturers in the United States, to support the international
competitiveness of member corporations

Japan Business Council in Europe (JBCE)

Hitachi Corporate Office, Europe as CSR
Committee chair

Making policy proposals to contribute to the further development of EU–Japan relations and the EU economy, as the body representing
Japanese corporations in the EU

Hitachi Sustainability Report 202019

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Ex t e r n a l Asse ssm ents an d Awards

Activities

Hitachi actively pursues a range of activities aimed at developing a more sustainable society. TheseCDP Scores for Fiscal 2019activities have earned the Hitachi Group high marks from numerous external organizations.

Actively Responding to ESG Assessment

Company

Approach

The Hitachi Group welcomes external assessments as a target for ESG*1 and sustainability-oriented

Score

Hitachi, Ltd.

Climate change: A– Water security: A

Hitachi Metals

Climate change: B– Water security: B–

Hitachi Construction Machinery

Climate change: A– Water security: B

Hitachi High-Tech

Climate change: B

Water security: B

investment.
Hitachi, Ltd. received high scores from the CDP,*2 which ranks companies based on theirenvironmental practices and the quality of their disclosure. We received an A, the highest score, for water
security, and an A– for climate change. We are also included in the Euronext Vigeo Eiris World 120
Index.*3

Results of ESG External Analysis in Fiscal 2019
Institution
RobecoSAM

Among Group companies, Hitachi Construction Machinery was selected for the Dow Jones
Sustainability Asia Pacific Index (DJSI Asia Pacific),*4 and Hitachi Metals, Hitachi Construction Machinery,and Hitachi High-Tech were selected for the FTSE4Good Index Series.*5*1 ESG stands for “environmental,” “social,” and “governance”—key factors in promoting socially responsible investment.
*2 CDP is a UK based international nonprofit organization that rates corporate initiatives and transparency in the three areas of climate change, water
security, and forests using an eight-level scale of A to D−.
*3 Euronext Vigeo Eiris World 120 Index: A sustainability index created jointly by NYSE Euronext, which operates several stock exchanges in the
United States, and Vigeo Eiris, an ESG research firm in France and United Kingdom. The index comprises 120 companies from Europe, North
America, and Asia Pacific that have achieved the most advanced performance in the ESG areas.
*4 DJSI: A family of ESG indexes developed by Dow Jones & Company (USA) and RobecoSAM (Switzerland) that includes global and regional
indexes with specific compositions. DJSI World, for example, selects on a global basis, while the DJSI Asia Pacific Index covers Japan, Asia, andAustralia.
*5 FTSE4Good Index Series: One of the indexes calculated by the London Stock Exchange—owned FTSE Group that selects component stocks
based on their ESG performance, specifically environmental management, climate change mitigation, human rights and workers’ rights, supply
chain labor standards, and bribery and corruption prevention.

MSCI

Index

Hitachi Construction Machinery

MSCI Japan ESG Select Leaders Index

Hitachi Metals, Hitachi Construction
Machinery, Hitachi High-Tech

MSCI Japan Empowering Women Index (WIN)

Hitachi Metals, Hitachi High-Tech

FTSE4Good Index Series

Hitachi Metals, Hitachi Construction
Machinery, Hitachi High-Tech

FTSE Blossom Japan Index

Hitachi Metals, Hitachi Construction
Machinery, Hitachi High-TechEuronext Vigeo Eiris World 120 Index

Hitachi, Ltd.

FTSE

Vigeo Eiris

Companies selected

Dow Jones Sustainability Asia Pacific Index

Hitachi Sustainability Report 202020

Contents

Management

Introduction

Environmental

SocialGovernance

Assurance

External Assessments and Awards

Diversity Management Selection 100

Hitachi Wins Silver at the First Annual ESG Finance Awards

Hitachi, Ltd. is included in the Diversity Management Selection 100, an

Hitachi, Ltd. was presented with a silver award at the ESG Finance Awards, a program launched by the

initiative of Japan’s Ministry of Economy, Trade, and Industry (METI). The

Ministry of the Environment to promote the dissemination and growth of ESG finance in Japan. In fiscal

Diversity Management Selection 100 system chooses and recognizes

2019 we held an ESG Briefing for the first time, where our top management clearly described theircompanies that have achieved high results in such areas as improving

commitment to sustainable management and listened closely to comments from shareholders and other

innovation and productivity by using the talents of diverse employees,

stakeholders. We were highly praised for our continuous efforts in this area, which also include our

including women, different nationalities, older employees, and people

Group’s governance structure, which aims to instill sustainable management across the entire Group, andwith disabilities. Hitachi was lauded for going beyond simply introducing

steady practice of PDCA in accordance with our ambitious long-term environmental and climate change

diversity programs to promote diversity management Group-wide as atargets, including our Environmental Action Plan, to be updated every three years based on these

corporate strategy backed by strong management commitment.

targets.

Kurumin Certification

Hitachi Integrated Report 2019 Awarded Grand Prize at Nikkei Annual ReportAwards and Encouragement Prize at WICI Japan Awards

Hitachi, Ltd. has received Kurumin certification.*1 This was granted under Japan’s Act on
Advancement of Measures to Support Raising Next-Generation Children, in recognition of its

At the 22nd Nikkei Annual Report Awards, sponsored by Nikkei, Inc. and held to recognize Japaneseachievements in developing and implementing action plans supporting child care so thatcompanies producing superior annual reports, Hitachi, Ltd. won the grand prize. The Hitachi
Integrated Report 2019 earned high praise for providing a clear, persuasive overview of ourcompany’s activities, including our top management’s determination, consistent growth strategies
aimed to accelerate innovation, and philosophy of and approach to risk management. The report
also won an encouragement prize at the 7th WICI Japan Awards for Excellence in Integrated
Reporting.

employees can work with the peace of mind that comes from a good work-life balance.
*1 Hitachi Group companies with Kurumin certification include Hitachi Construction Machinery Co., Ltd., Hitachi Hitachi
High-Tech, Hitachi Urban Investment, Ltd., Hitachi Systems Ltd., and Hitachi Solutions, Ltd.

Eruboshi Certification
Hitachi, Ltd. promotes diversity as an important component of its management
strategy and strives to create work environments enabling its diverse human capitalto play an active role. In recognition of these initiatives, we received Eruboshi
certification, which is conferred to companies that are implementing exceptional
measures under the Act on Promotion of Women’s Participation and Advancement in
the Workplace. Hitachi, Ltd. was awarded class 2 (assessed in three categories);
other Group companies receiving Eruboshi certification include Hitachi High-Tech(class 3), Hitachi Systems (class 3), and Hitachi Solutions (class 3).

Hitachi Sustainability Report 202021

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Striving to Increase Environmental Value
Hitachi aims to achieve a decarbonized society, a resource efficient society, and a harmonized society with nature under its Environmental Vision.
To this end, we strive to achieve the long-term environmental targets of Hitachi Environmental Innovation 2050 not just within Hitachi itself but
across our entire value chain. Additionally, we support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD),
and are actively advancing our efforts to clarify and disclose information on climate-related risks and opportunities.

Hitachi Sustainability Report 2020

22

Environmental
CONTENTS

23 Environmental
Our Environmental Vision
25 Advancing
and Long-Term Environmental Targets
25 The Environmental Vision and Hitachi
Environmental Innovation 2050
26 Environmental Action Plan

28 Environmental Governance

28 Framework for Promoting
Environmental Governance
29 Environmental Management System

33 Achieving a Decarbonized Society

33 Efforts to Achieve a Decarbonized Society
34 Contributing to a Decarbonized Society
Through the Decarbonization Business36 Contributing to a Decarbonized Society
at Business Sites (Factories and Offices)
40 Climate-related Financial Information
Disclosure (Based on TCFD
Recommendations)45 Achieving a Resource Efficient Society
45 Efforts to Achieve a Resource Efficient
Society
46 Building a Water Efficient Society
49 Building a Society That Uses Resources
Efficiently

a Harmonized Society with52 Achieving
Nature52 Efforts to Achieve a Harmonized Society
with Nature
53 Managing and Reducing Chemical
Substances
55 Preserving Ecosystems

56 Environmental Data

56 GHG Emissions Throughout the Value Chain
58 Environmental Load from Operations
63 Environmental Load by Region
65 Environmental Management Data
66 Environmental Accounting

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

103-2

En vi ron m enta l
Key SDGs

Solar power generation system newly installed at
Hitachi Automotive Systems Gunma Plant.

Why

it matters

Hitachi’s Corporate Credo is to “contribute to society through the development of

Innovation Business in collaborative creation with its stakeholders.” To uphold thissuperior, original technology and products.” We seek solutions to environmental

vision and work toward achieving a decarbonized society, a resource efficient society,issues, which are of serious concern to society, through our business operations andand a harmonized society with nature, we have established a set of long-term

promote environmental management from a long-term perspective. Meeting society’s

environmental targets looking toward 2030 and 2050 called Hitachi Environmental

expectations with innovations that mitigate environmental issues also presents major

Innovation 2050, and promote Group-wide environmental activities in line with ourbusiness opportunities.

Environmental Action Plan, which is updated every three years. Toward the goal of a

Hitachi’s Environmental Vision states that “Hitachi will resolve environmental issues
and achieve both a higher quality of life and a sustainable society through its Social

What
we are doing
Enhancingenvironmental
governance23

decarbonized society in particular, we have announced our intention of aiming forcarbon neutrality at our business sites (factories and offices) by fiscal 2030.

Core initiatives

Goals and KPIs

Achievements in FY 2019

Enhance environmental governance
Enhance environmental management
systemReduce environmental burden through“Eco-Factories & Offices Select”
certification
Implement environmental education for
employees
Ensure environmental compliance

Cultivation of environmental human capitalin the Hitachi Group
Implementation rate of voluntary
environmental audits of business sites
outside Japan by business units andGroup companies (number of
implementing sites/number of sites): 20%

Registered data from about 1,000 business sites in 63
countries in the Environmental Data Collection System(Eco-DS) to estimate environmental load
Achieved a total score of 177 GPs in the GREEN 21
evaluation of our Environmental Action Plan, exceeding the
fiscal 2019 benchmark of 160 GPs
Under “Eco-Factories & Offices Select,” of our approximately
1,000 facilities, achieved 6 new certifications, 2 recertifications,and 64 renewed certifications (total certified facilities: 72)
Implementation rate of voluntary environmental audits ofinternational business sites outside Japan by business units
and Group companies: 26%

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental

Achieving adecarbonizedsocietyWhat
we are doing

103-2

Core initiatives

Goals and KPIs

Achievements in FY 2019

Expand decarbonization business
Improve environmental performance of
products and services throughEnvironmentally Conscious Design
Assessments
Reduce CO 2 emissions at business sites(factories and offices)
Introduce Hitachi Internal Carbon Pricing(HICP) framework
Introduce renewable energy

Reduction rate of CO 2 emissions per unitof products and services: 19%
Identification and review of climate changerisks and opportunities
Reduction rate of CO 2 emissions per unit
at business sites (factories and offices):
7%

Reduction rate of CO 2 emissions per unit of products andservices: 19%
Announced goal of realizing carbon neutrality by fiscal 2030
at all business sites (factories and offices)
Implemented investment in energy-saving equipment in
35 cases totaling ¥260 million through HICP
Reduction rate of CO 2 emissions per unit at business sites(factories and offices): 5%
Generated 2.6 times more renewable energy for its own use
than the previous fiscal year

Build a water efficient society
Respond to water risks
Build a society that uses resources
efficiently
Transition to a circular economy

Reduction rate in water use per unit: 23%
Reduction rate in waste and valuables
generation per unit: 10%

Released Water Risk Guidelines
Promoted measures based on water risk survey results
Reduction rate in water use per unit: 26%
Promoted recycling activities for each product
Reduction rate in waste and valuables generation per unit:
14%

Promote initiatives to minimize impact onnatural capitalManage chemical substances in productsManage chemical substances in business
operations
Promote initiatives to preserve
ecosystems

Reduction rate in chemical atmosphericemissions per unit: 16%
Calculation of positive and negative
impact on natural capital

Reduction rate in chemical atmospheric emissions per unit:
21%
Built calculation methods for positive impact (e.g. benefits offorest conservation activities) and negative impact (LIME2
evaluation of business activities) into Environmental Data
Collection System (Eco-DS)
Revised list of Voluntarily Controlled Chemical Substances inaccordance with EU’s POP Regulation

Achieving a resource
efficient society

Achieving aharmonized society
with nature

Note: Figures in “Goals and KPIs” are goals for fiscal 2019, compared to fiscal 2010.

24

Key SDGs

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

25

A d va n c ing O ur Environ men tal V i s i on an d L on g-Te rm Env i ronm e nt a l Ta rge t s
The Environmental Vision and Hitachi Environmental Innovation 2050
PolicyGoals

102-11 102-15

103-2

In order to fulfill its corporate social responsibility for reducing global and local environmental
burden, Hitachi has made striving to resolve related issues through its business operations part ofProgress in Reaching Long-Term Environmental Targets

Goals

Activities

its management strategy. In response to the 2015 adoption of the Paris Agreement on climatechange and the UN’s Sustainable Development Goals (SDGs), in September 2016 we establishedThe quantitative targets of the Hitachi Environmental Innovation 2050 are specified in the

our Environmental Vision and long-term environmental targets called Hitachi Environmental

Environmental Action Plan for 2021 (covering fiscal 2019–2021). Progress toward major targets is

Innovation 2050. In order to achieve these long-term targets, we drew up our Environmental Action

being made, as shown in the table below, and we are generally on track. We will continuePlan, a set of short-term targets that are updated every three years. Implementation of theincreasing our efforts to achieve these long-term targets.

Environmental Action Plan for 2021, covering fiscal 2019–2021 and formulated in line with the 2021

Efforts Toward Achieving a Decarbonized Society

Mid-term Management Plan, is currently underway, and we are steadily accumulating achievements

Products and Services

as we work to meet the detailed KPIs that the plan includes.
Our environmental strategy, centered on the Environmental Vision and our long-term
environmental targets, is deliberated over by the Executive Sustainability Committee, chaired by thepresident and CEO, and advanced by the Hitachi Group as a whole.

Reduction rate of CO2 emissions perunit from use of products andservices (base: FY 2010)

Fiscal 2019 result

Fiscal 2021 target

Fiscal 2030 target

Fiscal 2050 target

19%

20% or higher

50%

80%

Business Sites (Factories and Offices)

Environmental Vision

Reduction rate of total CO2
emissions (base: FY 2010)

Fiscal 2019 result

Fiscal 2021 target

Fiscal 2030 target

Fiscal 2050 target

17%

20% or higher

100%(carbon neutral)(Maintain 100%)

Hitachi will resolve environmental issues and achieve both a higher quality of life and a sustainable
society through its Social Innovation Business in collaborative creation with its stakeholders.
We also aim to achieve a decarbonized society, a resource efficient society, and a harmonizedsociety with nature—the components of a sustainable society—in accordance with this Vision.

Note: The reduction rate of total CO2 emissions is an indicator that includes such variables as the amount of CO2 emissions
reduced due to self-consumption of energy, the amount of renewable energy purchased, and the amount of reduction using
non-fossil fuel energy certificates.

Long-Term Environmental Targets: Hitachi Environmental Innovation 2050

Efforts Toward Achieving a Resource Efficient Society

For a decarbonized society
CO2 emissions per unit through the value chain
80% reduction by fiscal 2050, 50% reduction by fiscal 2030 (compared to fiscal 2010)
Achieve carbon neutrality by fiscal 2030 at business sites (factories and offices)Enhanced Efficiency in the Use of Water

Reduction rate in water use per unit
(base: FY 2010, Hitachi Group)

For a resource efficient society
Build a society that uses water and other resources efficiently with customers and society
50% improvement of efficiency in use of water/resources by fiscal 2050 (compared to fiscal
2010 in the Hitachi Group)

For a harmonized society with nature
Minimize impact on natural capital

Contributing to a Decarbonized Society at
Business Sites (Factories and Offices)

Building a Water Efficient Society

Fiscal 2019 result

Fiscal 2021 target

Fiscal 2030 target

Fiscal 2050 target

26%

26% or higher-

50%

Enhanced Efficiency in the Use of Resources
Reduction rate in waste andvaluables generation per unit
(base: FY 2010, Hitachi Group)

Improving Environmental Performance ofProducts and Services Through Environmentally
Conscious Design Assessments

Fiscal 2019 result

Fiscal 2021 target

Fiscal 2030 target

Fiscal 2050 target

14%

12% or higher-

50%

Notes: • See the referenced pages for details on the figures cited.
• In fiscal 2019, slowdowns in factory operations due to COVID-19 may have resulted in CO2 and other emission reductions.

Building a Society That Uses Resources
EfficientlyContents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 202026

Advancing Our Environmental Visionand Long-Term Environmental Targets

Environmental Action Plan
To achieve its Environmental Vision and the Hitachi Environmental Innovation 2050 long-term environmental targets, Hitachi draws up an Environmental Action Plan containing indicators and targets for thethree-year period covered by the Mid-term Management Plan and promotes its steady implementation.

Environmental Action Plan for 2021 (Fiscal 2019–2021)

Goals

Activities

We are pressing forward with environmental activities based on the Environmental Action Plan fortargets for fiscal 2019–2021, as well as the results for fiscal 2019. GREEN 21 is used as a system for2021 formulated in line with the 2021 Mid-term Management Plan. The table below outlines theevaluating and managing the achievement made over the three years for each goal.

Environmental Action Plan for 2021

Our environmental activities and targets are updated every three years with a view to achieving our long-term environmental targets.

Environmental Management
Items

Indicators

Promote environmental human capital development

Environmental human capital development of the Hitachi Group

Enhance global environmental management

Implementation rate of voluntary environmental audits (numberof implementing sites/number of sites outside Japan)

Reduce CO2 emissions of
products and services

Indicators

Reduction rate of
CO2 emissions perunit (base: FY 2010)

Fiscal2019
targets
19%

Fiscal2019
results(achievementlevel)

19%

Fiscal2020
targetsFinalfiscalyear(2021)
targets

20%

21%

◆◆◆

Address climate changerisks and opportunities

Identification and review of risks and opportunities

Reduce CO2 emissions ofbusiness sites (factories
and offices)

7%
Reduction rate of
CO2 emissions per1
unit* (base: FY 2010)

5％

Reduce CO2 emissions
from transportation(shipping)

Reduction rate oftransportationenergy consumption
per unit (Japan)*2(base: FY 2010)

7%

9%

8%

9%

◆◆

◆◆

20%

26%

Fiscal 2020 targets

50%

10%

11%

Items

Water
circulation(factories
and offices)

Resource
circulation(factories
and offices)

Final fiscal year (2021) targets

80%

◆◆◆

A Resource Efficient Society

A Decarbonized Society

Items

Fiscal 2019 results (achievement level)

Fiscal 2019 targets

Indicators

Enhanceefficiency in theuse of water
Respond to
water
shortages

Reduction rate inwater use per unit
(base: FY 2010)

Enhanceefficiency in theuse ofresources
Reduce andrecycle wastematerials

Reduction rate inwaste andvaluables
generation perunit (base: FY
2010)

Fiscal2019
targets
23%

Fiscal2019
results(achievementlevel)

26%

A Harmonized Society with Nature
Fiscal2020
targetsFinalfiscalyear(2021)
targets

24%

26%

◆◆◆

Items

Chemical
substances(factories
and offices)

Reducechemicalemissions

Promotion of measures based on water risk survey results

Evaluation system for the achievement of the Environmental Action Plan

10%

14％
◆◆◆

11%

12%

Indicators

Fiscal2019
targets

Reduction rate in 16%
chemical
atmosphericemissions per unit
(base: FY 2010)

Fiscal2019
results(achievementlevel)

21%

Final
fiscalyear(2021)
targets

17%

18%

◆◆◆

Ecosystem Reduce impact Calculation of negative impact (environmental impact
preservation on naturalassessment of business activities)
capitalCalculation of positive impact (forest conservation activities)
Contribute to
ecosystem
preservation

Promotion of ecosystem preservation activities

GREEN 21◆◆◆ Achieved*1 Reduction rate of CO2 emissions per unit refers to reductions in CO2 emissions from just Hitachi’s consumption of energy.
*2 This is a target for Japan only. Targets in other countries are set on a voluntary basis.

Fiscal2020
targets◆◆ Partially achieved

Environmental Action Plan Achievement
Evaluation System: GREEN 21

Contents

Introduction

Environmental

Management

SocialGovernance

Advancing Our Environmental Visionand Long-Term Environmental Targets

GREEN 21: FY 2019 Evaluation Results (Hitachi Group)

Environmental Action Plan Achievement
Evaluation System: GREEN 21

SystemActivities

FY 2019 target: 160 GPs
FY 2019 result: 177 GPs

100

Environmental management
46 GPs80

GREEN 21 is used as a system for evaluating and managing our achievements made over three-60

year periods toward the targets set in our Environmental Action Plan.

40
20

GREEN 21 converts the level of achievement toward the Environmental Action Plan targets ateach of the approximately 200 major manufacturing sites classified as category A into green points(GPs), then makes an evaluation on a category-by-category basis. A perfect score for any category

A harmonized society with nature
36 GPs0

A decarbonized society
38 GPsis 100 GPs. Points are awarded for meeting the Environmental Action Plan’s annual targets and, as
an added incentive, for particularly ambitious activities. Representing progress in terms of GPs
shows how much each site has achieved in each category, and allows sites to be compared witheach other, the results of which are in turn used in the Environmental Action Plan’s PDCA (plan-docheck-act) cycles.
The Sustainability Promotion Division also uses the results of the GREEN 21 evaluation as acondition for awarding its Eco-Factories & Offices Select certification for business sites that
promote activities demonstrating a high level of environmental consciousness and produce notable
results in that area.
Achievements in FY 2019

From fiscal 2019, progress has been evaluated for individual categories (environmental
management, a decarbonized society, a resource efficient society, and a harmonized society
with nature) newly created based on the Environmental Action Plan for 2021. The total score forall the categories was 177 GPs, exceeding the fiscal 2019 benchmark of 160 GPs. One factor
behind the higher score was progress made in water risk assessment as part of our efforts tobuild a resource efficient society.

A resource efficient society
57 GPsAssurance

Hitachi Sustainability Report 202027

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 202028

En vi ron m enta l G o ver n an ce
Framework for Promoting Environmental Governance
Structure102-11 102-29 102-31
To achieve our Environmental Vision and reach our long-term environmental targets, we are

Sustainability Strategy Promotion Structure

Audit Committee

enhancing environmental governance by building a global structure to support environmental
decision making and implementation at Hitachi, Ltd. and consolidated subsidiaries (a total of 815
companies as of March 31, 2020).
Important items related to environmental initiatives are deliberated by the Executive Sustainability

Executive Sustainability Committee• Chair: President & CEO

Committee, chaired by the president and CEO of Hitachi, Ltd., and attended by top Hitachi• Members: Senior Executive Committee members, business unit CEOs, Hitachi, Ltd. division heads

executives. Members meet twice a year to discuss material environment-related policies and• Key roles: Discuss and decide on sustainability strategy at management/BU/department levels

measures, including those in response to climate change, to share progress reports andachievements, and to set the course for further improvements and new initiatives.

the Mid-term Management Plan by environmental promotion division heads from business units andmajor Group companies participating in Eco-Management Meetings. Targets (and measures toachieve them) in the Environmental Action Plan that affect not only our environmental strategy but
also our business strategy—like those to reduce the CO emissions of our products and services—2

are determined jointly by the Eco-Management Meetings and Sustainability Promotion Meetings,
attended by business promotion division heads. A progress report concerning important targets inthe Environmental Action Plan is made to the Executive Sustainability Committee, and instructions
from committee members are reflected in actual environmental activities.
Group-wide efforts to advance environmental activities are undertaken outside Japan as well.
Environmental officers are assigned to China, the rest of Asia, the Americas, and Europe to share
information on the state of progress of our environmental activities and on the latest environmental
regulations in each country and region. Respective Regional Environmental Meetings are also held
once or twice a year.

Eco-Management
Meetings• Members: Environmental
promotion division heads at
BUs and key Group
companies• Key roles: Discuss andimplement concretemeasures to achieve longterm environmental targets insustainability strategy

Group company C

compliance risks, the three-year Hitachi Group Environmental Action Plan is formulated in line withGroup company B

To develop ways to achieve our long-term environmental targets and reduce environmental

Group company A

executive officers.

Business unit Cchange and other environment-related material issues are made to the committee by Hitachi• Members: Businesspromotion division heads at
BUs and key Group
companies• Key roles: Discuss andimplement specific measures
for sustainability strategy

Business unit B

directors conducts an audit of sustainability-related operations once a year. Reports on climate

Sustainability
Promotion Meetings

Business unit A

We have adopted a committee system to separate the responsibilities for management oversightfrom the execution of business operations. Under this system, the Audit Committee of independent

Sustainability Strategy Promotion Structure

Secretariat
Sustainability
Promotion
Division

Regional
HQs

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

29

Environmental Governance

Environmental Management System
Enhancing Our Environmental Management System

SystemCollecting and Monitoring Environmental Load Data to
Improve Environmental Practices

Activities

Hitachi has globally applicable criteria for environmental management classification to conduct
environmental management properly and efficiently in accordance with the environmental load andTo conduct environmental management efficiently and effectively, we collect environmental load

compliance risk levels of Group business sites, both large and small. We assign a score for eachdata using the Environmental Data Collection System (Eco-DS). The system, which supports threeclassification item, such as the amount of power consumed, the volume of waste generated, andlanguages (Japanese, English, and Chinese), monitors and registers items in about 20 categories,

whether or not legal restrictions apply. Each Group business site is classified into one of three

ranging from environmental load data on items such as energy use, water use, and waste

categories: A, B, and C. Environmental management is then conducted based on the respective level

generation, to whether an item falls under relevant environmental laws and regulations, toof risk. Of our approximately 1,000 business sites, about 200 major manufacturing sites are classified

environmental accounting. We have also set up an international help desk to support the system’s

as category A. These sites account for more than 90% of the Group’s total environmental load.

operation and promote understanding of environmental management.

The business units and Group companies with category A sites participate in Eco-Management

The collected data is aggregated and analyzed to implement a PDCA cycle for environmental

Meetings to draw up the Environmental Action Plan, which is then disseminated throughout themeasures, such as determining environmental management classification into the categories A, B,

business units and Group companies by environmental strategy officers, chosen from among theand C; identifying environmental management issues; and sharing instructive examples within theheads and general managers of those organizations. These business units and Group companies

Group. GREEN 21 uses the data registered in the system to calculate green points (GPs) for

also formulate their own environmental action plans based on Hitachi Group’s Environmental Action

evaluating the level of target achievement. Approximately 200 manufacturing sites classified as

Plan and strive to achieve their targets.

category A aggregate and analyze data biannually on such key items as energy, water, and waste

In addition to adhering to the in-house environmental management system, all our global

materials.

category A manufacturing sites have acquired third-party certification, such as ISO14001.

Categories by Criteria for Classification of Environmental Management
Setting targets based on theEnvironmental Action Planand reporting environmentalload data to Hitachi, Ltd.
headquarters
Category A
Category B
Category C

Reporting environmental load
data to Group environmental
strategy officers

Reporting violations ofenvironmental laws and regulations
to Hitachi, Ltd. headquarters andresponding to the managementclassification survey

Achievements in FY 2019

In fiscal 2019, data from about 1,000 business sites in 63 countries, including factories,
research laboratories, and offices, was registered in the system to estimate the environmentalload of the entire Hitachi Group.

List of ISO 14001-Certified Companies
http://www.hitachi.com/environment/data/
iso14001.html

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Environmental GovernanceChemical Substance Management System

Management of Chemical Substances in Products

To collect and manage data on chemical substances in materials, parts, and products from our
suppliers, Hitachi operates A Gree’Net, a green procurement system compatible with the
chemSHERPA*1 format, to grasp what chemical substances are used in our products—from designand development, procurement, and production to quality assurance and shipping—and to respondto legal and regulatory frameworks at shipping destinations.
To properly manage chemical substances used in our business operations, we have introduced adatabase for chemical substance management called CEGNET, which keeps track of the latest laws
and regulations and our own voluntary regulations and supports searches for new substance risks.
The system also collects and aggregates data on the amount of chemical substances handled,emitted, and transferred in our operations, helping to reduce the volume of chemicals that we handle
and emit to the environment.

Survey/register

A Gree’Net(green procurement system)

Disclosure requirements/
Information transfer

Registration database
Suppliers
Environmental
information

Manage amounts of designatedchemical substances in a product bymaterial and part

Customer/society
Environmental
information

Aggregated database
Manage total amounts of designatedchemical substances by product andbusiness

Achievements in FY 2019

Requests/Data confirmation

Approximately 1.34 million parts and products with chemical substances are registered in A
Gree’Net as of March 31, 2020. This is around 200,000 less than the previous fiscal year due to adecrease in the number of Hitachi Group companies as a result of changes in our business

Hitachi Group business sites

portfolios.
We held 13 briefings on chemSHERPA tools and A Gree’Net for suppliers using the system at
Healthcare Kashiwa, Omika Works, Kasado Works, Shimizu Works, Mito Works, and Hitachi IE
Systems between July 2019 and March 2020. The briefings were attended by 1,276 people andhelped to deepen understanding of these tools and this system.
*1 chemSHERPA: A shared transmission scheme throughout the supply chain to ensure proper management of chemical substances in
products and continuing compliance with the ever-growing requirements of major global laws and regulations like the REACH regulation
and RoHS directive.

Management of Chemical Substances in Business Operations

Chemical Substance Management System (CEGNET)
Regulatory/voluntary control
information

New chemical risk searches

Chemical data

Network

Registration and aggregation of data on
amounts handled, emitted, andtransferred

Hitachi Group business sites

Hitachi Sustainability Report 202030

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Environmental Governance

Reducing the Environmental Burden Through“Eco-Factories & Offices Select” Certification

SystemActivities

Environmental Education for Employees

Employee Engagement

Activities

Hitachi believes that promoting greater environmental awareness and understanding among

Hitachi has implemented an “Eco-Factories & Offices Select” certification program for business sites

employees is essential to efforts to energize its environmental activities. Toward that end, we offerthat promote activities demonstrating a high level of environmental consciousness and produce

general education using e-learning for all Group employees, from new hires to executive officers.

notable results in that area. This helps raise the environmental awareness of employees andWe also provide specialized Hitachi Group training on environmental risks and compliance withpromote environmentally conscious activities at our business sites.

environment-related laws and regulations for working-level employees in charge of environmental

Based on certification criteria that were developed for our manufacturing (factory) andmanagement and internal environmental auditors. Particularly in China, where we have more thannonmanufacturing (office) divisions globally, we certify factories that actively engage in improvements

30 category A manufacturing sites, we provide training on compliance with the country’s

to achieve efficient production and offices that have been environmentally designed. Superior

increasingly strict environmental laws and regulations.

policies from certified factories and offices are shared with the entire Group, with other locations
encouraged to implement them as well. To maintain and raise the level of environmental awarenessthrough Eco-Factories & Offices Select, certified factories and offices are re-evaluated every fiscal
year, and only those that meet the evaluation requirements have their certification renewed.

Achievements in FY 2019

In fiscal 2019, we created new e-learning materials for general education with a view tosustainability in line with the 2021 Mid-term Management Plan. These materials will be rolled
out globally starting in fiscal 2020. An environmental management training program scheduled
for March 2020 in China was postponed due to COVID-19.

Achievements in FY 2019

In fiscal 2019, of our approximately 1,000 facilities, 6 were newly certified, 2 were recertified, and64 had their certifications renewed. The total number of certified factories and offices was 72.

Environmental Education and Training System
TargetEco-Factories &Offices SelectEco-Factory SelectEnergy efficiency
Renewable energy use
High-efficiency lighting
Recycling of waste and other resources
Efficient water recycling
Reductions in chemical substanceemissions

Eco-Office SelectHigh-efficiency lighting
Renewable energy use
Energy savings
Improved office building
environmental performance

Facilities that have met their annual targets for each fiscal year under
the GREEN 21 evaluation system

Eco-Factories & Offices

Specialized education

Facilities that have met (1) their annual targets for each fiscal year under the
GREEN 21 evaluation system, and (2) at least one of the following criteria:

General education

Eco-Factories & Offices Select Certification Criteria

Beginning

Intermediate

Advanced

Introductory training for new employeesAllemployees

Online e-learning: Eco-Mind education (General topics:
Global environmental issues, environmental law, etc.)

Online e-learning: Eco-Mind education (Hitachi Group topics:
Environmental policy, Environmental Action Plan, etc.)

Workinglevel

Basic environmental management course for working-level
employees (management of waste, air/water quality, and hazardous
materials; development and operation of management systems; etc.)
Education for Eco-Factories

employees

Eco-Product development training
Risk communicator training
Internal
environmental

Factories and Offices

Introductory

auditors

ISO 14001 auditor brush-up training
ISO 14001 auditor certification
training

ISO 14001 senior auditor
certification training

Hitachi Sustainability Report 202031

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Environmental Governance

Environmental Education in Fiscal 2019
Contents of training

Implementation Status of Internal Environmental Audits
TargetHitachi Group training on recent
amendments to laws and operational
Employees working in air, water
procedures as well as basic environmental quality, and waste management
management
Environmental management training
program to reduce environmental risks in
Working-level employees
China and raise the knowledge of workinglevel employees

Number of participants
Japan: 105 people from 33 companies
China: 68 people from 41 companies

Implementing division

TargetCorporate division of Hitachi, Ltd.
(Sustainability Promotion Division)

Business units, headquarters of Group companies,
and business sites classified as category A in ourenvironmental management classification

Usually every three years

Major business sites and subsidiaries of business
units and Group companies*1

Usually every three years

Overseas business sites of business units andGroup companies that are classified as category A
in our environmental management classification*2

Usually every three years

Divisions within business sites

Usually every year

Corporate divisions of business
units and Group companies(environment divisions)

Postponed due to COVID-19

ISO 14001-certified sites(audit teams)

Environmental Compliance

Activities

306-3

Frequency*1 According to the Hitachi Group Global Audit Standards, which specify matters concerning internal audits conducted by business units andGroup companies.
*2 According to the Environmental Action Plan.

In order to better ensure compliance with the laws and regulations of each country and region andminimize environmental risks, Hitachi sets and monitors compliance with voluntary management

Number of Regulatory Violations and Complaints (Hitachi Group)

criteria that are more stringent than regulatory requirements. If we find a violation or receive acomplaint, we take steps to enhance environmental risk management by sharing the causes and20

16

countermeasures throughout the Group and preventing a recurrence of similar incidents. As part ofour measures to address the pollution of soil and groundwater, we are examining the soil and water
for any contamination at business sites where hazardous chemical substances are being or were15

12

once used. If contamination is found, we will conduct cleaning and monitoring activities until
decontamination is complete.
In fiscal 2019, we designated 15 business sites that committed an environmental violation in thepast three years as high-risk business sites. The relevant business units and Group companies
began providing guidance to these sites to strengthen compliance activities. Through enhanced
guidance to these high-risk business sites, compliance management has improved outside
Japan and the number of relevant legal and regulatory violations decreased.

6

2015

Water quality

Air quality

4

2
1
2
1

3

0

4

5

3
1
1

5

Achievements in FY 2019

12
4

10

3

13

2016

10

3

5

2

1

4

4

1
3

2017

Waste matter

2018

2019

Complaints
Regulatory
violations(FY)

Other (equipment registration, etc.)

Complaints

Hitachi Sustainability Report 202032

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

33

A c h i e v i n g a Decarbo ni zed Soci ety
Efforts to Achieve a Decarbonized Society
Approach

Hitachi Environmental Innovation 2050 contains long-term reduction targets for CO 2 emissions perunit of 50% by fiscal 2030 and 80% by fiscal 2050 (compared to fiscal 2010 levels) throughout
Hitachi’s value chain.
The value chain for our products and services encompasses all stages from the procurement of
raw materials and parts to production, transportation, use, disposal, and recycling. In May 2020 weannounced an even more ambitious CO 2 reduction target of achieving carbon neutrality, which will
mean net zero emissions, at our business sites (factories and offices) by fiscal 2030.
Approximately 90% of our value-chain emissions result from the use of our products and services
after they are sold, and reducing these emissions will be crucial to reducing CO 2 emissions acrossthe value chain. However, CO 2 emissions from the use of sold products and services are greatly
influenced by changes in product sale price and business portfolios. We have established anindicator for providing products and services that produce less CO 2 from among products andservices offering equivalent value, and, recognizing the importance of this matter, have set andcontinue to manage reductions goals for our main products and services on the basis of CO 2
emissions per unit. Specifically, by fiscal 2030, we aim to reduce CO 2 emissions per unit by 50% for
products and services at the usage stage and contribute to reducing global CO 2 emissions throughenergy systems that do not emit CO 2 at the operational stage and expanding our new
decarbonization business using digital technology such as OT and IT.
Additionally, in response to growing investor interest in the long-term impact of climate change on
financial performance and corporate operations, we actively disclose climate-related information inaccordance with the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD) and also engage in dialogue with investors.

Disposal/recycling 0.4%

Transportation 0.1%

To reduce CO 2 emissions from the use of our products and services, which make up the largest
proportion of emissions in our value chain, we have established target reduction rates of CO 2
emissions per unit from products and services while in use. These rates are based on fiscal 2010.
Given the unique qualities of the wide range of businesses we engage in, for each product or service
subject to this initiative, we calculate the reduction rate of CO 2 emissions per unit with CO 2 emissions
as the numerator and function size*1 as the denominator, and work toward overall reduction.
We also have high expectations for specific long-term CO 2 reduction countermeasures such as
sales of renewable energy systems with zero emissions while in use and the use of technologicalinnovation to replace existing products or services with new versions that provide the same value
but emit less CO 2 while in use.
The Guidelines on Calculating CO 2 Emission Reductions for Hitachi Group Products andServices*2 specify the following three methods for calculating different types of CO 2 emission
reductions. Figures considered reductions for products and services while in use under the GHG
Protocol, a global standard for CO 2 emission reduction disclosure, are calculated using method (1).
Methods (2) and (3) are for avoided emissions.
(1) Energy-saving feature enhancements
Set a reduction rate of CO 2 emissions per unit (compared to fiscal 2010) based on efficiency
enhancements such as energy-saving feature enhancement in products and services. Every year,
calculate reductions in CO 2 emissions considering the production volume of the relevant year.
(2) Reduction through new systems and solutions based on technological innovation
solutions that emit less CO2 while providing equivalent value to existing products, services, and solutions.
(3) Reduction through the deployment of non-fossil energy systems
Calculate avoided emissions as reductions in CO 2 emissions due to the introduction ofrenewable and other non-fossil energy systems, as compared to grid-supplied electricity (using
the average emissions factor of the base year, fiscal 2010).

Use 86.3%
Procurement of raw materials/parts 7.5%

GHG Emissions Throughout the Value Chain

ApproachCalculate avoided emissions as reductions in CO2 emissions due to the adoption of new systems andRatio of CO2 Emissions at Each Stage of Hitachi Value Chain in Fiscal 2019
Production 4.0%

Objectives for CO 2 Emissions per Unit from Products andServices in Use and Approach to Avoided Emissions

Other (capital goods, etc.) 1.7%

*1 Major functions of products correlated with CO2 emissions.
*2 The Guidelines are based on various standards, including the Guidance on Quantifying Greenhouse Gas Emission Reductions from the Baseline
for Electrical and Electronic Products and Systems (IEC TR62726) issued by the International Electrotechnical Commission (IEC), and calculation
methods established by the government or industrial associations.

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Achieving a Decarbonized Society

Contributing to a Decarbonized Society Through the Decarbonization Business
Expanding the Decarbonization Business

Activities

To achieve a decarbonized society set out in its Environmental Vision, Hitachi is pursuing

individual employees. In the energy sector, we will promote wider use of renewable energy throughdecarbonization business that contributes to reducing CO 2 emissions, including business to provide

increased efficiency of power transmission and distribution. In the industry sector, we will improve

products and services with enhanced energy-saving features, business to introduce renewableefficiency of industrial equipment like compressors and transformers used at production sites. In theenergy, and business to offer solutions to improve efficiency and reduce CO2 emissions throughmobility sector, we will not only work to enhance the efficiency of elevators for buildings and theirdigitalization, such as the use of Lumada. We will expand the decarbonization business by

security and safety functions through remote monitoring but also to improve the ease of their

supplying solutions in the five business areas of IT, energy, industry, mobility, and smart life, andmaintenance. Finally, in the smart life sector, we will contribute to energy management in smart

help the world mitigate and adapt to climate change. In the IT sector, we will develop work style

cities and developing, producing, and providing electrification parts for automobiles.

innovation solutions and other digital technologies to help improve the working environment for

Decarbonization Business: A Hitachi Focus

IT solutions

Finance and public-oriented solutions
Promoting digital solutions
Data center
Developing smart data centers
Servers/storage
Enhancing energy-saving features ofservers and storage

Energy solutions

Industry solutions

Power grid solutions
Enhancing efficiency of powertransmission/distribution

Smart logistics
Improving energy-saving features
through fully IT-enhanced logistics

Energy management
Advancing smart energy management
to reduce peak electricity demand

Factory automation
Enhancing energy efficiency throughshorter lead times

Power generation
Promoting power generation systems
using wind and other non-fossil
energy sources

Water business
Enhancing efficiency of water andsewage systems
Industrial products
Enhancing efficiency of industrial
products

Mobility solutions

Smart life solutions

RailwaysEnhancing energy-saving features ofrolling stock
Developing smart operating systems
Enhancing maintenance service
efficiency through rolling stockmonitoring

Smart cities
Reducing CO2 through comprehensive
urban energy management solutions

Elevators
Enhancing energy-saving features of
elevators and escalators throughreplacement
Enhancing energy efficiency throughtotal building solutions

Vehicle electrification
Promoting electrification through electric
powertrain systems
Home appliances
Enhancing energy efficiency of home
appliances
Promoting connected home appliances
Smart therapies
Enhancing energy-saving features of
medical devices

Hitachi Sustainability Report 202034

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a Decarbonized Society

Achieving CO 2 Emission Reductions During the Use of
Products and Services
302-5

Initiatives for Improving Environmental Performance of Products and Services
Goals

Activities

Promoting environmentally conscious process: In accordance with the IEC 62430*1 criteria, promote
environmentally conscious process in designing and developing products and services including by

305-4

305-5

Hitachi set a target for fiscal 2019 of 19% reduction in CO2 emissions per unit from products andservices compared to the base year of fiscal 2010, and our actual rate of reduction in fiscal 2019was 19%. This is due to an increase in sales of high energy-saving products, including industrial
equipment and equipment used for social infrastructure.

meeting environmental regulatory requirements and ascertaining the environment-related needs of our
stakeholders within our existing management system.
Implementing Life Cycle Assessments (LCAs): For our main, priority products, quantitatively evaluate
their burden on the global environment in such areas as the consumption of mineral resources, fossil
fuels, and water resources, as well as their impact on climate change and air pollution, disclose theresults to our stakeholders, and utilize them in improving the design of next-generation products.

Environmental Action Plan for 2021 Management Values*1 The standard developed by the International Electrotechnical Commission concerning environmentally conscious design for electrical andelectronic products.

Reduction in CO2 Emissions per Unit (Hitachi Group)
FY 2010 (base year)
CO2 emissions fromuse of products
Function size*1

100

From base year%

19% reduction

Reducing CO2 Emissions Throughout the Value Chain

FY 2019
CO2 emissions fromuse of products
Function size

FY 2019 reduction target: 19%81%*1 Major functions of products correlated to CO2 emissions.

Improving Environmental Performance of Products and Services
Through Environmentally Conscious Design Assessments

SystemWe conduct independently developed Environmentally Conscious Design Assessments for all products
and services involving a design process to steadily improve environmental performance throughout theGroup. We identify 30 environmental impact items that may cause climate change, resource depletion,and ecosystem degradation across the entire life cycle of products and services, assess theenvironmental burden reduced through our business activities in multifaceted ways, and strive forfurther reductions.

