Hitachi Group
Sustainability Report 2015
FY 2014 Results

Hitachi Group
Sustainability Report 201501
Contents

Contents
Introduction

The Hitachi Group and Sustainability

03

06

Hitachi and Society

07

Hitachi’s Approach

12

Leadership

17Management Message/Executive Officer’s Message/Message from Representative

Innovation from 2015 to the Future

25

Energy Solutions

26

Traffic Infrastructure Initiatives

33

Initiatives for Social Infrastructure Security

39

Foundation for Promoting CSR Management

46

CSR Management

47

Hitachi R&D and Intellectual Property

50

Stakeholder Engagement

58

Our Ongoing CSR Activities: Environment

64

Environmental Management Strategies and Initiatives

65

Environmentally Conscious Products and Services

75

Environmentally Conscious Production

85

Preserving Ecosystems

104

Environmental Communication

109

Environmental Engagement

112

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Sustainability Report 201502
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Contents

Our Ongoing CSR Activities: Social

113

Respect for Human Rights

114

Supply Chain Management

118

Diversity and Inclusion

124

Employee Health, Safety, and Welfare

135

Global Human Capital Development

139

Quality Assurance Activities

144

Customer Satisfaction

147

Communication with Shareholders and Investors

152

Social Contribution Activities

156

Engagement with Society

169

Our Ongoing CSR Activities: Governance170

Corporate Governance

171

Risk Management

175

Compliance

177

Governance Engagement

184

Performance Data & Assurance

185

List of Key Indicators

186

Overview of Financial Results, Board Members, and Employee Data

188

Main Assessments and Awards

190

Third-Party Assurance and Verification

193

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Innovation from 2015 to the Future

46–63Foundation for Promoting CSR Management

64–184

Our Ongoing CSR Activities

185–195

Environment

Performance Data & AssuranceSocialGovernanceContents

Introduction
How to Use This Report
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Hitachi Group
Sustainability Repor t 2015

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06-24

The Hitachi Group and Sustainability

25-45

Innovation from 2015 to the Future

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Foundation for Promoting CSR Management

64–184

Our Ongoing CSR Activities

185-195

Performance Data & Assurance

Environment

SocialGovernanceContents

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Editorial Policy

Basic Concept

The Hitachi Group Sustainability Report 2015 presents basic policies, promotion systems,
measures, and key performance indicators on our activities in keeping with related
reporting guidelines. The report is a tool with which we engage with our stakeholders
through honest and transparent disclosures of information regarding fiscal 2014 activities
and Hitachi’s stance in addressing social and environmental issues that are vital to thesustainability of corporate management and society.
What This Report Covers (Scope of Reporting)
PeriodThe main period covered is fiscal 2014 (April 1, 2014, to March 31, 2015)

Companies

Hitachi, Ltd., and 995 consolidated subsidiaries (including variable interest entities):
total 996 companies

Scope of Data

Financial data: Hitachi, Ltd., and 995 consolidated subsidiaries (including
variable interest entities): total 996 companies and 261 equitymethod affiliates
Social data:

Scope of data indicated under each item

Environmental
data:

Hitachi, Ltd., and 995 consolidated subsidiaries (including
variable interest entities): total 996 companies. However, forenvironmental performance data associated with Hitachi’sbusiness operations, Hitachi Group companies whoseenvironmental load comprises 90% of the total (based on
Hitachi calculations) are included.

Reporting Cycle

Published every year as an annual report

Date Published

July 2015* The data for each fiscal year are the results according to the scope of data in that fiscal year.
* The base fiscal year data have been revised to match the scope of data for fiscal 2014.

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Our Ongoing CSR Activities

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Environment

Performance Data & AssuranceSocialGovernanceContents

Introduction

Symbol Marks Used in This Report*: Technical terms, proper nouns, tables, diagrams, etc. requiring explanation
Hitachi References in This Report

Hitachi, Ltd.: Information on or initiatives of Hitachi, Ltd.
Hitachi: Information on or initiatives of all Group companies in and outside JapanKey Guidelines Referred to in Preparing This ReportGRI Sustainability Reporting Guidelines (G4), Global Reporting Initiative
Environmental Reporting Guidelines (2012 version), Ministry of the Environment, Japan
Environmental Reporting Guidelines 2001—With Focus on Stakeholders, Ministry of
Economy, Trade, and Industry, Japan