Case Study

Project

Department, Group company

Activity

Reducing CO2
emissions using IT

Systems & Services
Business, Hitachi, Ltd.

Reducing CO2 emissions by 42% through JP1/
Client Process Automation IT products

https://www.hitachi.com/environment/
casestudy/2019/case01.html

New G-Series air
compressors

Hitachi Industrial
Equipment Systems

Reducing CO2 emissions by about 6% throughimprovement in air compressor efficiency

https://www.hitachi.com/environment/
casestudy/2019/case02.html

Participation in the
Carbon Footprint
Communication
ProgramServices & Platforms
Business Unit, Hitachi,
Ltd.

New verification and approval of Hitachi Virtual
Storage Platform 5000 Series enterprise storage(four models in series)

https://www.hitachi.com/environment/
casestudy/2019/case03.html

35

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a Decarbonized Society

Contributing to a Decarbonized Society at Business Sites (Factories and Offices)
CO 2 Emission Reductions at Business Sites (Factories and Offices)and Hitachi Carbon Neutrality 2030

PolicyIntroducing the Hitachi Internal Carbon Pricing Framework

To promote CO2 reduction at our business sites (factories and offices), in fiscal 2019 we started

Hitachi is working toward achieving its target of reducing CO2 emissions from our business sites

operating the Hitachi Internal Carbon Pricing*1 (HICP) framework, which provides sites with(factories and offices) by 50% compared to fiscal 2010 by fiscal 2030, as set out in Hitachi

incentives to invest in necessary new equipment.

Environmental Innovation 2050, our long-term environmental targets.

SystemThe HICP framework is an internal system that aims to achieve CO2 reduction effectively. It helps

To accelerate these efforts, in 2020 we announced an additional goal of realizing carbon neutrality

visualize CO2 reduction from investment in equipment at factories and offices and encourageby fiscal 2030 at all business sites (factories and offices). We call this goal “Hitachi Carbon Neutrality

investment in new equipment that drives decarbonization through energy-saving and other2030.”

measures as an extension of the established decision-making process on investment.

Under Hitachi Carbon Neutrality 2030, we aim to be carbon neutral by effectively reducing

Specifically, with reference to emissions trading and carbon taxes globally, we establish

emissions by 100% by fiscal 2030 compared to fiscal 2010, instead of the original 50% reduction

company-internal carbon prices, convert into monetary value the effect of CO2 reduction due totarget. The following initiatives will help us achieve the new target.

investment in equipment that contributes to decarbonization, add this to the value of energy

Major Initiatives for Reducing CO2 Emissions at Business Sites (Factories and Offices)

reduction effects, and use the result to evaluate the effect of our investment. By applying incentives
like these, we aim to further expand our investment in equipment that contributes todecarbonization.

Factories

Improve equipment efficiency by introducing and upgrading to high-efficiency equipment
Reduce energy use during production by raising efficiency through the use of Lumada andproduction technologies cultivated over long years of experience
Optimize equipment operation and stop energy waste by installing smart meters
Review product designs and processes

decarbonization a higher priority, but also minimize the future risks of climate change and make

Offices

Build new facilities with high energy efficiency
Combine and integrate existing facilities
Install energy-saving equipment and optimize equipment operation in collaboration withbuilding owners

Factories and offices

Install renewable energy systems
Use electricity from renewable sources
Adopt the non-fossil fuel energy certificate*1 system
Introduce off-balance-sheet solar power generation for self-consumption
Promote investment in carbon-reduction equipment through adoption of the Hitachi Internal
Carbon Pricing (HICP) framework*1 Credits assigned to energy certified as having been produced from renewable sources. Purchasers of such credits can offset theirconventional energy use instead of implementing their own reduction measures.

Toward the goal of Hitachi Carbon Neutrality 2030, we have formulated a plan to make three
existing factories in fiscal 2020 and a total of more than seven factories in fiscal 2021 carbon neutral.
We believe that the technologies and experiences developed through efforts to achieve our carbon
neutrality targets will help us offer business proposals accurately responding to our customers’
decarbonization needs, thereby greatly contributing to expanding our new business opportunities.

As the climate change issue deepens, we anticipate risks like increased burdens from carbon
taxes and new emissions trading frameworks to emerge. By incorporating those risks into ourequipment investment decisions, we can not only make investment in equipment that contributes toourselves more resilient. The introduction of the HICP framework is a key part of this process.
Achievements in FY 2019

Establishing and implementing the HICP framework resulted in additional investment in energysaving equipment. Such equipment did not receive investment before due to low returns, but it
qualified under the HICP framework as it is expected to help reduce CO2 emissions. Fiscal
2019 saw 35 cases of investment in energy-saving equipment with a total investment of ¥260
million, contributing to an annual reduction of 1,356 tons of CO2 emissions. The annual amountof CO2 emission reductions from our business sites improved 2% compared to the previous
fiscal year.
*1 Internal carbon pricing: An in-house tool to assess in monetary terms the amount of carbon generated or reduced in order to voluntarily
make investment decision and conduct risk management.

36

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a Decarbonized Society

Investment effect in monetary terms

Hitachi Internal Carbon Pricing (HICP) Framework

CO2 reduction effects

Actions and Achievements
CO2 reduction effects(in monetary terms)

Activities

302-1

302-4

305-4

305-5

At Hitachi, the achievement of environmental targets for individual business sites (factories and offices) set
by the Environmental Action Plan for 2021 is measured by CO2 emissions per unit. Because we conductbusiness in various sectors, the KPI of CO2 emissions per unit for each business site is calculated using thesite’s CO2 emissions as the numerator and its activity amount*1 as the denominator.

Energyreduction effect

Energyreduction effectIn fiscal 2019, the reduction rate of CO2 emissions per unit was 5% against a target of 7%(compared to the base year of fiscal 2010). Part of the reason for not hitting the target was a lower
efficiency of facility use due to a decrease in sales. There were also some business divisions that

Before introducing HICP
framework

After introducing HICP
framework

could not achieve expected reductions in CO2 emissions per unit due to a failure to appropriately
respond to a reduction in the fixed power allocation linked to sales.
We report the total CO2 emissions from our entire Group, including CO2 emissions from power

Set internal carbon prices based on future risks like increased burden fromcarbon taxes and emissions trading
Convert effects of CO2 reduction from investment in equipment that
contributes to decarbonization into monetary value

plants selling electricity. Total CO2 emissions in fiscal 2019 decreased by approximately 599 kt-CO2
compared to fiscal 2018*2 due to the sale of our power plants and a drop in sales. CO2 emissions byregion, excluding those from power plants, fell as a result of reorganization of business sites and a
decline in sales in Japan. In the Americas, a materials company that became a reporting company in

Evaluate effect of investment by adding monetary effect of CO2 reduction topreviously calculated monetary value of effects of energy reduction throughinvestment

fiscal 2016 accounts for a large portion of CO2 emissions, and we will look into ways to promote theuse of inexpensive renewable energies.
*1 A value closely related to CO2 emissions at each business site (for example, production quantity, output, building floor space, and number of employees).
*2 The CO2 electrical power conversion factor for total CO2 emissions is market-based.

Increase priority of investment in equipment that contributes todecarbonization

Environmental Action Plan for 2021 Management Values

Reduction in CO2 Emissions per Unit (Hitachi Group)
Encourage investment in equipmentthat contributes to decarbonization

Renewable energy

High-efficiency equipment

FY 2010 (base year)
CO2 emissions*1
4,703 kt-CO2
Activity amount

100

From base year%

5% reduction
FY 2019 reduction target: 7%

FY 2019
CO2 emissions
4,441 kt-CO2
Activity amount95%*1 CO2 emitted within the organization (Scopes 1 and 2).
Notes: • As the CO2 electrical power conversion factor in calculations of CO2 emissions per unit, a unified factor of 0.530 kgCO2 /kWh isapplied across the entire Hitachi Group.
• The Environmental Action Plan’s management values do not include amounts for our power plants in fiscal 2010 (base year) or fiscal 2019.

37

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

38

Achieving a Decarbonized Society

CO2 Emissions (Hitachi Group’s factories, offices, and power plants)(kt-CO2/year)
6,000
4,500

5,322 10

5,433

Reducing Transportation Energy Consumption
16

1,454*1

1,519*1

375
211
402

265
470

283
499

2,541

2,392

2,377

4,346 7

4,973 15
1,343*1

4,374 30

3,000

(factories and offices), we have established targets for the reduction of transportation energy use per

286
572

unit for each business unit and Group company in Japan. Outside Japan, these targets are voluntary.
Our business sites are promoting a modal shift to highly efficient transportation methods, improving

2,285

1,500

2,030
810

0

As part of our efforts to reduce energy output during transportation as well as at our business sites

1,228*1

236
540

2015

Power plants*2

Japan

732

2016

739

2017

554

2018

truck loading ratios and taking other measures to reduce transportation energy consumption, and

228

2019

(FY)

China

AmericasRest of Asia (excluding China and Japan)

Activities

switching to the use of eco-cars for in-house operation. Considering a modal shift from truck to rail
Europe*1 Includes 1,070 kt-CO2 (fiscal 2016), 1,163 kt-CO2 (fiscal 2017), 1,112 kt-CO2 (fiscal 2018), and 950 kt-CO2 (fiscal 2019) emitted bya materials company that became a reporting company in fiscal 2016.

transportation a high priority, we are working toward “Eco Rail Mark company” and “Eco Railcertified product” certifications from the Ministry of Land, Infrastructure, Transport, and Tourism.
Transitioning from truck to railway transportation is expected to reduce CO2 emissions per unit to*2 Emissions from power plants selling electricity in Japan are included in the CO2 emissions data for fiscal 2017 and onward.

one-eleventh of its current level, and we plan to continue expanding our use of railways for long-Notes: • Starting from fiscal 2019’s calculations, Scope 2 emissions were changed from a calculation method using a unified Group-wide

distance transportation.

electrical power conversion factor to a market-based calculation method, and past data was recalculated based on this.
Regarding CO2 electrical power conversion factors: in Japan (including power plants), adjusted conversion factors for individual
power businesses based on the Act on Promotion of Global Warming Countermeasures are used; overseas, the latest values
for each fiscal year supplied by the International Energy Agency (IEA) as conversion factors for individual countries are used.
• Energy-related CO2 emissions in fiscal 2019 were 1,489 kt-CO2 (Scope 1) and 2,885 kt-CO2 (Scope 2).

Achievements in FY 2019

In fiscal 2019, CO2 emissions from transportation within Japan for the Hitachi Group were 88.4
kt-CO2,14.4 kt-CO2 less than the previous fiscal year. To reduce CO2 emissions, we actively

worked to improve efficiency when loading products for transportation and increase our use ofcoordinated transportation, reducing CO2 emissions by more than 10% compared to fiscal 2018.

Introducing Renewable Energy

Activities

Eco Rail Mark Initiatives

We are promoting the use of solar, wind, and other forms of renewable energy at our business sites.
Going forward, we will accelerate these efforts, aiming to raise the share of renewable energy in our
total electricity consumption to 2% by fiscal 2030.
Achievements in FY 2019

In fiscal 2019, Hitachi generated a total of 18,022 MWh of renewable energy for its own use,which is 2.6 times the amount generated in the previous fiscal year. Renewable energy
generated by equipment installed at business sites (factories and offices) accounted for 0.3% of
the electricity consumed by the entire Hitachi Group.
Major Business Sites Using Renewable Energy
Hitachi Computer Products (America)

11,325 MWh/year of wind power used

Tata Hitachi Construction Machinery (India)

12,629 MWh/year of solar power generated

Company

Certification

Hitachi, Ltd.

Eco Rail Mark company*1
Eco Rail certified product*2

Hitachi-Omron Terminal Solutions

Eco Rail Mark company*1

Hitachi Industrial Equipment Systems

Eco Rail certified product*2*1 A mark conferred on companies using railways for more than 15% of freight land transportation covering 500 km or more; for 15,000 tons
or more in volume per year; or for more than 15 million ton-kilometers in volume × distance per year.
*2 A mark conferred on products using railways for more than 30% of freight land transportation covering 500 km or more in terms of volume × distance.

About the Eco Rail Mark
http://www.mlit.go.jp/tetudo/ecorailmark/ecorailmark-english.html

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a Decarbonized Society

Energy Savings in Eco-Factories & Offices
Project

Case Study

Department, Group company

Activity

Promoting measures for carbon neutrality
Increasing use of renewable energy with off-balance-sheet
solar power generation systems for self-consumption

Hitachi Automotive Systems, Hitachi High-Tech
Manufacturing & Service

Reduction in CO2 emissions of about 820 t-CO2 by increasing use of renewable energy

https://www.hitachi.com/environment/
casestudy/2019/case04.html

Reducing CO2 by increasing efficiency of cupola furnaces
and utilizing unused energy through heat recovery

Hitachi Metals

Reduction in CO2 emissions by 15% compared to previous fiscal year through initiatives
including increased efficiency of cupola furnaces and heat recovery

https://www.hitachi.com/environment/
casestudy/2019/case05.html

39

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

40

Achieving a Decarbonized Society

Climate-related Financial Information Disclosure (Based on TCFD Recommendations)
In June 2018, Hitachi announced its endorsement of the recommendations by the Financial Stability

Strategy

Policy102-11 102-15 102-29

Board (FSB)’s Task Force on Climate-related Financial Disclosures (TCFD). The following contains key

201-2

The Environmental Vision and Hitachi
Environmental Innovation 2050
Efforts to Achieve a Decarbonized Society

We are responding to climate change by fulfilling our responsibilities as a global company inclimate-related financial information in line with the TCFD’s recommendations.

achieving a decarbonized society. Taking note of the total CO2 reductions required globally under the
RCP 2.6*1 and RCP 8.5*2 scenarios of the Fifth Assessment Report of the Intergovernmental Panel

Governance

Structure

on Climate Change (IPCC), we have established long-term environmental targets called Hitachi
Environmental Innovation 2050 based on our Environmental Vision calling for CO2 reductions

Hitachi sees climate change and other environmental issues as important management issues. A reportto the Board of Directors in 2016 was followed by the establishment and announcement of longterm environmental targets called Hitachi Environmental Innovation 2050 containing CO2 reduction
targets for fiscal 2030 and fiscal 2050.
The Board of Directors discusses the Group’s sustainability strategy, including climate change
measures, as a key component of management strategy. The Executive Sustainability Committee,
chaired by the president and CEO and staffed by heads of corporate divisions and business units,
meets twice a year to discuss and reach decisions on material environment-related policies andmeasures, including those in response to climate change, and to set the stage for implementation.
In addition, the Audit Committee of independent directors conducts an audit of sustainabilityrelated operations once a year, and Hitachi executive officers report on climate-related material
issues to the committee during the audit.
As for activities outside the company, in 2019 an executive officer in charge participated in the
TCFD Study Group on Implementing TCFD Recommendations for Mobilizing Green FinanceThrough Proactive Corporate Disclosures, launched by the Ministry of Economy, Trade, andIndustry, and helped compile its report. Hitachi also participates in an industry-government-

throughout our value chain of 50% by fiscal 2030 and 80% by fiscal 2050, compared to fiscal 2010.
In May 2020 we announced an even more ambitious CO2 reduction target of achieving carbon
neutrality, which will mean net zero emissions, at our business sites (factories and offices) by fiscal 2030.
*1 A Representative Concentration Pathway (RCP) scenario under which, at the end of the 21st century, the increase in global temperaturesfrom preindustrial levels is kept below 2°C.
*2 An RCP scenario that assumes that emissions will continue to rise, resulting in an approximately 4°C rise in global temperatures compared
to preindustrial levels.

Identification and Assessment of Climate-related Risks and Opportunities
The Hitachi Group operates a broad array of businesses around the world, with each businesshaving its own set of risks and opportunities. We are responding to the impact of climate change byassessing climate-related risks and opportunities in accordance with TCFD classifications. We makesector-specific assessments of risks and opportunities for important business sectors that have arelatively high likelihood of being affected by climate change. Our assessments are also categorizedaccording to time span, namely, short term, medium term, and long term, as defined below.
Time Spans for Assessing Climate-related Risks and Opportunities

academia initiative called the TCFD Consortium—comprising 164 companies and other

Time span

organizations—as a member of its Steering Committee and contributed to the formulation of TCFD
Guidance 2.0, announced in July 2020.

Short term

Over the next three years
from fiscal 2019 to 2021

Reason for adoption
Corresponds to the three-year management period covered by theEnvironmental Action Plan for 2021, established in line with the 2021
Mid-term Management Plan

Medium term Through fiscal 2030

Time span of our fiscal 2030 long-term environmental targets

Long termTime span of our fiscal 2050 long-term environmental targets

Through fiscal 2050

Hitachi’s Corporate Governance Framework and
Its Features
Sustainability Strategy Promotion Structure
Framework for Promoting Environmental
GovernanceContents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

41

Achieving a Decarbonized Society

Climate-related Risks

Climate-related Opportunities

As for climate-related business risks, we have followed the TCFD’s classification in considering

CO2 emissions during the use of our products and services by our customers account for(1) risks related to the transition to a low-carbon economy in the 2°C scenario and (2) risks related

approximately 90% of total emissions in our value chain. To achieve the CO2 reduction targets set

to the physical impacts of climate change in the 4°C scenario, which assumes that efforts to reduce

forth in our long-term environmental targets and 2021 Mid-term Management Plan, Management

global CO2 emissions have failed.

Plan, it is essential that we reduce emissions during use. Developing and providing products andContributing to a Decarbonized Society Throughthe Decarbonization Businessservices that emit zero or very little CO2 during their use will not only satisfy customer needs but(1) Risks related to the transition to a low-carbon economy (applying mostly to the 2°C scenario)

also help meet society’s demands for reduced emissions. This represents a business opportunity for
us in the short, medium, and long term and constitutes a major pillar of the Social Innovation

Category

Major risksTime span

Main initiatives

Policy andlegal

Increased business costs fromthe introduction of carbon
taxes, fuel/energy consumption
taxes, emissions trading
systems, and other measures

Short tolong term

Avoid or mitigate increases in business costs, suchas from carbon taxes, by further enhancing
production and transport efficiency and promoting
the use of non- or low-carbon energy sources

Technology

Loss of sales opportunities
due to delays in technology
development for products andservices

Medium tolong term

Contribute to reducing CO2 emissions by developing
and marketing innovative products and services thatlead to the achievement of long-term environmental
targets and expanding the decarbonization business
Promote the development of low-carbon products byimplementing Environmentally Conscious Design
Assessments when designing products and services

Market andreputation

Impact on sales due tochanges in market values orassessment of our approach toclimate issues

Medium tolong term

In the light of rising investor and market interest in
climate change and growing expectations of thebusiness sector, clearly identify the reduction of
CO2 emissions in our management and businessstrategy by incorporating reduction targets for fiscal
2021 in the 2021 Mid-term Management Plan inline with our long-term environmental targets

Business that we are promoting as a management strategy.
Climate-related opportunities
Category

Major opportunities

Main initiatives

Products/
services andmarkets

Increased corporate
value and revenue fromexpanded sales of
products and services
with innovativetechnology that cancontribute to themitigation andadaptation of climatechangeDevelop and market products and services that contribute to a
decarbonized society, expand the decarbonization business, and promote
the development of innovative devices and materials that contribute to
reducing the environmental burden
Create solutions that leverage Hitachi’s strengths in operational technology(OT), IT, and products, as well as expertise in R&D (high-efficiency, energysaving products; high-efficiency production systems using digitaltechnology; power generation systems using non-fossil energy that do notemit CO2; environment-friendly mobility; and building of smart,environmental cities)

Resilience

Provision of solutions toaddress climate-related
natural disasters

Provide disaster-mitigation solutions, such as high-performance fire-fighting
command systems
Provide construction machinery that enables speedy recovery efforts(2) Risks related to the physical impacts of climate change (4°C scenario)
Category

Major risksTime span

Main initiatives

Acute andchronic
physicalrisks

Climate-related risks tobusiness continuity, including
increased severity of typhoons,floods, and droughts (acuterisks) as well as rising sea level
and chronic heat waves(chronic risks)

Short tolong term

Take into account the possibility of flood damage
when deciding on the location or equipment layoutof a new plant. Measures tailored to the water risksof each manufacturing site will be strengthened in
the future based on the results of a water risk
assessment now being conducted

Hitachi's Approach to Water Risks

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Achieving a Decarbonized Society

Responding to Climate Scenario Risks and Opportunities for Each BusinessIn selecting the businesses that have a relatively high likelihood of being affected by climate

Hitachi operates a broad array of businesses, with each business having its own set of risks andopportunities. We therefore selected businesses that have a relatively high likelihood of beingchange, we took many different factors into account and chose those with (1) relatively high CO2

affected by climate change and examined the business impact of and responses to the 2°C and 4°C

emissions from the use of products and services, (2) a relatively high need for fossil fuels during the

scenarios. Under the former, our assessments were premised on there being stronger measures anduse of products and services, and (3) high sales volume within the Group. The businesses weregulations for decarbonization envisioned by the IPCC’s RCP 2.6 scenario. By assuming somewhat

selected using these criteria were railway systems, power generation and power grids, IT systems,tighter regulations and an earlier target date for CO2 reductions, we can prepare ourselves for theindustrial equipment, automotive systems, and construction machinery. Our assessment of the major

1.5°C scenario. Under the latter, we focused on there being increased climate-induced natural

climate-related risks and opportunities for these businesses are outlined in the following table:disasters as a result of lax regulations, as projected by the RCP 8.5 scenario.
The Business Environment, Major Risks and Opportunities, and Strategies under the 2°C and 4°C Scenarios
Target businesses

The businessenvironment andmajor risks andopportunities underthe 2°C scenario

The businessenvironment andmajor risks andopportunities underthe 4°C scenario

Railway systems

Power generation and power grids

IT systems

Industrial equipment

Automotive systems

Construction machinery

Business environment: Global demand fortransport systems that emit less CO2 per
distance covered will grow with tighter CO2
emission regulations in each country andregionBusiness environment: Global demand forelectricity generated from renewable energy,
nuclear power, and other non-fossil sources
will grow with tighter CO2 emission
regulations in each country and region.
Power networks will increasingly
accommodate natural energy produced
through distributed generation.

Business environment: Demand forenergy-saving, high-efficiency IT solutions
will grow with tighter CO2 emission
regulations in each country and region.
There will also be a jump in demand for data
centers and data analysis systems toaccommodate the expansion of suchfinancial services as investments and loans
for decarbonization businesses and green
bond issues, as well as of data utilization
businesses.

Business environment: Global demand forenergy-saving industrial equipment will growwith tighter CO2 emission regulations ineach country and region

Business environment: Electric vehicles
will rapidly spread with tighter laws andregulations on fuel efficiency andenvironmental standards, and increases infossil fuel prices. Markets for alternative,
non-fossil technologies like hydrogen andbiofuel vehicles will expand. The number ofcountries and regions with near zero salesof internal combustion engine vehicles will
increase.

Business environment: Demand forelectric and low/no carbon-fuel construction
machinery will grow with tighter laws andregulations on the use of fossil fuels.
Environmental regulations for items otherthan CO2 emissions (air and noise pollution,etc.) will grow tighter in urban areas.

Risks: Competitiveness will decline if there
are delays in the development of innovativeemission-reducing technologies, including
those to improve the efficiency of railway
services through digital utilization, such as
dynamic headway (flexible operation in
response to passenger demand) as well as
new mobility services like MaaS

Risks: Delays in the construction of power
networks enabling the mass introduction ofrenewable energy with large output
fluctuations

Risks: Competitiveness will decline if there
are delays in the development oftechnologies and human capital to offer
energy-saving, high-efficiency IT solutions;shortages in human capital; and slow
implementation of decarbonization
measures for energy-consuming data
centers

Risks: Competitiveness will decline if there
are delays in the development of highefficiency, low-loss products

Risks: Failure to transition to a new
business environment of rapidly declining
sales of internal combustion engine vehicles

Risks: Higher development costs, lost
markets due to slow response, and higher
costs in building customer support for theuse of electric and low/no carbon fuelmachinery. Loss of customers due to theshort range of electric machinery and lackof fueling and power-storage infrastructure
for low/no carbon fuel machinery. Declining
demand due to divestment of major coalcompanies.

Opportunities: Demand will grow for
railways, which emit less CO2 per distancecovered. There will be a shift to energysaving railcars from conventional models,
and the efficiency of railway services will be
improved through digital utilization. Data
usage will also boost demand for new
mobility services.

Opportunities: Business opportunities willgrow with rising demand for renewableenergy—the key to a decarbonized future—
and with the provision of grid solutions,digital service solutions, and energy
platforms that can accommodate thediversification of energy suppliers

Opportunities: Demand will grow forenergy-saving and high-efficiency
information systems that contribute tozero-emissions. There will also be increased
demand for platforms to offer suchenvironment-related financial services asinvestments and loans for decarbonization
businesses and green bond issues.

Opportunities: Utilization of IoT,
digitalization, and connected systems todevelop innovative products and solutions
that contribute to CO2 emission reductions
without relying on the energy-savingfeatures of individual products

Opportunities: Markets for alternative,
non-fossil technologies like electric,hydrogen, and biofuel vehicles will expand

Opportunities: Sales and sale opportunities
for electric machinery, a broader diversity offuel types, and digital applications will
increase as companies turn to newtechnologies and adapt to new site
environments

Business environment: Demand forelectric-powered transport will gradually
increase even without tighter energy
regulations. Damage from typhoons, floods,
and other natural disasters caused byclimate change will rise sharply.

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

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

Business environment: Typhoons, floods,
and other natural disasters caused byclimate change will rise sharply

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

Business environment: Natural disasters
caused by climate change will rise sharply,
boosting demand for construction
machinery to support speedy and safe
recovery efforts

Continued on next page

Hitachi Sustainability Report 202042

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Achieving a Decarbonized Society

Target businesses

The businessenvironment andmajor risks andopportunities underthe 4°C scenario

Non-environmental
market factors(neither the 2°C nor
4°C scenario)

Responses to futurebusiness risks(business
opportunities)

Financial information(sales volume ofeach target sector)

Railway systems

Power generation and power grids

IT systems

Industrial equipment

Automotive systems

Construction machinery

Risks: The high frequency of natural
disasters will exacerbate damage to
production facilities, worsen working
environments, and disrupt supply chains,
leading to delays in deliveries and the
procurement of parts

Risks: The high frequency of natural disasters
will increase damage to power generation andtransmission/distribution facilities, hamper efforts
to restore power transmission/distribution, anddisrupt supply chains, leading to delays indeliveries and the procurement of parts

Risks: Natural disasters will exacerbate
damage to production facilities, worsen
working environments, and disrupt supply
chains, leading to delays in deliveries andthe procurement of parts

Risks: Natural disasters will exacerbate
damage to production facilities, worsen
working environments, and disrupt supply
chains, leading to delays in deliveries andthe procurement of parts

Risks: Natural disasters will exacerbate damage
to production facilities and disrupt supply chains,
leading to delays in deliveries and the
procurement of parts. A breakdown in one linkof the supply chain will have an increasingly
severe impact on production overall.

Risks: Natural disasters will exacerbate
damage to production facilities, worsen
working environments, and disrupt supply
chains, leading to delays in deliveries andthe procurement of parts

Opportunities: Transport systems more
resilient to natural disasters can be developed.
Competitiveness can be enhanced by providing
added value in such forms as energy-saving
railcars and adaptability to new technologies.

Opportunities: Energy demand will grow as
warmer weather leads to increased use of
air conditioning. Demand will increase fordisaster-resilient power generation andtransmission/distribution technologies.

Opportunities: Demand will increase forsocial and public systems that help reduce
damage from natural disasters and for IT
systems required as part of a BCP

Opportunities: Efforts to accommodate IoT
products will lead to higher demand forremote control and remote maintenanceduring natural disasters

Opportunities: Demand will grow fortechnologies to enhance the efficiency ofinternal combustion engines

Opportunities: Infrastructure projects toprevent and mitigate disasters and support
recovery efforts will increase

Economic growth will lead to urbanizationand population growth around the world,
driving the railway business globally as anefficient form of public transport for large
numbers of passengers, regardless ofclimate conditions. Market size in Japan
will remain flat, but the Asian market
overall will see substantial growth.
Long-distance transport will decline going
forward as the global pandemic restricts
travel and encourages remote work. The
decline in demand, though, will not be as
severe as that for air transport.
Competition will grow as major railway
manufacturers in various countries will
expand their business to meet global
demandEconomic growth, urbanization, andpopulation growth will push up demand forenergy, especially electricity, mainly indeveloping countries
Energy supply and demand will diversify
due to various factors, such as CO2
emissions, environmental burden,
economic performance, safety, and supply
stability
Digital technology will be further applied toenhance the stability and efficiency of thepower supply

Further digitization globally will
exponentially increase the volume of data
circulated, accumulated, and analyzed.
Experience with the global pandemic willprompt a shift to remote, noncontact, andonline formats, both in our life and work,and boost demand for solutions thatfacilitate such a shift.
New services and businesses utilizing big
data, IoT, AI, and other digital technology
will expand rapidly

Digitalization, infrastructure renewal,
population decline, and worker shortages
will expand the automation market inindustrial countries
As the global pandemic forces people tostay at or work from home, demand willgrow for factory automation enabling ahandful of workers to operate a factory
The industrial market in emerging
economies will grow due to a rise inproduction plants

Economic growth, urbanization, population
growth, and infrastructure development
like road construction will expand theglobal market for automobiles as a flexible
and personal means of transport
The global pandemic may temporarily
dampen passenger vehicle sales due torestrictions on people’s movement, butcommercial vehicle sales appear to berising as need for goods delivery increases
Non-environmental functions likeautonomous driving and advanced safety
features that promote safety, security, andcomfort will drive competitivenessResponse to business risks under 2°C or
4°C scenarioContinue to strengthen the railway
business, as global demand for railways
will increase under either scenario
Specifically, develop and market moreenergy-saving railcars and batterypowered railcars for non-electrified
sections. Strengthen railway services
through digital utilization, such as dynamic
headway (flexible operation in response topassenger demand), and new mobility
services like MaaS.
Given the increasing frequency of natural
disasters, take risk aversion into accountwhen deciding the location and equipmentlayout of a new plant. Keep an eye on the
supply chain in strengthening our ability torespond to business disruption risks inaccordance with our BCPs.

Response to business risks under 2°C or
4°C scenarioContinue to enhance response to relevantmarkets in view of expected higher demand
for non-fossil energy under either scenario
Strengthen the provision of grid solutions,digital service solutions, and energy
platforms that can accommodate theincreased use of renewable energy anddiversification of energy supply and demand
management
Given the increasing frequency of natural
disasters, develop technologies for disasterresilient renewable energy systems anddisruption-resistant power transmission/
distribution systems. Take risk aversion into
account when deciding the location andequipment layout of a new production plant.
Keep an eye on the supply chain instrengthening our ability to respond tobusiness disruption risks in accordance with
our BCPs.

Response to business risks under 2°C or
Response to business risks under 2°C or
4°C scenario
4°C scenario
Under either scenario, continue developing
Continue to develop innovative digitalenergy-saving, high-efficiency products
technologies, nurture necessary humanthat use IoT technology. Focus particularly
capital, and enhance digital service
on connected products withsolutions that generate new value in viewcommunication features. Miniaturized,of expected growth in society’s demandhigh-efficiency, low-loss products can also
and markets for digital services underhelp reduce CO2 emissions.
either scenario
Specifically, enhance competitiveness by
Given the increasing frequency of naturalproviding energy-saving and highdisasters, take risk aversion into accountefficiency IT solutions that contribute towhen deciding the location and equipment
zero-emissions; platforms for expandedlayout of a new plant. Keep an eye on theenvironment-related financial services for
supply chain in strengthening our ability todecarbonization businesses; social andrespond to business disruption risks inpublic systems to prevent naturalaccordance with our BCPs.
disasters, reduce damage, and enhance
resilience; and IT systems for BCPs
Given the increasing frequency of natural
disasters, strengthen our ability to respondto business disruption risks in accordancewith our BCPs

Response to business risks under 2°C
scenario
Promote R&D of electrification technology
and other alternative technologies toenhance response to new markets, suchas for electric vehicles

Impact on part of ¥580.3 billion in railway
systems business sales (FY 2019)

Impact on part of ¥399.2 billion in Energy
Sector sales (FY 2019)

Impact on part of ¥2,099.4 billion in IT
Sector sales (FY 2019)

Impact on part of ¥811.6 billion in
automotive business (Hitachi Automotive
Systems) sales (FY 2019)

Impact on part of ¥424 billion in Industry
Sector’s industrial products business sales(FY 2019)

Worker shortages will be addressed throughfurther labor savings, automation, remote
work, and the development of safety-related
products and solutions
Products, services, and solutions (such as
CO2-free machines/attachments suited forwork at dismantling sites, in narrow spaces,
and underground) will be further developed
to meet the needs of smart infrastructurebuilding amid rapid urbanization
Emerging economies with expanding
markets represent both increased sale
opportunities and intensifying competition
with emerging manufacturers
There is a need for stronger total supply
chain management to accommodate
shifting demand and for enhanced
resilience of the business portfolio

Response to business risks under 2°C
scenario
Advance product development with aneye on trends in electrification and low/no
carbon fuel to minimize development andproduct costs
Build a system covering the entire value
Response to business risks under 4°C scenario
chain to work with and support thePromote R&D and product development ineducation of maintenance staff engaged inexisting technologies, including internal
new technologies to accommodate
combustion engines, to not only improvecustomer requests for servicing and rentals
energy efficiency but increase such
non-environmental value as safety, security, Response to business risks under 4°C scenario
and comfort
Promote the development and manufacture
Given the increasing frequency of naturalof innovative products and solutions thatdisasters, take risk aversion into accountenable a speedy recovery from disasters
when deciding the location and equipment
Given the increasing frequency of natural
layout of a new plant. Keep an eye on thedisasters, take risk aversion into accountsupply chain in strengthening our ability towhen deciding the location and equipment
respond to business disruption risks inlayout of a new plant. Keep an eye on theaccordance with our BCPs.
supply chain in strengthening our ability torespond to business disruption risks inaccordance with our BCPs.
Impact on part of ¥931.3 billion inconstruction machinery business (Hitachi
Construction Machinery) sales (FY 2019)

We believe that by paying close attention to market trends and developing our business flexibly and strategically, we have high climate resilience in the medium to long term under either the 2°
C or 4°
C scenario
Note: The above scenario analyses are not future projections but attempts to examine our resilience to climate change. How the future unfolds may be quite different from any of these scenarios.

Hitachi Sustainability Report 202043

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

44

Achieving a Decarbonized Society

Risk Management

Structure

The Hitachi Group evaluates and monitors climate-related risks for each business unit and Group
company as part of a process of assessing risks and opportunities in accordance with theEnvironmental Action Plan, updated every three years. The results are tabulated by the
Sustainability Promotion Division of Hitachi, Ltd., and their importance is checked at Sustainability
Promotion Meetings. Those risks and opportunities perceived as being particularly important for theGroup as a whole are deliberated by the Executive Sustainability Committee, chaired by thepresident and CEO of Hitachi, Ltd.

Metrics and Targets

Goals

Our environmental activities are managed through the Environmental Action Plan, whose metrics andtargets are updated every three years, including those to measure and manage climate-related risks
and opportunities.
We use the reduction rate of CO2 emissions per unit compared to fiscal 2010 to set targets andmonitor progress across our many Group products and services in the value chain. Under the current
Environmental Action Plan for 2021 (covering fiscal 2019–2021) as well, we have established annual
targets and monitor progress for each business unit and Group company.
Total greenhouse gas emissions (Scope 1, Scope 2, and Scope 3) across our value chain arecalculated based on GHG Protocol standards, and we have published annual figures since fiscal
2012. Given the nature of our business, some 90% of our total CO2 emissions come from the use ofsold products in Scope 3. CO2 emissions can fluctuate greatly, though, due to changes in sales
volume and our business portfolio. To advance CO2 reductions during the use of sold products andservices, therefore, we set targets and monitor progress for the reduction rate of CO2 emissions perunit. In other words, for products and services featuring equivalent value, we focus on metrics toprovide customers and society with those that emit less CO2. At the same time, we will make anexerted effort to not only reduce per unit but also total CO2 emissions from our business sites(factories and offices).

Environmental Action Plan for 2021
(Fiscal 2019–2021)
GHG Emissions Throughout the Value Chain

Contents

Introduction

Environmental

Management

A c h i e v i n g a R eso urce E ffi ci en t Soci ety
Efforts to Achieve a Resource Efficient Society
Approach

The issues of water and resource scarcity, triggered by rising water demand and population growth—
resulting in higher volumes of resources collected, extracted, used, and eventually emitted as waste—
are common concerns for the entire world. Hitachi’s business operations will respond to these issues
by working with our customers and society to help build a society that uses water and other resources
efficiently. We have set a fiscal 2050 target of improving the usage efficiency of water and otherresources by 50% compared to fiscal 2010 levels. We will create higher economic value using lesswater and other resources and pursue production activities with a low environmental burden.

Initiatives to Achieve a Resource Efficient Society

Achieving a Resource Efficient Society

Building a society that uses
water efficiently

Building a society that uses
resources efficiently

Responding to water risks

Shifting to a circular economy

Enhancing efficiency in the use of water

Enhancing efficiency in the use of resources

SocialGovernance

Assurance

Hitachi Sustainability Report 202045

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

46

Achieving a Resource
Efficient Society

Building a Water Efficient Society
Water Stress Levels at Manufacturing Sites

Hitachi’s Approach to Water Risks

Approach

303-2

WRI/Aqueduct
https://www.wri.org/aqueduct/about

303-5

Embracing the importance of developing region-specific risk measures that take the respective water

Enhancing Our Environmental Management
Systemstress*1 levels into account, Hitachi strives to better understand the water issues faced by some 200
business sites around the world, which are classified as category A in our environmental
management classification. To this end, we identify water risks at each site by using ourEnvironmental Data Collection System (Eco-DS) and such globally recognized tools for water risk
assessment as the Aqueduct, developed by the World Resources Institute (WRI); the Water Risk
Filter, developed by the World Wide Fund for Nature (WWF) and the German development financeinstitution DEG; and the Flood Hazard Map of the World produced by the European Union. To
identify water risks, we analyze and evaluate water risks for each business unit and Group company,
per country and region, and for the entire Group using approximately 50 assessment items, including
physical risks like water stress that may affect water resources and quality or cause water damage;regulatory risks leading to higher water and discharge costs or new taxes; and reputation risks thatcan negatively affect communication with stakeholders, thereby implementing measures based on
the nature and characteristics of each region and business.
Achievements in FY 2019

In December 2019, we released the Water Risk Guidelines, which stipulate policies on how to
identify and respond to water risks at each region and business area, taking into consideration
the impacts of water risks on our business. The guidelines were developed with reference toSetting Site Water Targets Informed by Catchment Context,*2 published in August 2019, andare shared among the Hitachi Group together with the checklist to identify water risks and case

Low
risk

studies of measures taken at our business sites.

Low tomediumrisk

Mediumto high
risk

High
risk

Hitachi Group manufacturing sites*1 Water stress occurs when demand for water outpaces availability. The maximum volume of available water supply per capita is used as anindex to measure levels of scarcity. The minimum volume of water required for living, agriculture, industry, energy, and the environment is
considered to be 1,700 cubic meters per person per year, and regions below this level are said to experience water stress. According to the
WRI Aqueduct risk analysis, when the ratio of total annual water withdrawn to average annual water supply within an area is 80% or more,
it is defined as extremely high risk.
*2 A guide created by members of UN Global Compact, CEO Water Mandate, Pacific Institute, WRI, WWF, and other global institutions withthe aim of helping companies set effective site water targets.

Created based on Aqueduct data.

Extremely
high
risk

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a Resource
Efficient Society

Actions and Achievements

Activities

In fiscal 2019, we set a target of a 23% reduction (over the base year of fiscal 2010) for water
usage per unit and achieved a 26% reduction. The volume of water used declined by 20.9 million
cubic meters, or 40% from the base year. Our measures to reduce water usage include more
stringent management of water intake using flowmeters, leakage control by installing above-groundwater pipes, circular use of cooling water, and reuse of purified waste water.
Environmental Action Plan for 2021 Management Values

Reduction in Water Usage*1 per Unit (Hitachi Group)
FY 2010 (base year)
Amount used
52.75 million m3

26% reduction%

Project

Case Study

Department, Group company

Activity

Reducing
groundwater use byrecycling cupolafurnace cooling water

Hitachi Metals

About 40% reduction in groundwater use by
installing new water tanks and cooling towers tocool the furnaces

https://www.hitachi.com/environment/
casestudy/2019/case06.html

Reducing water use
by visualizing
groundwater flow

Hitachi Global Life
Solutions

Water conservation efforts including the
introduction of a power-monitoring system that
automatically measures the flow of groundwaterhttps://www.hitachi.com/environment/
casestudy/2019/case07.html

FY 2019

From base year

100

Activity amount*2

Improving Water Use Efficiency

Amount used
31.90 million m3
Activity amountFY 2019 reduction target: 23%

74%

Products and Services that Contribute to Resolving Water Issues

Activities

Hitachi will provide customers with a wide range of water-related products and services, thereby
contributing to resolving water issues through its global business operations.

*1 Amount of water used in the production process.
*2 Activity amount is a value closely related to water use at each business site (for example, output, sales, and production weight).

Achievements in FY 2019

The Republic of South Africa (South Africa) suffers from a serious water shortage. Hitachi is engaged in ademonstration project of RemixWater,*1 an integrated seawater desalination and water reuse system in

Water Usage*1 (Hitachi Group)

the city of Durban in cooperation with the New Energy and Industrial Technology Development
Organization (NEDO). In fiscal 2019, we started operating the system at the demonstration site of a(million m3/year)
50

43.91

40

0.01
0.89
1.22
3.56

41.34

30
20

38.23

wastewater treatment plant in the city. In this demonstration project, we construct desalination facilities
0.02 38.54
37.02
0.04
3.09*20.04 36.41 0.28
2.78*2
1.51
2.71*22.68*2
1.51
1.34
1.39
4.00
4.04
3.93
4.05
32.72

Japan

2015

2016

2017

Rest of Asia (excluding China and Japan)

2018
China

conventional seawater desalination systems*4 and reducing the impact on the nearby marine

28.01

10
0

treated and discharged wastewater every day, while saving 30% more energy*3 compared toenvironment. We plan to introduce this technology in South Africa and to other regions with serious

29.00

30.17

aiming to produce 6,250 tons*2 of product water meeting potability standards from seawater and2019
Americaswater shortages, thus contributing to the development of water infrastructure and industry.
(FY)

Europe*1 The total amount of water used in manufacturing processes and for other purposes, such as in offices.
*2 Includes water used by a materials company that became a reporting company in fiscal 2016 (2.12 million m 3/year in fiscal 2016,
1.91 million m 3/year in fiscal 2017, 1.92 million m 3/year in fiscal 2018, and 1.63 million m 3/year in fiscal 2019).

*1 RemixWater is a registered trademark of Hitachi in Japan.
*2 This corresponds to a water supply population of about 25,000.
*3 Hitachi estimates for RemixWater in case of converting 100,000 m 3/day at 3.5% seawater salinity.
*4 Conventional systems desalinate by filtrating seawater through a reverse osmosis (RO) membrane. High pressure is needed to permeate
the RO membrane, leading to high energy consumption.

47

Contents

Introduction

Management

Environmental
Achieving a Resource
Efficient Society

Hitachi’s Water-related Products and Services
Activity field

Products or services (implementation to date)
Wastewater recycling systems

Creating water resources
Seawater desalination systems
Water and sewage treatment, etc. (over 200 sites in about 40 countries and regions)

Developing water infrastructure

Water purification plants (approximately 700 plants in Japan)
Sewage treatment plants (approximately 900 plants in Japan)
Comprehensive digital solutions for water and sewage treatment operators

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

48

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Achieving a Resource
Efficient Society

Building a Society That Uses Resources Efficiently
Achievements in FY 2019

Hitachi’s Approach to Transition to a Circular Economy

Approach

We collected a total of 15 tons of end-of-life personal computers and monitors, including all-inone computers, of which 12 tons were recycled, achieving a resource recycling rate of 80%.

To help build a recycling-oriented society, Hitachi will advance a shift from the conventional linear

The total weight of recyclable materials*1 recovered from four types of end-of-life home

economy to a circular economy. We will develop closed-loop recycling and servicizing* businessappliances collected was approximately 86 kt, of which some 77 kt were recycled. By productmodels through utilization of recycled materials, manufacturing that is oriented to resource saving andtype, the recycling rate for refrigerators and freezers was 80%, exceeding by 10% point thelong product life, reduction and recycling of factory waste, refurbishing* and remanufacturing,* andlegal requirement of 70% and that for washing machines and dryers was 93%, exceeding byrecycling of end-of-life products. These are advanced at each stage of the value chain, namely,

11% point the legal requirement of 82%.

1

2

3

procurement, development and design, production, distribution and sales, use, and disposal.
*1 Servicizing: Providing customers with the function of a product rather than selling them the product itself.
*2 Refurbishing: Servicing end-of-use products to a condition conforming to new-product standards.
*3 Remanufacturing: Restoring end-of-use products through disassembly, washing, component replacement, and other work to a condition
equivalent to new products.

Efficient Use of Resources Throughout the Value Chain*1 Recyclable materials: Parts and materials recovered from the four types of end-of-life home appliances (air conditioners, TVs, refrigerators andfreezers, and washing machines and dryers) and recycled by putting them to use in house or by selling them or transferring them free ofcharge to others who will use them. The data is aggregated from Hitachi Global Life Solutions and Hitachi-Johnson Controls Air Conditioning.

By-Product Recycling Activities
Large-capacity storage unit

Disposal

Procurement

Collection of end-of-use products,
recycling, remanufacturing

Use of recycled materials,
closed-loop recycling

Clean, check, and refurbish parts of the used device replaced by a new one for use as our warrantybacked maintenance parts (US)Construction machinery
Remanufacture used units at recycling plants as high-function, reasonably priced units which have

Use
Repair, reuse,refurbishing, sharing

Efficient Use of
Resources
Throughout
the Value Chain

Development & Design
Environmentally conscious design,
resource saving, long product life

functions equivalent to those of new ones (Japan, China, Australia, and six other countries)
Electric components for automobiles
After collecting malfunctioning components from dealers and repair shops, disassemble, check, clean
and restore, reassemble, and inspect those components and market them as products featuring theDistribution & Sales

Production

Reuse, sharing, servicizing,
reduced packaging

Effective use of factory waste, closedloop recycling, reduced packaging

same performance as new ones (Japan)
Industrial equipment (pumps, motors, distribution boards, transformers, refrigeration equipment,
and air conditioners)
Collect and reuse end-of-life products as resources (Japan)
Home appliances

Activities Related to Use and Disposal of Products

Activities

301-1

301-2

301-3

In Japan, Hitachi has built its own product recycling network providing services near our customers
to collect and recycle such end-of-life products as supercomputers, mainframes, and othercomputing machines; communication equipment like network devices and telephone switchboards;
and information equipment like ATMs, though collecting and recycling of these products arevoluntary and not legally required of manufacturers.

Recycle the four types of end-of-use home appliances (air conditioners, TVs, refrigerators andfreezers, and washing machines and dryers) at our 19 recycling plants as part of cooperative efforts
among five companies*1 in response to the 2001 Home Appliance Recycling Law (Japan)*1 Hitachi Global Life Solutions; Sharp Corp.; Sony Corp.; Fujitsu General Ltd.; and Mitsubishi Electric Corp.

Hitachi Sustainability Report 2020

49

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

50

Achieving a Resource
Efficient Society

Plastic Recycling Activities

Activities

Hitachi Global Life Solutions, the major consumer of plastic in the Hitachi Group, uses plastic in partsfor washing machines and refrigerators and packing materials for ceiling lights. The company procures
recycled plastic materials produced within the Hitachi Group using plastic parts recovered from end-of-Environmental Action Plan for 2021 Management Values

Reduction in Waste and Valuables Generation*1 per Unit (Hitachi Group)
FY 2010 (base year)

life home appliances and plastic containers as well as purchasing recycled plastics from materials

Amount generated
1,434 kt

manufacturers.

Activity amount*2

FY 2019

From base year

100%

14% reduction

Amount generated
1,226 kt
Activity amountFY 2019 reduction target: 10%

Achievements in FY 201986%

During fiscal 2019, a total of 1,163 tons of recycled plastic materials from end-of-life home
*1 Amount of waste and valuables generated from the production process.
*2 Activity amount is a value closely related to waste and valuables generation at each business site (for example, output, sales, andproduction weight).

appliances were used as parts for home appliances and packing materials.

Actions and Achievements

Activities

306-2
For fiscal 2019, we set a target of a 10% reduction (from a base year of fiscal 2010) for waste andvaluables* generated per unit, bettering this by achieving a 14% reduction. The amount of waste

Waste and Valuables Generation*1 (Hitachi Group)(kt/year)
1,500

1,336

2

1,356

1,384

4

4

1,302

10

1

and valuables generated was reduced by 208 kt or 14% compared to the base year. We strived to

1,000

618 1

reduce waste by installing recycling facilities within our business sites as well as through closed-loop
recycling, whereby the by-products and scrap from the production process are reused as resources

63
36
98
420

500

by other business sites, and repeated use of packing and cushioning materials during transport.
Under the Zero Emission*2 initiative, which seeks to minimize landfill disposal, 67 business sites outof 167 target business sites achieved their zero waste emissions goal*3 in fiscal 2019.
*1 Waste and valuables: Materials generated through business activities. Each country has a legal definition of waste, and in Japan, the term
refers to refuse, bulky refuse, ashes, sludge, excreta, waste oil, waste acid and alkali, carcasses, and other filthy and unnecessary matter,
which are in solid or liquid state according to the Waste Management and Public Cleansing Law. Valuables, meanwhile, are those materials
left over after business activities other than waste, and can be sold or transferred free of charge to other parties as items of value.
*2 Zero emissions: The principles and methods advanced by United Nations University in 1994 aimed at eliminating waste from human activity
as much as possible while maximizing the use of resources and achieving sustainable economic and manufacturing activities.
*3 Zero waste emissions goal: Defined as a final disposal rate (landfill disposal/waste and valuables) of less than 0.5% in any given fiscal year.

0
Japan

2015

2016

744*2

725*2

734*2

670*2

48
107

55
117

55
130

58
146

435

455

461

418

2017

Rest of Asia (excluding China and Japan)

2018
China

(FY)

2019
Americas

Europe*1 The total amount of waste and valuables generated in manufacturing processes plus that generated in offices and other nonmanufacturingbusiness.
*2 Includes 675 kt (fiscal 2016), 675 kt (fiscal 2017), 689 kt (fiscal 2018), and 601 kt (fiscal 2019) of a materials company that became areporting company in fiscal 2016.

Zero Emission Sites
http://www.hitachi.com/environment/data/
zeroemission.html

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a Resource
Efficient Society

Efficient Use of Resources
Project

Case Study

Department, Group company

Activity

Recycling of waste sand

Hitachi Metals

Reduction in the amount of waste sand generated in the process of manufacturing castingproducts by about 4,000 tons through recycling

https://www.hitachi.com/environment/
casestudy/2019/case08.html

Recycling polishing sludge with an abrasive powder
compression system

Hitachi Automotive Systems

Recycling about 360 tons of polishing sludge that had been disposed of as industrial waste
annually by introducing an abrasive powder compression system

https://www.hitachi.com/environment/
casestudy/2019/case09.html

51

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

52

A c h i e v i n g a Harm o niz ed Soci ety wi th Natu reEfforts to Achieve a Harmonized Society with Nature
Approach

To adequately preserve the ecosystem and achieve a harmonized society with nature so that we may
continue to enjoy nature’s benefits, we have established targets to minimize our impact on natural
capital as part of our long-term environmental targets.
We classify the emission of greenhouse gases and chemical substances into the atmosphere andthe generation of waste materials as negative impact activities. Providing products and services that
contribute to ecosystem preservation and undertaking social contribution activities to protect theenvironment through the preservation of biodiversity and ecosystems are categorized as positive
impact activities. We will strive to minimize the difference between them by 2050.
By quantifying Hitachi’s positive and negative impact activities across the value chain, we areadvancing initiatives to reduce our negative impact and maximize our positive impact.

Initiatives to Minimize Impact on Natural Capital

Approach

Hitachi has identified and quantified the negative impact our business activities have on natural capitalwith the aim of reducing such impact. According to our estimates, approximately 40% of our negative
impact in fiscal 2019 was related to climate change, and 20%, respectively, to waste materials,
resource consumption, and urban air pollution. These results suggest that we need to further reduce
our environmental load to minimize our impact on natural capital, such as by increasing the energy
efficiency of our products and services, advancing factory efficiency, using resources more effectively,
and properly managing chemical substances.
As for our positive impact activities, we have been advancing social contribution activities like forest
conservation and business activities that directly contribute to ecosystem preservation, such asbuilding water treatment plants. We are also looking to quantify the impact of these activities.
We estimate the benefits gained through our forest conservation activities (flood prevention, water

A Timetable for Minimizing Impact

impoundment, water purification, soil loss prevention, and carbon fixation) on an ongoing basis using
evaluation methods commonly used in forestry-related public works projects.

Negative impact
Positive impact (ecosystem preservation activities)
Positive impact (contributions through products and services)Achievements in FY 2019

To enable the evaluation of forest conservation efforts, in fiscal 2019 we built a framework to100collect data on forest areas targeted for conservation activities through the Environmental Data
Collection System (Eco-DS).

Negative Impact on Natural Capital (FY 2019)

Impact (%)

Reduce negative impact

Decarbonized society
Resource efficient society
Harmonized society with nature(management and reduction ofchemical substances)

Minimize impact onnatural capital

Urban air pollution 19%

Ecosystem
preservation activities

Increase positive impact

Contributions
through products and services

0
2020

Other 4%

Activities to achieve long-term environmental targets
for a harmonized society with nature (management
and reduction of chemical substances)

Activities to achieve
long-term targets

2010

Ecotoxicity 5%

2030

2040

2050

Activities to achieve long-term
environmental targets for a
resource efficient society
Note: Calculated using version 2 of the Life-cycle Impact Assessment Method based on Endpoint Modeling (LIME2).

Climatechange36%
Resource
consumption
Waste
18%
materials
18%

Activities to achieve
long-term
environmental targets
for a decarbonizedsociety

Scope of Negative Impact Calculations

http://www.hitachi.com/environment/data/
method.html

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

53

Achieving a HarmonizedSociety with NatureManaging and Reducing Chemical Substances
Hitachi’s Voluntarily Controlled Chemical
Substances
http://www.hitachi.com/environment/data/chemical.html*1 REACH: The European Union regulation on Registration, Evaluation, Authorization, and Restriction of Chemicals.

Managing Chemical Substances

Approach

Hitachi believes that control and reduction of chemical substances like volatile organic compounds (VOCs),
one of the causes of urban air pollution, are important to minimizing our impact on natural capital.

*2 EU’s POPs Regulation: Regulation of the European Parliament and of the Council on persistent organic pollutants (POPs).

Managing Chemical Substances in Our Business Operations

SystemActivities

Based on this belief, Hitachi formulated the Regulations for Environmental CSR-Compliant

305-7

Monozukuri to manage chemical substances at all stages of its operations—from design anddevelopment, procurement, and production to quality assurance and shipping. Chemical substances inour products are divided into two categories, prohibited substances and controlled substances, forseparate management to respond to legal and regulatory frameworks at shipping destinations. With
regard to chemical substances used in our business operations, we reduce risk by assigning threeranks to the use of such substances: prohibited, reduced, and controlled, as well as by educatingchemical substance handlers and managers on laws and regulations and on proper risk assessment.

We have been cutting emissions of chemical substances from our factories and other sites throughstricter management, such as by expanding the number and scope of controlled chemical
substances. Information on our efforts has been translated into English and Chinese and sharedglobally with Hitachi Group members. We also follow legally prescribed procedures in measuring andmanaging emissions of sulfur oxides (SOx) and nitrogen oxides (NOx),*1 whose measurement isrequired under the laws and regulations of our business site locations, and are advancing efforts tofurther restrict emissions.
We comply with Japan’s Pollutant Release and Transfer Register (PRTR) Law*2 through Group-Managing Chemical Substances in Our Products

SystemActivities

Hitachi designates the chemical substances in our products requiring management as Voluntarily
Controlled Chemical Substances. With the basic principle of taking as our model the standards of theEU, where regulations are stringent, we determine and manage controlled chemical substances

wide monitoring of chemical substances released into the atmosphere or into public waters,
removed outside our plants as waste, or discharged into sewage systems, reporting the results tolocal governments for each office or plant. Although some substances are exempt from reporting
due to their small quantities, our policy is to aggregate and manage data on the handling, emission,and transfer of all PRTR substances totaling 10 kilograms or more per year.

extensively, regardless of export destination, type of industry, or purpose of use. Specifically, we

Achievements in FY 2019

distinguish between prohibited substances (Level 1), which are basically illegal to use inside andInitiatives in fiscal 2019 to reduce emissions of chemical substances included switching fromoutside Japan in products (including packaging) but which might be found in products from suppliers,

paints containing VOCs to water-soluble and powder paints as well as expanding their use andand controlled substances (Level 2), which includes substances we are required to track and manage

altering the painting and washing processes. These efforts enabled us to successfully achieve

the use of and substances requiring attention to recycling or appropriate disposal methods. The list of

our target of reducing atmospheric emissions of chemical substances per unit by 16%

managed substances and levels is revised when necessary based on updates to the EU’s REACH*1

compared to fiscal 2010.

and other regulations, with the aim of adding substances to the list of Voluntarily Controlled Chemical
Substances six months before they are officially regulated.
Achievements in FY 2019

Because perfluorooctanoic acid (PFOA), its salts, and PFOA-related substances were to be added to thelist of restricted substances in the EU’s POPs Regulation*2 in July 2020, we designated them asprohibited substances in a January 2020 revision. As a result, the list of Voluntarily Controlled Chemical
Substances now contains 23 prohibited substance groups and 21 controlled substance groups.

*1 Emissions of SOx and NOx: Calculated by multiplying their concentration and exhaust volume.
*2 PRTR Law: Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in the Environment and Promotion of
Improvements to the Management Thereof.

Enhancing Our Environmental Management
SystemContents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a HarmonizedSociety with Nature

Environmental Action Plan for 2021 Management Values

Reducing Chemical Substances in Our Business Activities

Case Study

Reduction in Atmospheric Emissions of Chemical Substances per Unit (Hitachi Group)
Project

FY 2010 (base year)
Emissions
4,982 tFrom base year

100

Activity amount*

1%

21% reduction

Emissions
3,886 tActivity amountFY 2019 reduction target: 16%

79%*1 A value closely related to atmospheric emissions of chemical substances at each business site (for example, substances handled, sales,
and output).

Reducing Atmospheric Emissions of Chemical Substances (Hitachi Group)(t/year)
5,000
4,000

4,380
3,615

3,000
2,000

9
113
199
373
2,921

57
187
291
662

4,391

3,183

58
178
246
899

3,010

4,392

64
142
184
966

3,036

3,886

57
215
125
792

2,697

1,000
0
Japan

2015

2016 *1

2017 *1

Rest of Asia (excluding China and Japan)

China

Department, Group company

Activity

FY 20192018 *1

2019 *1

Americas

Europe(FY)*1 Since fiscal 2016, the scope of controlled chemical substances has been expanded from 41 to 50 substances.
Note: Atmospheric emissions of VOCs and other chemical substances are calculated from the content rate included in the ingredients.

Hitachi Construction
Machinery

Reduction of VOC emissions by changing paints
for construction machinery and installing new
systems in China

https://www.hitachi.com/environment/
casestudy/2019/case10.html

Hitachi Automotive
Systems

Reduction of atmospheric emissions of VOCs by
installing a VOC emissions treatment unit

https://www.hitachi.com/environment/
casestudy/2019/case11.html

Reducing VOC
emissions54

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Achieving a HarmonizedSociety with Nature

Preserving Ecosystems
Initiatives to Preserve Ecosystems

Approach

Activities

304-3

Promoting Ecosystem Preservation

Case Study

306-5

At Hitachi, we seek to reduce the burden (negative impact) on natural capital caused by business

Project

Department, Group company

Activity

Mangrove planting inIndonesia

Hitachi Construction
Machinery and Hexindo
Adiperkasa

Planting of 2,811 mangrove seedlings inIndonesia

https://www.hitachi.com/environment/
casestudy/2019/case12.html

Araihama
reforestation project

Hitachi Industrial
Equipment Systems(Nakajo businessoffice)Reforestation of areas damaged by the pinewood
nematode

https://www.hitachi.com/environment/
casestudy/2019/case13.html

activities and to promote the positive impact, such as by undertaking social contribution activities toprotect nature and providing products and services that help preserve the ecosystem, thereby
minimizing our impact on natural capital by fiscal 2050 and realizing a harmonized society with nature.
Hitachi created an Ecosystem Preservation Activities Menu citing the specific activities to beundertaken to promote the preservation of the ecosystem, including not only CO2 emission
reductions, resource recycling, and chemical substances management but also activities that are
difficult to quantify but are nonetheless important, such as the protection of rare species and efforts
to make biodiversity a criterion when making investment decisions. Each business site sets its goals
and promotes initiatives based on the Ecosystem Preservation Activities Menu.
Ecosystem Preservation Activities Menu
Category

Activities taken

Production

Reducing use of resources that cannot be reused

4

Transportation

Using packaging that takes ecosystem into consideration

7

Collection, disposal, and recycling Reducing hazardous materials in products
Business sites

Value chain

Community
Water use thattakes watershedecosystem into
consideration

No. of menu
items

2

Product planning, development,
and design

During R&D, estimating impact on biodiversity during a product’s life cycle
and implementing, if needed, mitigation measures

3

Site management

Using native species, setting up biotopes

17

Water use

Using rainwater1

Investment and acquisition

Confirming impact on biodiversity when investing in or acquiring abusiness, and implementing measures to minimize such impact

1

Market entry and expansion

Including biodiversity as an investment criterion

1

Business development

Developing products and services to purify water, air, and soil andexpanding such businesses

1

Procurement

Preferentially procuring paper and other office supplies that takebiodiversity into consideration

17

Transportation

Implementing ballast water measures during marine transportation

2

Sales

Implementing sales expansion of products that take biodiversity into
consideration

9

Collection, disposal, and recycling Reusing and recycling components

7

Entire value chain

Promoting the use of renewable energy

1

Engagement

Promoting employee activities outside the company

3

Social contribution

Implementing desert greening and afforestation activities

12

Water intake

Observing and collecting biota information (impact on ecosystemdepending on intake volume)

14

Water discharge

Setting up biota management indicators and making observations (species
and numbers of inhabiting organisms)

14

55

Contents

Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

56

En vi ron m enta l Da ta
GHG Emissions Throughout the Value Chain
302-1

302-2

305-1

305-2

305-3

Calculating GHG Emissions Throughout the Value Chain(Hitachi Group, FY 2019)

305-4

Activities

We calculate greenhouse gas (GHG) emissions throughout the value chain in conformance with GHG
Protocol standards. This gives us a good grasp of emission hotspots in our value chain and thereby
establish effective targets and reductions measures. CO2 accounts for almost all of Hitachi’s GHG

Procurement of Raw Materials and Parts

Production

Transport, Use, Waste Disposal/Recycling

Scope 3

Scope 1

Scope 3

Upstream

Direct emissions

Downstream

1 Purchased goods andservices

Suppliers, etc.

emissions, with there being negligible release of other gases, making it all the more important to

7.5 %Direct emissions fromin-house fuel use andindustrial processes

1.4

2 Capital goods

focus on CO2 reduction efforts.
An extremely high share (over 80%) of our value chain emissions comes from the use of the
products and services we sell. We thus believe that we can make a major contribution to
decarbonization through our business operations by giving priority to enhancing the efficiency andenergy-saving features of our products and services.

Indirect emissions from productionof electricity and heat purchasedby the company
2.89 Mt-CO2e (2.6%)

Direct emissions from in-house fueluse and industrial processes
1.53 Mt-CO2e (1.4%)

Scope 3: Upstream
Total GHG
Emissions110.53

Other indirect emissions not covered by
Scope 1 and 2(Emissions by other entities related to thecompany’s activities)
10.2 Mt-CO2e (9.2%)

1.3 %3 Fuel- and energy-related

activities not included in
Scope 1 and 2

Extraction
companies, etc.

Scope 2
Scope 1

Construction
companies, etc.

0.2 %4 Upstream transportationand distribution

Shipping companies

Other indirect emissions not covered by
Scope 1 and 2(Emissions by other entities related to thecompany’s activities)
95.91 Mt-CO2e (86.8%)

distribution

0.0 %10 Processing of sold products

Processors of intermediate products

N/A

Scope 211 Use of sold products

Product end users

Energy-related
indirect emissions
Indirect emissions fromproduction of electricity
and heat purchased by
the company

2.6

0.1 %

0.1 %

6 Business travel

Transportation companies, etc.

0.0 %7 Employee commuting

Transportation companies, etc.

86.3

%

12 End-of-life treatment of soldproducts

Waste treatment companies

0.4 %

%

5 Waste generated in operations

Waste treatment companies

Mt-CO2e

Scope 3: Downstream%

Greenhouse Gas Emissions

9 Downstream transportation andShipping companies

0.0 %8 Upstream leased assets

Leasing companies
Included in Scope 1 and 2

Scope 3 factors outside thevalue chain
13 Downstream leased assets

Users of leased assets

0.0 %

14 Franchises

Franchise members
15 Investments

Investment destinations

N/A

0.1 %

In-house: Within the scope of the company’s organizational boundaries. In principle, the scope of all business activities of the company
itself and activities within or controlled by its consolidated subsidiaries.
Upstream: In principle, activities related to purchased products and services.
Downstream: In principle, activities related to sold products and services.

Detailed Data on GHG Emissions Throughout
the Hitachi Value Chain (Hitachi Group, FY
2019)

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Detailed Data on GHG Emissions Throughout the Hitachi Value Chain (Hitachi Group, FY 2019)
Category

Description

Calculation Results (Mt-CO2e)

Scope 1*1
Direct emissions

Direct emissions from in-house fuel use and industrial processes

1.53 (1.4%)

Indirect emissions from production of electricity and heat purchased by the company

2.89 (2.6%)

1 Purchased goods and services

Emissions from the resource extraction stage to the manufacturing stage, including raw materials, parts, supplied products, and sales

8.25 (7.5%)

2 Capital goods

Emissions generated in the construction, manufacture, and shipping of the company’s own capital goods, such as equipment, devices,buildings, facilities, and vehicles

1.40 (1.3%)

3 Fuel- and energy-related activities not included in Scope 1 and 2

Emissions from procuring fuel necessary for electricity and other energy production, including resource extraction, production,and shipping

0.22 (0.2%)

4 Upstream transportation and distribution

Emissions from distribution of raw materials, parts, supplied products, and sales prior to delivery of materials to the company, as well asother distribution activities of products for which the company bears the expense

0.09 (0.1%)

5 Waste generated in operations

Emissions from transportation, disposal, and treatment of waste generated in the company’s operations

0.12 (0.1%)

6 Business travel

Emissions generated from fuel and electric power used by employees for business travel

0.06 (0.0%)

7 Employee commuting

Emissions generated from fuel and electric power used in employee commuting

8 Upstream leased assets

Emissions from the operation of assets leased by the company, excluding those counted in Scope 1 and 2

Scope 2*2
Energy-related indirect emissions
Scope 3: Upstream (other indirect emissions)0.06 (0.0%)
Included in Scope 1 and 2

Scope 3: Downstream (other indirect emissions)
9 Downstream transportation and distribution

Emissions from transportation, storage, loading and unloading, and retail sales of products

10 Processing of sold products

Emissions by downstream companies during processing of intermediate products

N/A*3

11 Use of sold products*4

Emissions from use of products by end users, such as consumers and businesses

95.30 (86.3%)

12 End-of-life treatment of sold products*4

Emissions from transportation, waste disposal, and treatment of products by end users, such as consumers and businesses

0.49 (0.4%)

13 Downstream leased assets

Emissions from operating assets owned by the reporting company as lessor and leased to other entities

0.03 (0.0%)

14 Franchises

Emissions by franchises under Scope 1 and 2

15 Investments

Emissions related to management of investments

Total
Note: Figures in parentheses are percentages of GHGs emitted throughout the value chain.
*1 Includes SF6, PFC, HFC, N2O, NF3, and CH4. The gas and fuel conversion factor is based on the list of emissions and calculation methods published by Japan’s Ministry of the Environment.
*2 CO2 emissions were calculated using the 2017 CO2 electrical power conversion factor for world countries (in CO2 per kWh) in the Emission Factors (2019 edition), published by the International Energy Agency (IEA).
*3 Cannot be determined due to insufficient information on processing.
*4 CO2 emissions per unit is based on the Inventory Database for Environmental Analysis (IDEA), developed by the National Institute of Advanced Industrial Science and Technology (AIST) and the Japan Environmental Management Association for Industry (JEMAI).

0.01 (0.0%)

N/A
0.08 (0.1%)
110.53 (100%)

57

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Environmental Load from Operations
301-1

301-2

302-1

302-4

302-5

303-1

303-2

303-3

303-4

305-4

305-5

305-6

305-7

Overview of the Environmental Load from Business Operations (Hitachi Group, FY 2019)

306-1

306-2
Activities

The following is an outline of total resource inputs (energy, raw materials, etc.) and the environmental load (greenhouse gas emissions, waste generation, etc.) of Hitachi Group operations during fiscal 2019.

Products shipped: 2,537 kt

INPUT
Total Energy Input(crude oil equivalent)

2.07

OUTPUT

Total Resource Inputs
Fuel oil 3%

Solid fuel 7%

Greenhouse Gas Emissions

Gas 14%

4,415Electricity 76%

GL
Plastics 4%

Other materials 5%

Operations

Raw Materials Input

3,776

kt

Substances Handled

185.6

Greenhouse gas
substances
handled 5%

Ozone-depleting
substances
handled 0%

kt

36.41

Groundwater,etc. 35%

4.6

million m 3

Industrial
water, riverwater 43%

*1 CO2e: CO2 equivalent.
*2 PRTR substances: The 462 chemicals designated in Japan’s Pollutant Release and Transfer Register (PRTR) Law.

53.09

Water Effluents Discharged
million m 3

Waste
reduction 8%

Recycle72%

NOx (nitrogenoxides) 18%

Ozone-depleting
substances emitted(CFC-11, etc.) 0%

SOx (sulfur oxides)
6%

PRTR
substancesdischarged ortransferred
76%

kt

Total Volume ofWater recycling

Landfill 20%

kt

Discharged or Transferred

Tap water 22%

Total Water Input

CO2 emissions
97%

and Valuables

Chemical Substances

PRTR
substances *2
handled 95%

Other GHG
emissions3%

kt-CO 2e*1

Total Volume of Waste

1,302

Metals 91%

Total Chemical

Total Environmental Load

33.41

million m 3

Underground infiltration,
evaporation, etc. 10%
Sewerage
23%

Public water
67%

Detailed Data on Resource Input andEnvironmental Load Output

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Introduction

Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Detailed Data on Resource Input and Environmental Load Output

Activities

Energy Inputs and GHG Emissions During Business Operations
The following is an outline of the energy consumed during Hitachi’s business operations and the part of our environmental load consisting of greenhouse gas (GHG) emissions.
Total Energy Inputs
Renewable energy

Electricity

Non-renewable energy

Electricity
For heatingGas

FY 2015

FY 2016

FY 2017

FY 2018

3.9 GWh (39 TJ)

2.9 GWh (29 TJ)

3.2 GWh (11.2 TJ)

7.1 GWh (25.6 TJ)

18.0 GWh(64.8 TJ)

5,111 GWh (49.7 PJ)

5,903 GWh (57.4 PJ)

6,020 GWh (58.4 PJ)

6,021 GWh (58.4 PJ)

5,992 GWh

(58.2 PJ)——

130 GWh (2.7 PJ)

128 GWh (2.6 PJ)

128 GWh (2.6 PJ)
273 GWh (1.3 PJ)

FY 2019

For cooling——

277 GWh (1.3 PJ)

273 GWh (1.3 PJ)

To generate steam——

644 t (41.7 TJ)

648 t (41.9 TJ)

0.11 billion m 3 (4.9 PJ)

0.18 billion m 3 (8.1 PJ)

0.19 billion m 3 (8.6 PJ)

0.18 billion m 3 (8.4 PJ)

For heating——

18.4 million m (0.9 PJ)

18.6 million m (0.9 PJ)

18.6 million m (0.9 PJ)

For cooling——10.3 million m 3 (0.5 PJ)

10.5 million m 3 (0.5 PJ)

10.5 million m 3 (0.5 PJ)

Natural gas

To generate steam

3

3

648 t (41.9 TJ)
0.15 billion m 3(7.0 PJ)
3——

560 kt (2.0 PJ)

567 kt (2.0 PJ)

74 kt (4.1 PJ)

241 kt (13.0 PJ)

269 kt (14.5 PJ)

251 kt (13.5 PJ)

150 kt(8.0 PJ)

84 ML (3.2 PJ)

149 ML (5.6 PJ)

117 ML (4.5 PJ)

87 ML (3.3 PJ)

75 ML(2.1 PJ)

Solid fuel (coke)

0.008 kt (0.0 PJ)

173 kt (5.2 PJ)

179 kt (5.4 PJ)

188 kt (5.5 PJ)

162 kt(4.8 PJ)

Total energy consumption (crude oil equivalent)

61.9 PJ(1.58 GL)

89 PJ (2.30 GL)

91 PJ (2.35 GL)

88 PJ (2.27 GL)

LPG, LNG, etc.
Fuel oil (heavy oil, kerosene, etc.)

566 kt (2.0 PJ)

80 PJ (2.07 GL)

Greenhouse Gas Emissions
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

4,346 kt-CO 2

5,322 kt-CO 2

5,433 kt-CO 2

4,973 kt-CO 2

4,374 kt-CO 2

SF6 (sulfur hexafluoride)

56 kt-CO 2e

37 kt-CO 2e

40 kt-CO 2e

35 kt-CO 2e

24 kt-CO 2e

PFCs (perfluorocarbons)

4 kt-CO 2e

4 kt-CO 2e

4 kt-CO 2e

5 kt-CO 2e

4 kt-CO 2e

HFCs (hydrofluorocarbons)

16 kt-CO 2e

19 kt-CO 2e

7 kt-CO 2e

3 kt-CO 2e

3 kt-CO 2e

N2O, NF3, CH4 (dinitrogen monoxide, nitrogen trifluoride, methane)

1 kt-CO 2e

2 kt-CO 2e

1 kt-CO 2e

3 kt-CO 2e

2 kt-CO 2e

CO 2 emissions
Other GHGs

CO 2 from non-energy sources
Total GHGs

6 kt-CO 2

3 kt-CO 2

3 kt-CO 2

7 kt-CO 2

8 kt-CO 2

4,429 kt-CO 2e5,387 kt-CO 2e5,488 kt-CO 2e

5,026 kt-CO 2e4,415 kt-CO 2e

Notes: • Starting from fiscal 2019’s calculations, Scope 2 emissions were changed from a calculation method using a unified Group-wide electrical power conversion factor to a market-based calculation method, and past data was recalculated based on this. Regarding CO2 electrical power
conversion factors: in Japan (including power plants), adjusted conversion factors for individual power businesses based on the Act on Promotion of Global Warming Countermeasures are used; overseas, the latest values for each fiscal year supplied by the International Energy
Agency (IEA) as conversion factors for individual countries are used.
• The gas and fuel oil conversion factor is based on the list of emissions and calculation methods published by Japan’s Ministry of the Environment.

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Raw Material Inputs and Waste and Valuables Generation During Business Operations
The following is an outline of the raw materials used during Hitachi’s business operations and the part of our environmental load consisting of waste and valuables generation.
Raw Material Inputs
Raw materials

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

1,638 kt

2,710 kt

3,388 kt

4,031 kt

3,454 kt

New materials—

1,497 kt

1,571 kt

1,624 kt

1,372 kt

Recycled materials, etc.

—

1,213 kt

1,817 kt

2,407 kt

2,082 kt

149 kt169 kt151 kt165 kt147 kt—167 kt150 kt163 kt143 ktMetalsPlastics
New materials
Recycled materials, etc.

—

2 kt

1 kt

2 kt

4 kt

347 kt314 kt258 kt207 kt175 ktNew materials—

308 kt

250 kt201 kt173 ktRecycled materials, etc.

—

6 kt

8 kt

6 kt

2 kt

2,134 kt

3,193 kt

3,797 kt

4,403 kt

3,776 kt

Other materials

Total raw materials

Total Volume of Waste and Valuables
Waste reduction
Recycling

ReuserMaterials recycled
Thermal recovery

Landfill
Total waste and valuables generation
Nonhazardous (hazardous* )1*1 Figures in parentheses are the generation of waste defined as hazardous under the Basel Convention.

FY 2015

FY 2016

FY 2017

FY 2018

FY 201953 kt

68 kt (0.4 kt)

83 kt (9.0 kt)

94 kt (5.6 kt)

101 kt (17.5 kt)

3 kt

1 kt (0.4 kt)

1 kt (0.4 kt)

1 kt (0.0 kt)

5 kt (2.2 kt)

506 kt1,001 kt (21.5 kt)

1,038 kt (20.2 kt)

1,044 kt (25.6 kt)

919 kt (25.3 kt)

13 kt

12 kt (2.4 kt)

11 kt (1.4 kt)

13 kt (1.4 kt)

21 kt (4.9 kt)

43 kt

254 kt (2.0 kt)

223 kt (5.2 kt)

232 kt (3.7 kt)

256 kt (6.1 kt)

618 kt1,336 kt

1,356 kt

1,384 kt

1,302 kt—

1,309 kt (27 kt)

1,320 kt (36 kt)

1,348 kt (36 kt)

1,246 kt (56 kt)

60

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Inputs, Discharges, and Transfers of Chemical Substances During Business Operations
The following is an outline of the chemical substances handled during Hitachi’s business operations and the part of our environmental load consisting of chemical substance discharges and transfers.
Chemical Substances Handled
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019177 kt190 kt205 kt189 kt177 ktOzone-depleting substances handled

11 t

208 t

77 t

130 t

62 t

Greenhouse gas substances handled

3,791 t3,425 t5,656 t5,640 t8,520 tTotal chemicals handled

180.8 kt

193.6 kt

210.7 kt

194.8 kt

185.6 kt

PRTR substances handled

Chemical Substances Discharged or Transferred
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

PRTR substances discharged or transferred

4.4 kt4.5 kt4.3 kt4.1 kt3.5 ktSOx (sulfur oxides)

144 t

290 t

297 t

274 t

255 t

NOx (nitrogen oxides)

719 t

1007 t

931 t

929 t

822 t

1 t (0 t-ODP *1)

1 t (0 t-ODP)

1 t (0 t-ODP)

1 t (0 t-ODP)

2 t (0 t-ODP)

5.3 kt5.8 kt5.5 kt5.3 kt4.6 ktOzone-depleting substances emitted (CFC-11, etc.)
Total Discharges and Transfers

Note: Includes a materials company that became a reporting company in fiscal 2016.
*1 ODP (ozone depletion potential): A coefficient indicating the extent to which a chemical compound may cause ozone depletion relative to the depletion for CFC-11 (trichlorofluoromethane, ODP = 1.0). The conversion factor uses the ODP and global warming
potential of Japan’s Ministry of the Environment.

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Water Inputs and Effluent Discharges During Business Operations
The following is an outline of the total water resources used during Hitachi’s business operations and the part of our environmental load consisting of effluent discharges.
Total Water Inputs
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Tap water (water for drinking and other household uses)

5.65 million m 3

7.77 million m 3

7.40 million m 3

7.61 million m 3

7.95 million m 3

Industrial water, river water

20.13 million m 3

18.41 million m 3

17.46 million m 3

16.63 million m 3

15.58 million m 3

Groundwater

18.13 million m 3

14.92 million m 3

13.56 million m 3

12.74 million m 3

12.84 million m 3

Rain water

0.00 million m 3

0.03 million m 3

0.02 million m 3

0.01 million m 3

0.02 million m 3

Recycled water (recycled from the wastewater of other organizations)

0.00 million m 3

0.21 million m 3

0.10 million m 3

0.03 million m 3

0.02 million m 3

Total water use

43.91 million m

41.34 million m

38.54 million m

37.02 million m

36.41 million m 3

Surface water

3

3

3

3

Total Volume of Water Effluents Discharged
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Public water

27.36 million m 3

26.16 million m 3

23.12 million m 3

22.44 million m 3

22.46 million m 3

Sewerage

9.37 million m 3

8.93 million m 3

8.62 million m 3

8.18 million m 3

7.74 million m 3

Underground infiltration, evaporation, etc.

6.58 million m

33.68 million m

3

3.39 million m

3

3.48 million m

3

3.21 million m 3

PRTR
Total water effluentsdischarged

43.30 million m 3

38.77 million m 3

35.13 million m 3

34.10 million m 3

33.41 million m 3

BOD (biochemical oxygen demand)

433 t

346 t

392 t

390 t

209 t

COD (chemical oxygen demand)

732 t

531 t

617 t

1,701 t

413 t *1

*1 The fiscal 2019 figure excludes business sites (which accounted for around 60% of demand the previous year) from which data collection has been hampered due to the spread of COVID-19.

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Environmental

Management

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Environmental Load by Region
Achieving a Decarbonized Society

Activities

CO 2 Emissions by Region (Hitachi Group)(kt-CO 2 /year)

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Europe

7

10

16

15

30

Americas375

1,454 *

1,519 *

1,343 *

1,228 *1

1

1

1

China

211

265

283

236

286

Rest of Asia (excluding China and Japan)

402

470

499

540

572

2,541

2,392

2,377

2,285

2,030

810

732

739

554

228

4,346

5,322

5,433

4,973

4,374

Japan
Power plants *2
Total*1 Includes 1,070 kt-CO 2 (fiscal 2016), 1,163 kt-CO 2 (fiscal 2017), 1,112 kt-CO 2 (fiscal 2018), and 950 kt-V (fiscal 2019) emitted by a materials company that became a reporting company in fiscal 2016.
*2 Emissions by power plants selling electricity in Japan were retroactively added to total CO 2 emissions in fiscal 2017.
Notes: • Starting from fiscal 2019’s calculations, Scope 2 emissions were changed from a calculation method using a unified Group-wide electrical power conversion factor to a market-based calculation method, and past data was recalculated based on this. Regarding CO 2
electrical power conversion factors: in Japan (including power plants), adjusted conversion factors for individual power businesses based on the Act on Promotion of Global Warming Countermeasures are used; overseas, the latest values for each fiscal year supplied by
the International Energy Agency (IEA) as conversion factors for individual countries are used.
• Energy-related CO 2 emissions in fiscal 2019 were 1,489 kt-CO 2 (Scope 1) and 2,885 kt-CO 2 (Scope 2).

Achieving a Resource Efficient Society

Activities

Water Usage by Region (Hitachi Group)(million m3/year)

FY 2015

FY 2016

FY 2017

FY 2018

Europe

0.01

0.02

0.04

0.04

0.28

Americas0.89

3.09 *1

2.78 *1

2.71 *1

2.68 *1

FY 2019

China

1.22

1.51

1.51

1.34

1.39

Rest of Asia (excluding China and Japan)

3.56

4.00

4.04

3.93

4.05

Japan

38.23

32.72

30.17

29.00

28.01

38.54

37.02

36.41

Total

43.91

41.34

*1 Includes water used by a materials company that became a reporting company in fiscal 2016 (2.12 million m /year in fiscal 2016, 1.91 million m /year in fiscal 2017, and 1.92 million m /year in fiscal 2018).
3

3

3

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Waste and Valuables Generation by Region (Hitachi Group)(kt/year)

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Europe

1

2

4

4

10

Americas

63

744 *

725 *

734 *

670 *1

1

1

1

China

36

48

55

55

58

Rest of Asia (excluding China and Japan)

98

107

117

130

146

Japan

420

435

455

461

418

Total

618

1,336

1,356

1,384

1,302

*1 Includes 675 kt (fiscal 2016), 675 kt (fiscal 2017), 689 kt (fiscal 2018), and 601 kt (fiscal 2019) of a materials company that became a reporting company in fiscal 2016.

Achieving a Harmonized Society with Nature

Activities

Atmospheric Emissions of Chemical Substances by Region (Hitachi Group)(t/year)

FY 2015

FY 2016 *1

FY 2017 *1

FY 2018 *1

FY 2019 *1

9

57

58

64

57

EuropeAmericas

113

187

178

142

215

China

199

291

246

184

125

373

662

899

966

792

Japan

Rest of Asia (excluding China and Japan)

2,921

3,183

3,010

3,036

2,697

Total

3,615

4,380

4,391

4,392

3,886

Note: Atmospheric emissions of VOCs and other chemical substances are calculated from the content rate included in the ingredients.
*1 Since fiscal 2016, the scope of controlled chemical substances has been expanded from 41 to 50 substances.

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Environmental Management Data
Number of ISO 14001 Certified Companies*1 (Hitachi Group, as of April 30, 2020)

Activities
FY 2019

Europe15

Americas

14

China

45

Rest of Asia (excluding China and Japan), etc.

42

Japan

82

Total

198

*1 Companies with at least one certified business site.

Number of Regulatory Violations and Complaints

Activities

306-3

Regulatory violations

Complaints

307-1

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Water quality

3

1

3

4

4

Air quality

1

2

1

2

0

Waste matter

1

1

0

3

0

Other (equipment registration, etc.)

3

2

4

4

1

4

6

5

3

5

65

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Environmental Data

Environmental Accounting

Activities

Environmental Investments
Total investment(billions of yen)

Investment in energy-saving equipment and equipment that directly reduces environmental load

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

7.50

5.12

10.99

9.86

9.71

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Environmental Protection Costs(billions of yen)

Items
Expenses
Business area

Maintenance costs for equipment with low environmental load, depreciation, etc.*1

24.22

19.19

22.17

23.57

22.62

Upstream/
downstream

Green procurement expenses, recovery and recycling of products and packaging,recycling expenses

0.97

0.63

0.72

0.68

0.68

Administration

Labor costs for environmental management, implementation and maintenance ofenvironmental management system

5.97

5.12

5.69

6.72

4.98

Research anddevelopment

R&D to reduce environmental burden caused by products and production processes,
product design expenses

75.71

63.13

62.55

61.86

77.01

Social activities

Planting, beautification, and other environmental improvement expenses

0.45

1.21

1.00

0.93

0.25

Environmental
remediation

Environmental mitigation costs, contributions, and charges

0.27

0.22

0.33

0.40

0.17

107.59

89.50

92.46

94.16

105.71Total*1 Equipment depreciation costs are calculated using the straight-line method over five years.

Environmental Protection Effects
Economic Effects*1(billions of yen)

Items

Major FY 2019 Activities

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Net income effects

Recovering value from waste by sorting and recycling

7.27

4.96

6.90

8.35

12.42

Reduced expenses effects

Installing high-efficiency equipment (lighting, power supply)

6.78

7.77

14.54

7.70

6.20

14.05

12.73

21.44

16.05

18.62

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

59

51

41

55

48

Total

*1 Economic effects include:• Net income effects: Benefits with real incomes, including incomes from the sale of resalable materials and incomes from environmental technology patents.
• Reduced expenses effects: Reduction in electricity, waste treatment, and other expenses through environmental load reduction activities.