Disclosure of Financial and Non-Financial Information

Hitachi, Ltd., following closely the deliberations of the European Union (EU) and theInternational Integrated Reporting Council (IIRC) about non-financial disclosure, presents
information to match the needs of stakeholders reading this report. The Annual Reportmainly presents financial information, while the Hitachi Group Sustainability Report mainlypresents non-financial information and clarifies how sustainability issues relate to financial
activities. The latest information is available on the Hitachi Group’s website.
Non-Financial Information Reports

Hitachi Group Sustainability
Report 2015

WEB CSR (Corporate Social

WEB Environmental Activities

WEB Global Community Relations andResponsibility)
http://www.hitachi.com/csr/

http://www.hitachi.com/environment/

Activities (Social Contribution Activities)
http://www.hitachi.com/csr/sc/* We also disclose information about Hitachi, Ltd. in the Corporate Governance Report.

Financial Information Reports

WEB Investor Relations
http://www.hitachi.com/IR-e/

Annual Report 2015
(2015 edition scheduled for
publication in August 2015)* Information about Hitachi Ltd. is also disclosed in the Annual Securities Report and theReport on the 146th Business Term.

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Innovation from 2015 to the Future

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64–184

Our Ongoing CSR Activities

185–195

Performance Data & Assurance

Environment

SocialGovernanceContents

Introduction

Third-Party Assurance and Verification
To enhance the credibility of this report, we commissioned third-party environmental,
governance, and social performance assessments in fiscal 2014. KPMG AZSA
Sustainability Co., Ltd. has provided assurance on a set of major governance and social
performance indicators in accordance with the International Standard on Assurance
Engagement (ISAE) 3000 and the Practical Guidelines for the Assurance of Sustainability
Information of the Japanese Association of Assurance Organizations for Sustainability
Information. Bureau Veritas Japan Co., Ltd. verified our environmental performance.
in the report.
Performance figures that have been assured/verified are indicated by
Report MediaThis report is a combination of the Hitachi Group Corporate Sustainability Report and the
Hitachi Group Environmental Sustainability Report, which we published until fiscal 2010.
The Hitachi Group Sustainability Report 2015, which emphasizes comprehensivenessand searchability of non-financial information, with special attention being given to
management transparency, is published as a PDF file (A4, 197 pages), while the easy-toread Hitachi Group Sustainability Report 2015 Highlights is issued in booklet form (B5, 18
pages). The booklet, in particular, contains valuable information regarding areas of social
interest and for understanding Hitachi’s sustainability management strategies.
Our CSR website enables us to communicate to a broad range of stakeholders,making available the gist of our sustainability management strategies, reports of ouractivities in fiscal 2014, details of our major achievements and guidelines for the media,
and news releases and other latest information.
BookletWebsitePDF

Hitachi Group Sustainability
Report Highlights

CSR (Corporate Social Responsibility)

Hitachi Group Sustainability Report

An easy-to-read communication tool targetingcustomers, including members of the generalpublic, and our transaction partners

A tool for communicating the gist of Hitachi’ssustainability activities to a broad range ofstakeholders

Contents

Contents

Hitachi’s Business and Society
Messages from Management
Examples of Social Innovation Business
CSR and Social Contribution Activities

Hitachi’s Business and Society
Messages from Management, Executive Officers, andRegional Representatives
Examples of Social Innovation Business
Basic Sustainability Policy
Gist of Sustainability Strategy
Overview of Actions and Key Results in Fiscal 2014
Latest CSR News
Cross-Reference Guidelines

Annual report targeting specialists and thosehighly interested in CSR emphasizing
comprehensiveness and searchability of nonfinancial information
Contents
Hitachi’s Business and Society
Messages from Management, Executive Officers, andRegional Representatives
Details of Social Innovation Business
Basic Sustainability Policy
Details of Sustainability Strategy
Reports of Activities in Fiscal 2014
Financial and Non-Financial Performance Indicators

Initiatives That We Participate In
We have been a member of the World Business Council for Sustainable Development(WBCSD) since 1995. We have been a member of the United Nations Global Compact
since February 2009.