Physical Effects*1(million kWh)

Item

Major FY 2019 Activities

Reduction in energy used during production

Installing LED lighting, upgrading air-conditioning equipment, etc.

*1 Physical effects refer to the annual amount of reduction in electricity consumption due to measures invested in during each fiscal year.

Environmental Liability

Activities

We have appropriated 6.3 billion yen in expenses for the disposal of PCB-containing waste and 1.3 billion yen to clean up contaminated soil as the amounts that we can reasonably project as of March 2020 as future environmental liabilities.

66

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Introduction

Management

Environmental

SocialGovernance

Assurance

Striving to Increase Social Value

Hitachi Sustainability Report 202067

SocialCONTENTS

68 Innovation Management
In order to grow sustainably and improve social value, Hitachi must meet a range of social expectations. As well as creating the innovation soughtby society, we need to establish a working environment where diverse talent can shine, and rigorously implement fair business practices and respectfor human rights throughout the value chain. We also aim for greater involvement in and development of the communities related to our businesses.

70 Research and Development
73 Intellectual Property

75 Human Capital

77 Global Human Capital Management
80 Talent Development
83 Diversity and Inclusion
86 Work-Life Management
89 Occupational Health and Safety
95 Freedom of Association and Collective
Bargaining

96 Human Rights

97 Respect for Human Rights Throughout
the Value Chain

100 Value Chain Management

102 Responsible Procurement
106 Quality and Product Safety Management
108 Customer Satisfaction

110 Community

111 Social Contribution Activities

114 Social Data

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

103-2

I n n ova t io n Mana g em en t
Key SDGs

Why

it matters

Under its Corporate Credo “to contribute to society through the development of

a new research initiative for open collaborative creation, we will accelerate open

superior, original technology and products,” Hitachi has focused its efforts on the Social

innovation and support our customers in resolving their challenges.

Innovation Business. Our 2021 Mid-term Management Plan sets the goals of creating

Hitachi believes that intellectual property (IP) activities make an important contributionsocial, environmental, and economic value for our customers. In fiscal 2020, we

to creating social, environmental, and economic value for our customers. Our Intellectual

established an R&D policy of becoming a global innovation leader in delivering social,

Property Division takes part in creating solutions that enhance such value, contributes toenvironmental, and economic value. By further enhancing Lumada and NEXPERIENCE, a

the global deployment of IP, and leads the way in resolving social issues toward

methodology for collaborative creation with customers, and making use of “Kyōsō-no-Mori,”

achieving the SDGs and Society 5.0 through IP activities.

What
we are doing
R&D

68

Core initiatives

Goals and KPIs

Achievements in FY 2019

Create value at the frontline (promote open
innovation)
Leverage technological strengths for value
creation (redesign innovation processes)
Become a technology leader (promote
innovation)

Expanding collaborative creation “spaces”
Creating a vision in each region
Contributing to expanding the Lumada
business in each region
Accelerating innovation in our five core
sectors
Strengthening our technologicalfoundation
Developing top digital talent in the field of
AI: 350 employees by fiscal 2021

Launched Kyōsō-no-Mori, a research initiative for open
collaborative creation
Established a corporate venture capital fundPromoted open innovation with governments and academic
institutions in each country and region
Globally expanded “Scale of Digital” business and “Scale byDigital” business
Promoted development of AI, digital trust, “Beyond 5G/6G”
technologies, electrification, and robotics for Lumada CPS
and other products
Developed disruptive technologies in the areas of quantum
computing, regenerative medicine, and environment
Established the Lumada Data Science Lab. by bringing
together top data scientists

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Innovation Management

What
we are doing
IP

69
103-2

Core initiatives

Goals and KPIs

Achievements in FY 2019

Provide support for creating solutions
Promote IP activities to resolve social
issues toward the SDGs and Society 5.0

Strengthening solution creation
Carrying out IP activities based on specificprojects that contribute to solving social
issuesDeveloped new method of collaborative creation to drive
solution creation using patent information as a catalyst
Introduced the “IP for society” concept, which promotes theuse of IP in certain areas of high public interest to maintainand evolve social norms (for example, allowing free use of
IPs to resolve social issues)
Established the IP Strategy Department to develop andimplement IP activities; in fiscal 2020, established a Data
Science Group within the department

Key SDGs

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Innovation Management

Research and Development
Hitachi’s R&D Policy and Initiatives

PolicyStructure

Activities

Over its history of more than 100 years, Hitachi has worked to develop cutting-edge technologies

Creating Value at the Frontlines(Promoting Open Innovation)

Structure

Activities

through its R&D activities in an effort to create innovation toward the future, adhering to the company’s

Hitachi is expanding open co-creation “spaces” in regions of focus to strengthen initiatives in growth

Corporate Credo of contributing to society through the development of superior, original technology andareas and in solving social issues, as well as to capture changes in the latest trends and create value

products. In fiscal 2020, we established an R&D policy of becoming a global innovation leader inby setting a vision for and exploring business opportunities in each region.

delivering social, environmental, and economic value. Building on Lumada as a foundation, we will further
accelerate open innovation and grow together with our stakeholders by combining our strengths inoperational technology (OT), IT, and products with the technology platforms in the Research &Development Group and external knowledge. Through these efforts, our goal is to enhance social,environmental, and economic value for our customers, as well as to improve people’s quality of life.
To realize this R&D policy, the Global Center for Social Innovation (CSI) acts as the frontline function,
working closely with the Center for Technology Innovation (CTI) to leverage Hitachi’s technology advantages
in creating new value. CTI and the Center for Exploratory Research (CER) are pursuing research to create
the world’s No. 1 technologies and disruptive technologies to become a technology leader.

Achievements in FY 2019

In fiscal 2019, as part of initiatives to expand co-creation “spaces,” Kyōsō-no-Mori was launchedwithin the Central Research Laboratory in April 2019, followed by the relocation of the Silicon
Valley Research Center of Hitachi America, Ltd. to a new office building in Santa Clara, California
with Hitachi Vantara to strengthen collaboration and establish a development center for digitalsolutions through open co-creation. We are looking at different business models together withstartups through ideathons and hackathons held by such research centers. In October, Hitachi
and the New South Wales State Government agreed to establish a “Kyōsō (collaborative creation)
Centre” in Western Sydney, Australia, to accelerate the creation of social innovation. We have

Achievements Since FY 2019

In April 2019, Kyōsō-no-Mori, a research initiative for open collaborative creation (co-creation),
was launched within the Central Research Laboratory. In June, a corporate venture capital fundwas established to promote industry-academia-government cooperation and collaboration withstartups. In April 2020, the Lumada Data Science Laboratory was established within Kyōsō-noMori, bringing together top data scientists to further enhance value through digital solutions.

begun co-creation activities from early 2020 with a view to opening the center in 2023.
As part of our activities to promote regional co-creation, we are engaged in a joint project withThailand’s prestigious Chulalongkorn University to create new services that will help realize afuture digital city. A “healthy aging” project in collaboration with Tsinghua University in China isalso underway.
To enhance social, environmental, and economic value, projects on the environment and aging
were launched under the direct control of the Research & Development Group. Our goal is to

R&D Policy for FY 2020
Policygenerate new value together with the Future Investment Division which is responsible for

Become a global innovation leader in delivering social, environmental, and economic value

technology trends and global changes. Further, the Hitachi-UTokyo Laboratory that has madepolicy proposals for next-generation grid systems since 2016, has begun studies since fiscal 2020

CSI

Creating value at the frontlines

identifying mid- to long-term focus areas and managing projects based on next-generation

on a total energy system project to achieve zero carbon, and contribute to raising environmental

Leveraging technological strengths for value creation

CSI-CTI collaboration

Becoming a technology leader

CTI

CER

and social value.

Hitachi Sustainability Report 202070

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Innovation Management

In the past, Hitachi has identified customer issues and promoted end-to-end value creation from vision

The MaaS solution, for example, provides value to businesses and people by coordinating the entire

design to services based on its originally developed co-creation methodology “NEXPERIENCE.” Going

regional traffic network and peripheral services through the application of technologies developed forforward, NEXPERIENCE will evolve into a methodology that quantifies social, environmental, andrailway systems, such as operation control and scheduling. This is just one example of how we will

economic value, with enhanced risk assessment, to enable collaboration with multiple companies or

use OT technology, one of our technology strengths, to differentiate ourselves from our competitors

regional communities to resolve social challenges. We will accelerate value creation through the delivery

and enhance value creation in each region.

of solutions by gaining insight into the challenges faced by regional communities and incorporating theminto vision design and rulemaking, as well as by working with our global front teams.

Becoming a Technology Leader (Promoting Innovation)

Global Open Innovation Network
RegionResearch centers

Hitachi will accelerate innovation in each of its five core sectors to enhance social, environmental,

EuropeUK (London & Cambridge), Denmark (Copenhagen), France (Sophia Antipolis),
Germany (Munich)Americas

United States (Santa Clara & Detroit)

China
Asia (Oceania)

Activities

and economic value by increasing people’s quality of life and our customers’ corporate value. To
achieve this, we are using Lumada as a common platform to realize a cyber-physical system thatseamlessly connects cyberspace with the real world in real time, focusing on the development of AI,

Beijing, Shanghai, Guangzhou

digital trust, and technologies for “Beyond 5G/6G.”

India (Bangalore), Singapore, Thailand (Chonburi), Australia (Sydney)“Explainable AI” technologies that can explain the rationale behind the decisions they reach are being
developed and already in use for loan screening in a co-creation with a financial institution. Development
of digital trust technologies is also underway, including public biometrics infrastructure using a proprietary

Leveraging Technology Strengths to Create Value(Transforming the Innovation Process)hands-free authentication system and confidential information-processing technologies that allow data to
Structure

Activities

In order to create solutions that contribute to enhancing people’s quality of life and our customers’
corporate value, we are working closely with our global frontline teams to expand the Lumada
business by leveraging R&D’s technology platforms and knowledge in OT, IT, and products(OT×IT×Products), and globally developing our “Scale of Digital” business centered on the IT sector
as well as our “Scale by Digital” business centered on OT and products.
OT×IT specialists have been assigned to each region in North America, Europe, China, Asia
Pacific, and Japan to resolve challenges faced by our customers in those regions and promote our“Scale of Digital” business. With this organization, we aim to achieve an n-fold expansion by
developing digital solutions such as maintenance repair through co-creation with customers.
In relation to our “Scale by Digital” business, we are utilizing Lumada solution cores that can beapplied across our five sectors for solution development, such as blockchain or data analytics
technology, to connect stakeholders and create value by linking multiple services in areas such as
MaaS (Mobility as a Service), IaaS (Infrastructure as a Service), smart manufacturing and logistics.

be processed while encrypted. For “Beyond 5G/6G” networks and services, we will accelerate
co-creation with customers using 5G demo environments in Japan and North America.
We are also strengthening R&D in areas such as robotics and electrification technologies to further
advance technology platforms supporting key products such as high-speed trains, elevators, particle
beam therapy equipment, biochemical/immunological analysis systems, inverters, and air compressors.
Furthermore, in the area of quantum computers, the Hitachi Cambridge Laboratory has successfully
demonstrated fundamental technology that will lead to the fast readout at very low temperatures
necessary for quantum computing. Also, through joint research with Myoridge Co. Ltd., known for its
technology for culturing iPS-derived differentiated myocardial cells, we have developed new technology
to automate 3D culturing using Hitachi’s equipment for automated mass culturing of iPS cells.
Other collaborations include projects with startups to co-create new areas of business throughcorporate venture capital funds.
In our quest to improve social, environmental, and economic value, Hitachi is focusing onelectrification, renewable energies, and hydrogen systems, seeking to become a leading company inenvironmental value.

Hitachi Sustainability Report 202071

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Innovation Management

For renewable energy, we are developing systems to balance energy supply and demand whenlarge-scale renewable energy systems are introduced, to ensure stable power supply. We are also

R&D Investment and Fostering Digital Talent

Activities

proceeding with demonstration projects such as in urban areas with our Area Energy Management
System using AI and in national projects with the Ministry of Economy, Trade, and Industry and the

Hitachi invests around 4% of its revenue in research and development to strengthen its capabilities in

Ministry of the Environment, Japan, on systems producing and using hydrogen.

the five core sectors of its Social Innovation Business. Corporate-led R&D is focused on co-creation

By drawing on our combined expertise in OT×IT×Products, Hitachi will strive to develop theworld’s No. 1 technologies and disruptive technologies and deliver high value to our customers.
Achievements Since FY 2019

In the field of electrification for a zero carbon society, we are working on high-efficiency
technologies for electric power systems such as motors and inverters to reduce carbon
emissions from electric vehicles and industrial equipment. Our 800 V inverter for EVs thatallows long-distance driving won the 62nd (2019) Nikkan Kogyo Shimbun Best Ten New
Product Award.

with customers, development of the world’s No. 1 technologies and disruptive technologies, as well
as expanding common digital platforms and enhancing research capabilities outside Japan toachieve an n-fold expansion of the Lumada business, our growth engine, and expand businessworldwide.
Further, to meet society’s needs associated with advancements in digitalization, Hitachi isstrengthening digital expertise, including top digital talent in AI-related areas. In April 2020, in
cooperation with the business division, researchers specializing in the fields of AI and data analytics
were brought together with engineers and consultants with deep knowledge in OT necessary forpractical application to form the Lumada Data Science Laboratory, a new organization for greatercollaboration leveraging their individual skills and expertise. The Research & Development Group is

Developing Technology to Prevent the Spread of COVID-19
Hitachi’s first priority is the safety and health of all of its stakeholders, including
customers, partners, and Hitachi Group employees and their families worldwide, and it iscommitted to preventing the spread of the novel coronavirus (COVID-19). In May 2020,
we began manufacturing face shields for medical use. The Research & Development
Group played a central role in designing the face shields, incorporating advice fromfocusing on developing top-class digital talent in the field of AI, and intends to increase the numberof employees meeting this description from 306 as of the end of fiscal 2019 to 350 by fiscal 2021.

R&D Expenditure(billion yen)

(%)
5

500

medical staff at the Hitachi General Hospital in the city of Hitachi, Ibaraki Prefecture. The

400

3.3%

3.5%

3.6%

face shields were provided free of charge on a priority basis to designated medical

300

333.7

3,239

332.9

institutions for specified infectious and class I infectious diseases in Japan. They werealso provided free of charge to designated medical institutions for class II infectious
diseases.
In response to changes in society and lifestyles brought about by COVID-19, we aredigital technology leveraging remote operation or automation, to contribute to asustainable and resilient society that can coexist with the novel coronavirus.

3.4%

323.1

293.7

4
3

264.0

200

2

100

1

0

2015

2016

pursuing technology and solution development in the environmental and life scienceareas, as well as in supporting technologies such as measurement technology and

3.4%

3.7%

R&D expenditure (left scale)

2017

2018

2019

2020
(planned)

R&D expenditure as % of revenue (right scale)

(FY)

0

Hitachi Sustainability Report 202072

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

73

Innovation Management

Intellectual Property
Hitachi’s 2021 Intellectual Property Mid-term Management Plan

PolicyHitachi’s IP Strategy

PolicyIntellectual property (IP) is a key element of Hitachi’s business strategy. Hitachi will promote IP activities to create

Under the Social Innovation Business, Hitachi has formulated and implemented an IP strategy thatsolutions that enhance value for customers in line with the 2021 Mid-term Management Plan, globally deploy theconsists of two pillars: IP strategy for competitiveness and IP strategy for collaboration.

created IP, and contribute to resolving social issues related to the SDGs and Society 5.0 through IP activities.

IP strategy for competitiveness is centered on acquiring and utilizing patents and other IP rights. “IP

Regarding solution creation, our Intellectual Property Division takes an active role, by taking part in the

Master Plans” customized for the nature of each business are formulated and implemented to enforce

solution development process and developing new collaborative creation methods (Patentathons) using patent
information as a catalyst to drive solution creation. It also supports the promotion of open innovation activities
designed to create solutions, such as Ideathons and Hackathons, from the intellectual property side.

competitiveness.
IP strategy for collaboration is an IP strategy based on collaboration. As opportunities forcollaborative creation with our customers and partners increase through the use of our IoT platform,

Regarding global deployment of the IP we have created, the division will contribute to the globalization of

Lumada, we have expanded the scope of our IP activities to include not only copyrights, patents, andHitachi’s business by strengthening international patent applications (PCT applications) that cover inventions

trade secrets but also information assets such as data and information, and are using IP to promotethat were developed through open innovation with our customers and partners in addition to inventions frompartnerships and build ecosystems.

our own R&D activities.

Global IP activities have changed rapidly in recent years due to the emergence of gigantic platform
companies and advancement of open innovation. From fiscal 2020 onward, we will evolve our IP

Achievements Since FY 2019

Regarding solving social issues, in fiscal 2019 Hitachi introduced the “IP for society” concept, inwhich it promotes the use of IP in certain highly public domains to maintain and evolve social
norms. Moving forward, we will consider further ways to contribute to resolving social issues
through IP, including contributions to combating the spread of COVID-19 through measures
such as allowing free use of IP related to products that prevent the spread of infection.

OT (Product/O&M)

IP strategy for new era

IT (SI)

Design future society/Progress social modelIoT (Digital Solution)

Collaboration stage
Competition stage

Close

Promote partnership

Enhance competitivenessIP for customer/partner

IP for Hitachi

Hitachi

Hitachi

IP Master Plan

Open

CustomerPartner

Co-creation IP activity

Open

IP for society
HitachiCustomerPartnerInternational
Standardization
Government
University ・・・
agencyorganization

strategy by closely examining the circumstances of the “new normal” post COVID-19, as well as
political, economic, social, and technological trends.

Hitachi Group Codes of Conduct: 6. Protectionof Intellectual Property and Brand
http://www.hitachi.com/corporate/about/conduct/index.html#ank8071860

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Innovation Management

Framework for IP Activities

Structure

SystemAwards for IP Activities

Activities

We currently have IP offices in Santa Clara and Detroit in the United States, Beijing in China, London

At the Intellectual Property Achievement Awards for fiscal 2020, sponsored by the Ministry ofin the United Kingdom, and Singapore to cover our globalized business.

Economy, Trade, and Industry and the Japan Patent Office, Hitachi, Ltd. received the Award fromAchievements Since FY 2019As a control tower for developing and implementing new IP activities based on the focus
sectors and regions for investment under the 2021 Mid-term Management Plan, in fiscal 2019
we established the IP Strategy Department within the Intellectual Property Division. The new
department plays a central role as a hub in forming a global talent network and works closelywith major sites around the world, as well as building close ties with our newly established
Corporate Venturing Office in addition to our Strategy Planning Division, the Government andExternal Relations Group, and the Corporate Brand & Communication Division in Hitachi, Ltd.
In fiscal 2020, a Data Science Group was launched within the IP Strategy Department. The
new group is responsible for cultivating IP data scientists who can use IP AI tools to perform
comprehensive analysis of IP information (such as patents) along with non-IP information (suchMinister of Economy, Trade, and Industry along with high praise for the establishment of our IP
strategies for competitiveness and collaboration as well as our active engagement in IP activities toresolve social issues in advance of competitors. This was our first award since receiving the Award
from Commissioner of the Japan Patent Office 28 years ago in 1992, and our first time winning themore prestigious Award from the Minister of Economy, Trade, and Industry.
Clarivate Analytics also included Hitachi in its Derwent Top 100 Global Innovators for the ninth
consecutive year, and the Japan Institute of Invention and Innovation presented Hitachi with thefiscal 2019 Imperial Invention Prize for our design of the Class 800 high-speed train for the UK. Thisis the third consecutive year that we have received high honors from the National Commendation
for Invention, a prestigious Japanese award for invention established in 1919, and the first time that
the Imperial Invention Prize, the highest prize offered by the National Commendation for Invention,as market and R&D information) and propose management and business strategies by showing

has been awarded in recognition of outstanding design. Hitachi, Ltd. has received the Imperialpresent business standings and future projections.

Invention Prize eight times in total, more than any other recipient.

Reward System for Employee Inventions
We motivate employees in the R&D field with an ample reward system for new inventions. To makethis reward system as fair and transparent as possible, we set standards to evaluate inventions anddisclose these standards to employees. We also have a mechanism for receiving inquiries about the
rewards, as well as opinions on the reward system.
We have established a special department within the Intellectual Property Division to plan and operate
this system, while an internal Invention Management Committee made up of R&D, legal affairs, personnel
management, and IP experts ensures that the system operates effectively across the whole Group.
Internal Rewards for Inventors
Invention Information System
Arbitration Committee forInvention Rewards
Business Contribution
Awards Annual Top 100
Patent Contribution Awards
Top 50

System allowing inventors to check the evaluation standards used to calculate rewards
for inventions
Committee to which inventors can appeal if they disagree with the amount they havebeen awarded
President’s awards to the top 100 inventors based on patent rewards received
Ranking of the top 50 young inventors (under 35 years of age) based on patent rewards
received within five years of their joining Hitachi

Protecting Our Designs and Brand
Protecting Hitachi’s designs and brand is crucial for promoting our Social Innovation Business andsupporting our global operations. We take resolute measures against such infringements as making
and selling counterfeit goods copying our designs or carrying the Hitachi brand and illegally applying
for or registering trademarks similar to the Hitachi brand.
In recent years, we are taking action to identify counterfeiting networks, whose manufacturingmethods and sales channels have become more sophisticated and diverse. We are also working with
e-commerce site operators on countermeasures against online counterfeit sales.

Hitachi Sustainability Report 202074

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

103-2

H u ma n Ca pita l
Key SDGs

In order to engender innovation and create new value in a global and digital era, HitachiWhy

it mattersWhat
we are doing

treatment and career advancement.

is working on attracting, retaining, and developing diverse talent, and transforming its

In recognition of the “new normal” in light of the ongoing novel coronavirus (COVID-19)

organization to drive sustainable business growth. With due attention paid to respecting

pandemic, not only are we promoting diverse working styles as a driver of telecommuting

the rights of employees, equality of opportunity, occupational health and safety, andinnovation, in order to improve productivity and allow employees to use their abilities to theemployee well-being, we strive to build good relations between employees and theutmost, we are also implementing job descriptions, performance management, and othercompany, including promoting work environments that make employees feel proud andsystems to clarify the role of, expectations for, and output of each employee’s position,

happy to work at Hitachi, and engage in active dialogue regarding employee

and accelerate the pivot to job-based human capital management.

Core initiatives

Goals and KPIs

Develop global human capital
Promote people analytics
Ensure fair evaluation and compensation

Promoting global human capitalmanagement in order to hire, promote,and develop diverse human capital

Accelerated the pivot to job-based human capitalmanagement in light of the COVID-19 pandemic
Undertook initiatives to protect employees fromtransmission and support telecommuting
Trialed People Analytics in certain business divisions

Develop management-level leadership
Globalize management training
Develop digital talentManagement-level leadershipdevelopment
Strengthening our digital talent (increasing
the number of data scientists to 3,000 by
fiscal 2021)

Established a training system for digital transformation and arange of digital talent training programs targeting different
positions
Strengthened recruitment at the Indian Institutes ofTechnology and other top-class universities around the world

Global human capitalmanagement

Talent development

75

Achievements in FY 2019

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Human CapitalWhat
we are doing

103-2

Core initiatives

Goals and KPIs

Review our systems and operations in lightof the Statement on Diversity andInclusion
Expand hiring of people with disabilities

Achieving a 10% ratio of both female andnon-Japanese executive and corporate
officers by fiscal 2020
Increasing of the number of female
managers in Japan to 800 by fiscal 2020
(twice the number at the end of fiscal 2012)

Held the 6th Hitachi Group Women Leaders’ Meeting
Held the 4th Global Women’s Summit

Promotion of work-life management

Work-life
management

Promote work-life reform
Enhance work-life management support
systems
Develop support systems that meet
diverse employee needs

Strengthened support for balancing work and nursing carewith initiatives such as a seminar for all employees aged 40
and over on how to balance work and nursing care
Launched a child-care matching service in collaboration withcompany-led nurseries

Achieving zero fatal accidents by the endof fiscal 2021; reducing lost-time
accidents globally by 50% compared tothe previous year

Established the Safety Management Division
Established the Health and Productivity Management
Promotion Office (in April 2020)

Occupational healthand safety

Establish occupational health and safety
management systems
Prevent work-related accidents
Provide support for staying mentally andphysically healthy

Respect the rights of employees
Foster employee-management dialogue

Deepening mutual understanding throughdialogue between employees andmanagement

Engaged in continuous employee-management dialogue

Diversity andinclusion

Freedom of
association andcollective bargaining

76

Achievements in FY 2019

Key SDGs

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Global Human Capital Management
Developing Global Human Capital

Approach

Developing Global Human Capital

Structure

Hitachi’s 2021 HR Strategy, based on its 2021 Mid-term Management Plan, is designed to allow theIn order to become a world leader in the Social Innovation Business, we believe it is important tocompany’s diverse global team to grow through their work, feel proud and happy about working at

maintain high engagement across countries and regions as well as companies and establish diverse

Hitachi, respect diverse values, and contribute to the creation of safe and vibrant workplaces each inhuman capital and a working environment that maximizes personal and organizational performance.

their own way. Alongside this, we are striving to cultivate a common Hitachi Group Identity in all

Based on this idea, we have developed a global human capital management strategy. We hire,

employees worldwide, along with the values of Harmony, Sincerity, and Pioneering Spirit that

promote, and develop human capital via global human capital management that uses unifiedcomprise the Hitachi Founding Spirit, so that we can work as One Hitachi across countries, regions,performance evaluation criteria and offers a common leadership development program forand divisions to contribute to society. To this end, we are advancing a variety of enhanced measures

employees around the world.

around the four key concepts of “Talent,” “Culture,” “Organization,” and “HR Transformation.”
In recognition of the “new normal” in light of the ongoing novel coronavirus (COVID-19) pandemic,

In addition, as a way of integrating the various existing measures for the management of global
human capital, we have built a platform containing an array of information about the skills, career

we are also making telecommuting standard for a wide range of positions. As well as promoting

orientations, and other aspects of our human capital. We use the platform for globally optimized

diverse working styles as a driver of telecommuting innovation, in order to improve productivity andplacement, identifying and nurturing management leaders of the future, and strengthening manager-

allow employees to use their abilities to the utmost, we are implementing job descriptions,employee communication.

performance management, and other systems to clarify the role of, expectations for, and output ofeach employee’s position, and accelerate the pivot to job-based human capital management.

also served as chief transformation officer of global operations. Initiatives he has led in this role

Main Enhanced Measures of the 2021 HR Strategy
4 Key Concepts of the HR Strategy

TalentAttract, retain, and develop diverse talent to leadbusiness growth

CultureTransform organizational culture and employee
mindset to encourage proactivity and individual growth

Organization

Reform organization and transform employment policies
to adapt to environmental changes; take action onorganizational reshuffling

HR Transformation
Transformation

Achievements in FY 2019

From fiscal 2019, Levent Arabaci, general manager of our global human capital division has
include using global shared services to standardize and optimize shared work within theMain Enhanced Measures Toward FY 2021
Develop digital human resources*1
Develop mindset and skills to become global leaders
Promote diversity and inclusion*2
Build Hitachi culture globally*3
Foster a culture of career ownership

Ensure safety, health, and compliance*4
Build job-based HR management*5

Group, drastic operational reforms on the back of increased diversity, business process
re-engineering using cutting-edge digital technologies within and outside the company, andoptimal deployment of talent.
Additionally, in order to change the awareness and behavior of employees as we seek toreinvent ourselves as a global leader in the Social Innovation Business, we reconsidered ourcompetencies. Our new focus will be on competencies in line with both Hitachi’s Corporate
Credo and the Founding Spirit. These will be used as shared behavioral objectives to unite
diverse human capital and organizations as we seek to raise awareness of Hitachi’s corporate
culture globally.

Execute HR transformation
Implement HR career development and mindset
transformation
Shift to digital HR*1Developing Digital Talent*2

Diversity and Inclusion*3

Solidifying the Hitachi Group Identity*4

Occupational Health and Safety*5

Developing Global Human Capital77

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Shared Global Foundation for Group-wide Human Capital Management

Ensuring Fair Evaluation and Compensation

SystemGlobal Human Capital Database

To visualize the entire Group’s human capital for a macro understandingof HR data

Hitachi Global GradeTo evaluate the role and responsibilities of each position against unified
standards shared by the entire Group

Global Performance Management

To align business and individual objectives and promote sustainableimprovement and growth of both individuals and businesses

Global Leadership Development

To clarify human capital requirements for key management positions and identify
and develop candidates for management leadership from around the worldis fair and competitive in the context of the labor market for each national or region industry. Each

Hitachi University

A learning management system shared globally by the entire Group.

employee’s compensation is set based on an annual performance review. Feedback on this review is

We believe that a fair global system of employee evaluation and compensation is essential for
attracting diverse and highly engaged human capital regardless of nationality. Accordingly, we haveestablished a Global Compensation Philosophy shared by all Group companies based on the principles
of ensuring market competitiveness, pay for performance, and maintaining transparency.
We have developed a performance-based compensation system for full-time, regular employees that

also provided as fuel for further development.
We ensure compliance with the laws and regulations of each country and region in which we operate

Promoting People Analytics

when determining compensation. Starting pay for new graduates in Japan—which accounts for about
Activities

Hitachi’s People Analytics initiative involves gathering and analyzing data about employee awarenesshalf of the Group’s full-time, regular employees—is roughly 20% higher than the weighted average ofJapan’s regional minimum wages.

and behavior and putting it to use in human resources and management policy.
Quantifying the effect of human resources initiatives has always been difficult. Evaluations have tended
to be based on the experience or intuition of the evaluator. However, with People Analytics, which uses IT

Conducting a Global Employee Survey

Activities

such as AI and data analysis, optimal initiatives based on objective indicators and analysis can be

We conduct an annual global employee survey called Hitachi Insights as a way of measuring

promulgated. Not only does this allow the human resources to follow the development of each and every

employee engagement.*1 In September 2019, the survey was administered for the seventh time.

individual employee, it can also contribute to management by activating human capital.

Around 200,000 employees worldwide were sent the survey in one of 14 different languages, andIn concrete terms, this means conducting a survey based on a unique psychological scaleroughly 180,000 responses were received. This represents a response rate of 87%, the highest sinceconstructed under the academic guidance of the University of Tsukuba, then making use of AI inthe survey was first performed in 2013. Results continue to improve, with an overall approval rating

analyzing the awareness of individuals and job assignment and behavioral data arising from theof 61% (1% higher than last year, 7% higher than 2013) and an engagement indicator of 60%

survey’s results. This makes it possible to provide individual employees with insight encouraging a(unchanged from last year, 7% higher than 2013). Moving forward, senior management andchange in behavior, streamline human capital placement, and otherwise formulate more effective

managers on site will confirm the survey results for their own organizations and, throughand precise human resources initiatives.

communication with team members, take concrete action through the PDCA cycle, further

Achievements in FY 2019

In fiscal 2019, as well as trialing People Analytics in certain business divisions, we formulated
a plan for expanding the scope of its implementation. From fiscal 2020, we will expand its
deployment to more business divisions in Japan. We will also begin planning for a global
rollout of People Analytics across the entire Group.

enhancing the level of engagement.
*1 Hitachi uses the term “engagement” to refer to employees’ understanding of the company’s strategies and policies, as well as their job satisfaction and desire to take actions on their own initiative to bring about results.

78

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

79

Human Capital

Promoting the “Make a Difference!” Idea Contest

Activities

Hitachi believes that changing the awareness of each and every employee is necessary for achieving

their ideas are linked to real experience in creating new businesses, but also by providing an

the corporate reforms needed to steadfastly uphold our medium- to long-term vision. We therefore

opportunity for employees to think for themselves, make decisions, and see a project through tolaunched the “Make a Difference!” idea contest for all employees around the theme of the “I will”

completion. For some prize-winning ideas, the verification experiment process has already begun.

mindset. This is designed to encourage participant growth, not only through a change in perspective as

In fiscal 2019, 741 ideas were received.
Support for Employees During the COVID-19
Pandemic[Occupational Health and Safety]

Countermeasures Against the COVID-19 Pandemic
Amid the novel coronavirus (COVID-19) pandemic, ensuring the health and safety of all

Hitachi, Ltd.’s Main Policies Supporting New Workstyles for the “New Normal”

employees is our highest priority as we strive to prevent the spread of the virus. As well as
promoting telecommuting for, in principle, all positions except those requiring a physicalpresence for society to function, we are undertaking initiatives to protect employees fromtransmission and support telecommuting.
COVID-19’s impact is global, and our countermeasures in each region are informed by theconditions around regional headquarters. Hitachi Europe surveyed telecommuting employees tofind out what they needed, and developed an action plan to provide it. At Hitachi India, ane-learning course on COVID-19 was created and shared to raise awareness of the virus and how

Support for
employees based on
immediate risk oftransmission

Financial support forpurchases necessary to
prevent transmission

3,000 JPY per month per person toward the cost of
telecommuting or, if working at the office, preventing
transmission via masks, disinfectant, etc.

Financial support forpurchase of telecommuting
equipment

Financial support for the purchase of IT devices, work
desks, chairs, and other equipment for telecommuting

Establishment of Novel
For employees who work in environments where risk ofCoronavirus Countermeasure transmission is thought to be high, an allowance of 500–
Allowance
1,000 JPY per day depending on the level of risk

employees can prevent its spread.
We also used the “Make a Difference!” platform to gather ideas globally across the Group for
new workstyles or ways Hitachi employees could come together as one and contribute to society.
This project, titled “Challenge to COVID-19,” attracted some 1,430 ideas from around the world.
One proposal involving support via crowdfunding for small business owners affected by the
pandemic has already been adopted. Regarding the other proposals, after discussion with
relevant divisions, the decision was made to divide them among 15 themes for further
consideration of their feasibility. In concrete terms, regarding social contribution activities, we will
promote activities such as providing online education to children; as contributions utilizing
Hitachi’s technology, we are preparing for the implementation of systems and products leading
the way to a new lifestyle predicated on prevention of infection.

Main policies forsupporting mediumto long-term
telecommutings

Deployment of Inbound
Medical Assistance Services
for foreign employees
working in Japan

In addition to a 24-hour, year-round call center offering
medical assistance in 16 languages for foreign employees
and their families in Japan, including referrals andappointments to medical facilities and arrangements for
emergency transport and hospitalization, translation via
telephone and other services

IT environment
improvements

Improvement of remote access environment, lending
laptops for telecommuting, etc.

Appropriate health support
for long-term telecommuters

Remote counseling by occupational physicians and othermedical staff, provision via intranet of information forstaying mentally and physically healthy, etc.

Provision of tools for
Using Hitachi’s unique “happiness level,” which measures
stimulating communication people’s feelings of contentment, to stimulate communication

Hitachi Group’s COVID-19-Related Support Efforts[Social Contribution Activities]
Responding to COVID-19[Business Continuation Initiatives]

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Talent Development
Hitachi’s Approach to Talent Development

PolicyApproach

Global Management Training

SystemActivities

Hitachi has traditionally placed great emphasis on developing talent, including the establishment of the

We are globalizing our talent development programs in accordance with global talent management

Apprenticeship Training School, predecessor of today’s Hitachi Industrial Skills Academy, in 1910, thestrategy to develop management-level human capital.

year of Hitachi’s own founding. The pedagogical principles established in 1959 as our Educational
Guidelines emphasized the spirit of y eki (guidance through assistance) and jikyō (endeavor throughone’s own efforts).
That spirit has been inherited to the present day. In addition to on-site training through work tasks,
we are also expanding education globally across the Group to improve individual capabilities, skills, andspecialties. We will continue to support the growth of each and every individual employee with the goalof developing talent who can contribute to resolving social issues.

Achievements in FY 2019

In fiscal 2019, we launched the Global Group Executive Development Course (Global GEC)
for new leaders of Hitachi subsidiaries outside Japan. This e-learning course, attended by
100 people in fiscal 2019, fosters a basic understanding of Hitachi’s management andprovides the latest information for advancing our Social Innovation Business. We arecontinuously developing new programs to foster human capital.
Management Training Currently Offered Globally

Management-level Leadership Development

Approach

Activities

Hitachi believes that innovation in talent management to resolve the diverse challenges of global
society is essential to increasing social, environmental, and economic value, making it vital to develop
the management-level leadership who will drive this innovation and change. For this reason, we
approach management-level leadership development as a medium- to long-term initiative with thepresident and CEO and Nominating Committee playing a central role.

Global Leadership Acceleration
Program for Key Positions (GAP-K)

Selective training held for 3 months in India and Japan to accelerate developmentof future management candidates. Attended by 30 people from 8 countries.

Global Advanced Program for
Leadership Development (GAP-L)

Held twice a year with the aim of developing the superior leadership, mindset, andskill necessary to drive Hitachi’s global development. Attended by around 60 local
leaders from 19 countries expected to perform well in overseas subsidiaries.

Global Leadership Acceleration
Program for Managers (GAP-M)
Ready to Lead (R2L)

Leadership training with globally unified content for general managers and new
managers. In fiscal 2019, held in 8 regions and attended by around 3,000
participants.

When developing candidates for appointment in the next and subsequent term to executive
positions including president, CxO, and division head, several hundred candidates are selected fromNumber of Participants of Global Management Training Programs

the Hitachi Group’s human capital around the world and given both on-the-job training (OJT), including
stretch assignments, and off-the-job training (Off-JT) such as external training and coaching.

(people)We also select a “Future 50” of around 50 outstanding emerging employees as future candidates for

5,000

management-level leadership. By giving this Future 50 tough assignments and opportunities for direct

4,000

discussion with independent directors, we accelerate their development in a focused manner.

3,362

3,530

2015

2016

3,821

3,844

4,063

2017

2018

2019

3,000
2,000
1,000
0

(FY)

Hitachi Sustainability Report 2020

80

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Developing Digital Talent

Approach

Goals

Structure

Providing Younger Employees with Overseas Experience

Activities

To accelerate our Social Innovation Business using digital technologies, we are working to develop

Hitachi maintains a broad array of programs to systematically cultivate and secure people who canhuman capital that can lead a digital transformation. We are increasing the amount of digital talent

succeed in global business. To develop the careers of people capable of understanding and adapting

across the entire Hitachi Group from 30,000 employees in fiscal 2019 to 37,000 in fiscal 2021. At the

to local cultures and lifestyles, we offer a program enabling younger employees in Japan to live andend of April 2020, we had around 2,000 data scientists with specialist knowledge of data analysis,

work in another country. We have dispatched more than 5,000 Group employees in total, allowing

including AI, IoT, and the utilization of big data, and we are aiming to increase that number to 3,000

them to take part in over 80 programs designed to promote understanding of other cultures and toby fiscal 2021 as we expand our global digital solutions.

engage in language studies, local field studies, and internships, as well as to provide opportunities towork with local people to resolve social issues. In fiscal 2019, we moved to encouraging employees toAchievements in FY 2019

Aiming to further develop and strengthen our digital talent, we consolidated our various training
institutes into the Hitachi Academy in April 2019, and are currently constructing a training systemengage in opportunities for leadership training to accelerate the development of employees ready totake on global challenges.

for developing human capital to drive digital transformation. In fiscal 2019, we established atraining system for digital transformation and a range of digital talent training programs targeting
different positions, focusing on developing world-leading human capital and digital talent in orderto accelerate our Social Innovation Business. We also strengthened recruitment at the Indian
Institutes of Technology and other top-class universities around the world.
Through a development policy that combines knowledge and skill obtained by participatingin training with OJT, we will strengthen our digital talent development along the twin axes ofbroader fundamental training and specialist development.

Career Development Support in Japan

Activities

Hitachi has developed a broad range of career development support that focuses on employees’“internal careers,” namely, their individual values and views on the significance and meaning of theirwork. By ensuring that individuals can fulfill their potential and maximize their creativity and linking
individual growth to positive outcomes and growth for the organization, we enhance our corporate
value. Along with promoting self-understanding and fostering strong individuals with theindependence and autonomy to think and act for themselves, we are also providing support tocreate a framework that will capitalize on the engagement and motivation of individual employees

Data Scientists in Hitachi Groupand to enhance mutual understanding as a way of fostering the teamwork needed to enhance(people)3,000

organizational strength and performance.

3,000

Recognizing the importance of maximizing individual and organizational performance as we seek

2,500

to become a major global player, we implement Global Performance Management (GPM) grounded

Approx. 2,000

2,000

in diversity and the individual, thereby promoting career development with respect for each

1,500
1,000

employee’s individuality and personal aspirations.

Approx. 1,000

In concrete terms, based on the idea that the center of career development is the work that700

employees perform daily in the workplace, we implement a cycle aimed at the growth of each500
0June 2018

April 30, 2019

April 30, 2020

End of FY 2021
(Goal)

employee through a process in which goals for daily tasks are set and then pursued, followed byevaluation of the results to formulate the next objectives. We call this Global Performance
Management, and it includes the following initiatives.

Hitachi Sustainability Report 202081

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Global Performance Management

proceed in, their career goals, and their career path, and then engage in self-directed efforts to

Performanceplanning

After consulting with their supervisors to reach a consensus on short-term objectives, employees
work with supervisor guidance and support. At the end of the fiscal year, they consult withsupervisors on whether these objectives were met and set new ones for next fiscal year.

develop their career and abilities. Around 13,900 people have participated in the program so far (asCareerconsultation

Employees meet with supervisors to discuss medium- and long-term career plans regarding suchmatters as requests for transfers or overseas postings.

education for younger employees and training for middle-aged or older employees to help them

We also provide direct support for individual career development through a career development

We also operate a Career Counseling Center as part of our career development support. At the

program that supports workplace communication. This program is the Hitachi Career Development

center, employees can speak with professional counselors about any concerns they have regarding

Workshop (H-CDW). Through self-analysis work, participants consider the direction they should

their work, their career, or interpersonal relationships, in order to help them seek a solution themselves.

of March 31, 2020), with a focus on technicians, managers, and researchers in their 30s. In addition
to those programs, Hitachi also offers programs targeting specific age groups, such as career
prepare for the changes ahead in their careers.

Initiatives at Regional Headquarters to Develop Employee Skills
Hitachi is a company with global operations, so its skills development programs are

Hitachi (China) Ltd.: The growth of all employees is promoted through a training system

implemented primarily by its regional headquarters in keeping with the focus of eachcatering to different levels of development, enabling workers to develop the specialized andregion’s business operations and cultural environment. Through these efforts, we seek tocomprehensive skills they need to perform their jobs. Global training materials and theidentify and nurture the human capital who will become Hitachi’s leaders globally acrosse-learning platform for general employees are expanded with content to help employees

the Group.

acquire the skills and knowledge.

Hitachi America, Ltd.: An individualized e-learning platform is used alongside a Global

Hitachi Europe Ltd.: Employees across Europe can develop their skills through classroom

management training program for employees aspiring to become global leaders. HR

lectures and online classes, enabling them to acquire professional qualifications in culturalbusiness partners work with managers at Hitachi Vantara Corp.—the core of Hitachi’sawareness, presentation skills, and IT desktop skills. Global management training and otherdigital solutions—to assess employee skills and capabilities while helping employees set

programs bring together Hitachi leaders in Europe, helping build an important network inand achieve their personal goals.

support of One Hitachi.

Hitachi Asia Ltd.: A regional program to enhance the knowledge and skills needed to growHitachi India Pvt. Ltd.: L&D Committee consists of senior executives and meets twice a year

Hitachi’s business in Asia is implemented in addition to making full use of Global

to discuss training programs. Employees are encouraged to build skill sets by making full use

management training courses and an e-learning platform for general employees. Trainingof Global management training courses and the e-learning platform for general employees.

roadmaps to develop employee knowledge, skill sets, and competencies are created to

Advances through self-learning were made while employees worked from home due to theachieve optimal work performance.

COVID-19 pandemic, and the top-performing employees were honored by Hitachi India.

Hitachi Sustainability Report 202082

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Diversity and Inclusion
Among global diversity initiatives, the achievement of gender equality across the entire Group has

Toward Achieving Diversity and Inclusion

Approachbeen identified as needing particular attention, and initiatives like our Global Women’s Summit areunderway across the Group.

Hitachi has composed a Statement on Diversity and Inclusion and strives to create an environment

We also hold regular meetings to exchange opinions on diversity with labor unions.

where diverse human capital can exercise its potential to the fullest. Furthermore, we continually review
our systems and operations in light of this statement.

Hitachi Diversity StructureStatement on Diversity and Inclusion
Diversity and Inclusion Open Our Future

Hitachi, Ltd. President

Diversity is the wellspring of our innovation and our growth engine. Hitachi regards personal
differences—such as gender, nationality, race, religion, background, age, and sexual
orientation—as well as other differences, as facets of people’s individuality. By respecting our
employees’ individualities and positioning them as an advantage, Hitachi frames its diversity
and inclusion as conducive to both the individual’s and the company’s sustainable growth. Witha diverse workforce, strong teamwork and broad experience in the global market, we will meet
our customers’ needs.

Diversity Management Promotion Framework

Advisors:
External directors

Advisory Committee:
Chief Human Resource Officer (CHRO)
Executive officers and general managers incharge of personnel affairs and laboradministration in Group companies
General managers in charge of personnel affairs
and labor administration in business units

Structure

Hitachi has created a Diversity & Inclusion Development Center to promote its diversity initiatives,
including support for diverse human capital and work-life management. The center acts as asecretariat managing the Advisory Committee and Diversity Development Council, which are

Hitachi Group Diversity Development
Council
Section managers in charge of personnel affairs
and labor administration in Group companies,business units, and business groups/sites

operated jointly by Hitachi, Ltd. and 15 Group companies. The Advisory Committee ensures followthrough on our diversity management policy, while the Diversity Development Council discusses
specific activities and shares best practices. Both meet every six months.
Group companies and business sites are also advancing diversity management in accordancewith their challenges and circumstances. To this end, they have set up their own diversitypromotion organizations and projects, such as those to help develop women’s careers, in order toenhance initiatives geared to the challenges faced by individual workplaces.

Organizations and projects
at companies andbusiness groups/sites toadvance diversity(including issues related to
women in workplace)

Around50 projects

Diversity & Inclusion
Development Center(dedicated organization)
Human Capital Group* Participating enterprises (15 companies as of March 2020): Hitachi
Chemical, Hitachi Metals, Hitachi
Construction Machinery, Hitachi
High-Tech, Hitachi Urban Investment,
Hitachi Industrial Products, Hitachi
Automotive Systems, Hitachi Global
Life Solutions, Hitachi Industrial
Equipment Systems, Hitachi Systems,
Hitachi Solutions, Hitachi Insurance
Services, Hitachi Life, Hitachi
Capital, Hitachi Transport System

Hitachi Sustainability Report 202083

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Human Capital

KPIs for Promoting Diversity

Number and Ratio of Female Managers
Goals

Activities

405-1
With the aim of increasing diversity among executive officers and managers, Hitachi, Ltd. has createdthe following two key performance indicators (KPIs). These demonstrate our commitment both

2,688
600

Increase the number of female managers in Japan to 800 by fiscal 2020 (twice the number atthe end of fiscal 2012).
To achieve these goals, as well as reinforcing existing programs, we introduced the Hitachi Group
Women’s Career Success Survey to highlight progress with initiatives and outstanding issues in eachbusiness division and to set numerical targets for each division, strengthening our management
commitment. We will also boost women’s individual ambitions and morale through programs such as
the Hitachi Group Women Leaders’ Meeting and the Roundtable Conference with Female
Independent Directors, which support female employees at the supervisory level and above. We
intend to create an environment where as many women as possible are able to optimize theirpotential in management positions.

509

474

6.7%

200

2,000
1,000

73

0 2000

2015

2016

2017

2018

2019

Female managers, Hitachi, Ltd.*1 (left scale)
Female managers, Hitachi Group*2 (right scale)
Percentage of total, Hitachi, Ltd.*1
Percentage of total, Hitachi Group*2

Achievements in FY 2019attended by 31 women newly appointed to managerial positions in Hitachi Group companies
within Japan. A lecture by an external expert and a roundtable on the theme “Proactive Career
Building and Behavioral Change” promoted a lively exchange of views between participants, and0divisions or differences based on gender or age.

8.8
6.4

6
4

(%)
10.0

8

change at the workplace.

Employee compensation is set according to each individual’s roles and achievements, with no

10.0

10

2

Alongside these efforts, we are working to change the mindset of managers and male staff regarding

Target number of female managers, Hitachi, Ltd.

Ratios for Female and Non-Japanese Executive and Corporate Officers (Hitachi, Ltd.)

each participant announced a personal action plan and statement to further encourage behavioral

gender parity and examining our working style as a whole with the aim of transforming our corporate culture.

02020 (FY)(Target)Note: Figures include section manager–level employees and above.
*1 Since fiscal 2017, “Female managers” has included managerial employees dispatched from Hitachi, Ltd. to other companies and those acceptedfrom other companies by Hitachi, Ltd. Earlier figures include regular managerial employees dispatched to other companies but exclude those
accepted from other companies. Figures for fiscal 2020 are targets.
*2 Beginning in fiscal 2019, the scope of reporting shifted from full-time, regular female managers, excluding those dispatched to non-Group
companies, to all female managers including those dispatched from Hitachi, Ltd. to other companies; figures for previous years have beenadjusted to match this new scope. Rising numbers of female managers in part reflect improved coverage of our human capital databases.

(people)The 6th Hitachi Group Women Leaders’ Meeting was held in February 2020. The meeting was

3,000

5.5%

4.8%

4.2%

4.1%

4.0%

8.9%

8.3%

(people)
4,000

700

635

2,562 577 7.3%

6.5%
400

Achieve a 10% ratio of both female and non-Japanese executive officers and corporate officers
by fiscal 2020.

800

3,325

800

internally and to the world to supporting diverse human capital and enhancing diverse management.
Goals for Hitachi, Ltd. (KPIs)

4,302

3,975
3,638

(people)

7.1

6

5.0
2.4
2

2.6
3

8.0

7
6.0

5

5

3.7

8.6

4

4.0
2.0

2

June 2017 June 2018 June 2019 June 2020

End offiscal 2020
(Target)Number of female executive and corporate officers (left scale)
Ratio of female executive and corporate officers

0

Number of non-Japanese executive and corporate officers (right scale)
Ratio of non-Japanese executive and corporate officers

Note: Disclosure began in 2017, when initiatives for increasing diversity among executive and corporate officers started.

Hitachi Sustainability Report 202084

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Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Achievements in FY 2019

Ratios for Male/Female and Japanese/Non-Japanese Directors (Hitachi, Ltd.) (as of July 2020)
Item
Directors

Number

Total

Male
13

Ratio (%)

FemaleJapanese

Non-Japanese

11

2

7

6

84.6

15.4

53.8

46.2

Basic Salary and Total Individual Compensation for Female and Male Managers at Hitachi, Ltd. (Fiscal 2019)
Basic Salary

Total Individual Compensation

100：104

100：106

Three special subsidiaries within the Hitachi Group were merged into one new company on
April 1, 2020, in an effort to improve management stability by expanding business scale andincrease employment of people with disabilities within the Group.*2*1 Includes one special subsidiary and 25 related Group companies.
*2 The new company’s name is Hitachi You and I Co. Ltd. The company employs around 450 people, of which around 380 are people with disabilities.

Employment of People with Disabilities and Employment Ratio (Hitachi, Ltd.) *1
Legally required employment rate*2

Note: Benefits for men and women are identical. Differences between male and female salary and compensation are due to age distribution, grade distribution, etc.
(people)Global Women’s Summit

2,400

The Global Women’s Summit is a venue where Hitachi Group employees from various countries,

2,000

regions, companies, and positions gather for discussion on the theme of achieving gender equality.

1,600

To encourage attendance by as many employees as possible, the summit takes place at a different

1,200

country of the world each year. The meeting for fiscal 2019 was held in October in Japan—the fourth

800

country, following the United Kingdom, the United States, and Singapore—and was attended by around400

180 executives and employees from 17 countries and regions. During the meeting, President and CEO
Toshiaki Higashihara and a female independent director made speeches, and panel discussions were
held featuring prominent leaders from regional offices. At workshops and networking dinners, participants
deepened their engagement with each other, exchanging information and career advice.
Newly added this year were a program for both male and female employees and a panel discussion
involving male executives, offering all participants, male or female, an opportunity to consider gender

0

2.23
2.11

1.85
981

1,370.5

2.15

1,848

2.26

2.33

(%)

2,403

2.3
2.2

1,899

2.1

1,437

2.0
1.9
1.8

2000

2016

2017

Employment of people with disabilities (left scale)

2018

2019

2020

(FY)

0

Employment ratio (right scale)*1 Includes special subsidiaries and related Group companies. (Two special subsidiaries and 17 related Group companies in fiscal 2020.)*2 The legally required employment rate was 1.8% up to fiscal 2012, 2.0% between fiscal 2013 and 2017, and became 2.2% in fiscal 2018.
Note: • Data compiled in June 1 of each fiscal year.
• The employment ratio is calculated according to methods prescribed in the relevant laws.

parity in the workplace.

B-BBEE Initiatives in South Africa

Expanding Hiring of People with Disabilities

Activities

405-1

As Hitachi expands its business in South Africa, it pursues activities aligned with thecountry’s Broad-Based Black Economic Empowerment (B-BBEE)*1 policies to create
employment and economic development. As of the end of fiscal 2019, Hitachi

Hitachi, Ltd. and Group companies in Japan have worked hard to employ people with disabilities, such

Construction Machinery Southern Africa has achieved a B-BBEE rating of level 4, while

as by holding a special hiring fair and study meetings for Group companies to share information. We have

Hitachi Vantara has reached level 5.

also worked to expand the range of employment opportunities for people with disabilities, coordinatingwith special subsidiaries to develop new positions for such individuals in IT. As a result, as of June 2020
the employment ratio of people with disabilities was 2.33% at Hitachi, Ltd.*1 and 2.38% for the entire
Group in Japan. Both of these figures exceed Japan’s legally required employment rate of 2.2%.

*1 B-BBEE: Companies and organizations in South Africa are scored on their B-BBEE initiatives and contributions and rated on ascale from level 1 (highest) to 8 or as being “non-compliant.”

Hitachi Sustainability Report 202085

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Work-Life Management
ApproachWork-Life Innovation Initiatives at Hitachi, Ltd.
Initiative

Key components

Hitachi goes beyond “work-life balance,” in which employees are simply urged to balance work andTop commitment

Send message within company

private life, to promote “work-life management,” which encourages employees to proactively take

Review of operations and processes

Reform administrative operations at headquarters
Clarify rules for outgoing email
Use support tool designed to optimize meeting durations and participant
numbers and improve meeting efficiency

Strengthening of workplace management

Increase operational transparency using in-house consultants(experience-oriented approach)
Improve attendance management system for compliance ruleenforcement

Promotion of time- and locationindependent work practices

Expand telecommuting program
Create environments where internal wireless local area network (LAN) canbe accessed safely
Distribute around 30,000 IT tools to support paperless and online
meetings
Roll out location-independent work for managerial-level employees
Expand satellite office network (88 sites as of March 2020, with over
50,000 monthly users across the entire Hitachi Group)
15,651 people participating in Telework Days

Companywide promotional tactics

Put up posters, create intranet site
Share best practices by giving awards

charge of improving the quality of both their work and private lives. We believe that practicing work-life
management will enrich employees’ work and private lives, enhance professionalism, and build
personal character, resulting in both individual and organizational growth over the long term. Based on
this philosophy, we have established systems to support work-life reforms and a balance between
employees’ work and private lives.

Promoting Work-Life Reform

Approach

SystemActivities

Hitachi, Ltd. promotes a companywide work-life reform initiative, “Hitachi Work Life Innovation,” todevelop workstyles allowing talent from diverse backgrounds to work with enthusiasm anddemonstrate strong performance.
In order to put work-life reform into practice, it was determined that reform of administrative
operations at the company’s headquarters was necessary. To that end, we implemented a review ofour own business operations and processes.

Enhancing Work-Life Management Support Systems

Today, 70% of all full-time, regular Hitachi employees take advantage of our telecommuting and

System401-2

satellite office work programs, including managerial-level employees, flex workers, and career-track

401-3

employees who need to balance work with child care or nursing care. The programs do not require

Hitachi, Ltd. introduced and expanded an array of programs to support work-life balance, striving to

the applicants to come into the office for a certain amount of time, nor are there any limitations on

create a more friendly working environment. We have distributed an Allowance for Balancing Childthe number of times for doing so, allowing employees to work from wherever they need to be forCare and Work; launched “Hokatsu Concierge,” an information-providing service supporting thechild care or nursing care. If posted away from their families, they can work from their family home.

search for a nursery; and provided a child-care matching service in collaboration with company-led

We are also rolling out location-free work for managerial-level employees, allowing them to perform

nurseries. Through these kinds of support, we offer an environment where work and parenting cantheir duties from anywhere when approved by the company. To further enhance our telecommuting

be balanced with peace of mind.

and satellite office work programs, since fiscal 2020 we have added balance between work andAdditionally, with Japan’s society continuing to age, it is expected that more employees will be involved

medical care as grounds for program use, and made the programs available to all employees

in caring for their elderly family members. We have, therefore, declared the years from fiscal 2018 to fiscal

meeting the necessary conditions.

2020 a period to focus on reinforcement of work and nursing care balance support, and are expanding
programs. We have established a new “Points for Balancing Nursing Care and Work” systemstrengthening financial support for employees. We also conducted awareness surveys and work-life
support seminars to encourage employees and provide information to prepare for this issue, emphasizing
the importance of balancing work with nursing care and conveying practical know-how on the topic.

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Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Return and Retention Rates After Maternity and Child-Care Leave (Hitachi, Ltd.)

Achievements in FY 2019

Sometimes employees quit their job unexpectedly due to caregiving obligations when better information on
nursing care might have helped them balance those obligations with work. To prevent such outcomes,
Hitachi, Ltd. held a seminar for all employees aged 40 and over on how to balance work and nursing care.
Anticipating that their families might also need such information, we also created the Handbook on

Balancing Work and Caregiving , which includes the basic information provided in the seminar along withcase studies on using support systems and services, and distributed a copy to each employee’s home.
In Japan, to support a more balanced approach between work and parenting, in fiscal 2020 welaunched a child-care matching service in collaboration with company-led nurseries. This service
enables employees who are looking for a nursery for their children to apply for admission to acompany-led nursery, created with the help of the Cabinet Office’s support program, thereby
expediting an early return to work for employees on maternity or child-care leave.

Work-Life Management Support System at Hitachi, Ltd.
Child-Care Support System
For women

Pregnancy

FY 2019
Return rate (%)

Retention rate (%)

Male

100

Female

97.4

Male

84.8

Female95.5

In-House Child-Care Centers
Hitachi, Ltd., in collaboration with its labor union, has set up in-house child-care facilities with capacity
for approximately 70 children in its Yokohama Office as a way to support employees in balancing workwith child care.

Support Systems that Meet Diverse Employee Needs

Nursing-Care Support System
For menFertility treatment leave (1 year total)

ChildbirthMaternity leave (8 weeks
before and 8 weeks afterchildbirth)Child-careleaveChild-care leave (up to 3 years, until the childcompletes the first grade of elementary school; can betaken nonsequentially)

Return towork

Shorter working hours (generally 6, 6.5, or 7 hours)
Work from home (career-track employees)
Family-nursing leave (5 days per year), child-nursing leave(5 days per child per year)
Half-day leave (unlimited), leave for overseas spousetransfers (3 years or less)
Allowance for Balancing Child Care and Work
(up to 100,000 yen per year per child; until the childcompletes the third grade of elementary school)

Paternity leave(5 days total)

404-2

To respond to the diverse lifestyles and needs of its employees, Hitachi, Ltd. has provided a wide
Balancebetweenwork
andnursing
care

Leave for prenatal medical
appointments, pregnancy
problem leave, etc.

401-2

Flexible work styles based on eachindividual’s caregiving situation
and available leave system• Flexible working hours• Working from satellite offices• Working from home
• Shorter working hours• Annual paid leave (in hours)• Half-day leave• Family-nursing leave• Child-nursing leave• Nursing-care leave (5 days peryear)• Nursing-care leave (1 year in total,
can be taken nonsequentially)
Other financial support forbalancing nursing care and work
• Points for Balancing Nursing
Care and Work (1,000 points[100,000 JPY] per person
receiving care per year)

Cafeteria Plan* (child-care and nursing-care menu)
1*1 Flextime and discretionary labor systems are also available. The Cafeteria Plan is a system in which employees can select the support that theyneed, when they need it, according to their “Cafeteria Points.”

range of support through welfare benefits that includes a Cafeteria Plan program, housing support
such as dormitory and family housing and a housing allowance system, allowances for balancing
work with child and nursing care, a property accumulation promotion system, an employee stock
ownership program, retirement and pension plans, group insurance, a consolation payment system,
internal sales, cultural and physical education activities, and employee cafeterias.
The Cafeteria Plan allows employees to select the benefits they receive, depending on individual lifestyles andneeds, from a list of options, such as skills development, child care, nursing care, health promotion, anddonations. Employees can use their Cafeteria Points to select the type of support they need when they need it.
For our retirement and pension plans, defined contribution and defined benefit plans have been
introduced across the Hitachi Group in response to the diversification of lifestyles among the elderly
and the changes in forms of employment.
Achievements in FY 2019

Starting in fiscal 2020, we expanded the scope of our support systems to recognize same-sex
partners of employees. Considering the intent of laws around equal pay for equal work, we are
expanding the scope of some support systems to cover limited-term contract employees as well.

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Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Initiatives at Regional Headquarters to Create a Good Working Environment
The Statement on Diversity and Inclusion guides Hitachi’s endeavors to create work

Hitachi Europe Ltd.: In addition to conducting a Global Employee Survey, Hitachi Europe

environments that allow our diverse range of human capital to work with enthusiasm andindependently implements a survey targeting employees who choose to leave the company.

to support workstyles that are conducive to each employee achieving their full potential.

Their reasons are analyzed, and measures to reduce attrition are formulated. Support isRegion-specific policies are also implemented by our regional headquarters.

provided to employees’ philanthropic activities, with auctions and sporting events being

Hitachi America, Ltd.: Initiatives to promote diversity and inclusion include a mentor
program and webinars to share the experiences of employee role models. Of theemployees promoted between January and early August 2020, 36% were women. New

organized to benefit a charity selected by a vote among employees each year. An online
program was implemented in Germany to promote the health of employees working fromhome during the COVID-19 pandemic.

hires during the same span were about one-third women, and half were ethnic minorities.

Hitachi India Pvt. Ltd.: To ensure the safety of female employees, those traveling on business

Nearly 30% of minority employees have reached the level of director or higher.

or leaving work after 7:00 p.m. in the summer and 6:00 p.m. in the winter are permitted to

Hitachi Asia Ltd.: Efforts to make Hitachi Asia the best place to work in Asia include
providing equal opportunities for all employees and creating workplaces that foster andretain outstanding human capital. Emphasis is placed on employee engagement aimed atpromoting teamwork and recognizing the importance of human capital diversity. The
concerns of employees’ families are also considered, such as by offering flexible working
hours to enable a better work-life balance and providing fringe benefits for family members.
Hitachi (China) Ltd.: Activities are being promoted to strengthen inter-divisional
cooperation. A group of mainly younger employees are asked to introduce their division’s
work to workers in other divisions to deepen understanding and encourage collaborative
creation across divisions. The activities were launched in fiscal 2019 with the participationof 27 employees, and the network built through these activities has contributed tosmoother business operations. Plans for fiscal 2020 include increasing the frequency of
meetings and holding them online.

use the company car or a taxi. Measures to support employees working from home during
the COVID-19 outbreak are being expanded, such as by using a cellphone app offering online
meditation and yoga sessions.

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human CapitalOccupational Health and Safety
Basic Principle for Occupational Health and Safety

Policy403-1

Establishing Occupational Health and
Safety Management Systems
403-1

Ensuring the health and safety of all employees is the basic principle underlining the Hitachi Group

403-2

Framework

System

403-3

403-4

Health and Safety Policy, which is shared by all Hitachi Group companies around the world.

Hitachi, Ltd. is committed to building an organization in which employees can promote safety

Employees work together to create healthy, safe, and secure work environments that aim to be

activities of their own accord. To this end, in April 2019, we established a Safety Management

accident free.

Division that reports directly to the president. This division holds an annual Safety Strategy
Congress, attended by safety officers from each Group company and representatives from each

Hitachi Group Health and Safety Policy

division, to set budgets and objectives for companywide safety strategy, review ongoing efforts to“Health and Safety Always Comes First.”

improve occupational health and safety management systems, and share the clear commitment fromtop management to make protecting the health and safety of employees their top priority. The state

Policies
In accordance with our mission, “Contribute to society through the development of superior,original technology and products,” the Hitachi Group will endeavor to ensure safe and healthy
workplaces under the principle of “Health and Safety Always Comes First.”

of occupational health and safety management, including important health and safety issues, isreported regularly to the Senior Executive Committee and meetings of Group company presidents.
In addition, the Safety Strategy Promotion Council, attended by safety department managers fromeach business unit and Group company, examines the promotional frameworks for safety activities
and education in each division alongside standards to be shared across the Group.

To accomplish this, we will:
1. Continually be involved in health and safety activities in order to prevent work-related injuries
and sickness by designating the health and safety of employees as management’s top priority.
2. Comply with the local laws and regulations in each company regarding health and safety.
3. Develop a safe and comfortable work environment by encouraging employees to maintain their

In Japan, a health and safety commission—composed of business owners, labor union officials,
and employees—is convened at each business site every month to discuss and share information
related to such issues as work-related accident cause analysis and countermeasures and health andsafety activities in light of the situation regarding employees who have taken sick leave.

own health and taking a proactive stance on health and safety activities in the workplace.
4. Require an understanding of Hitachi’s principle and the promotion of health and safety
awareness from all business partners of the Hitachi Group.

Achievements in FY 2019

In fiscal 2019 senior management at Hitachi, Ltd. held one-on-one meetings with the CEOs ofeach business unit and Group company presidents to reinforce their commitment to health5. Contribute to the creation of a safe and pleasant society by emphasizing activities that makehealth and safety a top priority in all of Hitachi’s business activities.

and safety management.
We also introduced an Incident Investigation System as a tool for analyzing occupational

Revised November 2013

accidents to be commonly used across the Hitachi Group and intend to roll it out globally.

Goals for Hitachi, Ltd. (KPIs)
Achieving zero fatal accidents by the end of fiscal 2021; reducing lost-time accidents globally
by 50% compared to the previous year.

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Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Safety Management Framework

Initiatives for Preventing Work-related Accidents
Business units/Group companies

Hitachi, Ltd. headquarters

Business sites/
Works

Employee Engagement

403-5

403-7

To prevent work-related accidents among employees, Hitachi sets and applies its own safety
standards to be observed at manufacturing sites around the globe as well as advancing health and

Safety Management Divisionsafety measures tailored to the operations of individual companies. In particular, under the Safety
Management Division, we have worked to improve our safety measures in terms of both policy, by
Safety Strategy Congress

examining and improving our risk assessment frameworks, and technology, by using IT and digitaltechnology to prevent accidents.

Safety officers and representatives attending

Additionally, because the risk of accident is higher for workers not yet accustomed to their work or
environment, employees and temporary workers receive individual health and safety training and

Safety Strategy Promotion Council

on-the-job training before work begins, to help prevent accidents by ensuring that they understand

Safety department managers attending

work procedures and dangers. We are also working to build an education system that meets therequirements of the occupational health and safety management system integrated across theGroup’s operations worldwide. At each business site, the system will provide training for safetyadministrators at each organizational level and safety training for specific hazardous work activities

Initiatives to Prevent Work-related Accidents
TargetDetails

Hitachi Group Key
Group companies and business
Safety Management sites that have experienced
Designation System serious work-related accidents

Under the leadership of top executives, target companies
and business sites take on both management-driven andbottom-up initiatives to formulate specific plans, and theprogress of these plans is monitored by safety officers, who
also lead initiatives to prevent recurrence.

Hitachi Group
Health and Safety
Portal System

Based on each accident’s severity, analysis of its causes andexamples of countermeasures are registered in the system andshared with the entire Group as part of our knowledge base to
be used globally. By analyzing detailed accident informationfrom multiple perspectives aggregated by the system, similar
accidents can be prevented.

Incident
Investigation
Database

In Japan

Entire GroupAn Incident Investigation Database was built to analyze
accidents and formulate future countermeasures in accordancewith the Incident Investigation System established in 2019. The
database is currently operational for Japan, and we intend toroll it out globally.

as appropriate for organizational structure or business type.
On occasions of business restructuring, we share the details of the health and safety management
frameworks and initiatives of the organizations to be merged in advance, and, paying all due respect
to the organizational cultures on both sides, ensure that safety is always preserved during theexecution of a smooth business launch.

Current Work-related Accident Situation

Activities

403-9
Unfortunately, during fiscal 2019, we had four fatal work-related accidents. Although the number oflost-time accidents decreased by 23% compared with the previous fiscal year, improvement isrequired. Taking an honest view of our present situation, we are continuously striving to improve ourhealth and safety management systems, reviewing our risk management to make it more effective
and enhancing our employees’ ability to determine the cause of accidents.

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Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Work-related Accident Frequency Rate
2.0

1.61

1.5

1.06

1.63
1.15

Initiatives to Improving Employee Health
1.83

1.66

1.80

403-6

0.5

0.51
0.18

0.22
0

2015

All industries

2016

1.20

1.20

0.58

0.54

0.20

0.17

2018

2019

1.02

403-10of mind. The basic principle of the Hitachi Group Health and Safety Policy, shared by all Group

0.45
0.25
2017

Manufacturing industries

Activities

Hitachi believes that health is the foundation for employees being able to work with energy and peace

1.0

0.54

ApproachElectrical machinery sector

companies globally, is that “Health and Safety Always Comes First.” Based on this principle, we strive
as one to create working environments that allow workers to do their jobs without anxiety over theirmental or physical health. In particular, within Japan, we are promoting support for identifying
employees struggling with physical and mental issues, not just work-related but also private, and workwith the Health Insurance Society to promote the individual support provided to each employee.

Hitachi GroupIn Japan, occupational healthcare workers, human resources divisions, and the Health Insurance

Notes: Work-related accidents are defined as those involving fatality or work-time loss of one day or more. Hitachi Group figures for Japan, including
Hitachi, Ltd., are for 240 Group companies in 2015; for 200 Group companies in 2016; for 201 Group companies in 2017; for 188 Group
companies in 2018; and for 169 Group companies in 2019.

Society work together to promote a range of health support and appropriate health promotion
management in accordance with Japan’s Industrial Safety and Health Act.
Achievements in FY 2019

Hitachi Group’s Global Safety Figures (Occurrence Rate*1)

In order to advance employee health and promote health management, in fiscal 2019 the results of athird-party external evaluation conducted in the previous fiscal year were brought together with on-site
2016

2017

2018

2019

reports for review and discussion by in-house occupational healthcare staff. Going forward, we will strive

North America

27.65

24.33

27.96

20.76

100

Central and SouthAmerica

2.33

1.62

0.44

0.57

to further strengthen the foundation of health management, with the Health and Productivity

80

Europe

10.70

10.82

6.08

4.78

India

2.07

1.44

1.44

1.63

60

China

1.59

1.53

1.46

1.17

Asia (excluding India,
China, and Japan)

5.43

4.41

3.34

2.63

Oceania

39.07

24.41

21.94

29.07

Occupational healthcare provided by occupational physicians, nurses, and other occupational

Africa

17.26

9.93

11.76

9.72

healthcare personnel both at health-management centers located at individual business locations andOverseas total

7.76

7.42

7.43

5.78

regional health-management centers serving multiple business locations

Japan

1.57

1.85

1.64

1.53

Global total

3.95

4.22

4.20

3.45

Health maintenance measures provided based on periodic medical exams and other examinations to

120

40
20
0

2016

2017

2018

2019

*1 Occurrence rate is the rate of workplace accidents per 1,000 directly contracted employees (excluding cases without lost workdays).
Note: Collection of statistics began in 2016.

Management Promotion Office, established in April 2020, playing a central role in improving healthsystems and policies in cooperation with the human resources division and the Health Insurance Society.

Health Support Initiatives in Japan

prevent serious disease
Medical interviews and advice to prevent mental and physical disorders among employees working
long hours
Consultations and guidance by occupational healthcare workers to address employees’ healthconcerns and encourage regular exercise

Hitachi Group Health and Safety Policy

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Environmental

SocialGovernance

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Hitachi Sustainability Report 2020

Human Capital

Proactive implementation of stress checks specified by law at all business sites—even those employing

Initiatives Addressing Mental Health at Hitachi

fewer than 50 employees, which are only required to make efforts toward compliance—to help
Occupational
physicians
andoccupational
healthcare
staff

prevent mental health issues and revitalize workplaces
Qualitative improvement of occupational healthcare activities and the human capital development ofoccupational healthcare workers through regular meetings, study groups, and training sessions

Self-careLine care(individual)(superior)

Human resources
division

attended by both occupational healthcare workers and human resources officers
Stress-check system specified in law

Absences

Working environment improvement
workshops, etc.

1.00
Preventive
management

0.65

0.24

0.24

0.26

0.24

0.25

2015

2016

2017

2018

2019

(while healthy)

0.50

0.00
Mentale-learning; “Thinking about
mental and physical health”
versions 1–3

Physical

Note: Percentage of employees taking sick leave for seven or more consecutive days, or formally taking leave (Number of employees taking
sick leave per month ÷ Number of employees per month × 100).

Addressing Mental Health

Activities

403-6
Hitachi has established measures addressing mental health to be taken by employees, workplace
managers, occupational healthcare workers, and human resources divisions, and is working to
spread basic mental health knowledge and understanding of ways to deal with stress, as well as to

Indicator
management(while mentally
unhealthy)

Mental healthconsultations
during medical
exams

Regularconsultations(at beginning of andduring absences
and leave)

Support for
returning toworkManagement toprevent recurrence

Programs
supporting
return to work

reinforce the ability of those in each position to respond to these issues.
Repetition
management

Health exams of various types

Workplacemanagement

Workplacemanagement

Workplacemanagement
guidance

Promotion of various
types of healthexams

Healthconsultations

Condition
management(from decision to return
to after returning
to work)

Health consultations

Promotion oftraining andeducation

EAP*1 corporate
diagnosis
Line care training
360FBP*2

Handbooks for managers
e-learning for managers

0.64

0.56

Leave system

Trial return system

Regularconsultations

Regularconsultations(during repetition
after return to work)*1 EAP: Employee Assistance Program.
*2 360FBP: 360-degree Feedback Program.

Handbooks for employees taking
leave

0.60

0.52

Stress coping seminars
EAP*1 consultations and otherconsulting services

Healthimprovement
activities(Seminars andhealth guidance
fromoccupational
physicians)

Managementof thoseworking
extensive
overtime

Regularconsultations

Managementof employees
on leave

Consideration of tasks upon
returnRegular consultations
Follow-up status checks after
return to work

Programs
supporting
return to
work

Collaboration to support return to work

Guidance to external facilities
supporting return to work

Reduction oflong working
hours

Regularconsultations

Training for human resources officers

Mental health education

(%)

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Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Encouraging Employees to Receive Medical Exams and Vaccinations

Medical Exam and Screening Attendance Rates
Activities
(%)

403-6

100.0

80.9

In Japan, Hitachi has established a system offering financial support for medical exams by the Health

80.0

Insurance Society, and encourages employees aged 35 and over in particular to receive the general
physical and other exams specified in law, as well as targeted screening based on their age, in order

40.0

Furthermore, as a response to metabolic syndrome, in addition to special health guidance madecompulsory for the Health Insurance Society, we actively promote policies to prevent and control

0

conditions such as diabetes, cerebral strokes, and myocardial infarctions. Additionally, each year on

93.2

80.7
78.5

80.6
79.3

50.0

51.1

53.2

33.2

35.3

35.6

2015

2016

2017

47.0

Stomach cancer screening*4

Breast cancer screening*2

90.6

81.3

78.4
78.1

78.9

General physical exam*1

May 31, World No Tobacco Day, we run an anti-smoking campaign aimed at employees.
Society has established financial support frameworks for vaccinations against conditions such as

79.0

81.4

60.0

to promote early diagnosis and treatment.

To prevent employees from infectious diseases at overseas destinations, the Health Insurance

81.5

92.9

93.2

91.0

76.4
74.5
72.4
58.2

37.1

41.5

2018

2019

(FY)

Uterine cancer screening*3

Intestinal cancer screening*4

Lung cancer screening*5*1 Men and women aged 35 and over. *2 Women aged 30 and over. *3 Women aged 25 and over. *4 Men and women aged 30 and over.
*5 In FY 2016–2017, men and women aged 50 and over; from FY 2018, changed to men and women aged 35 and over.

hepatitis A, tetanus, and cholera, as well as flu vaccinations for employees and their families toprevent the flu spreading in workplaces. As an initiative to prevent employees falling ill or sufferingfrom serious conditions, we encourage vaccination in the early stage of each illness’s spread. These
programs are used by around 120,000 employees and family members each year.

Health Promotion Initiatives for Employees and Their Families

Activities

403-6

Achievements in FY 2019

In fiscal 2019, as part of our efforts in Japan to encourage male employees of the generation

To encourage healthy lifestyles among employees and their families, the Hitachi Health Insurance

not covered by a national MR vaccination program as children to receive an antibody test forSociety has established a portal site for individuals entitled “My Health Web.”and vaccination against measles and rubella—both of which are now free of charge—we
introduced an incentive point system in cooperation with the Health Insurance Society.

By providing information on health exam results and a system of incentive points allowing
employees to receive rewards for entering health-related activities, the site raises health awareness,helps employees understand the state of their own health, and offers a range of support for adopting
a healthier lifestyle.
Achievements in FY 2019

Our health promotion initiatives for fiscal 2019 included an Autumn Walking Campaign using thepedometer function on “My Health Web.” The program ran for around three months and hadsome 21,000 participants. A ranking chart for participants was presented on the website,
encouraging them to compete over daily results as they improved their health.

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Hitachi Sustainability Report 2020

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Human Capital

Promoting Collabo-Health*1

Activities

403-6
As well as carrying out individual health improvement initiatives according to their own uniquecharacteristics, Group companies in Japan strive to maintain and improve the health of employees by

Support for Employees During the COVID-19 Pandemic
Hitachi is taking measures to prevent the spread of COVID-19 and ensure the health and safetyof employees and their families globally across the Group.
Hitachi, Ltd. adopted a sweeping work-from-home policy in March 2020 and maintained ataking full advantage of the services offered by the Health Insurance Society. Initiatives are evaluated on

telecommuting rate of 80% during Japan’s state of emergency. In addition to establishingan annual basis, with recognition of the most accomplished companies and business sites within thein-house procedures to deal with infections among employees, we adhere to government

Group heightening the motivation among business owners and employees to pursue such activities.

guidelines in preventing the spread of infection. Should an employee test positive, we instruct*1 Collabo-Health: A concept involving insurers like the Health Insurance Society proactively working with business owners, with a clear division oflabor and a good working environment, to effectively and efficiently improve the health of insured persons (employees and their families), including
with preventive strategies.

everyone in the same workplace to stay at home and monitor their health, and we also disinfectHitachi Group’s General Policies in Response to
COVID-19https://www.hitachi.com/information/
ImportantNotices/management.html#section2Countermeasures Against the COVID-19 Pandemic[Global Human Capital Management]
Hitachi Group’s COVID-19-Related Support Efforts[Social Contribution Activities]
Responding to COVID-19[Business Continuation Initiatives]

the workplace.
We are expanding our efforts to address a broad array of mental and physical health concerns
among long-term telecommuters. For example, we provide remote healthcare counseling, offer
tips on staying healthy while working from home, support foreign employees seeking medical

Health and Safety Considerations for Nuclear Businesses
403-7
Since 2008, Hitachi has been working with the world’s leading nuclear power plant vendors todevelop voluntary, private principles of conduct covering the exportation of nuclear power plants
and reactors. The “Nuclear Power Plant and Reactor Exporters’ Principles of Conduct” wereformally revealed on September 15, 2011. They were adopted by all involved in its development,
and we have also indicated our adherence to them.
Regarding our employees and other persons employed at nuclear sites under the HitachiGroup umbrella, we perform exposure management based on our internal management

services in Japan, and ensure the human rights of infected employees.
Helping Employees in Japan Stay Healthy
Initiatives

Details

Remote counselingby occupational
physiciansStart of remote counseling by occupational physicians and nurses as an early-response
measure to address the mental and physical health concerns of long-term
telecommuters

Tips on staying
healthy whileworking from home

Launch of a website providing information on ways to keep mentally and physically fit—such as stress-coping strategies and simple, at-home exercises—and links to career-,family-health, and other counseling services

Inbound Medical
Assistance Services

A 24-hour, year-round call center offering medical assistance in 16 languages for foreign
employees and their families in Japan, including referrals and appointments to medical
facilities and arrangements for emergency transport and hospitalization

Looking after
infected employees

Messages delivered by the CEOs of business units to give reassurance to infectedindividuals and raise awareness among their colleagues

systems, and perform evaluation of radiation damage (dose management).
For health management in particular, our management indicators for radiation exposure arestricter than those set by Japan’s Ministry of Health, Labor, and Welfare. We monitor physicaland mental health along with exposure dose even for employees of partner companies, and an
occupational physician from Hitachi visits sites to perform examinations and offer health advice.

Nuclear Power Plant and Reactor Exporters’
Principles of Conduct
https://www.hitachi-hgne.co.jp/en/index.html

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Freedom of Association and Collective Bargaining
Respecting the Rights of Employees

Policy102-41

403-4

Notification of Work-related Transfers and Reassignments

407-1

System402-1

The Hitachi Group Codes of Conduct call for the upholding of the fundamental rights of employees in

The collective agreement between Hitachi, Ltd. and the Hitachi Workers Union states that any

line with the principles of the United Nations Global Compact.

transfer or reassignment of an employee for work-related reasons should adequately take into

In concrete terms, in Japan, where labor unions are recognized, we espouse the threeconsideration the situation of the employee, as well as requiring the company to promptly inform thefundamental rights of labor unions (to organize, to bargain collectively, and to act collectively) as

Hitachi Workers Union of the decision. More specifically, in cases of large-scale transfers or

seen in the collective agreement between the CEO of Hitachi, Ltd. and the representative of thereassignments, the company will consult with the labor union regarding the basic issues involved.

Hitachi Workers Union. The union has 23,847 members out of 37,701 employees as of October 31,
2019.

Cooperating to Improve Health and Safety
Respecting the Rights of Employees

System407-1
The relationship between employees and management at Hitachi, Ltd. and Group companies in

SystemHitachi, Ltd. and the Hitachi Workers Union are dedicated to improving health and safety levels
through employee-management cooperation. This includes signing a collective agreement on the
promotion of, among other things, health and safety mechanisms, a health and safety committee,
education and training programs, and health checks for employees.

Japan is stable with healthy ongoing dialogue. At Hitachi, Ltd., the Central Management Council,

The committee works to ensure a healthy and safe work environment through initiatives thatthe Business Units Management Council, and the Business Sites Management Council work to

include planning and tracking health and safety activities each year, reviewing measures to prevent

enhance mutual communication between employees and management, contributing to smoothindustrial accidents, and sharing information on whether employees have received their annual healthmanagement and business development, and improving working conditions for union members.

check-ups.

We also hold Hitachi Group management meetings to share information and exchange views andopinions on Group business conditions among the Federation of Hitachi Group Workers Unions(FHGWU). Group companies outside Japan also actively pursue dialogue with individual labor
unions and their representatives in accordance with the laws and regulations in each country andregion to deepen mutual understanding of employee working conditions and treatment as well as
business conditions.

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Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

103-2

H u ma n R ig hts
Key SDGs

Why

it matters

Hitachi understands that respecting human rights in business activities is not only

respect for human rights not just within Hitachi itself but for everyone in our supply

essential for corporate sustainable development, it is also a responsibility that all

chain or otherwise involved with our business activities, products, or services. As

companies must fulfill. In 2013, to clarify corporate responsibility with respect towell as implementing global training and awareness-raising activities andhuman rights, we established the Hitachi Group Human Rights Policy based on

establishing grievance mechanisms to address employee concerns throughout the

Hitachi’s Corporate Credo and Group Vision and designating it one of the highest

Hitachi Group, in recent years we have focused on human rights due diligencecodes governing our internal regulations.

(HRDD), working to construct frameworks and systems for recognizing andUnder the Hitachi Group Human Rights Policy, we pursue initiatives to ensure

What
we are doing
Respect for humanrights throughout
the value chain

96

reducing human rights risks.

Core initiatives

Goals and KPIs

Achievements in FY 2019

Ensure awareness of Hitachi Group
Human Rights Policy
Raise human rights awareness among
executives and employees
Recognize human rights risks andconstruct frameworks and systems for
reducing them through HRDD
Raise human rights awareness amongsuppliers, including issues around childlabor and forced labor

Training program on respect for humanrights: Attendance by each employee atleast once every three years (equivalent toa yearly participation rate of 33%)

Consolidated general consultation and reporting systems(contact points) for harassment and human rights issues into
Hitachi Global Compliance Hotline
Distributed human rights message from President and CEO
Toshiaki Higashihara on Human Rights Day
Revised e-learning program on business and human rights
Conducted human rights training session for executives titled“Current Perspective About AI Ethics”
Identified human rights risks to be addressed by entire Group
Conducted CSR procurement seminars for suppliers inSoutheast Asia

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Environmental

SocialGovernance

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Hitachi Sustainability Report 2020

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Human Capital

Respect for Human Rights Throughout the Value Chain
Hitachi Group Human Rights Policy

PolicyFramework for Human Rights

Framework

406-1

Hitachi believes that respecting human rights is its responsibility as a global company and indispensable

410-1

412-1

412-3

in conducting business. To this end, in May 2013 we formulated the Hitachi Group Human Rights Policy.

Hitachi, Ltd. has a Corporate Human Rights Promotion Committee to gauge the impact of business

The Senior Executive Committee reviewed and approved this policy, designating it one of the highest

activities on human rights and to deliberate on mechanisms and policies for preventing human rights

codes governing our internal regulations. During the formulation of the policy, Hitachi held stakeholder

violations, thereby improving Group-wide human rights awareness. The executive officer in charge of

dialogues, inviting representatives from the European Commission, the International Labour Organization

human resources chairs this body, whose members include representatives from corporate divisions.