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Environment

Performance Data & AssuranceSocialGovernanceContents

The Hitachi Group and

SUSTAINABILITY
Hitachi is committed to building a secure and comfortable world for allof its current stakeholders and future generations, working together
with these stakeholders to innovate and contribute to society. With ourtalented team and proven experience in global markets, we aim tocontinuously inspire the world. At the same time, to achievesustainable growth as a global company, we are accelerating creationof economic and social value.

Contents
Hitachi and Society

07

Hitachi’s Approach

12

Leadership

17

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Innovation from 2015 to the Future

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Environment

Performance Data & AssuranceSocialGovernanceContents

Hitachi and Society
Creating value to fulfill our Corporate Credo—contributing to society
through the development of superior, original technology and products—
has underpinned our business development for more than a century.
Hitachi’s R&D program focuses on products and services that help toresolve social issues.

Hitachi Group Profile

Corporate Profile (as of March 31, 2015)
Corporate name

Hitachi, Ltd.

Incorporated

February 1, 1920 (founded in 1910)

Head office

1-6-6 Marunouchi, Chiyoda-ku, Tokyo 100-8280, Japan

Representative

Toshiaki Higashihara
Representative Executive Officer, President & COO

Capital458.79 billion yen

Number of employees

31,375 (unconsolidated basis)
333,150 (consolidated basis)

Number of consolidated subsidiaries(including variable interest entities)

995 (Japan: 274, outside of Japan: 721)

Number of equity-method affiliates

261

Consolidated Financial Highlights for Fiscal 2014, Based on US GAAP
Revenues

9,761.9 billion yen (up 2%, year on year)

Operating income

600.4 billion yen (up 12%)EBIT*

551.0 billion yen (down 6%)

1

Capital expenditure374.3 billion yen (down 4%)

R&D expenditure335.5 billion yen (down 5%)

Total assets

12,395.3 billion yen

Net assets

4,274.3 billion yen

Overseas production as
percentage of total revenue

26%*1 EBIT: Defined income before income tax less interest income changes

Revenues, Operating Income, and EBIT
(billion yen)(billion yen)

12,00010,0009,665.8

9,315.8

8,000
6,000

444.5

4,000

443.8

573.2
412.2

585.6
532.8

422.0

1,200

9,761.9

9,616.2

9,041.0

600.4

1,000

551.0

800
600

358.0

400

2,000
0

200

2010

Revenues (left scale)

2011
Operating income (right scale)

2012
EBIT (right scale)

2013

2014

(FY)

0

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Hitachi and Society

Revenues and Ratio by Region

Other Areas

Number of Companies:
Number of Employees:(Consolidated for fiscal 2014, based on US GAAP)
Asia

Number of Companies:
Number of Employees:

EuropeNumber of Companies:
Number of Employees:

North America

Number of Companies:
Number of Employees:

2,216.6 billion yen (23%)
384
96,995844.7 billion yen (8%)
160
11,759Total Revenues
by RegionJapan
5,172.4 billion yen
Overseas
4,589.5 billion yen

Revenues and Ratio by Segment

355.5 billion yen (3%)

Other (Logistics and Other Services)

780.1 billion yen (7%)

Automotive Systems
936.9 billion yen (9%)

High Functional Materials & Components

5,172.4 billion yen (53%)
275* 1
193,209

Financial Services(Consolidated for fiscal 2014, based on US GAAP)

Smart Life & Ecofriendly Systems

Japan

Number of Companies:
Number of Employees:*1 Including Hitachi, Ltd. and 274 consolidated
subsidiaries in Japan.

1,060.4 billion yen (11%)
96
20,135

1,210.7 billion yen (11%)

467.5 billion yen (5%)
81
11,052

Information & Telecommunication Systems
Subtotal of Total
Revenues by
Segment
10,851.8 billion yen
Total Consolidated
Revenues
9,761.9 billion yen

1,504.5 billion yen (14%)

2,032.1 billion yen (19%)

Power Systems

472.6 billion yen (4%)

Social Infrastructure & Industrial Systems
1,646.8 billion yen (15%)

Electronic Systems & Equipment
1,132.3 billion yen (11%)

Construction Machinery
779.9 billion yen (7%)

Key Business Segments for Social Contributions
Creating value to fulfill our Corporate Credo—contributing to society through thedevelopment of superior, original technology and products—has underpinned our businessdevelopment for more than a century.
The issues humanity faces are becoming global in nature: environmental problems likeclimate change and ecosystem degradation, as well as energy, water, resource, and foodshortages, urban population growth, and the graying of societies. To solve these social
issues, as a global corporate citizen, we create both economic and social value for asustainable society.
Information & Telecommunication Systems

Our expertise, gained through work in a broad range of areas, enables IT services tailored todiverse needs—from consulting to systems integration, operations, and maintenance. We conductbusiness operations in regions including North America, Europe, Asia, and Africa.