(ILO), NGOs, and external companies, as well as lawyers specializing in human rights issues, and the

Policies decided through these deliberations are shared with business unit and business site

opinions and suggestions of these attendees are reflected in the final policy. In the policy, we clarify ourcommittees, led by business unit presidents and division heads to prevent human rights violations.

understanding of human rights as being, at a minimum, those outlined in the International Bill of Human
Rights*1 and the ILO’s Declaration on Fundamental Principles and Rights at Work. This policy shapes
Hitachi’s approach to meeting the responsibility to respect human rights, including implementing humanrights due diligence*2 in line with the UN Guiding Principles on Business and Human Rights,*3 providing
appropriate education to employees, adhering to laws and regulations in all the regions and countries
where we operate, and seeking ways to honor the principles of international human rights when facedwith conflicts between internationally recognized human rights standards and national laws. In
accordance with the policy, we use opportunities such as our e-learning program on human rights andmessages from President and CEO Toshiaki Higashihara on Human Rights Day to continuously raise

Human Rights Awareness Initiatives Targeting
Suppliers and Procurement Personnel
Hitachi Group Codes of Conduct
http://www.hitachi.com/corporate/about/conduct/index.html
Hitachi Group Human Rights Policy
http://www.hitachi.com/sustainability/policy/pdf/
human_rights_policy.pdf
Details of dialogue with stakeholders during
formulation of Hitachi Group Human Rights Policy
https://www.hitachi.com/sustainability/
download/pdf/csr2013e.pdf#page=123

Hitachi, Ltd. Framework for Promoting Respect for Human Rights
Corporate Human Rights Promotion Committee
Chairperson

Executive officer in charge of human resources

Business Unit and Business Site Committee
Chairperson

Business unit presidents and division
heads

Members

Division managers

Vice-Chairperson Executive officer in charge of legal affairs andrisk management
Members

Personnel in charge of corporate divisions
such as procurement, human resources, andCSR, including executive officers in charge ofsales and sustainability promotion

awareness among all employees. The policy is also included in the Hitachi Group CSR Procurement
Guidelines for our suppliers, and we strive, through a range of activities, to promote understanding
among suppliers of our approach to human rights and ensure that they act in accordance with it.
*1 International Bill of Human Rights: Collective name for the Universal Declaration of Human Rights and International Covenants on Human Rights
adopted by the United Nations.
*2 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 of actions to address impacts, and communicate externally.
*3 Guiding Principles on Business and Human Rights: Included in the March 2011 “Report of the Special Representative of the Secretary-General on
the issue of human rights and transnational corporations and other business enterprises, John Ruggie” (A/HRC/17/31).

Establishing a Global Grievance Mechanism

SystemCompliance Reporting System102-17In April 2020, we consolidated the Hitachi Group’s internal reporting systems into the Hitachi Global
Compliance Hotline. We are planning to merge the general consultation and reporting systems(contact points) for harassment and human rights issues at the business sites of each business unit
and Group company into this hotline in fiscal 2020. These efforts will clarify who to contact to

Respect for the Rights of Children

discuss human rights issues, make it easier for employees and those working with us to access

Hitachi respects the rights of children as outlined in the United Nations Convention on the Rights ofthese services, and promote the Group-wide effort globally by establishing an environment, including

the Child and the Children’s Rights and Business Principles developed by the United Nations
Children’s Fund (UNICEF). We strive to eliminate child labor in the Group and its supply chains as
specified in the Hitachi Group Codes of Conduct. We have also set forth in other relevant internal
regulations our policy of respecting human rights, including the rights of children.

a grievance mechanism, that helps Hitachi grasp and identify violations of human rights.

Hitachi Group Codes of Conduct
Work-Life Management
Advertising Activities

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Human Capital

Raising Human Rights Awareness Among Executives and Employees

Employee Engagement412-2

Human Rights Due Diligence (HRDD) Initiatives

Activities

In our Hitachi Group Human Rights Policy, we pledged to develop mechanisms for and to continue

Hitachi conducts regular group training and seminars and uses videos to educate employees in eachthe implementation of human rights due diligence (HRDD). We are working to improve our businessbusiness site and Group company. The target is for each employee to attend these sessions at least

processes. For example, our CSR procurement guidelines reflect the results of HRDD risk

once every three years (equivalent to a yearly participation rate of 33%). In fiscal 2019, theassessments performed in our procurement divisions.

participation rate came to approximately 65% at Hitachi, Ltd. and around 60% among Group
companies in Japan. Through these and other trainings and activities to raise awareness, we arecommunicating to our employees the importance of respecting human rights in each of their roles.
Achievements in FY 2019

Achievements in FY 2019

In fiscal 2019, we analyzed and reassessed a wide variety of information, including the resultsof our HRDD to date; human rights issues specified in Hitachi’s codes and guidelines;
information, advice, and inquiries from non-governmental organizations, the media, andIn fiscal 2019, we revised the e-learning program on business and human rights offered to all Hitachi

experts; items on assessments of corporate efforts by international initiatives; and the results

employees around the world. The goal of the program is to deepen understanding of the definitionof self-checks by suppliers and Group companies. Taking these results into account, weof and international standards for human rights as well as corporate responsibility to respect them.

identified forced labor and migrant labor as human rights risks that the Hitachi Group as a

It helps improve understanding and shows how human rights relate to business activities bywhole should work to address. Forced labor and migrant labor are issues of high concern that

introducing case studies involving discrimination, forced labor, and human rights issues at suppliers.

are increasingly the subject of legislation around the world. From fiscal 2020 onward, we will

Executive officers from Hitachi, Ltd. also participate in annual officer training sessions onhuman rights. In fiscal 2019, Hiroshi Nakagawa, group director of the RIKEN Center for Advanced

carry out specific measures globally across the Group and explore the establishment of humanrights risks management systems at individual business sites.

Intelligence Project (AIP), gave a presentation on “Current Perspective About AI Ethics.” He spoke
about the impacts AI development has had on human rights as well as ethical guidelines for AI
published by the Institute of Electrical and Electronics Engineers (IEEE), the Organisation for
Economic Co-operation and Development (OECD), and the Cabinet Office of Japan.
In Japan, where a revised labor law designed to prevent power harassment took effect in June 2020,
we are raising awareness of the issue of harassment through seminars for executives and workplace
discussion sessions for all employees as well as trainings for different levels and employees transferred abroad.

Implementation Status of Activities to Raise Awareness of Human Rights
TargetDetails

Number of participants

All Hitachi Group
executives andemployees

Distributed a human rights message by President and CEO Toshiaki
Higashihara on Human Rights Day

251,085 executives andemployees

All Hitachi Group
executives andemployees

Implemented an e-learning program on business and human rights(completed by employees roughly once every three years; contents
revised in fiscal 2019; provided in 15 languages)

A total of more than 160,000
Group executives and employees
globally (as of March 2020)

Executive officers Attended a presentation on “Current Perspective About AI Ethics” by Hiroshi
34
Nakagawa, group director of the RIKEN Center for Advanced Intelligence Projectof Hitachi, Ltd.

Implementation Status of Human Rights Due Diligence
FY

Initiatives

2013

Launched HRDD pilot programs in specified business sites
Analyzed and evaluated human rights risks in six ASEAN countries

2014

Developed a document with guidelines for implementing HRDD in collaboration with NPO Shift2015

Initiated HRDD in procurement divisions; assessed and prioritized human rights risks that employees are likely
to confront in the supply chain and explored mitigation strategies

2016

Initiated HRDD for human resources divisions at Hitachi; assessed and prioritized human rights risks for
employees and explored mitigation strategies

2017

Incorporated results of HRDD in procurement divisions into revision of CSR procurement guidelines for
suppliers; revised checklist used in supplier CSR monitoring (self-checks)

2018

Assessed and prioritized human rights risks in some business units and Group companies and discussed
mid-term action plan2018

Implemented self-checks for about 100 Group companies in Southeast Asia using checklists for suppliers

2019

Analyzed and reassessed results of HRDD to date to determine human rights risks that Hitachi Group must
address as a whole

Hitachi Sustainability Report 202098

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Human Capital

Addressing the Risks of Child Labor and Forced Labor

Activities

408-1

409-1

Response to Technical Intern Training Program Issues

Activities

In 2018, the Organization for Technical Intern Training, a legal entity whose establishment was

The Hitachi Group Codes of Conduct clearly express Hitachi’s firm stance against the use of childapproved by competent ministers conducted on-site inspections at Hitachi, Ltd. and 10 Grouplabor or forced labor either in Group companies or along our supply chain. Recognizing the growing

companies. These inspections identified violations of the Act on Proper Technical Intern Training

risks of forced labor amid the ongoing globalization of business, Hitachi also developed an e-learning

and Protection of Technical Intern Trainees, and the relevant companies were provided with

program for all Group executives and employees on the subject of human rights. The program draws

recommendations for improvement regarding intern training. Additionally, in September 2019,

on specific case studies to convey the importance of preventing forced labor and human trafficking

Hitachi, Ltd. received an order for improvement from the Immigration Services Agency of Japan andproblems before they occur.

the Ministry of Health, Labor and Welfare regarding the construction of its systems for carrying out

Hitachi’s CSR procurement guidelines for suppliers also clearly forbid the use of child labor orproper technical intern training according to authorized plans. Companies that received suchforced labor. As part of our efforts to raise awareness all along the supply chain, we distributed theserecommendations or orders for improvement have already taken corrective measures. We haveguidelines to tier 1 suppliers and conducted CSR procurement seminars in China and Thailand.

taken further strict measures to ensure that no further violation will take place throughout the entire

Human Rights Awareness Initiatives Targeting Suppliers and Procurement Personnel
FY

TargetInitiatives

2016

Employees responsible for
procurement and humanresources in Southeast Asia

Held a four-part webinar*1 series led by speakers from NGOs and businesses
implementing advanced countermeasures2016

Suppliers in China

Held CSR procurement seminars to explain the Hitachi Group’s CSR
activities and respect for human rights

2017

Suppliers in Malaysia

Conducted on-site visits and interviews regarding the working and living
conditions of migrant laborers, who are considered at high risk of bonded
labor and other issues

2017

Suppliers in China

Held CSR procurement seminars to explain the SDGs and other recent
sustainability trends, as well as how environmental and labor issues,
including human rights, are linked to business risks

2018

European Group companies

Procurement personnel from European Group companies formed the
Responsible Supply Chain Working Group2018

Suppliers in China

Held CSR procurement seminars to explain Hitachi Group CSR policies andactivities as well as the severity of human rights risks

2019

European Group companies

Created a webinar titled “Implementing the UN Guiding Principles on
Business and Human Rights” for procurement personnel in the working
group mentioned above

2019

Suppliers in Thailand

Held CSR procurement seminars to explain forced labor by providing casestudies*1 Webinar: A portmanteau word combining “web” and “seminar,” used to refer to an interactive seminar held online.

Group, such as constructing Group-wide policies, guidelines, and check systems for technicalintern training. We continue to strive to carry out appropriate technical intern training in accordancewith relevant laws and the aims of the Technical Intern Training Program and with due consideration
for human rights on the basis of the Hitachi Group Human Rights Policy.

Responsible Procurement

99

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

103-2

Va l u e C h ain Mana g emen t
Key SDGs

Why

it matters

As business becomes more and more globalized, there is a growing possibility ofensure their awareness but also conduct CSR Monitoring (self-checks) and CSR audits

procurement risks in the supply chain creating management problems. As an

to minimize procurement risks. To address the conflict mineral issue, Hitachi

enterprise that engages in businesses activities in many regions around the world,

formulated the Hitachi Group Conflict Minerals Procurement Policy to promote

Hitachi strives to identify and mitigate these risks in advance as much as possible.

responsible procurement in line with international guidelines.

Hitachi emphasizes sustainability in the value chain, and suppliers are selected strictly

Furthermore, embracing the Hitachi Founding Spirit of “Harmony, Sincerity, andin accordance with the Hitachi Group Global Procurement Code. Additionally, in order

Pioneering Spirit,” we adhere to basics and ethics and put right and wrong before

to share our CSR procurement policies, we not only distribute the Hitachi Group CSR

profit and loss, with all employees sharing our policy of making quality and reliability

Procurement Guidelines to approximately 30,000 suppliers around the world andour top priority, thereby strengthening our quality assurance activities.

What
we are doing
Responsible
procurement

100

Core initiatives

Goals and KPIs

Achievements in FY 2019

Improve value chain competitivenessbased on partnerships with suppliers
Share procurement policies with suppliers
Implement CSR procurement
Hold CSR procurement seminars
Respond to conflict mineral issue

Conducting audits on suppliers with thesupport of external auditing organizations

Formulated the Hitachi Group Global Procurement Code
Conducted CSR audits at 19 suppliers
Held a CSR seminar for suppliers in Thailand, our first inSoutheast Asia

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Value Chain Management

What
we are doing

103-2

Core initiatives

Goals and KPIs

Achievements in FY 2019

Practice our policy of making quality andreliability our top priority
Adhere to basics and ethics, put right andwrong before profit and loss

Improving product reliability and customer
satisfaction

Strengthened organizational structure for quality assurance
Promoted quality assurance activities globally
Carried out incident prevention activities
Promoted product safety activities
Carried out technical law compliance activities
Conducted quality and reliability education

Improve CS by reflecting customers’
voices in our business
Provide comprehensive customer support
onlineImprove CS in home appliances
Promote advertising activities

Improvement of CS
Proper information disclosure on products
and services

Continuously implemented CS and advertising activities

Quality and productsafety management

Customersatisfaction (CS)101

Key SDGs

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

102

Value Chain Management

Responsible Procurement
Basic Procurement Guidelines

PolicyCSR/Green Procurement
http://www.hitachi.com/procurement/csr/index.
html

Number of Hitachi Group suppliers(as of December 2019):

102-9
In April 2019, Hitachi instituted the Hitachi Group Global Procurement Code. Based on theframework of our CSR and green procurement guidelines, this is our highest code for procurement

Approx.

30,000companies (66 countries)

activities. It calls on Group companies and suppliers to give due consideration to human rights, labor
practices, safety, ethics, quality, and security in the supply chain. All Group companies follow thecode, and we share global supply chain issues within the Group as we engage in procurement

Supply Chain Management Organizational Structure

activities. Suppliers, too, are selected strictly in accordance with the code’s provisions.

President

Procurement activities are also carried out according to the Hitachi Group CSR Procurement
Guidelines, which were revised based on the results of human rights due diligence performed by
procurement divisions and version 5.1 of the Responsible Business Alliance (RBA, formerly called
EICC) Code of Conduct. We plan to revise these guidelines regularly in the future to ensure that they

Development of CSR/green procurement andresponsible minerals procurement policy

Value Chain Integration Division

always reflect global demands regarding corporate supply chain management.
Procurement officeconferences

CSR Supply Chain Management Framework

Conferences for procurement managers

Framework

308-1

411-1

412-1

414-1

Group Procurement Strategy
Meeting

Given the global reach of Hitachi’s business, procurement risks throughout the supply chain are
growing. The Hitachi Group is working hard to identify and mitigate these risks beforehand as muchas possible.
CSR supply chain management, responsible minerals procurement, and green procurement policies
and initiatives are discussed within Hitachi’s Value Chain Integration Division, which reports directly to

Regional procurement
conferences(biannual)(China/Asia/India: biannual; Europe/
Americas: annual)Category Strategic Conference

BU Procurement Meetings(annual)(annual)Hitachi Group CSR/BCP
Procurement Committee(biannual)

the president of Hitachi, Ltd. Policies and initiatives adopted after this discussion are sharedthroughout the Group through the Hitachi Group CSR/BCP Procurement Committee, which includes
members from business units and CSR/BCP Procurement Committees at key Group companies.
To address the issue of chemical substances in products, we recommend management with
chemSHERPA*1-CI/AI, a common scheme that facilitates transmission of information on chemical
substances in products throughout the supply chain.
*1 chemSHERPA: A standard developed by the Japanese Ministry of Economy, Trade, and Industry to facilitate the management of chemical
substances in products by creating a shared transmission scheme throughout the supply chain. The chemSHERPA-CI standard is applicable tochemical substances contained in chemical products and chemSHERPA-AI to those contained in molded products.

Implementation by
all procurement members

Business unit procurement members

Major Group company
procurement members

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

103

Value Chain Management

Strengthening Global Partnerships

Framework

Activities

Sharing Procurement Policies with Suppliers

Activities

A key element of the Hitachi Group Vision is to improve the competitiveness of our value chain

To share procurement policies with the approximately 30,000 suppliers of Hitachi business units andbased on partnerships with our suppliers. In order to promote procurement based on local

Group companies, we are undertaking the following initiatives.

production for local consumption in line with our business policy of international expansion, we
have appointed procurement officers to oversee local procurement in China, the rest of Asia,

Distributing the Hitachi Group CSR Procurement Guidelines

Europe, and the Americas. These officers carry out activities such as CSR audits, CSR monitoring

To ensure that the guidelines are strictly followed, we make them available in Japanese, English,(self-checks), and CSR procurement seminars in their respective regions to strengthen ourChinese, and Thai and distribute them to approximately 30,000 suppliers around the world. We also

response to CSR-related risks.

request acknowledgment of suppliers’ understanding in writing.

Local procurement officers are also responsible for addressing environmental risks in China.
Through the Institute of Public and Environmental Affairs, an environmental NGO, the officers obtain

Distributing the Green Procurement Guidelines

information about polluting enterprises made public by China’s central and regional government

We distribute guidelines that define our basic position on procuring environmentally friendly parts andbodies. They use this information not only for screening businesses who have transactions withproducts as well as our requirements of suppliers. The guidelines set out requirements forthese enterprises but also for urging the enterprises themselves to make improvements.

environmental conservation, including building an environmental management system and acquiring

Rate of Local Procurement of Materials for Main Regions

certifications. There are also requirements for reducing the environmental impact of products
supplied to Hitachi, such as conserving resources and energy, recycling, managing chemical
substances in products, and fully disclosing related information. In fiscal 2019, we revised theseguidelines to ban four types of phthalates in line with the EU’s RoHS directive.

China

90

%

Rest of Asia

71%

EuropeAmericas

%

%

78

69

Hitachi Group CSR Procurement Guidelines
http://www.hitachi.com/procurement/csr/csr/
index.html

Hitachi Group Green Procurement Guidelines
http://www.hitachi.com/environment/library/pdf/
green_en.pdf

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

104

Value Chain Management

Implementing CSR Procurement

Violations in FY 2019
Activities

414-2
Hitachi engages in the following initiatives to promote and pursue CSR procurement based on its
CSR supply chain management philosophy.

CSR Monitoring (Self-Checks)
We ask key suppliers to conduct CSR Monitoring (self-checks) using checklists based on the
Hitachi Group CSR Procurement Guidelines. After collecting and analyzing the results, we provide
feedback for related business operations to suppliers, and then work with those involved in the

In fiscal 2019, audits were conducted of 12 Chinese suppliers. Though there were no significant
violations, the following minor problems were identified with some suppliers, who wereaccordingly asked to remedy the issues.
Failure to comply with legal working hours, including overtime: 8 suppliers
Failure to conduct staff training, including fire safety measures, evacuation drills, andemergency response to hazardous chemicals: 7 suppliers
Failure to renew permit for discharging pollutants: 1 supplier*1 Intertek Certification: With a presence in over 100 countries across the globe, the Intertek Group provides a wide array of certification services inevery industrial field.

operations to resolve issues related to the suppliers. We are also reinforcing our onboarding
procedures for new suppliers in Japan, including providing them with the guidelines and asking

Holding CSR Procurement Seminars

them to complete a checklist.

In order to share the philosophy of Hitachi among our suppliers, we provide suppliers directly with

Implementation of CSR Audits

information in a face-to-face format. Specifically, we hold a CSR Procurement Seminar for HitachiGroup partners in China.

Hitachi, Ltd. has been auditing the manufacturing bases of its and Group companies’ suppliers in
China and the rest of Asia. For these audits, we engaged external evaluators such as theexperienced CSR auditing company Intertek Certification.*1 Our audits are based on the international
SA8000 certification standard developed by Social Accountability International (SAI), an American
CSR evaluation institution. These audits investigate our workplace practices, and an RBA-recognizedauditor checks suppliers’ CSR initiatives from the perspectives of labor and human rights, health andsafety, the environment, and ethics. Suppliers needing improvement were requested to submit
improvement action plans, and Hitachi, Ltd., together with Group companies, will work with andadvise the suppliers until they complete the planned improvements.

Activities in 2019

In fiscal 2019, we held a CSR seminar for suppliers in Thailand attended by 77 participants from 59
companies. At the seminar, our first in Southeast Asia, we explained our Group-wide CSR
procurement initiatives and activities, CSR procurement activities in ASEAN, CSR-related laws andregulations in Thailand, and promotion of ethical employment. Feedback from participants included
comments such as “I was pleased to gain necessary information and knowledge about CSR,” “Theseminar taught me the importance of working together on CSR initiatives,” and “More companies will
participate if the next seminar like this is held in an industrial park.” We believe that the seminar helped
participants deepen their understanding of our efforts on CSR and green procurement activities.
A seminar was also scheduled for China in February 2020, but was cancelled due to the spread of
COVID-19.

CSR Procurement Activities Implementation Status
FY 2019
CSR monitoring (self-checks)

291

CSR audits

1959

Supplier seminars

Human Rights Due Diligence (HRDD) Initiatives

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

105

Value Chain Management

Increasing Green Purchasing of Office Supplies

Activities

Hitachi Group Conflict Minerals Procurement Policy
http://www.hitachi.com/procurement/csr/
initiative/__icsFiles/afieldfile/2018/06/07/Hitachi_Group_Conflict_Minerals_Procurement_Policy.pdf

Hitachi Group Conflict Minerals Procurement Policy
Procurement Policy

We are improving our green purchasing rate* by using a Group-wide online procurement system called
1

the E-sourcing Mall. This system has a range of environmentally conscious products and promotes
procurement by clearly labeling these products. In fiscal 2019, our green purchasing rate reached 84%.
*1 Green purchasing rate: The ratio, by monetary value, of products with the Eco Mark among all products purchased subject to the Act on
Promoting Green Procurement.

The policy for procurement departments in all Hitachi Group companies have always been andwill continue to be to ensure that procurement activities do not result or aid in conflicts within thesame region and that the armed groups described above do not benefit from those activities,
while continuing responsible procurement activities of minerals that are not related to theconflicts in the region based on local laws. Additionally, we will continue to support the practiceof due diligence based on the “OECD Due Diligence Guidance for Responsible Supply Chains ofMinerals from Conflict-Affected and High-Risk Areas” among companies. With these in mind,

Response to the Conflict Mineral Issue

PolicyFramework

Activities

Hitachi Group would like to request all our suppliers to utilize the Conflict Minerals Reporting
Template developed by RBA/GeSI to continue checking the country of origin and supply chain of

In fiscal 2013, Hitachi formulated its Conflict Minerals Procurement Policy, declaring its stance andminerals, and also to procure from the CFS (Conflict Free Smelter)*1 listed within.

commitments regarding conflict minerals. The policy was revised in fiscal 2016 to explicitly lay out*1 CFS (Conflict Free Smelter): A list of smelters who have been identified as “not being involved in the conflict within the same region” by
the Responsible Minerals Initiative (RMI), an organization that was founded by the RBA/GeSI, which is a group that aims to solve theconflict minerals problem.

measures to be implemented to ensure responsible procurement, including inquiries based oninternational guidelines, so that procurement of components incorporating conflict minerals does notbenefit armed groups in the Democratic Republic of the Congo (DRC) or adjoining countries.
Expanding the scope of corporate responsibilities for the procurement of minerals is a global trend,with companies increasingly expected to address the overall risks to human rights as well as conflict

Hitachi’s Conflict Minerals Response Framework
Individual BUs/Group companies

Headquarters

risks, and recognize responsibilities that extend beyond the countries adjoining Congo to a wider area

Raising awareness/
information provision

where risks are high. We are currently revising our Conflict Minerals Procurement Policy in this respect.

CSR divisionindividual business units and Hitachi Group companies work together to respond to investigation

CSR division

requests and inquiries relating to conflict minerals. We also strive to grasp developments in conflictmineral-related laws and regulations in each country and region and what global society demands
Each Hitachi business unit and Group company investigates its use of conflict minerals and reports theresults to customers when requested. Supply chain investigations are carried out with the cooperation of
the relevant entities’ sales, procurement, and CSR divisions. In addition, Hitachi, Ltd., a member of theJapan Electronics and Information Technology Industries Association (JEITA)’s Responsible Minerals Trade
Working Group, has been addressing the conflict minerals issues with other members of the association.
In 2018, Hitachi, Ltd. and six key Group companies (Hitachi Metals, Hitachi Chemicals, Hitachi HighTechnologies, Hitachi Construction Machinery, Hitachi Automotive Systems, and Hitachi Industrial
Equipment Systems) performed investigations and replied to a total of 1,874 requests from customers.

Coordination
Procurement
division

Grasp national
regulatory trends
Grasp global trends
Information
sharing

Supportof enterprises, working to share information within the Group.

SupportSales divisions, business groups, plants, procurement divisions, and other divisions within

Information
sharing

Customers
Sales divisions

Understandcustomer needs

Contacts in business groups/plants(technical divisions, etc.)

Checkspecifications

QA divisions/R&D divisions*2

Check forpresence of
3TG*1

Procurement divisions

Supplier
investigation

Coordination
Raising awareness/
information provision

CSR/BCP
Procurement
Committee

Raisingawareness of
supplier

Consultation

Grasp national
regulatory trends
Grasp global trends

Supplier A

Supplier B

Supplier C

Supply chain due diligence by individual BUs/Group companies*1 3TG: Collective term for four commonly used conflict minerals: tin, tantalum, tungsten, and gold.
*2 May differ depending on business unit or Group company.

Main Groups in Which Hitachi Participates

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

106

Value Chain Management

Quality and Product Safety Management
Regarding our services business, which continues to grow in scale, we have established a Service

Hitachi’s Approach to Quality Assurance Activities

Approachand Software Quality Enhancement Division and are sharing quality activities and current challenges,
while also enhancing the reliability of our embedded software as the field becomes more advanced

As stipulated in the Hitachi Group Codes of Conduct, we uphold a philosophy of providing products andand complex by applying our solutions division’s software development capabilities and expertise inservices that our customers can use with confidence by meeting their specifications and quality

strengthening reliability to our product divisions (embedded software development divisions).

requirements. The Quality Assurance Standards in our corporate regulations also set out our basic

Technical Law Compliance Activities

principles for quality assurance activities.
Embracing the Hitachi Founding Spirit of “Harmony, Sincerity, and Pioneering Spirit,” we adhere toDistribute product regulations worldwide, along with amendment trends and enforcement dates, amongbasics and ethics and put right and wrong before profits and losses, with all employees sharing our policy

Hitachi Group companies.

of prioritizing quality and reliability above all else. We are strengthening the organization and

Clarify product-specific laws (the product-specific laws map); continuously improve regulatory compliancemanagement, technology, and human capital aspects of our quality assurance activities in every

activities and processes based on our product compliance management system.

process—from planning and development to design, manufacturing, testing, delivery, and maintenance.
Furthermore, under our approach of making prevention the duty of quality assurance, we are working

Product Safety Activities

beyond reoccurrence prevention and striving toward preventing incidents from occurring in the first place.

Use Guide for Preparing User Instruction Manuals to improve risk communication with our customers.

Our unique practice of OCHIBO-HIROI, which means “gleaning” in English, involves analyzing andlearning from failure to further develop our technologies. When an incident occurs, we not only investigate
the technical causes but also thoroughly discuss the process, framework, and motivating factors leading
up to occurrence, along with ways to prevent reoccurrence, in order to improve our product reliability andcustomer satisfaction.

Make the safety of our customers’ life, health, and property the top priority in product development and verify
safety at every step, from development and production to sales and maintenance.
Conduct risk assessments from a wide perspective in collaboration with related business units and researchlaboratories.
Ensure safety by reducing risks through design (fundamental safety design), protective measures (safeguards),
and usage information (product manuals), in order of priority.

Framework for Quality Assurance and Quality Assurance Activities

Structure

416-1
To ensure full control over quality governance, Hitachi has separated the quality assurance divisionfrom the manufacturing division in every business unit and Group company, creating a framework for
activity in which its customers’ safety and trust are the top priorities. In order to strengthen thisframework further, we have made BU and Group company quality assurance divisions independentof business divisions and reinforced their report lines to the Quality Assurance Division at our head
office, establishing systems for close information sharing between the two sides. We are also
strengthening governance by giving greater authority to the Quality Assurance Division at ourhead office.

Global Quality Assurance Activities
Build Hitachi quality by applying our fundamental principles for quality assurance activities globally andpreparing Global Quality Assurance Standards, thereby understanding the situation regarding incidents
globally through a unified set of rules.

Hitachi Group Codes of Conduct
https://www.hitachi.com/corporate/about/conduct/index.html#aid8071856

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Value Chain Management

Handling Product Incidents

Structure

Quality and Reliability Education

Employee Engagement

When a product incident occurs, the division responsible acts swiftly to resolve the problem. In case

We conduct field-specific technical lectures for engineers engaged in monozukuri craftsmanship atof a severe incident, we report to government agencies in line with legal requirements and disclosea range of levels from basic to expert.

the incident information to customers on our website and through other communication channels.
At the same time, we promptly submit a status report to top management, ensuring fast andEach business unit also conducts specialized technical courses regarding manufacturing, quality
assurance, and maintenance at their quality assurance training centers.

appropriate action at all companies across the Group.
In case we determine that retroactive action is necessary, we notify customers via newspaper
advertising and websites in order to carry out the necessary repair or replacement program.

Response Flow in the Event of Product Incident

Incident
occurrence

Hitachi Group
Information gathering

Top management
CustomerliaisonCustomers,
retailers

ReportQA
Division
Confirmation of status

Emergency
response
authorities

Investigative committee
on serious productincidents

Investigation of cause

Response and reporting

Consumer Affairs
Agency, etc.

On-siteinvestigation

Product
investigation

Investigation ofdamage scope

Seriousproduct
incident

Product recall
Notification via web, media

Decision on
seriousness
Flow of information

ReportInformation sharing

Hitachi Sustainability Report 2020107

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Value Chain Management

Customer Satisfaction
Structure for Reflecting Customers’ Voices

Structure

Improving CS in Home Appliances

Activities

416-1

The sales and marketing divisions at Hitachi, Ltd. use customer input in developing management,
product, and solution strategies. We identify key customers who will help grow our business, then

The Home Appliances Customer Satisfaction Division provides services and solutions to improveassign an account manager to each one. These account managers serve as customers’ “portals”

quality of life for people of all ages and regions of residence. In Japan, these initiatives are carried out

into Hitachi Group companies in Japan, and the whole Group works with them to build closer

under the slogan, “360° Happiness: Encircling People and All Their Dreams for the Future.”

relations with customers, including the following initiatives for improving customer satisfaction (CS).

Our call center and website handle about 2.13 million customer inquiries, repair requests, andcomplaints about washing machines, refrigerators, and other appliances per year.*1 We have

Initiatives for Improving CS

undertaken a number of initiatives to better respond to inquiries and to reflect customer feedback in

Location

Outlineour monozukuri craftsmanship, including improving the contact success rate by using outsourcing;

Headquarters andbranches in Japan

creating a database of customer feedback, including consultations, inquiries, and complaints; andExecutive seminars

Engage in direct dialogue with customers to learn their expectations ofHitachi and opinions about product strategies, and use this knowledge tocreate sales activity proposals based on customer needs

Hitachi Social
Innovation Forum

Global

Accelerate collaborative creation with customers in Hitachi’s Social
Innovation Businessin Japan. Based on the answers, we improve services through CS training courses and other programs.

Create opportunities for researchers to speak directly with customers andcontribute to collaborative creation of new businesses based on customer
needs and Hitachi technology

opened mainly in Asia and the Middle and Near East. We are also working on unifying management

Initiative

Technology
R&D sites in Japan
Community program

enhancing our website’s FAQ section.
We also conduct semiannual customer service evaluation surveys at approximately 90 service centers
With the expansion of Hitachi’s markets, 12 sales offices and manufacturing sites have beenof operations outside Japan.
*1 Since fiscal 2013, technical inquiries from suppliers and parts orders have been excluded from these statistics.

Providing Customer Support Online

Activities

Customer Contact Cases, Call Completion Rate (12-Month Average)（%）(Cases per month)

Hitachi offers comprehensive global customer support on its website to respond to customer
inquiries, opinions, requests, and complaints. We also conduct training courses like our Web Inquiry
Responsiveness Improvement Course to improve our handling of these inquiries.
Customer Support Activities in Fiscal 2019
Inquiries to comprehensive customer support

4,017

Web Inquiry Responsiveness Improvement Course attendees

31 (858 in total since fiscal 2009)

100,000
80,000

82.3

74.8

76.4

36,19736,91982.3

80

60,00038,81760

36,40740,000

4,050

3,500

3,049

20,00032,14733,41935,768

2015

100

82.0

2016

2017

2,539

32,26433,868

2018

1,607

40

30,65720

2019White goods (electric home appliances and other products) (left scale)
Brown goods (electronic equipment) (left scale)
Call completion rate (right scale)

(FY)

0

108

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Value Chain Management

Results of Evaluation Survey for Customer Repair Services (CS)Advertising Activities

Policy(%)

Because Hitachi, Ltd. believes that advertising activities must show proper consideration for society

100
95

97.3

97.4

97.3

97.3

96.5

as a whole as well as complying with laws and regulations, it has established a set of Advertisement
Guidelines, which it follows and updates in line with social developments.

90
85

To ensure that these guidelines are strictly followed even at business locations outside Japan,

80

where languages and customs vary, an Advertising Material Checklist is included. All items on the
checklist are confirmed when creating advertisements.

75
0

2015

2016

2017

2018

2019

(FY)

Flow of Customer Service
Individual
business division
Repair request

Information on repair service

RepairContact
CenterRepairFeedback on improvements

Designdivision

Customers
Inquiry

Response

Response activity

Quality assurance
division

Customer
SupportCenter (norepair)low of information

Input indatabase

Feedback

Manufacturing
division
Information sharing

109

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Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

103-2

C om mu nity
Key SDGs

Why

it matters

110

Under the 2021 Mid-term Management Plan that aims to enhance social, economic,

technology, engineering, arts, and mathematics) education, which has gained attention

and environmental value through the Social Innovation Business, we are actively

as a tool for fostering human capital capable of using cutting-edge technologies topromoting social contribution activities that will help create social and environmental

enhance their creativity, expressivity, and problem-solving skills.

value and contribute to the sustainable development of both society and business.

As a global company, we also support volunteer activity among employees, because

Based on the belief that we, as a company aiming to resolve social issues throughit is essential for employees to actively volunteer their time to address local issues andinnovation, have an important mission to foster not only our human capital but also

needs if we are to build trust with local communities and grow together with them as athose who will contribute to society in the field of science and technology moregood corporate citizen.

broadly, our focus in recent years has been on activities related to STEAM (science,What
we are doing
Social contribution
activities

Core initiatives

Goals and KPIs

Achievements in FY 2019

Work with all employees and other diverse
stakeholders to develop next-generation
human capital and promoteempowerment in the areas of STEAM, theenvironment, and community engagement
Promote social contribution activities
through the Hitachi Global Foundation

Developing next-generation human capital
Forging good relationships with local
communities

Reviewed our policy on social contribution activities basedon the belief that we have an important mission to foster
human capital who will contribute to society in the field of
science and technology
Added a new grant category for humanities and social
sciences to the Kurata Grants

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

111

Community

Social Contribution Activities
Policy on Social Contribution Activities

PolicyFunding for Social Contribution Activities

Activities

413-1

In order to achieve the 2021 Mid-term Management Plan, Hitachi is committed to creating social

413-2

and environmental value through the Social Innovation Business. At the same time, we are actively

In fiscal 2019, Hitachi and the Hitachi Global Foundation provided over 1.8 billion yen in funding

promoting social contribution activities in regions where we operate, conscious of the fact thattoward social contribution activities worldwide, including initiatives to cultivate a younger generationthese activities will help create social and environmental value as well, contributing to theof talent and financial donations and other support for disaster-struck areas. Additionally, 88,134

sustainable development of both society and business. In fiscal 2019, we reviewed our policy on

Hitachi Group employees (around 30% of the total) participated in social contribution activities.

social contribution activities based on the belief that we, as a company aiming to resolve social

Hitachi spends around 2 billion yen annually on social contribution activities, but that amount has

issues through innovation, have an important mission to foster not only our human capital but also

been shrinking due to a decrease in the number of consolidated Group companies and revised data-

those who will contribute to society centered on the field of science and technology. We also

gathering measures. However, fiscal 2019 marked the largest number of employees participating inprovide our employees with opportunities to actively volunteer their time in response to the needssocial contribution activities since we started gathering this data in fiscal 2016.

and challenges of local communities, as well as supporting those communities through donations

Hitachi Group employees are contributing to society through community-based activities in various

and pro bono activities. We believe this is essential in forging good relationships with local

forms and areas, such as cleaning up around our business sites, visiting and donating goods to welfare

communities and growing together with them as a good corporate citizen.

facilities, and participating in charity events. Many employees make full use of their knowledge andskills acquired through work for their contribution to society, such as running workshops for

Policy on Social Contribution Activities
Nurturing People, Connecting to the Future

At Hitachi, our Corporate Mission, “to contribute to society through the development of superior,schoolchildren on a wide range of themes, from science and the environment to career education, andimplementing programs aimed to support non-profit organizations through pro bono activities.

Breakdown of Funding for Social Contribution Activities in FY 2019

original technology and products,” is the basis for everything we do. We believe it is our pursuit tocontribute to solving societal and environmental issues and help achieve the Sustainable
Development Goals (SDGs) by accelerating our Social Innovation Business, as well as undertaking
corporate citizenship activities. Central to this goal are people: people in our business, people in our

Other

30.2%

Human development(including 4.7% for disaster relief)

40.6%

local and global communities, and people who are our future. Ultimately, it is individuals that havethe ability to create innovation, bring social impact, and deliver social good to society.

1,833.46 million yen*1

Therefore, the Hitachi Group is committed to investing in, developing, nurturing, andempowering future generations, together with our employees and diverse stakeholders in thefollowing areas:
STEAM (science, technology, engineering, arts, and mathematics)
The environment
Community engagement

Community support

26.4%

Environment

2.8%*1 Japan: Hitachi, Ltd., 153 Group companies, and the Hitachi Global Foundation.
Outside Japan: 234 Group companies.
Funding includes monetary and in-kind donations, independently organized programs, participation or dispatch of employees, community use of facilities, and employee donations; excludes personnel costs incurred from the participation or dispatch of employees.

Social Contribution Activities
http://www.hitachi.com/sustainability/sc/

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020112

Community

Funding for Social Contribution Activities and Number of Participating Employees(million yen)
2,500

(people)2,057*1

2,000

1,888*4

1,833*5

53,749

1,500
1,000

88,134

2,195*3
1,953*2889

32,11654,629
841

948

776

100,000

0

740

2015

2016

2017

2018

capital as a priority area for social contribution activities. We are actively working on a wide range ofissues at global and local community levels and implementing programs to support development of

40,000next-generation leaders and science and engineering human capital.

278

2019

Hitachi promotes human development activities centered on fostering the next-generation of human

60,00020,000383

Activities

80,000527
500Specific Examples of Social Contribution Activities

(FY)

0

Hitachi, Ltd., the Hitachi Global Foundation (left scale)
Hitachi Group (left scale)
Of Hitachi Group funding, amount related to STEAM*6 (left scale)
Total employees participating*7 (right scale)*1 Japan: Hitachi, Ltd., 136 Group companies (including equity-method associates and joint ventures), and the Hitachi Global
Foundation.
Outside Japan: 244 companies.
*2 Japan: Hitachi, Ltd., 134 Group companies, and the Hitachi Global Foundation.
Outside Japan: 159 companies.
*3 Japan: Hitachi, Ltd., 141 Group companies, and the Hitachi Global Foundation.
Outside Japan: 196 companies.
*4 Japan: Hitachi, Ltd., 141 Group companies, and the Hitachi Global Foundation.
Outside Japan: 152 companies.
*5 Japan: Hitachi, Ltd., 153 Group companies, and the Hitachi Global Foundation.
Outside Japan: 234 companies.
*6 Collection of statistics began in fiscal 2017.
*7 Collection of statistics began in fiscal 2016.

The cultivation of IT talent in particular is a global challenge amid the rapid development of IT
using AI and big data. In recent years, we have therefore been focusing on activities related to
STEAM (science, technology, engineering, arts, and mathematics) education, which has gained
attention as a tool for fostering human capital capable of utilizing cutting-edge technologies toenhance their creativity, expressivity, and problem-solving skills.
Specific Examples of Social Contributions
Activity
STEM education to develop
engineers in the United Kingdom

STEAM
education

Environment

Community
support

BU/Group company
Hitachi RailURL
https://www.youtube.com/
watch?v=AIlxAs41l2s

Activities to support science
Hitachi High-Techeducation with electron microscopes

https://www.hitachi-hightech.com/global/
science-edu/

Programing workshop for elementary
Hitachi Consulting
schoolchildren

http://www.hitachi.com/sustainability/sc/
report/archives/0460.html

Science workshop on the theme ofwater

Hitachi, Ltd.

http://www.hitachi.com/sustainability/sc/
report/archives/0461.html

Hitachi scholarship program for the
Asian University for Women

Hitachi, Ltd.

—

Ecosystem preservation activities in the
Shikoku Hitachi Group
Hitachi IT Eco Experimental Village—

Sato-umi activities—

Shikoku Hitachi Group

Hitachi Construction
Support for environmental education
Machinery Southern
programs targeting young people
Africa—

Hitachi Young Leaders Initiative

Hitachi, Ltd., Hitachi Asia http://www.hitachi.com/sustainability/sc/
Ltd.
education/next-generation/

Skill development program for youth
employment

Hitachi India—

Participation in Walk for Millions

Hong Kong Hitachi
Group

—

Social Contribution Activities
http://www.hitachi.com/sustainability/sc/

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

113

Community

Specific Examples of Hitachi Global Foundation Activities

Contributing to Society Through the Hitachi Global Foundation

Activities

Inheriting the intention of Namihei Odaira, the founder of Hitachi, to contribute to society throughbusiness activities, we wholeheartedly embrace the importance of social contributions. Since 1967,
we have established five foundations, including one for supporting scientists and another forsupporting development of university lecturers in Southeast Asia. These formed the basis of today’s

PillarActivity

Promotion ofacademic
research,science andtechnology

Kurata Grants

Program supporting researchers who engage, in pursuit of solutions to social
challenges, in creative and pioneering research in the natural sciences andengineering, or in unravelling the complex challenges faced by advanced technologicalsocieties and exploring the underlying philosophical and historical elements throughresearch in the humanities and social sciences
Total number of grants awarded as of end of fiscal 2019: 1,429

Hitachi Future
Innovator Program

Program promoting the development of science and engineering human capital
aimed at Japanese schoolchildren in the upper grades of elementary school, aiming
to cultivate personality traits (creativity, curiosity, independence, and challenging
spirit) and abilities (problem finding and solving ability) required for future humanresources in science and technology, in order to create innovators who will take aleading role in resolving social issues
Total number of schools and students participating as of end of fiscal 2019: 10
schools, 737 students

Pioneer Talk
interviews in website
My Tomorrow

Program supporting science and engineering education for women through raisinginterest in science and engineering careers among female junior high and highschool students

Hitachi Global Foundation, which was established in 2015 through a merger of the existing fivefoundations. In accordance with Odaira’s aspirations, the Hitachi Global Foundation conducts social
contribution activities centered on the three pillars of “promotion of academic research, science andtechnology,” “human development,” and “building multicultural symbiotic and diverse societies”
based on the recognition of current social issues.

Humandevelopment

Achievements in FY 2019

A new grant category of humanities and social sciences was added to the Kurata Grants, a
research fund established originally for the advancement of natural sciences and engineering, tosupport researchers exploring issues faced by our advanced scientific and technologicalsociety today.