Locations of our business operations:
Hitachi Virtual Storage Platform
G1000. (Hitachi, Ltd.)Sales
2,032.1 billion yen
Operating income
116.2 billion yen
EBIT
93.6 billion yen

140 countries and regions

To contribute solutions to issues facing society and our customers, we provide IT solutions worldwide,
particularly storage solutions supporting data utilization.
Main Products and Services

Systems Integration, Consulting, Cloud Services, Servers, Storage, Software, Telecommunications & Networks, ATMs

Principal Affiliated Companies (as of March 31, 2015)

Hitachi Information & Telecommunication Engineering, Ltd., Hitachi-Omron Terminal Solutions, Corp., Hitachi Computer
Products (America), Inc., Hitachi Computer Products (Europe) S.A.S., Hitachi Financial Equipment System (Shen Zhen) Co.,
Ltd., Hitachi Solutions, Ltd., Hitachi Systems, Ltd., Hitachi Consulting Corporation, Hitachi Data Systems Corporation,
Hitachi Information & Telecommunication Systems Global Holding Corporation

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Hitachi and Society

Power Systems

Our highly efficient and reliable nuclear power generation equipment, as well as our wind, solar,
and other renewable energy power generation solutions, help to bring about a low-carbon society.
We conduct business operations in regions including North America, Europe, and Asia.

Share of installed wind power generation capacity in Japan:Wind Power Generation System(Hitachi, Ltd.)Wind Power Kamisu 1st Offshore Wind
Farm, Wind Power Ibaraki, Co., Ltd.

34%*

1

In 2014, we had the greatest installed capacity for domestic wind power generation systems. To
contribute to a low-carbon society, we are improving our product efficiency and developing offshore
wind farms.
*1 Source: FTI Intelligence, March 2015

Main Products and Services

Sales
472.6 billion yen

Thermal, Nuclear and Renewable Energy Power Generation Systems, Transmission & Distribution Systems

Principal Affiliated Companies (as of March 31, 2015)

Operating income–6.1 billion yen
EBIT

Hitachi-GE Nuclear Energy, Ltd., Hitachi Power Solutions Co., Ltd., Horizon Nuclear Power Limited,
MITSUBISHI HITACHI POWER SYSTEMS, LTD.

–2.8 billion yen

Social Infrastructure & Industrial Systems

Our rail system, elevators and escalators, water treatment systems, and industrial equipment andenergy-saving solutions reduce the environmental burden. Business operations are focused on
industrial equipment and plants in the Asia region, rail systems in the United Kingdom, andelevators in China.

Ultrafast elevator speed:
Class 800 high-speed train cars areready for use in the Intercity RailService. (UK) (Hitachi, Ltd.)Sales
1,646.8 billion yen
Operating income
84.7 billion yen
EBIT
101.5 billion yen

1,200 m/min (72 km/h)

In 2016, Hitachi is scheduled to deliver the world’s fastest elevators, traveling 1,200 meters per
minute (72 kilometers per hour), for the CTF Finance Centre, 530 meters tall, under construction in
Guangzhou, China.
Main Products and Services

Industrial Machinery and Plants, Elevators, Escalators, Railway Systems

Principal Affiliated Companies (as of March 31, 2015)

Hitachi Industrial Equipment Systems Co., Ltd., Hitachi Elevator (China) Co., Ltd., Hitachi Building Systems Co., Ltd.,
Hitachi Industry & Control Solutions, Ltd., Hitachi Plant Construction, Ltd., Hitachi Rail Europe, Ltd., Mitsubishi-Hitachi
Metals Machinery, Inc.

Electronic Systems & Equipment

Hitachi provides semiconductor manufacturing equipment that supports the Information Age,broadcasting and wireless communications systems, medical care and testing systems, andelectric power tools. We conduct business operations in regions including North America, Europe,Asia, and Africa.

Hitachi Medical’s MRI System.