Building
multicultural
symbiotic
and diverse
societies

Details

The Hitachi Global Foundation)
https://www.hitachi-zaidan.org/global/index.html

Program urging a new understanding among everyday citizens of the importance ofSymposiums to build constructing “multicultural symbiotic and diverse societies,” defined as active, diverse,
multicultural symbiotic and inclusive societies that are lively and unified and where diverse viewpoints andand diverse societies values are mutually accepted across differences in attributes like gender, nationality,
age, abled or disabled status, and sexual orientation

Hitachi Group’s COVID-19-Related Support Efforts
Initiative

Details

Support for businessownersProvided US $1 million to support business owners impacted by COVID-19 through loans by
the nonprofit organization Kiva

Support for infectious
disease research

To support research into the kind of pioneering, practical medical technology that cancontribute to resolving the new social issues of the pandemic from Hitachi’s unique global
perspective, as well as the new social systems this entails, made the decision to donate 100
million JPY to the Hitachi Global Foundation and solicit further contributions from Hitachi’s
executive officers, corporate officers, and employees

Donations for medical
Provided medical supplies and equipment free of charge, including medical masks, face
professionals (funds and shields, and computed tomography (CT) equipment, and also made financial donations
supplies)

How Hitachi is responding to COVID-19
http://www.hitachi.com/information/
ImportantNotices/index.html
Countermeasures Against the COVID-19 Pandemic[Global Human Capital Management]
Support for Employees During the COVID-19
Pandemic[Occupational Health and Safety]
Responding to COVID-19[Business Continuation Initiatives]

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

S oc i a l D a ta

Innovation Management
Research and Development
R&D Expenditure
Reporting Boundary

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

R&D expenditure (billions of yen)

Hitachi Group

333.7

323.9

332.9

323.1

293.7

R&D expenditure as % of revenue

Hitachi Group

3.3

3.5

3.6

3.4

3.4

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

—

—

—

226

306

Top-Class Digital Talent in the AI Field
Reporting Boundary
Top-class AI digital talent
Notes: Disclosure began in fiscal 2018.

Hitachi Group114

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Human Capital
102-7

Employee Data

Number of employees

Number of employees

Average age*2

Average service (years)*1

Turnover ratio (%)*1*3

401-3

403-9

403-10

Reporting Boundary

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019335,244

303,887

307,275

295,941

301,056

Male*1

217,707

195,645

199,193

196,221

199,603

Female*1

47,67642,46041,87043,58145,359Japan

187,936

169,744

168,086

162,083

162,100

Asia

95,496

86,64988,61685,01386,787

North America

21,026

20,071

21,884

20,98522,034

Europe19,984

14,80816,517

17,074

17,850

Other areas

10,802

12,615

12,172

10,786

12,28537,35335,631

34,92533,49031,442

Male

31,53629,921

29,22027,82825,628

Female

5,817

5,710

5,705

5,662

5,814

41.1

41.4

41.8

42.1

42.4

Male

41.6

41.9

42.3

42.6

43.0

Female

38.2

38.7

39.2

39.5

40.1

14.4

15.0

14.9

15.1

15.0

15.2

15.8

15.4

15.8

15.7

Hitachi, Ltd.

Hitachi, Ltd.

Hitachi Group
Female

11.0

11.6

12.6

11.8

11.8

Japan

17.6

18.4

18.0

18.8

18.8

Asia

6.7

7.2

7.9

7.9

7.7

North America

8.2

8.4

8.7

7.1

7.2

Europe

6.5

7.9

8.4

7.6

8.3

Other areas

6.8

4.5

7.3

6.4

7.6

15.6

17.5

17.8

18.0

17.9

Male

15.9

17.9

18.3

18.5

18.5

Female

13.8

15.2

15.5

15.6

15.6

4.2

5.3

5.5

6.3

5.2

3.9

4.7

5.0

5.8

4.8

Hitachi, Ltd.

Hitachi Group
Male

Turnover ratio (%)*3

401-1

Hitachi GroupMale

Average service (years)

102-8

Hitachi, Ltd.

Female

5.6

7.8

7.8

8.4

7.2

Japan

2.4

2.3

2.1

2.2

2.5

Outside Japan

9.0

12.9

13.4

15.4

10.9

1.3

1.5

1.5

1.6

1.7

*1 Hitachi Group figures exclude approximately 40,000 manufacturing workers.
*2 Beginning in fiscal 2019, the scope of reporting shifted from full-time, regular employees to all employees across the organization; figures for previous years have been adjusted to match this new scope.
*3 Figures include only voluntary resignations.

115

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Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Global Human Capital Management
Approval Rating in Global Employee Survey
Reporting Boundary

FY 2015

FY 2016

FY 2017

FY 2018

Engagement indicator (%)

Hitachi Group

56

58

58

60

60

Overall (%)

Hitachi Group

58

60

61

60

61

FY 2019

Note: Questions change slightly each year. Above figures not adjusted for change in questions. Comparing fiscal 2019 results with previous years for unchanged questions only, overall approval has improved for five straight years.

Talent Development
Number of Participants of Global Management Training Programs
Reporting Boundary
Hitachi GroupFY 2015

FY 2016

FY 2017

FY 2018

FY 2019

3,362

3,530

3,821

3,844

4,063

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

—

—

—

—

30,000FY 2015

FY 2016

FY 2017

FY 2018

FY 2019——700

Approx. 1,000

Approx. 2,000

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019——

118,500*1

127,800*2

128,000*3

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

674

382

378

392

320

Digital Talent HeadcountReporting Boundary
Hitachi Group
Note: Disclosure began in fiscal 2019.

Number of Data Scientists
Reporting Boundary
Hitachi Group
Note: Disclosure began in 2018.

Average Amount Invested in Education per Employee
Reporting Boundary(yen)

Hitachi Group companies in Japan*1 Hitachi, Ltd. and 14 major Group companies in Japan.
*2 Hitachi, Ltd. and 13 major Group companies in Japan.
*3 Hitachi, Ltd. and 12 major Group companies in Japan.
Note: Disclosure began in fiscal 2017.

Number of Young Employees Participating in Training Outside Japan
Reporting Boundary
Hitachi Group companies in Japan

116

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Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Diversity and Inclusion
Reporting Boundary
Ratio of female employees (%)*1

Hitachi GroupFY 2015

FY 2016

FY 2017

FY 2018

FY 2019

18.5

18.3

18.2

18.8

19.4

Ratio of female employees (%)

Hitachi, Ltd.

16.5

16.8

17.2

17.8

19.0

Ratio (number) of female managers*1*2*3

Hitachi Group

6.5 (2,688)

6.7 (2,562)

7.3 (3,325)

8.3 (3,975)

8.9 (4,302)

Ratio (number) of female assistantmanagers*1*3*4

Hitachi Group

—

—

—

16.6 (14,909)

17.8 (18,028)

Ratio (number) of female managers* *3 5

Hitachi, Ltd.

4.0 (474)

4.1 (509)

4.2 (577)

4.8 (635)

5.5 (700)

General manager or above

3.2 (104)

3.3 (113)

3.2 (128)

3.4 (135)

3.9 (147)

Section manager

4.3 (370)

4.4 (396)

4.6 (449)

5.3 (500)

6.2 (553)

100 : 103

100 : 104

Basic salary ratio of female to male managers*6 Hitachi, Ltd.

——

100 : 102

Total individual compensation ratio of female tomale managers*6

Hitachi, Ltd.

——

100 : 104

100 : 105

100 : 106

Ratio of new female employees hired (%)*1

Hitachi Group

24.4

24.2

22.1

26.7

26.3

Ratio of new female graduates hired (%)*7

Japan

18.4

18.8

19.4

23.1

23.0

Asia

30.4

30.4

24.5

28.2

28.5

North America

33.0

22.0

26.2

32.8

29.7

Europe

29.0

20.5

19.6

23.8

22.9

Other areas

12.9

29.2

22.8

27.3

28.9

22.8

26.3

26.6

24.2

25.3

Hitachi, Ltd.
Technical

17.3

20.8

17.2

17.9

17.8

Administrative

45.5

42.1

53.8

51.6

48.9

*1 Hitachi Group figures exclude approximately 40,000 manufacturing workers.
*2 Beginning in fiscal 2019, the scope of reporting shifted from full-time, regular female managers, excluding those dispatched to non-Group companies, to all female managers including those dispatched from Hitachi, Ltd. to other companies and those accepted from other companies; figures for previous
years have been adjusted to match this new scope.
*3 Rising numbers of female managers and female assistant managers in part reflect improved coverage of our human capital databases.
*4 Disclosure began in fiscal 2018.
*5 Since fiscal 2017, “Female managers” has included managerial employees dispatched from Hitachi, Ltd. to other companies and those accepted from other companies by Hitachi, Ltd. Earlier figures include regular managerial employees dispatched to other companies but exclude those accepted fromother companies.
*6 Benefits for men and women are identical. Differences between male and female salary and compensation are due to age distribution, grade distribution, etc. Disclosure began in fiscal 2017.
*7 Graduates from universities or colleges (including postgraduate schools and technical colleges).

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Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Reporting Boundary
Number of employees taking maternity/
paternity leave

Hitachi, Ltd.

Return rates after maternity/paternity andchild-care leave *1

Hitachi, Ltd.

Retention rates after maternity/paternity
and child-care leave *1

Hitachi, Ltd.

Number of employees using shorter
working hours for child care

Hitachi, Ltd.

Number of employees taking
nursing-care leave

Hitachi, Ltd.

Number of employees using shorter
working hours for nursing care

Hitachi, Ltd.

Paid leave

Hitachi, Ltd.

Average overtime hours/month

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Male

307

352

426

464

445

Female

524

664

724

720

680

Male

—

97.1

98.5

97.4

97.4

Female

—

96.7

100.0

94.3

100

Male

—

98.6

98.0

99.4

95.5

Female

—

100.0

96.6

90.9

84.8

Male

3

2

2

5

9

Female

668

822

887

893

866

Male

9

8

14

9

10

Female

8

7

7

9

11

Male

3

3

3

2

4

Female

9

9

12

11

6

Average number of days

15.6

16.3

17.2

18.7

18.8

Ratio (%)

65.3

68.1

72.0

78.3

78.7

11.9

12.8

10.9

9.3

7.7

June 2017

June 2018

June 2019

June 2020

Hitachi, Ltd.

*1 Disclosure began in fiscal 2016.

Ratios for Female and Non-Japanese Executive and Corporate Officers (Hitachi, Ltd.)
Reporting Boundary
Number of female executive and corporate
officers

Hitachi, Ltd.

2

2

4

5

Ratio of female executive and corporate
officers (%)

Hitachi, Ltd.

2.4

2.6

5.0

7.1

Number of non-Japanese executive andcorporate officers

Hitachi, Ltd.

3

5

7

6

Ratio of non-Japanese executive andcorporate officers (%)

Hitachi, Ltd.

3.7

6.4

8.8

8.6

Note: Disclosure began in 2017, when initiatives for increasing diversity among executive and corporate officers started.

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Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Ratios for Male/Female and Japanese/Non-Japanese Directors (Hitachi, Ltd.)
Reporting Boundary

June 2016

June 2017

June 2018

June 2019

June 2020

Male

Hitachi, Ltd.

Number

11

11

10

9

11

Ratio (%)

84.6

84.6

83.3

81.8

84.6

FemaleHitachi, Ltd.

Number

2

2

2

2

2

Ratio (%)

15.4

15.4

16.7

18.2

15.4

Japanese

Hitachi, Ltd.

Number

8

8

8

7

7

Ratio (%)

61.5

61.5

66.7

63.6

53.8

Non-Japanese

Hitachi, Ltd.

Number

5

5

4

4

6

Ratio (%)

38.5

38.5

33.3

36.4

46.2

13

13

12

11

13

Total

Employment of People with Disabilities and Employment Ratio (Hitachi, Ltd.*1)
Reporting Boundary

June 2016

June 2017

June 2018

June 2019

June 2020

Employment of people with disabilities

Hitachi Group companies in Japan *1

1,370.5

1,437

1,848

1,899

2,403

Employment ratio (%)

Hitachi Group companies in Japan*1

2.11

2.15

2.23

2.26

2.33

2015

2016

2017

2018

2019

4

3

5

0

4

*1 Includes special subsidiaries and related Group companies. (Two special subsidiaries and 17 related Group companies in fiscal 2020.)

Occupational Health and Safety
Reporting Boundary
Number of fatal accidents

Hitachi Group

Occupational accident severity rate *1

Hitachi Group companies in Japan *1

0.07

0.18

0.17

0.11

0.03

Occupational accident frequency rate*1

Hitachi Group companies in Japan *1

0.22

0.18

0.25

0.20

0.17

Notes: • January to December each year.
• Work-related accidents are defined as those involving fatality or work-time loss of one day or more.
*1 Hitachi Group figures for Japan, including Hitachi, Ltd., are for 240 Group companies in 2015; for 200 Group companies in 2016; for 202 Group companies in 2017; for 188 Group companies in 2018; and for 169 Group companies in 2019.

119Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Hitachi Group’s Global Safety Figures (Occurrence Rate)*1
North America

Reporting Boundary

2016

2017

2018

2019

Hitachi Group

27.65

24.33

27.96

20.76

Central and South America

Hitachi Group

2.33

1.62

0.44

0.57

EuropeHitachi Group

10.70

10.82

6.08

4.78

India

Hitachi Group

2.07

1.44

1.44

1.63

China

Hitachi Group

1.59

1.53

1.46

1.17

Asia (excluding India, China, and Japan)

Hitachi Group

5.43

4.41

3.34

2.63

Oceania

Hitachi Group

39.07

24.41

21.94

29.07

Africa

Hitachi Group

17.26

9.93

11.76

9.72

Overseas total

Hitachi Group

7.76

7.42

7.43

5.78

Japan

Hitachi Group

1.57

1.85

1.64

1.53

3.95

4.22

4.20

3.45

Global total*1 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.
Note: • Collection of statistics began in 2016.

• January to December each year.

Absences
Reporting Boundary

2015

2016

2017

2018

2019

Mental (%)

Hitachi, Ltd.

0.52

0.56

0.60

0.64

0.65

Physical (%)

Hitachi, Ltd.

0.24

0.24

0.26

0.24

0.25

Note: Percentage of employees taking sick leave for seven or more consecutive days, or formally taking leave (Number of employees taking sick leave per month ÷ Number of employees per month × 100).

Medical Exam and Screening Attendance Rates
FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

General physical exam*1 (%)

Reporting Boundary
Hitachi, Ltd.

78.9

78.1

78.5

79.3

72.4

Breast cancer screening* (%)

Hitachi, Ltd.

47.0

50.0

51.1

53.2

58.2

Uterine cancer screening*3 (%)

Hitachi, Ltd.

33.2

35.3

35.6

37.1

41.5

Stomach cancer screening* (%)

Hitachi, Ltd.

80.9

78.4

80.7

80.6

74.5

Intestinal cancer screening*4 (%)

Hitachi, Ltd.

81.5

79.0

81.4

81.3

76.4

Lung cancer screening* (%)

Hitachi, Ltd.

91.0

93.2

92.9

93.2

90.6

2

4

5

*1 Men and women aged 35 and over. *2 Women aged 30 and over. *3 Women aged 25 and over. *4 Men and women aged 30 and over.
*5 In fiscal 2016–fiscal 2017, men and women aged 50 and over; from fiscal 2018, changed to men and women aged 35 and over.

120

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Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Value Chain Management
Responsible Procurement
CSR Procurement Activities Implementation Status
Reporting Boundary

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

Total for specified period

CSR monitoring (self-checks)

Hitachi Group

218

316

131

345

291

1,801*1

CSR audits

Hitachi Group

20

20

18

24

19

149*2

Supplier seminars

Hitachi Group

12

29

65

126

59

291*3

*1 Total from fiscal 2011 to fiscal 2019.
*2 Total from fiscal 2012 to fiscal 2019.
*3 Total from fiscal 2015 to fiscal 2019.

Rate of Local Procurement of Materials for Main Regions
FY 2016

FY 2017

FY 2018

FY 2019

China (%)

Reporting Boundary
Hitachi Group

64

78

88

90

Europe (%)

Hitachi Group

83

70

81

78

Rest of Asia (%)

Hitachi Group

64

71

71

71

Americas (%)

Hitachi Group

69

57

66

69

Note: Collection of statistics began in 2016.

121

Contents

Introduction

Management

SocialEnvironmental

Governance

Assurance

Hitachi Sustainability Report 2020

Social Data

Community
Social Contribution Activities
Funding for Social Contribution Activities and Number of Participating Employees
Reporting Boundary

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

889

527

948

841

776

Hitachi Group

2,057*1

1,953*2

2,195*3

1,888*4

1,833*5

Of Hitachi Group funding, amountrelated to STEAM*6

Hitachi Group

—

—

740

383

278

Human development (%)

Hitachi Group

—

—

44.8

49.3

40.6

Environment (%)

Hitachi Group

—

—

2.9

2.0

2.8

Community support (%)

Hitachi Group

—

—

34.6

20.5

26.0

Other (number in parentheses:
disaster relief) (%)

Hitachi Group

——17.7 (9.7)

28.2 (6.9)

30.6 (4.7)

Hitachi Group—32,11653,74954,62988,134

Funding for social contribution
activities (million yen)

Breakdown of funding for social
contribution activities (%) *7

Hitachi, Ltd. and the Hitachi Global Foundation

Total employees participating*8*1 Japan: Hitachi, Ltd., 136 Group companies (including equity-method associates and joint ventures), and the Hitachi Global Foundation.
Outside Japan: 244 companies.
*2 Japan: Hitachi, Ltd., 134 Group companies, and the Hitachi Global Foundation.
Outside Japan: 159 companies.
*3 Japan: Hitachi, Ltd., 141 Group companies, and the Hitachi Global Foundation.
Outside Japan: 196 companies.
*4 Japan: Hitachi, Ltd., 141 Group companies, and the Hitachi Global Foundation.
Outside Japan: 152 companies.
*5 Japan: Hitachi, Ltd., 153 Group companies, and the Hitachi Global Foundation.
Outside Japan: 234 companies.
*6 Collection of statistics began in fiscal 2017.
*7 Disclosure broken down into current segments began in fiscal 2017.
*8 Collection of statistics began in fiscal 2016.

122

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Striving to Increase Corporate Value

Hitachi Sustainability Report 2020

123

Governance
CONTENTS

124 Corporate GovernanceNot only is Hitachi strengthening its corporate governance in areas like the role and composition of the Board of Directors andstandards for determining the suitability and independence of its independent directors, it is also taking self-directed action to enhance
corporate value by sharing its Codes of Conduct across the Group, ensuring compliance with laws and regulations, and advancing risk
management. In this way, we contribute both to the company’s own sustainable growth and the development of the economy as a whole.

125 Corporate Governance

131 Compliance

132 Promoting Work Practices in Line with
International Codes of Ethics

135 Risk Management

136 Addressing Risks and Opportunities
140 Business Continuation Initiatives

141 Information Management

143 Information Security
145 Personal Information Protection
146 Online Content Management

147 Governance Data

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

implementation of measures focused on promoting constructive dialogue.

Hitachi views the expansion of long-term and overall shareholder returns as an

it matters

important management objective. Hitachi and its Group companies maintain good

To advance these efforts effectively, we are working to improve our corporate

relationships with a wide range of stakeholders, and we recognize that thesegovernance by ensuring thorough separation between the oversight and execution ofrelationships make up an important portion of our overall corporate value.

management, establishing a swift business execution system, and striving to achieve

Accordingly, we are striving to establish a system that will facilitate the maintenancehighly transparent management.

of these relationships and improve our corporate value, primarily through theWhat
we are doing
Corporate
governance

124

103-2

C or p or ate G o ve r na nce

Why

Hitachi Sustainability Report 2020

Core initiatives

Goals and KPIs

Achievements in FY 2019

Implement all of the principles of the
Corporate Governance CodeRun board meetings to sustainably
enhance corporate value andshareholders’ common interests
Approve and dismiss the CEO andformulate succession plan
Implement internal control over financial reporting
Enhance collaboration through tripartite audits
Build a more effective and efficient
auditing system

Ensuring legality, soundness, andtransparency of Hitachi’s business
Rapid response to economic and social
conditions

Analyzed and evaluated effectiveness of the Board of
Directors of fiscal 2018
Implemented an “chief auditor” system in five sectors (IT,energy, industry, mobility, smart life) and built an internal
control system spearheaded by chief auditors under the
executive vice presidents managing each sector

Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Corporate GovernanceCorporate Governance
History of Hitachi’s Corporate Governance Reform

Structure

Activities

Hitachi’s Corporate Governance Framework and Its Features

102-26
1999
2003
2006

Introduction of Objective Perspective
Demarcation of Management Oversightand Execution
Enforcement of Revised Companies Act

2010

Enhancement of Interactions with CapitalMarkets

2012

Acceleration of Global Management

2012
2014
2015
2016

2019

102-18 102-22 102-23 102-24

Management Advisory Committees
Practical advice from experts in Japan and overseas
Shifted to a company with committees (currently a company with nominating committee, etc.)
To increase management speed and improve management transparency

The Senior Executive Committee is an advisory body to the President & CEO that conducts multifaceted discussions and makes careful
decisions regarding important matters that impact Hitachi or its Group companies. As of April 2020, it consisted of 11 members,
including the President & CEO, executive vice presidents (6 members), senior vice presidents (3 members) and a vice president.

General Meeting of Shareholders
Hitachi IR Day (briefing on business strategy by division) was launched
Clarification of commitment of top management of the business units to the capital
markets
Independent directors, including foreign directors, were increased
Independent directors comprised the majority of directors
Development of Corporate Governance Guidelines

Development of Guidelines forStrengthening Governance
Development of Stewardship CodeStart of Application of Corporate Governance CodeEnhancement of Dissemination of
Publication of an integrated report
Information About Medium- to Long-term
Sustainable Growth
Executive vice presidents were placed in five sectors
Acceleration of the Social Innovation
ESG Briefing session was held
Business Across Five Growth Fields
An independent director (chair of the Audit Committee) and the CEO shared their remarks

Appointment

Senior Executive
Committee

3Appointment/
Oversight

Policy102-22405-1

President &CEO

Report2 Board of Directors

2 executive members 11 non-executive members

Executive Vice Presidents andExecutive Officers/Senior Vice
Presidents and Executive
Officers/Vice Presidents andExecutive Officers(including 2 female members)

1

Nominating
Committee

4 directors

1Compensation
Committee

1

4 directors

Audit
Committee

5 directors*

Audit

Internal
Auditing
Office1

ReportImplementing All of the Principles of the Corporate Governance Code

Structure

Executive
Officer
Department
in charge

Executive
Officer
Department
in charge

Department
in charge

Department
in charge*1One standing Audit
Committee member

Audit

Audit

We are implementing all of the principles of the Corporate Governance Code.

Audit
ReportNon-independent

Director Composition
Independence(ratio of Independent directors)

Structure

Diversity(ratio of non-Japanese directors)

Directors with Abundant Experience
Hitachi has 13 directors, 6 of whom are nonJapanese and 2 of whom are female. This
team of directors applies their abundant

Independent
directors

76.9%

Non-Japanese
directors

46.2%

experience and knowledge related tothe management of global companies,
legal affairs, accounting, capital markets,
government agencies, and the field of digital

2 female directors(15.4% of overall director total)

technology to facilitate discussions informed
by a wide variety of perspectives.

Independent

POINT ❶
Transparency in Management
We became a company withcommittees (currently a company witha nominating committee, etc.) in 2003.
We have established a Nominating
Committee, a Compensation Committee
and an Audit Committee, which are mostly
made up of, and are chaired by,independent directors. The system wehave in place to ensure transparency inmanagement separates the oversight andexecution of management, facilitates thefull exercise of supervisory functions andenables discussions and reports to be
conducted appropriately within thesethree committees.

Accounting Auditors

POINT ❷
Independence of the Board of
Directors

POINT ❸
Enhanced Collaboration
Through Tripartite Audits

We increased our number of
independent directors, including nonJapanese directors, in 2012.
Our Board of Directors, which is chairedby an independent director, has 13
members, including 10 independent
directors, 2 directors who are also serving
as executive officers and 1 director who is
not serving as an executive officer. In
addition, we have established a systemthat facilitates the full exercise of
supervisory functions by maintaining
separation between the oversight andexecution of management.

Hitachi’s Audit Committee andinternal audit section collaborate
with third-party accounting
auditors to strengthen its“tripartite auditing,” which aims toincrease the effectiveness ofinternal controls.

Hitachi Sustainability Report 2020125Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Corporate Governance

Administrative Performance of the Board of Directors

Structure

Activities

The Board of Directors approves the basic management policy for the Hitachi Group and supervises
the execution of the duties of executive officers and directors in order to sustainably enhance corporate
value and shareholders’ common interests. The basic management policy includes the Mid-termManagement Plan and annual budget compilation. The Board of Directors focuses on strategic issues
related to the basic management policy as well as other items to be resolved that are provided in laws,
regulations, the Articles of Incorporation, and Board of Directors Regulations.
Within the Board of Directors, there are three statutory committees—the Nominating Committee, theAudit Committee, and the Compensation Committee—with independent directors accounting for the
majority of members of each committee. Board of Directors meetings were held on 9 days during fiscal
2019, and the attendance rate of directors at these meetings was 98%. The attendance rates for eachindependent director were as shown in the table below. To assist with the duties of the Board ofOverseas Board of Directors Meetings and Panel Discussions Involving Experts
In principle, Hitachi holds a meeting of its Board of Directors annually in a foreign country that is deeply
connected with its businesses. In December 2019, this meeting was held in the City of Zurich in the Swiss
Confederation. As a side event, we also held a panel discussion involving representatives from theInternational Energy Agency (IEA), European powertransmission and distribution companies, and Japanesescholars. This panel discussion increased the depth ofunderstanding our directors and associates haveconcerning the “three Ds” (decarbonization, dispersion,and digitalization) and new power system trends,
including the ongoing establishment of power grids in awide range of regions and nations.

Directors and each committee, staff who are not subject to orders or instructions from executive
officers are assigned.

Analysis and Evaluation of the Effectiveness of the Board of Directors

Status of Board of Directors Meetings Held in Fiscal 2019102-28

Attendance/Number of days on which the meetings were held*1
Name

Board of Directors

Nominating Committee

Audit Committee

Compensation Committee

Katsumi Ihara

100%

—

100%

100%

Cynthia Carroll

100%

100%

—

—

Joe Harlan

100%

—

—

—

George Buckley

100%

—

—

—

Louise Pentland

89%

—

—

—

Harufumi Mochizuki

100%

100%

100%

100%

Takatoshi Yamamoto

100%

—

100%

100%

Hiroaki Yoshihara

100%

100%

100%

—

*1 Number of days during term of office on which Board of Directors meetings were held: 9.
Number of days during term of office on which Nominating Committee meetings were held: 8.
Number of days during term of office on which Audit Committee meetings were held: 15. Number of days during term of office on which
Compensation Committee meetings were held: 4.
Note: Indicates role as board or committee chairperson.

Activities

Hitachi, Ltd. evaluates the effectiveness of its Board of Directors as a whole each year, in a continuous
effort to maintain and improve its functions.
Fiscal 2019 Evaluation Process

1. Questionnaire-based
self-assessment by
each director(February–March 2020)

Points of evaluation
Composition of Board of Directors: Member diversity, numbers and ratios of independent directors andinside directors, etc.
Clarification of the responsibilities and expected roles of the Board of Directors
Operation of Board of Directors: Meeting frequency, discussion time, proposal selection, discussion
content, role of chairperson, etc.
Contribution: Contribution to management strategy formulation and changes in corporate culture, member
demonstration of experience and knowledge, etc.
Understanding regarding the company: Group identity, risk factors
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 byindependent directors(March 2020)

Independent directors held an exclusive meeting to discuss the effectiveness of the Board of Directors.

3. Discussion and review
within the Board of
Directors (June 2020)

The Board of Directors held a discussion based on the results of the questionnaire-based self-assessment
and discussions conducted in the exclusive meeting attended by independent directors, comparing theseresults to those of the previous year and considering the statuses of related initiatives. Through this
discussion the Board of Directors analyzed and evaluated its overall effectiveness and identified policies
through which it can increase this effectiveness.

Hitachi Sustainability Report 2020126

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Corporate GovernanceEvaluation Results and Future Initiatives

CEO Appointment, Dismissal, and Succession Plan

Overall evaluation in fiscal 2019
Overall evaluation in
fiscal 2019

Fiscal 2019 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 andimprovement of Boardof Director functions

The Board of Directors will continue to conduct discussions concerning business strategies for each sector. At
the same time, it will discuss the progress of our Mid-term Management Plan as appropriate while accounting
for circumstances surrounding COVID-19.
We are strengthening collaboration between the Board of Directors and the Nominating Committee while further
contributing to CEO succession planning (for example, expanding reports made to the Board of Directors
through the Nominating Committee, enhancing coaching for successive and next-generation candidates).

Enhancement ofoperational support ofthe Board of Directors
and improvement of its
practical aspects

While accounting for circumstances surrounding COVID-19, we are improving our operational support systemthrough the continuous sharing of information obtained through independent directors’ visits to Hitachi Groupbusiness premises and event participation.
We will achieve further improvements related to the composition and content of materials, as well as to theirpreliminary provision.

Future initiatives

Structure102-24
Hitachi’s Board of Directors decides upon the appointment and dismissal of executive officers,
including the CEO, with the goal of constructing an optimal business execution system for
management. Decisions regarding the appointment or dismissal of executive officers are based upon
proposals made to the Nominating Committee, while decisions related to the position of CEO are
made based on preliminary deliberations and proposals from the Nominating Committee. As
stipulated in our Corporate Governance Guidelines, our basic policy concerning CEO appointments
and dismissals requires that individuals serving in the position of CEO have extensive experience andachievements in the field of company management. They must also be considered optimally suitedfor conducting management aimed at achieving Hitachi’s goals of continuously raising its corporate

Administrative Performance of the Three Committees

Activities

Regarding our CEO Succession Plan, as the speed of change accelerates, we are striving to build a

Nominating Committee

Audit Committee

Compensation Committee

The Nominating Committee has the authority todetermine proposals submitted to the general
meeting of shareholders for the election anddismissal of directors. The Nominating
Committee consists of four directors, three ofwhom are independent directors.
It also determines director candidates andholds preliminary hearings concerning theappointment and dismissal of executive
officers, including the CEO. In fiscal 2019, theNominating Committee held meetings on eightdays.

The Audit Committee has the authority to audit
the execution of duties of directors andexecutive officers and to decide on proposals
submitted to the general meeting ofshareholders for the election and dismissal of
accounting auditors. The Audit Committee
consists of five directors, including four
independent directors and one standing Audit
Committee member.
Hiroaki Yoshihara, the chairman of the Audit
Committee, has been involved in accounting
and other business practices at the KPMG
Group for many years and possesses a
considerable breadth of knowledge concerning
finance and accounting.
In fiscal 2019, the Audit Committee held
meetings on 15 days.

The Compensation Committee has theauthority to determine remuneration policies for
directors and executive officers andremuneration for individuals (including amountsof remuneration) based on these policies.
Composed of four directors, including three
independent directors, the committee strives toensure objectivity, transparency, and fairness in
the remuneration determination process.
In addition, the Compensation Committee
verifies and reviews details of the processused for determining remuneration for
individuals, including assessments concerning
basic remuneration amounts, evaluations ofprogress made toward individual targets, andperformance appraisals that are tied toshort-term incentive compensation.
In fiscal 2019, the Compensation Committee
held meetings on four days.

Primary Activities
The Audit Committee conducted activities thatwere focused on its priority matters forconsideration, which included the enhancement ofcollaboration and the promotion of information
through tripartite audits (involving the Audit
Committee, internal audit sections, and accounting
auditors), as well as the construction andoperational evaluation of internal control systems
based on perspectives concerning the adequacyof risk management and business execution. In
addition, standing Audit Committee members
established an understanding regarding timely andappropriate information through collaboration withinternal audit sections and attendance at meetingsof the Senior Executive Committee and otherimportant internal conferences. Furthermore, they
subsequently shared this information with othercommittee members.

Primary Activities
The committee determined remuneration
amounts for individual directors and executive
officers in accordance with established policies
while verifying and reviewing details of theprocesses applied when conducting
performance appraisals tied to short-term
incentive compensation for executive officers
and evaluating progress made toward individual
targets. In addition, the committee reviewed theexecutive compensation system while giving
due consideration to compensation granted to
managers at global companies and the goal of
sharing value with shareholders. Furthermore,
the committee decided upon policies covering
remuneration for directors and executive officers
in fiscal 2020, including the implementation of a
restricted stock unit (RSU) compensation
system for non-Japanese officers.

Primary Activities
In addition to deciding upon the contents of the
proposal made concerning director
appointments at the Annual General Meeting of
Shareholders, the Nominating Committee
reviewed and confirmed the executive officer
system implemented in fiscal 2020. In addition,
it promoted committee-related activities
including discussions and individual interviews
aimed at developing candidates for future
management and leadership positions.

value and further serving the common interests of its shareholders.
system that enables us to appropriately and promptly secure and develop (both internally and globally)
necessary management personnel who will provide leadership that will allow us to realize our growthstrategies. We are also concentrating on providing training for selected employees while targeting theearly development of candidates for future management positions. Accordingly, we are developing
next-generation leaders capable of acting authoritatively and resolutely by establishing forums whereparticipants can discuss what is necessary for Hitachi’s future growth and make recommendations tomanagement.
In addition, we have identified a group of about 50 employees from around the Hitachi Group with nextgeneration development potential. People in this “Future 50” group are selected on merit, regardless of age,gender, or nationality. They are given challenges to help expand their horizons and build their perspectives
through tough assignments, including different types of work and internal and external training
opportunities. The Future 50 group members receive one-on-one mentoring opportunities with independent
directors to benefit directly from their extensive business experience and global perspectives. Our aim is tochange mindsets so that we can develop people for important positions in the future.

STEP 1

STEP 2

STEP 3

STEP 4

STEP 5

Designate important
positionsDefine the roles
and personnel
requirements
associated with
important positions

Select candidates
for important
positions

Evaluate
candidates

Develop candidates

Hitachi Sustainability Report 2020

127

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Introduction

Management

Environmental

GovernanceSocialAssurance

Hitachi Sustainability Report 2020

128

Corporate GovernanceDirector and Executive Officer Compensation

PolicySystemCompensation to Executive Officers (FY 2020)

System102-35 102-36 102-37
コーBasic Policy
Compensation shall be such that it enables the Company to attract necessary personnel to achieve an
improvement in corporate value through global business growth.
Compensation shall be commensurate with roles and responsibilities of each Directors and Executive Officers.
Compensation for Directors shall be such that it enables them to exercise functions of supervision ofmanagement effectively.
Compensation for Executive Officers shall be such that it enables them to contribute to sustained
improvement in corporate value through the execution of business and employs an appropriatebalance between short-term performance and medium- and long-term performance.
The level of compensation shall be determined taking into account compensation levels at othercompanies as well as economic and market trends.
The Compensation Committee utilizes external experts to gain expert advice and an objective
viewpoint, if necessary, for considering the details and amounts of compensation.

102-35 102-36 102-37
Basic remuneration : short-term incentive compensation : medium- and long-term incentive compensation = 1:1:1 ratio

Total remuneration
Fixed pay
Set according to the relevant position
by adjusting that amount to reflect
financial results and individual
performance.

1

Evaluated referring to adjusted operating income
and operating cash flows for each division, among
other indicators, to measure the level ofachievement of targets under the Mid-termManagement Plan and the annual budgets fordivisions.

decided by adjusting a basic amount to reflect full-time or part-time status, committee membership andposition, travel from place of residence, etc. A director concurrently serving as an executive officer is not
paid compensation as a director.
(2) Executive Officersof compensation, taking into account the composition of executive compensation for major global
companies, in order to improve corporate value through the growth of global businesses. The higher the
position an executive officer holds, the higher the proportion of variable pay in total annual compensation.
If it is found that an executive officer has engaged in misconduct during his/her term of office, executive
officer compensation that has already been paid shall be returned to the company (clawback provision).
Please refer to Compensation to Directors and Executive Officers on pp. 93–98 of the Annual Securities
Report (The 151st Business Term).

2

Medium- and long-term
incentive compensation

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

Short-term incentive compensation
Linked to evaluations of companywide performance (80%)

Compensation for directors is basic remuneration as fixed pay. The amount of basic remuneration is

The basic amount of each type of compensation is set based on the ratio of 1:1:1 as the standard form

Short-term incentive
compensation

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

(Other executive officers)
Linked to evaluations ofdivisional performance (50%)(1) Directors

incentive compensation and medium- and long-term incentive compensation as variable pay.

1

(Executive officers forming the Senior Executive Committee*1 )Compensation Structure

Compensation for executive officers consists of basic remuneration as fixed pay, and short-term

Variable pay

Basic remuneration

Linked to evaluations ofCompanywide performance(30%)
Evaluated referring to consolidated
revenues, adjusted operating income,
EBIT, and net income attributable to
Hitachi, Ltd. stockholders in order tomeasure the level of achievement ofconsolidated financial forecasts
disclosed to stakeholders, including
shareholders and investors.

Linked to evaluations
regarding the achievement of
individual targets (20%)

Varies according to the evaluation of
the level of achievement of individual
target for each executive officer
determined based on his/her
responsibility.

*1 The rates used for “other executive officers” apply when “executive officers forming the Senior Executive Committee” are in charge of business
units or businesses.
2

Medium- and long-term incentive compensation

The shares of restricted stock• The restriction on transfer shall be lifted if executive
officers resign from all of the positions of the company’s
executive officer, director, and corporate officer.
• With regard to one-half of granted shares of restricted
stock, the number of shares whose transfer restriction islifted shall be determined after ex-post evaluation inwhich the total shareholder return of Hitachi stock is
compared to growth rate of TOPIX (both measured over
the three years dating back to the beginning of the fiscal
year during which corresponding medium- and long-term

incentive compensation was issued). Lifting of transfer
restrictions shall apply to all granted shares if the TSR/
TOPIX Growth Rate Ratio is 120% or more. Lifting oftransfer restrictions shall apply to part of granted shares if
the TSR/TOPIX Growth Rate Ratio is 80% or more but
less than 120%.*2 Transfer restrictions shall not be lifted
for any shares if the TSR/TOPIX Growth Rate Ratio is lessthan 80%. Shares whose transfer restrictions are notlifted shall be acquired by the company without
consideration.

*2 Number of shares whose transfer restrictions are lifted = Number of granted shares × {(TSR/TOPIX Growth Rate Ratio × 1.25) – 0.5}

Annual Securities Report (pp. 93–98)
https://www.hitachi.com/IR-e/library/stock/
hit_sr_fy2019_4_en.pdf

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Corporate GovernanceInternal Controls over Financial Reporting

Structure

Enhanced Collaboration through Tripartite Audits

Structure102-25102-11

To ensure the reliability of its consolidated financial reporting, the Hitachi Group is establishing andIn pursuit of sustainable growth in corporate value, Hitachi’s Audit Committee and internal audit

implementing relevant internal controls. We evaluate their effectiveness by adhering to standards for

section collaborate with third-party accounting auditors to strengthen its “tripartite auditing,” which

the evaluation of internal controls related to financial reporting that are generally accepted as fair andaims to increase the effectiveness of internal controls. Our Audit Committee takes the lead in thisreasonable.

regard as the three parties communicate closely to share risk information and assessments

Furthermore, we have established a J-SOX Committee with the goal of raising the effectiveness ofthese internal controls. This committee evaluates internal control effectiveness and establishes

concerning risk response while securing transparency and ensuring appropriate checks andbalances.

frameworks designed to improve and strengthen them.

Creation of a system focused on
maintaining transparency and a senseof urgency

Management of risk associated with
global business expansion
Internal Control Assessment Framework
Financial
Services
AgencyHitachi, Ltd. President &CEO
Chief Financial Officer
Internal
ControlReportEnsuring transparency and a senseof urgency and improving theeffectiveness of internal controls

Audit
Committee

ReportJ-SOX Committee
ReportBusiness Units and Major
Group Companies
ReportSubsidiary Companies
Execution

Sharing of risk information andassessments of risk response

ReportReportTripartite
audit
approach

Cooperation

Internal Auditing
Office(Internal Audit
Office)Accounting
auditors(accounting audits)

External Audits

Regulation

Audit
Committee· Audit plans· Audit policy and auditing methods· Assessment and reporting of audit
results· Methods and results of internal
audits· Evaluation of group audit system

Internal audit
section(Internal Audit
Office)· Sharing of risk information· Audit plans and results· Internal audit results· Reciprocal reporting and evaluation
concerning group audits· Reporting on the quality control
system

Tripartite
audit
approachAccounting
auditors(accounting
audits)· Exchange of information regarding audit
plans, auditing methods, and audit
results· Sharing of risk information· Division of internal auditing duties andmutual utilization of audit information

Hitachi Sustainability Report 2020129

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Corporate Governance

When conducting business audits, we use IT systems to expeditiously search for reference

Building a More Effective and Efficient Auditing System

Structure102-25
Our Audit Committee formulates audit plans in accordance with its risk-based approaches andconducts audits for each consolidated business unit. Audit Committee members meet directly withbusiness unit heads before the internal audit section’s audits are carried out. These members theninform the internal audit section about concerns and issues related to the implementation ofbusiness 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 these risks
through employee awareness surveys and thorough implementation of business strategies. Hitachi’s
internal audit section performs regular internal audits at each business site and location. Thissection reports directly to the CEO and is independent from organizations that are subject to its
audits. The internal audit section also formulates audit plans based on past audit records and themost recent business circumstances. Additionally, this section performs audits upon receiving
direction from the Audit Committee, ensuring their effectiveness. The internal audit section at
Hitachi is responsible for confirming the legality and appropriateness of all business operations,
including those related to accounting, production management, sales, purchasing, IT systems,
compliance, and human resources. Furthermore, acting on behalf of our management team, theinternal audit section confirms that employees are well versed in the ideas and policies of ourmanagement, that their operations are being carried out based on these ideas and policies, andthat business strategies are being implemented in a way that will efficiently lead to sustainablegrowth.
To further raise audit effectiveness, we implemented a “chief auditor system” in five sectors (IT,
Energy, Industry, Mobility, Smart Life) in April 2019. Through this action, we built an internal control
system spearheaded by chief auditors and enhanced collaboration with the executive vicepresidents who manage each sector and with the Audit Committee.
Although these chief auditors do not act as legal agents under the Companies Act, they stillassume responsibility for governance in each sector. They also function as a reporting line forstatutory auditors at Hitachi subsidiaries who are legal agents under the Companies Act and areworking to improve the efficiency of our internal control systems.

information contained within materials submitted prior to audit in an attempt to improve efficiency.
We are currently building a system that will allow our internal audit section to share information withprofessional accounting auditors using the Lumada platform’s data lake and expect it to becomplete in fiscal 2020. When reading audit reports submitted by the internal audit section, ourCEO must be able to quickly understand the issues identified by these reports and make prompt
judgments concerning whether immediate action is required. In the future, our internal audit section
will continue to maintain its transparency and independence while working to improve audit
efficiency as one member of our tripartite audit system.
Our accounting auditors perform audits that focus on the accuracy and reliability of our financial
statements. First, they adopt a risk-based approach in response to the group’s overall financial
status. Applying this approach, they then determine the scope and methods of the audit, formulate
an audit plan, and share opinions with the Audit Committee. Next, based on the audit plan, they
perform audits on each of the five sectors and the business units they comprise, enabling effective
and efficient understanding of data related to Hitachi’s finance department and each of its businesssegments. If, during the auditing process, our accounting auditors discover a degree of risk that
could impact future financial statements significantly, or issues that, even if monetarily small, could
have a large qualitative effect, they share information related to 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 and improvement suggestions through the finance department.
Recently, they have also been working to raise the efficiency of checks on the accuracy ofnumerical figures by using IT systems to investigate all cases, rather than performing test-checking
through sampling.

Hitachi Sustainability Report 2020

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Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

it matters

With the globalization of the economy, borderless corporative activities—spanning

decision-making procedures and actions for all Hitachi Group executive officers andcountries and regions with different governmental and economic frameworks, trade

employees.

practices, and sets of values—are increasingly vital. Spreading understanding of andAdditionally, with stricter regulations in countries and regions around the worldrespect for norms among all Hitachi Group employees is a fundamental management

regarding important business practices such as bribery prevention and adherence toissue as we seek to rigorously implement fair business practices and avoid risks

competition law, Hitachi has formulated in-house regulations in line with internationalaround the globe. Hitachi addresses this partly through the Hitachi Group Codes ofstandards, and is sharing these regulations and enforcing thorough compliance

Conduct and the Hitachi Group Code of Ethics and Compliance, which spell out

throughout the Group.

What
we are doing
Promoting work
practices in linewith international
ethics codes

131

103-2

C om p l i anc e

Why

Hitachi Sustainability Report 2020

Core initiatives

Goals and KPIs

Achievements in FY 2019

Comply with the Hitachi Group Codes ofConduct
Implement the Hitachi Global Compliance
Program (HGCP)Prevent antisocial transactions
Prevent bribery and corrupt practices
Comply with competition law
Carry out strict export control
Implement thorough tax compliance

Compliance reporting achievements:
459 reports
Thorough implementation of prevention ofbribery and corrupt practices andcompliance with competition law

Formulated the Hitachi Group Code of Ethics and Compliance
Conducted a compliance risk survey of 821 Group companies
Launched a Group-wide internal reporting system called the
Hitachi Global Compliance Hotline
Had more than 170,000 employees, including executive
officers, complete an e-learning program on prevention ofbribery and corrupt practices and compliance withcompetition law
Conducted training sessions to prevent violations ofcompetition law for general managers from sales divisions
more likely to be exposed to compliance risks

Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Hitachi Sustainability Report 2020

132

Compliance

Promoting Work Practices in Line with International Codes of Ethics
Hitachi Group Codes of Conductbusiness units and key Group companies, while the internal audit section regularly conducts GroupPolicy

Employee Engagement102-16
Hitachi, Ltd. has formulated the Hitachi Group Codes of Conduct, which all executives andemployees across the entire Group pledge to uphold. The Codes of Conduct are translated into 13
languages and shared with Hitachi Group executive officers and employees around the world.
An e-learning tool has also been made available in Japanese and 13 other languages to reinforce
understanding of the Codes of Conduct. Additionally, the Hitachi Group performs an annual
employee survey on awareness of matters such as business ethics and compliance as part of its

wide reviews to verify that each area of compliance is being appropriately operated. In cases wherethese reviews identify necessary improvements, corrective measures are swiftly implemented.

Hitachi Group Codes of Conduct/Hitachi Group
Code of Ethics and Compliance
http://www.hitachi.com/corporate/about/conduct/index.html

Hitachi, Ltd. also convenes an Advisory Committee of outside experts to gain new insights into
compliance and apply them proactively in its own efforts.
Since fiscal 2013, we have conducted surveys related to bribery risk every three years at Group
companies in regions with high risks of bribery and corrupt practices. The surveys are based on
potential bribery risk scenarios. We will continue to perform regular risk assessments like these anduse the results to improve compliance activities in all Group companies.
Achievements in FY 2019

efforts to cultivate a healthy corporate culture.

In fiscal 2019, we conducted a compliance risk survey of 821 Group companies worldwide with

Achievements in FY 2019

In fiscal 2019, we explored ways to ensure a deeper understanding among all executive officers
and employees of the Hitachi Group Codes of Conduct and clearly share the ideas on corporate
ethics and compliance that must be shared across the entire Hitachi Group. The result of thisprocess was the Hitachi Group Code of Ethics and Compliance, established in April 2020 tothe aim of implementing the compliance program based on risk management classification
applicable throughout the Hitachi Group. Based on the survey results, we will allocate
resources to high-risk operations and regions, thereby securing the effectiveness of the
program as we strive to take thoroughgoing measures according to risk levels.

further emphasize to Hitachi executive officers and employees the importance of acting inaccordance with corporate ethics and following compliance procedures. The code has beentranslated into 14 languages and shared with executive officers and employees around the world.

Compliance Reporting System

System102-17

Compliance Framework

Structure

Based on the Hitachi Group Codes of Conduct and the Hitachi Group Code of Ethics and Compliance,
Hitachi established the Hitachi Global Compliance Program (HGCP) to promote compliance.
To implement this program, we have appointed a senior executive as the head of risk management
for the entire Hitachi Group, to supervise management-level risk management executives frombusiness units and key Group companies. Under this system, policies and measures are sharedthrough the Compliance Management Conference, composed of these risk management executives.
Each executive is assisted by a compliance manager who implements practical support measures.
Globally, we have also appointed compliance heads in 11 regions, responsible for implementing
education and sharing information as well as arranging consultation services with outside attorneys.
Issues in the promotion of compliance measures are clarified through individual dialogue with

To prevent and promptly address illegal or inappropriate activity and enhance its ability to selfregulate, Hitachi has instituted an internal reporting system allowing direct reports to be maderegarding actual or suspected compliance violations. This system can be used not only by
employees within the Hitachi Group but also by temporary staff and business partners, such as
suppliers and distributors. The facts related to all reports are subject to thorough investigation andchecking, and people who have identified themselves in the reports are informed of the investigation
results. We make every effort to deal with situations as appropriate, including taking remedial action
where necessary. In fiscal 2019, we received 459 reports from all Group companies worldwide.
In addition, we have implemented the Channel to the Board of Directors system to allow all
Hitachi, Ltd. employees to directly report problems anonymously or under their real names to Hitachi
directors in cases where they see any illegality or extreme inappropriateness in business conduct bydivision heads, executive officers, or other management personnel.

Establishing a Global Grievance Mechanism

Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Hitachi Sustainability Report 2020

Compliance

Achievements in FY 2019

In fiscal 2019, to further strengthen the Group’s governance and compliance, we integrated
internal reporting systems within the Group into a Group-wide system called the Hitachi Global
Compliance Hotline. Launched in April 2020, the new system enhances our reporting system

Educational Activities for Preventing Bribery andCorrupt Practices

Employee Engagement

205-1

capacity by offering 24/7 service in multiple languages both online and via telephone.

205-2

To ensure awareness of the HGCP rules and policies concerning prevention of bribery andcorruption and compliance with competition law, we developed a global e-learning program about

Prevention of Antisocial Transactions

them and made it available in 15 languages—including Japanese, English, and Chinese—for use by
PolicyStructure

To cut off all relationships with organized crime groups and other antisocial forces, in the Hitachi Group
Codes of Conduct we have laid out provisions stating that we will never engage in antisocialtransactions under any circumstances, and will refuse any improper demands and unfair deals. We
conduct eligibility checks on new as well as existing business partners and, in Japan, include antisocial

Group companies worldwide.
Achievements in FY 2019

In fiscal 2019, more than 170,000 employees across the Hitachi Group, including executives,completed the e-learning program. To raise awareness of compliance, we asked participants topledge to adhere to compliance rules.

force rejection clauses in contracts so that if it is determined that a business partner belongs to an
antisocial force, we can promptly void the contract and end the relationship. The entire Hitachi Group
acts decisively to eliminate approaches from antisocial forces in partnership with external specialist

Competition Law Compliance Policy

Policyinstitutions (the National Center for the Elimination of Boryokudan or the police).
Hitachi engages in business based on the principles of conformance with the law and business ethics

Policies for Preventing Bribery and Corrupt Practices

and fair and open competition. We included business standards and guidelines related to these
Policyprinciples in the HGCP, in addition to rules concerning competition law.

Preventing bribery and corrupt practices is a major challenge for any company today. Hitachi
established rules against bribery and corruption for the HGCP along with guidelines indicating
specific spending thresholds for entertainment, gifts, and other arrangements provided to public
officials. We also have policies banning facilitation payments and requiring due diligence proceduresfor business partners. With anti-corruption regulations growing stricter in recent years around theglobe, we also expend great effort ensuring that we are in strict compliance with the US Foreign
Corrupt Practices Act (FCPA) and all other relevant laws and regulations in the countries andregions where we do business.

Preventing Violations of Competition Law

Activities

As with our initiatives against bribery and corrupt practices, we are developing educational activities
globally using e-learning material available in 15 languages—including Japanese, English, andChinese—while at the same time ensuring that we comply with the HGCP’s rules concerningcompetition law and other related business standards and guidelines. To enhance awareness of
ethical principles and practices globally, we created a global version of our standards regarding
contact with competitors. We also provide a collection of case studies on competition law and othertopics for workplace discussion to Group companies in three languages—Japanese, English, andChinese—to raise employee awareness.

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

Compliance

Achievements in FY 2019(1) Group companies strictly comply with all relevant laws and implement tax management when

In fiscal 2019, Hitachi, Ltd. held its special biennial training sessions for managers. The sessions

pursuing their business activities, bearing in mind such international tax-compliance standards as

were attended by about 1,100 general managers and equivalents from sales divisions who are

the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations of themore likely to be exposed to compliance risks in business operations as they meet with

Organisation for Economic Co-operation and Development (OECD), as well as that body’s Action

competitors and participate in public tenders.

Plan on Base Erosion and Profit Shifting (BEPS).
(2) Group companies effectively, continually, and proactively manage tax-related issues as socially
responsible organizations, while maintaining Hitachi brand value and seeking to maximize

Export Controls

shareholder value.
PolicyStructure(3) Group companies build sincere and positive relations of trust with the tax authorities in theregions where the companies do business, and strive to maintain and develop those relations.

For basic export control policies, we have adopted the Hitachi Group Codes of Conduct, which state:“We will help maintain international peace and security through compliance with all applicable laws andregulations concerning import and export, and will operate appropriately according to our internal rules
and policies.” Hitachi, Ltd. has established Corporate Regulations concerning Security Export Control

Tax Compliance Initiatives

Activities

based on this policy to carry out strict export control practices in line with relevant laws and

To ensure risk management for taxation in response to globalization, Hitachi follows relevant tax-

regulations, screening all goods and technologies intended for export against such factors as

related regulations applicable to the Group as a whole as well as rules for transfer pricing

destination countries and regions as well as intended end use and end users. We provide guidance

management. We also manage transfer pricing in accordance with the OECD Transfer Pricing

and educational support for the formulation of regulations and the establishment of frameworks to

Guidelines and the laws and regulations on transfer pricing in each country or region where Group

Hitachi Group companies to ensure that all Group companies follow the same export control policies incompanies are located.

accordance with relevant laws and regulations.
At present, as part of our educational program for all Group companies, we host training sessions
and workshops on export control. Additionally, we operate a basic e-learning program in 14 languages
and a program for working-level employees in Japanese, English, and Chinese. These ongoing efforts
help ensure that export control is thoroughly enforced throughout the Group.

Violations of Laws and Regulation

Activities

205-3

206-1

419-1

In fiscal 2019, there were no incidents in which Hitachi violated or was penalized under laws or
regulations regarding bribery or corrupt practices. One of our Group companies, however, wasHitachi’s Tax Compliance Approach

Approach

Hitachi has built a system of tax governance in order to comply with indications made by the tax
authorities in each country and respond to risks concerning taxation, such as tax-related legal
proceedings. Specifically, we established a set of tax-related regulations and set rules for Grouptransfer pricing management. We are striving to enhance awareness of the rules and regulations
throughout the Group. In connection with the globalization of our business, we are implementing
risk management for taxation that focuses in particular on the points listed below:

found to have violated a competition law in an international deal involving automobile parts. We takethis incident seriously and are striving to prevent recurrence of such violations by revising ourorganization and policies and enhancing education and audits. Regarding tax compliance, Hitachi
acts in accordance with all applicable laws and regulations and did not have any significant fines ornonmonetary sanctions for noncompliance with tax laws and regulations.

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Introduction

Management

Environmental

SocialGovernance

Assurance

it matters

Social and environmental issues, including climate change, resource depletion, the curtailment

has on society and the environment and to identify countermeasures. Meanwhile, we remainof business activity due to significant disasters, and social instability due to growing inequality,

actively engaged in promoting our own sustainable growth while contributing to the realization ofare having a substantial impact on corporate value creation and business models. Amid such aa sustainable society by seeking out business opportunities contributing to the resolution of

drastic change in the business environment, companies must have a clear understanding of

global issues, including those relevant to the UN Sustainable Development Goals (SDGs) andopportunities and risks and take appropriate measures if they are to achieve sustainable growth.

Society 5.0. In addition, we are enhancing our business continuity plans (BCPs) to ensure thatmanagement of its investments. The Executive Sustainability Committee deliberates the social

Since fiscal 2019, along with disclosing key information based on the recommendations of the Task Forceand environmental impact of our business activities to clarify any negative impact our businesson Climate-related Financial Disclosures (TCFD), we have also been promoting climate change responses.

Core initiatives

What
we are doing

the impact of risks does not disrupt our business and thereby significantly affect society.

Hitachi launched an Investment Strategy Committee to strengthen the quantitative risk

Risk and opportunity
management

Business
continuation
initiatives

135
103-2

R i sk M a na g em ent

Why

Hitachi Sustainability Report 2020

Goals and KPIs

Achievements in FY 2019

Understand and respond to risks andopportunities related to investment,sustainability, etc.
Implement risk management to strengthenbusiness and ensure business continuity

Understanding risks and taking
appropriate action

Continued to understand risks and take appropriate action
Disclosed information based on the TCFD’s
recommendations

Strengthen procurement BCPs
Improve safety for employees sent todangerous regions

Further strengthening procurement BCPs

Strengthened procurement BCPs at major business sites inJapanIntroduced Procurement BCPs Management System forbusiness partners in Japan

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

Introduction

Management

Environmental

GovernanceSocialAssurance

Risk Management

Addressing Risks and Opportunities
Risks and Opportunities

ApproachManagement strategy

Structure102-11 102-30

103-2

Reflected in

Under the 2021 Mid-term Management Plan, which began in fiscal 2019, we will expand our

Executive levelbusiness while leveraging the company’s competitive advantages. We plan to invest ¥2.0–2.5 trillion

Ascertain risks andopportunities

in focus areas over the three-year period ending in fiscal 2021. A solid risk management system is
indispensable for seizing growth opportunities and implementing aggressive management.
Hitachi established the Investment Strategy Division in 2017 and the post of Chief Risk

Investment
strategy

Sustainability

Information
security

Management Officer (CRMO) in April 2020 to better understand risk and take appropriate action.
The company in the same year established the Executive Sustainability Committee to focus on thecompany’s policies regarding 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 istaking to address them.

Risk Management System• Enhance
individual
investment andbusiness
evaluation criteria• Strengthen themonitoring oflarge-scale M&A
and other projects• Enhancebusiness risk
management

Structure102-29 102-30
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 arisingfrom complex shifts in political and economic conditions around the world. Hitachi aims to create
new revenue opportunities while controlling risks. To do this, we maintain a clear understanding andmany risks the company should be prepared for as well as opportunities for growth.
In April 2020, we established the new post of CRMO to formulate and execute risk management
policies and strategies for the entire Hitachi Group. We also established the Hitachi Group
Corporate Ethics and Compliance Code to clearly share ideas regarding corporate ethics andcompliance that should be shared throughout Hitachi, as we work to further ensure that all Hitachi
executives and employees act in complete compliance with corporate ethics.

Compliance

Qualityassurance

Business
continuity
plan (BCP)• The Executive
Sustainability
Committee, theSustainability
Promotion
Meeting and the
Eco-Management
Meeting focus on
ascertaining andresponding torisks affecting
society and theenvironment,
including climatechange andhuman rights• Promoteinformation
security
governance*1• Promotecollaborative
creation by
fostering a security
ecosystem• Rebuild a cultureof safety andestablish a safe
workplace• Develop
countermeasures
to prevent workrelated accidents• Entrenchawareness ofregulations related
to businesspractices throughHitachi Global
Compliance
Program• Implement quality
assurance
activities from theperspectives of“organization andmanagement,”“technology,” and“human resources”
in every process—from productplanning anddevelopment todesign,manufacturing,delivery, andmaintenance• Establish andmaintain BCP
systems as adisaster/hazard
countermeasure• Procurement
BCPs• Formulate BCPs
at major Hitachi
facilities

Sustainability
Management

Information
Security

Occupational
Health and
SafetyCompliance

Quality andProduct Safety
Management

Business
Continuation
Initiatives

Hitachi Integrated
Report 2020 (p. 61)

http://www.
hitachi.com/
IR-e/library/
integrated/index.html

Risk management for strengthening business and business continuity

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 the

Occupational
health andsafetyMarket risks• Economic trends• Exchange rate fluctuations• Funding procurement
environment• Falling stock or other prices

Management environment
risksManagement policy andstrategy risks

Other risks affecting overall
company management• Procurement of raw materials
and components• Fluctuations of quotations andcosts in long-term contracts, aswell as contract cancellations• Credit risks of partners andsuppliers• Demand and supply balance• Rapid technological innovations• Human resource retention• Intensifying competition• Strategies relating tostrengthening the Social
Innovation Business• Mergers & Acquisitions, joint
ventures and strategic alliances• Business restructuring• Worsening performance ofequity-method associates• Overseas business activities• Cost structure reform efforts• Intellectual property• Litigation and other legal
proceedings• Product quality and responsibility• Large-scale disasters• Dependence on information
systems• Management of confidential
information• Debt related to retirement benefits• Dilution due to additional issuanceof shares*1 Information security governance supports corporate governance by building and implementing an organization’s internal
control mechanisms related to information security.

Hitachi Sustainability Report 2020

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Introduction

Management

Environmental

GovernanceSocialAssurance

Risk Management

Investment Risks and Opportunities

Post-Investment Flowchart
Approach

Structure

Monitoring by business unit

102-15 102-29 102-30
To accelerate the global Social Innovation Business amid structural changes and increasing uncertainty inthe world economy, it is increasingly important to understand investment risks and opportunities (e.g.,

Monitoring by Headquarters

M&A and orders for projects) and to take appropriate measures. As shown in the flowchart below, with

Contravention of specified conditions

regard to individual investment decisions (e.g., execution, business plan changes and disposals), underBusiness withdrawal, sale, or continuation determined by business unit

the ultimate authority of the Board of Directors and depending on the scale and content of the projects,
Hitachi delegates authority to the Senior Executive Committee (which, in principle, meets twice permonth) and respective business units to facilitate flexible and appropriate decision-making. In addition,
regarding important matters to be deliberated by the Senior Executive Committee, prior to deliberations,

Investment Strategy
Committee

Senior Executive Committee

Reportdiscussions are held with the Investment Strategy Committee*1 advisory body, whose findings, including
Business withdrawal, sale, or continuationpros and cons, are reported to Senior Executive Committee members, including the President.
*1 Investment Strategy Committee: Consists of 10 members from the finance department and other relevant corporate divisions (as of March 31,2020), including the Executive Officers in charge of Investment Strategy and Management Strategy as chairman and vice chairman.

Investment Execution Flowchart
Business unit (BU) management
meeting
Investment Strategy
Committee
Clarify project risk factors, identify
important issues, report findings,
including project pros and cons

ReportThrough the above process, Hitachi will further strengthen asset profitability and risk tolerance
while ascertaining risks before and after investments are made.

Senior Executive Committee

Board of Directors

BU CEO or executive vicepresident approval

President approval(important projects)

Board of Directors discussion(particularly important projects)

Quantitative Understanding of Risks

Activities

102-15
Hitachi calculates the maximum risk (Value at Risk) assumed by statistical methods according to thetype of assets held on the Group’s consolidated balance sheet.
Considering total consolidated net assets and other factors, we visualize the surplus capacity ofgrowth investments to monitor growth opportunities and ensure that risks are not excessively

After making an investment, Hitachi regularly monitors the business objectives and achievement
status of the project, considering changes in the external environment. In principle, each business

unbalanced compared to Hitachi’s consolidated management strength.
In addition, by analyzing risk conditions in each country and sector and the outlook for future

unit ensures flexibility, but Headquarters may also be involved depending on the level oftrends, Hitachi gains a quantitative understanding of risk concentrations in specific countries andimportance. Also, regarding changes in business plans and the disposal or reorganization of

sectors in comparison with profitability.

important investment targets, discussions are held by the Senior Executive Committee as in theexecution stage. For investment targets whose business is not progressing as planned, Hitachi
established a framework to deliberate on the pros and cons of continuing business, including
withdrawal as an option, so as to improve capital efficiency.

Hitachi Sustainability Report 2020137

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Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

138

Risk Management

Understanding and Responding to Risks andOpportunities Related to Sustainability

sustainable society by seeking out business opportunities contributing to the resolution of important
Activities

domestic and overseas issues, including those relevant to the UN Sustainable Development Goals (SDGs)
and Society 5.0.

201-2
Social and environmental issues, including climate change, resource depletion, the curtailment of businessactivity due to significant disasters, and social instability due to growing inequality, are having a substantial

Risk Factors

Activities

impact on corporate value creation and business models. Amid such drastic changes in the businessenvironment, companies must have a clear understanding of opportunities and risks and take appropriate
measures if they are to achieve sustainable growth over the long term.
Hitachi can gain a clear understanding of sustainability-related risks, and accordingly take appropriate
actions, thanks to the efforts of the Executive Sustainability Committee and other related committees. We
remain actively engaged in promoting our own sustainable growth while contributing to the realization of a102-15201-2

We conduct business on a global scale across a broad range of business areas and utilize
sophisticated, specialized technologies to carry out our operations. Thus, we are exposed to a wide
range of risks related to our operations. The following risks are based on the assumptions we
consider reasonable as of the date this report was issued.
For more information on business risks and other risks, please refer to our 151st Annual Securities Report.

Major Risks and Opportunities
Major risk factors
Fluctuations in product supply anddemand, exchange rates, andresource prices; insufficient raw
materials and components

Rapid technological innovation

Details on risks and opportunities
Risks• Price fluctuations, including for products, exchange rate impact, and excess inventory• Exchange rate impact and price fluctuations, including for raw materials and components• Impact from significant disasters on the supply chain• Shrinking demand and impact on the supply chain caused by the spread of COVID-19
Risks• Decreased competitiveness if development of cutting-edge technology or application of a product/service
does not progress as expected• Reduction or elimination of existing market due to technological innovation
Opportunities

Company actions• Build close relationships with multiple suppliers• Ensure an appropriate response to changes in demand in eachregion by promoting a local production and local consumption
model for products and services• Strengthen resilience to business interruption risks by formulating
BCPs at domestic and major overseas facilities

Responsible Procurement
Business Continuation Initiatives
Hitachi Integrated Repot 2020 (p. 38) Sustaining
Financial Soundness, Enhancing Cost Management
http://www.hitachi.com/IR-e/library/integrated/index.htmll• Promote open innovation through industry-academia-government
cooperation• Secure and develop digital talent• Strengthen Lumada• Foster an innovation ecosystem through the above

Hitachi Integrated Repot 2020 (p. 24) Expand Revenuesby Accelerating the Social Innovation Business
http://www.hitachi.com/IR-e/library/integrated/index.htmll
Hitachi Integrated Repot 2020 (p. 30) Reinforce Global
Competitiveness
http://www.hitachi.com/IR-e/library/integrated/index.html• Expand the direct hiring of frontline and digital talent overseas• Create workplaces where diverse talent can work comfortably• Secure highly skilled global talent using a global common
platform for HR Management• Retain and develop talent through through a common learning
management system globally across the Group and in-house
education programs

Hitachi Integrated Repot 2020 (p. 24) Expand
Revenues by Accelerating the Social Innovation
Business
http://www.hitachi.com/IR-e/library/integrated/index.html
Hitachi Integrated Repot 2020 (p. 30) Reinforce Global
Competitiveness
http://www.hitachi.com/IR-e/library/integrated/index.htmll• Establish a global occupational health and safety system that
includes lessons learned from global operations, theentrenchment of global norms, and the sharing of successstoriesOccupational Health and Safety• Develop advanced technology to generate new business opportunities
Securing human resources

Risks• Impact on new hires and worker retention due to increased competition to hire and retain highly skilledworkers
Opportunities• Grow opportunities for the recruitment and retention of highly skilled workers who share Hitachi’s vision
Occupational health and safety

Risks• Impact on business due to inability to create healthy, safe, and secure work environments• Impact on business activities from employees infected with COVID-19

151st Annual Securities Reporthttps://www.hitachi.com/IR-e/library/stock/
hit_sr_fy2019_4_en.pdf

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Risk Management

Major risk factors
M&A, investment in new projects,
etc.

Details on risks and opportunities
Risks• Failure related to insufficient management of projects involving M&A aimed at strengthening the Social
Innovation Business, investment in new projects, R&D investment/CAPEX, and large-scale orders
Opportunities• Build a foundation for growth through the acquisition of new management resources
Geopolitical risks

Risks• Impact on Hitachi Group’s overseas businesses due to political, economic and social trends
Tighter laws and regulations

Risks• Tighter laws and regulations regarding investment, exports, and customs duties
Example: Impact on business activities from the introduction of new laws and regulations related to theprotection of personal data, such as the General Data Protection Regulation (GDPR) in Europe
Compliance

Risks• Loss of 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 and responsibility

Risks• Loss of trust and claims for damages due to defects or a deterioration in product and service quality
because of the increased complexity/sophistication of products or services, or the diversification of
production sites or suppliers

Climate change/significant
disasters

Risks• Impact on business activities due to measures in line with the tightening of international regulations to curb
greenhouse gas emissions and the depletion of energy and resources• Impact on business activities, from production to sales, due to a significant disaster affecting major
facilities in Japan or overseas
Opportunities

Company actions• Carry out strategy formulation in business units and phase-gate
management in various councils and approval meetings• Analyze and discuss market trends, other company trends,
technological trends and potential risks at Investment Strategy
Committee, Business Strategy Meeting, Senior Executive
Committee, Board of Director and Audit Committee meetings

Corporate Governance• Regularly update our understanding of global political andeconomic trends, analyze the impact on our business andswiftly implement countermeasures on a Group-wide basis• Operate personal information protection systems in line with
Hitachi’s personal information protection policy• Identify businesses subject to the GDPR, assess risk, implement
appropriate safety management measures in line with thoserisks, and conduct worker training

Information Security• Implement Group-wide compliance programs based on HitachiGroup Codes of Conduct as highest principles• Strengthen measures to prevent bribery and violation ofcompetition laws

Compliance• Strengthen the quality assurance system• Engage in activities aimed at preventing accidents• Engage in activities aimed at ensuring compliance with laws andregulations related to technology• Ensure intensive risk assessment• Implement measures for handling product accidents• Conduct quality and reliability-related training

Quality and Product Safety Management• Strengthen measures to achieve the CO 2 reduction targets in
Hitachi Environmental Innovation 2050
• Implement measures in line with an analysis of Hitachi risks andopportunities based on climate-related scenarios• Formulate BCPs to strengthen our ability to respond to businessdisruption risks

Achieving a Decarbonized Society
Climate-related Financial Information Disclosure
Business Continuation Initiatives
Hitachi Integrated Repot 2020 (P. 28) Creation of Socialand Environmental Value
http://www.hitachi.com/IR-e/library/integrated/index.html• Promote cybersecurity strategies through risk management andvalue creation• Enhance technological and product development for digital
environments

Information Security
Hitachi Integrated Repot 2020 (P. 42) Story of Value
Creation in the IT Sector
http://www.hitachi.com/IR-e/library/integrated/index.html
Hitachi Integrated Repot 2020 (P. 24) Expand Revenuesby Accelerating the Social Innovation Business
http://www.hitachi.com/IR-e/library/integrated/index.html• Expand the decarbonization business by offering climate change–related solutions
Information security

Risks• Computer viruses or other factors adversely affecting information systems
Opportunities• Expand revenue opportunities through increased demand for information security measures• Respond to increased demand for IT solutions in line with the expansion of remote work

Hitachi Sustainability Report 2020

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Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Hitachi Sustainability Report 2020

140

Risk Management

Business Continuation Initiatives
Hitachi’s Thinking on BCPs

Approach

Structure

Procurement BCPs Initiatives

Approach

Activities

Given the close relation of our business to social infrastructure, we are enhancing our businessTo minimize the impact of disasters that may occur, the procurement divisions in business units and key

continuity plans (BCPs) to ensure that the impact of risks does not disrupt our business and thereby

Group companies in Japan have created procurement BCPs that (1) standardize and use generic parts tosignificantly affect society. The Hitachi Group Guidelines for Developing Business Continuity Plans

make procurement as flexible as possible; (2) cultivate multiple suppliers; (3) distribute production across(Overview) and the Hitachi Group Guidelines for Developing Business Continuity Plans (By Department)
were issued in Japanese, and then translated into English and Chinese for distribution to all HitachiGroup companies to enhance preparedness for major disasters and other risks.
Regarding infectious diseases, we released the Hitachi Group Guidelines for Pandemic Influenza
Preparedness in Japanese, English, and Chinese. In fiscal 2019, they served as a useful tool in dealing
with the novel coronavirus (COVID-19) pandemic.
We have also appointed personnel with responsibility for risk-response policies at our main overseas bases.
Around 300 overseas Group companies prepared BCPs to strengthen their ability to respond to businessseveral locations; (4) budget inventory strategically; and (5) consider substitute products.

risks, including major disasters, infectious diseases, political instability, social disruption, and acts of terrorism.

We held desktop exercises to see whether or not procurement BCPs would be effective against
earthquakes and held group discussions about what should be done during and after suchdisasters, seeking further improvements.
Achievements in FY 2019

In fiscal 2019, all major Group business sites in Japan with production lines (192 sites in total)
took steps to strengthen the procurement BCPs.
In January 2020, we introduced the Procurement BCPs Management System for ourbusiness partners in Japan to efficiently share information among Hitachi Group companies in

Responding to COVID-19
to provide instructions on preventive measures to Group companies worldwide. Similarly, each

Improving Safety for Employees Sent to Dangerous Regions

SystemGroup company formed its own task force to secure the safety of their employees and business
continuity while helping to maintain social infrastructure through its business operations.
Our regional headquarters around the world gather local information as well as sharing
information on the measures taken by Hitachi Group companies in their respective regions.

The president of Hitachi, Ltd. strengthened our policy of ensuring the safety of employees sent tocountries and areas at higher risk of conflicts, terrorism, and other threats. Survey missions of in-houseand outside experts are sent beforehand to such areas. After employees are dispatched, we conduct
additional local surveys every six months to confirm the effectiveness of our safety policies.

BCP Initiatives in Japan
Created BCPs for both major earthquakes and novel strains of influenza as appropriate to eachbusiness operation (fiscal 2011).
Conducted earthquake drills simulating a major seismic event (annually).
Conducted initial response drills simulating a major earthquake in the suburbs of Tokyo (2018).
Developed action plans including setting up substitute headquarters in the Kansai region in case our Tokyo
headquarters temporarily cease to function (2017); conducted drills to set up substitute headquarters (2019).
Conducted drills to set up an earthquake task force on a remote-work basis, on the assumption that amajor seismic event had occurred on a holiday, shutting down traffic (2019).

Support for Employees During the COVID-19
Pandemic[Occupational Health and Safety]
Hitachi Group’s COVID-19-Related Support Efforts[Social Contribution Activities]

time of a disaster.

A COVID-19 task force led by the president of Hitachi, Ltd. was established at Group headquarters

Countermeasures Against the COVID-19 Pandemic[Global Human Capital Management]

Hitachi is also contributing to safety measures at other Japanese corporations operating outside
Japan. To help enhance collaboration between the private and public sectors in this area, weparticipate in the Council for Public-Private Cooperation for Overseas Safety organized by Japan’s
Ministry of Foreign Affairs and take part in public-private exercises to counter terrorism and kidnapping.
Achievements in FY 2019

In fiscal 2019, against the threat of terrorism expanding around the world and the COVID-19
pandemic, we employed a range of safety measures, including providing timely alerts to employees.
This underscores our commitment to ensuring the safety of our employees working around the globe.

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

it matters

Even as the development of IoT creates new value, cyberattacks are growing

socioeconomic activity, privacy risks have also increased. Data associated withincreasingly sophisticated and widening in focus from traditional IT to encompass theindividuals, including location information and purchase history, has come to be known

IoT/OT field as well. The risks for corporations include leaks of information, operational

collectively as “personal data.” The use of personal data can be expected to create value

stoppages, and even direct disruption to business, making information security one ofgoing forward, but protecting this data and showing due consideration for privacy is

the most critical issues companies face. The development of Hitachi’s Social Innovation

essential. Hitachi not only implements comprehensive personal information

Business has highlighted the vital importance of information security governance as amanagement, strictly adhering to all relevant laws and regulations in every country andkey management issue, and measures are being put in place to address it.

region where it does business, it also aims to create value by using personal data safely

With the arrival of the digital age due to advances in IT and the internationalization ofWhat
we are doing
Information
security

141
103-2

I n f or m a tio n Mana g emen t

Why

Hitachi Sustainability Report 2020and securely while keeping privacy protected.

Core initiatives

Goals and KPIs

Disseminate Information Security Policies
Strengthen information management
Prevent information leaks
Provide education programs on
information security
Conduct thorough information security
audits and inspections

Information security and personal
information protection audits at all Group
companies and business units (annual)

Achievements in FY 2019
Launched cyber security risk-management activities

Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Information Management

What
we are doing
Personal
information
protection

Core initiatives

Goals and KPIs

Protect personal information
Manage customer information
Manage online content

Personal information leaks: 0

Achievements in FY 2019
Held e-learning programs on information security andpersonal information protection (participating employees:
around 40,000)
Conducted opinion surveys on use of consumer data in big
data businesses
Developed e-learning tool on using social media andaddressing associated risks

Hitachi Sustainability Report 2020

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103-2

Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Hitachi Sustainability Report 2020

143

Information Management

Information Security
Chaired by the CISO, the Information Security Committee determines all policies and procedures

Information Security Policies

PolicyHitachi considers one of its top management priorities to be information security governance tominimize the risk of business disruption such as leaks of information or operational stoppages due tocyberattacks. The Japan Business Federation’s Declaration of Cyber Security Management also placed

for information security and personal information protection. These decisions are conveyed to all
Hitachi Group business sites and companies, and are implemented by the relevant information
security officers.

Framework for Promoting Information Security

emphasis on cyber security measures as a critical management challenge from the aspects of both
value creation and risk management. Hitachi approaches the issue of information security governancePresident & CEO

based on the same concept.
At the same time, as a global company, we regard cyber security risk as one of our management
risks. Accordingly, to allow us to declare both internally and externally Group policies for addressing
this risk, we have formulated Information Security Policies in line with our corporate management
policies and based on our cyber security risk management.
We have our data centers and other divisions ISMS-certified by the ISMS Accreditation Center inInformation security chief auditor

Chief information security officer

accordance with the ISO/IEC 27001 Information Security Management System international standard.
This certification has been received by 7 divisions of Hitachi, Ltd. and 27 divisions of 21 Group
companies.*1

Information Security Committee*1 As of July 31, 2020.

Information Security Policies
1. Formulation and continuous improvement to information security management regulations
2. Protection and continuous management of information assets
3. Strict observance of laws and standards

Information Security Management

Structure

Hitachi reinforces its information security in line with its Global Information Security Administration

4. Education and training

Rules, which conform to the international ISO/IEC 27001 standard. These rules are globally

5. Incident prevention and management

distributed by the headquarters of Hitachi, Ltd. and its Group companies. Other measures include

6. Assurance of fair business practices within the corporate group

actively promoting the use of shared security services and related support for information security
provided by regional headquarters in the Americas, Europe, Southeast Asia, China, and India.
The Information Security Committee determines policies and procedures for information security

Framework for Promoting Information Security

Structureand personal information protection. The Information Security Promotion Council and other bodies
convey decisions internally and to other companies in the Hitachi Group. Information security

At Hitachi, Ltd., the CISO (Chief Information Security Officer), the C-level executive with ultimate

officers at business sites and companies ensure that these decisions are implemented in theauthority and responsibility regarding the handling of information security and personal privacy

workplace.

issues, oversees promotion of information security for all Hitachi products and internal facilities.

Details of our information security initiatives are contained in our Information Security Report.

Information Security Report 2018 (latest edition)
https://www.hitachi.com/sustainability/download/
pdf/securityreport_e.pdf

Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Information Management

Achievements in FY 2019

As cyberattack methods become more diversified, our business is at a higher risk of damage

Education on Information Security

Employee Engagementfrom incidents taking place in a broader range of areas. To address this risk, in fiscal 2019 we
expanded the scope of our risk management from the security of the internal IT environment

Hitachi holds annual e-learning programs on information security and personal information protectionused by our existing OA to launch a new series of cyber security risk management activities.

for all executive officers and employees.

We are currently working to reduce business risk by expanding our efforts in the environments

Nearly all of the roughly 40,000 employees at Hitachi, Ltd. participate in these programs. We offer

where products and services are developed, produced, and manufactured as well as the supply

a variety of courses that have different goals and are tailored to different target audiences, including

chain and the process of developing products and services.

new employees, new managers, and information system administrators. We also implement
simulation training to educate employees about malicious targeted e-mail attacks and othercyberattacks. Employees are sent examples of targeted e-mail to heighten their awareness of

Security Monitoring
In Hitachi, the Security Operation Center (SOC) monitors security on a 24/7 basis so global-scale
cyberattacks can be detected and countermeasures initiated right away. The Incident Response Team
(IRT) collects and develops threat intelligence*1 and manages the response to any security incidents.
*1 Threat intelligence: An approach to countering cyberattacks using knowledge of new threats gathered from a range of information on cybersecurity.

Preventing Information Leaks

security through direct experience.
Our educational programs, shared within the Group, provide Group-wide education on information
security and personal information protection.

Thorough Information Security Audits and Inspections

Activities

The Hitachi Group has developed its approach to security based on the “plan-do-check-act” (PDCA)
Structure

Hitachi takes the following IT steps to prevent information leaks: encrypting devices; using thinclients;*1 employing electronic document access control and expiration processing software;
maintaining ID management and access control by building an authentication infrastructure; andfiltering e-mail and visited websites. In response to the recent spate of targeted e-mail attacks andother cyberattacks, we are participating in an initiative to share information between the private
sector and the government. We are also enhancing our IT organization by adding more layers to ourleak prevention procedures.
To prevent leaks from our suppliers, we review their information security measures based on
Hitachi’s own standards before allowing them access to confidential information. We also provide
tools to suppliers (procurement partners) for security education and for checking businessinformation on computers. In addition, we require suppliers to check and remove businessinformation from personal computers.
*1 Thin client: A terminal with the minimum necessary software. Thin client computing significantly enhances cyber security by storing applications and data on the server.

cycle for its information security management system. We conduct annual information security andpersonal information protection audits at all Group companies and business units.
The president of Hitachi, Ltd. appoints officers to conduct independent audits. These officers are
not allowed to audit their own units, underlining our commitment to fairness and objectivity inauditing. There are 196

Hitachi Group companies in Japan, including Hitachi, Ltd., that conduct

audits in the same way as Hitachi, Ltd., and all results are subject to confirmation. For Hitachi Group
companies outside Japan, we use a “common global self-check” approach to ensure Group-wide
auditing and inspections. We implement Confirmation of Personal Information Protection andInformation Security Management annually for the voluntary inspection of Hitachi, Ltd. business unit
workplaces. We conduct monthly Confirmation of Personal Information Protection and Information
Security Management assessments at 629 operations (as of March 2020) that handle important
personal information. This regular control mechanism ensures ample safety management andimplementation.

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Contents

Introduction

Management

Environmental

SocialGovernance

Assurance

Hitachi Sustainability Report 2020

145

Information Management

Personal Information Protection
Personal Information Protection Policy

PolicyManagement Framework for Customer Information

Structure

Hitachi, Ltd.’s Personal Information Protection Policy sets out its corporate philosophy and principles

Hitachi’s customer relations management framework, HiCRM, has been deployed at approximately

on personal information protection. The policy is disseminated to all executive officers and

200 Group companies to collect and accurately manage customer and transaction information

employees, as well as being publicly available.

Group-wide, in addition to serving as a marketing tool. HiCRM covers more than 80% of the orders
received across the whole Group, with the database enabling us to formulate more effective sales

A personal information protection management system based on the policy has also been
established. Through the rollout of the system, as well as the safe handling of personal information,

strategies and offer collaborative solutions by multiple businesses. Going forward, we will consider

programs for all employees, and periodic audits, we are ensuring protection of personal information.

rolling out the system more aggressively across the Group.

Privacy Mark*1 Certification

Privacy Protection Initiatives by Hitachi’s IT Sector

Activities

418-1
Hitachi, Ltd. received Privacy Mark certification. The entire Hitachi Group is committed to personal
information protection, with 39 Hitachi Group companies having received the Privacy Mark as ofMarch 31, 2020.

Approach & Activities

We are taking proactive steps on privacy protections to ensure that personal data is used safely andsecurely.
In Hitachi’s IT sector, which leads our digital business, we have assigned a personal data manager
responsible for managing privacy protection and established a privacy protection advisory committee

Hitachi also strives to safeguard personal information globally at Group companies outside Japanto support risk assessments and develop countermeasures based on knowledge and expertise of

based on each company’s personal information protection policy and compliance with all applicableprivacy protection. In accordance with the policies set by the committee, our employees implement

laws and regulations as well as the expectations of society at large.

privacy impact assessments for processes where personal data will be handled and take measures

There were no cases of personal information leakage during fiscal 2019.

to prevent privacy violations. When employees find it difficult to assess risks on their own, or*1 Privacy Mark: A third-party certification established in April 1998 that is granted by the assessment body Japan Information Processing
Development Corporation to businesses that have taken appropriate security management and protection measures related to personal
information.

conclude that risks of privacy violation are high, the privacy protection advisory committee will
extend support to deal with the case and help reduce risks. In fiscal 2019, we dealt with 190 privacy
protection cases of this sort.
In order to leverage the expertise built on these experiences when conducting business with our

Responding to Personal Data Protection Laws Around the World

SystemWith the increasing risk of privacy violation in recent years due to the advent of the digital age
following advances in IT and the globalization of socio-economic activities, lawmakers are actively
seeking to create and modify relevant laws and legislation in countries and regions around the world.
The Hitachi Group pays close attention to relevant laws and legislation on a global basis, including
the European General Data Protection Regulation (GDPR), making efforts to comply with themacross the Group. It also monitors relevant legislation and social trends and takes action in responsewhen necessary.

customers, we have made publicly available a whitepaper on Hitachi’s privacy protection initiatives in
the use of personal data. Furthermore, Hitachi regularly conducts consumer opinion surveys on theuse of consumer data in big data businesses to understand changing consumer perceptions andtake them into consideration when updating privacy protection measures.

Hitachi Personal Information Protection Policy
http://www.hitachi.com/privacy-e/Contents

Introduction

Management

Environmental

SocialGovernance
Information Management

Online Content Management
Information Management Policies on
the Use of the Web and Social Media

PolicyHitachi has been active in promoting initiatives to deepen customer understanding of its Social
Innovation Business through its corporate website and social media accounts. To protect our brandand avoid violating the rights of others, including human rights, in implementing these initiatives, wehave established the Hitachi Social Media Policy for global use, which stipulates usage policies. To
raise awareness of this policy, an e-learning tool on approaching the use of social media andaddressing associated risks is available in Japanese, English, and Chinese.

Assurance

Hitachi Sustainability Report 2020146

Contents

Introduction

Management

Environmental

GovernanceSocialAssurance

Hitachi Sustainability Report 2020

G ove r n anc e Data

Corporate Governance

Leadership Demographics
Gender
Total

Directors*1
Executive officers*

1

Executive and corporate officers*1 *3(Ratios for female and non-Japanese executive and corporate officers)*1 As of July 2020.
*2 Including 10 independent directors (four from Japan and six from outside Japan).
*3 Including fellows.

Nationality

Male

FemaleJapanese

Non-Japanese

13*2

11

2

7

6

33

33

0

31

2

70

65

5
(7.1%)

646(8.6%)

147

Contents

Introduction

Management

Environmental

To enhance the reliability of the data disclosed in the Hitachi Sustainability Report 2020, we havereceived independent assurance of key environmental and social performance indicators by KPMG.

The standards, guidelines, and calculation methods used in collecting environmental data areposted on our website.

Governance

Assurance

Hitachi Sustainability Report 2020

148

Assurance

I n d e p e n de nt Assura n ce

AZSA Sustainability Co., Ltd. The indicators that were assured are marked with aSocialCalculation Methods for Environmental Load Data
https://www.hitachi.com/environment/data/
method.html

Inquiries

Sustainability Promotion Division
1-6-1 Marunouchi, Chiyoda-ku, Tokyo 100-8220, Japan
Tel: +81-3-3258-1111 Fax: +81-3-4235-5835
www.hitachi.com/sustainability/