MRI scanners shipped:

6,850

1,132.3 billion yen

As of the end of March 2015, Hitachi Medical had shipped MRI medical scanners to 85 countries.
Through development of these scanners and other medical equipment, Hitachi contributes to improving
people’s healthcare.

69.4 billion yen

Semiconductor Manufacturing Equipment, Test and Measurement Equipment, Advanced Industrial Products, Medical

Sales
Operating income
EBIT
59.9 billion yen

Main Products and Services

Electronics Equipment, Power Tools

Principal Affiliated Companies (as of March 31, 2015)

Hitachi High-Technologies Corporation, Hitachi Koki Co., Ltd., Hitachi Kokusai Electric Inc., Hitachi Medical Corporation

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Hitachi and Society

Construction Machinery

Our technological expertise helps us to develop solutions in civil engineering and construction,building demolition, mining, and construction machinery sales, service, and maintenance. We
conduct business operations in regions including North America, Europe, Asia, and Africa.

Overseas sales ratio:
Hitachi Construction Machinery’s
ultralarge hydraulic excavator and dump
truck for use in mining.

Sales
779.9 billion yen
Operating income

74%

This is the fiscal 2014 overseas sales ratio for construction machinery. Our excavators, wheel loaders,and dump trucks are used at construction sites and mines around the world.
Main Products and Services

Hydraulic Excavators, Wheel Loaders, Mining Machinery

Principal Affiliated Companies (as of March 31, 2015)

Hitachi Construction Machinery Co., Ltd.

54.7 billion yen
EBIT
55.6 billion yen

High Functional Materials & Components

This business segment produces high functional materials and components for IT, home
appliances, and cars, including semiconductor and display materials, circuit boards and relatedmaterials, synthetic resin car parts, storage devices, advanced special metals, magnetic materials
and parts, advanced molded components, and cable materials. We conduct business operations
in regions including Asia, North America, and Europe.
Hitachi Chemical’s anisotropic
conductive film.

Sales
1,504.5 billion yen
Operating income
123.0 billion yen

World share of anisotropic conductive film for LCDs (Hitachi estimation): ca.

60%

Hitachi Chemical’s Anisotropic Conductive Films for Displays, the world’s most widely used material
for connecting LCD panels to the semiconductor chips that drive the liquid crystal elements, havecontributed to the development of high-quality displays for smartphones and tablet computers.
Main Products and Services

Semiconductor and Display Related Materials, Circuit Boards and Materials, Automotive Parts (Molded Plastics, etc.), Energy
Storage Devices, Specialty Steels, Magnetic Materials and Components, Wires and Cables

EBIT
129.2 billion yen

Principal Affiliated Companies (as of March 31, 2015)

Hitachi Chemical Company, Ltd., Hitachi Metals, Ltd.

Automotive Systems

We supply cutting-edge automotive equipment and systems globally, including systems for engine
management, electric powertrain, drive control, and car information. We conduct business
operations in regions including the Americas, Europe, China, and Asia.

Fiscal 2013 ratio of automotive electronics products:
Hitachi Automotive Systems’s inverter.

Sales
936.9 billion yen

45%

Hitachi Automotive Systems aims for high levels of safety and fuel efficiency in developing electronics
products. The electronics products share in fiscal 2013 placed Hitachi at the equivalent of third place
among the top 10 global suppliers.
Main Products and Services

Engine Management Systems, Electric Powertrain Systems, Drive Control Systems, Car Information Systems

Operating income
56.1 billion yen
EBIT
34.9 billion yen

Principal Affiliated Companies (as of March 31, 2015)

Clarion Co., Ltd., Hitachi Automotive Systems, Ltd., Hitachi Automotive Systems Americas, Inc.

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Hitachi and Society

Smart Life & Ecofriendly Systems

Our air-conditioning systems, home appliances, LED lighting, solar power systems, and otherenvironmental business devices help to increase energy efficiency and reduce the environmental
burden. We conduct business operations in regions including China, Asia, and Europe.
Room Air Conditioner “Stainless-Clean
Shirokuma-kun.”

Sales
780.1 billion yen
Operating income
27.9 billion yen
EBIT
32.1 billion yen

Grand Prize winners:

3 kinds of products

Three Hitachi Appliances products won fiscal 2014 Energy Conservation Grand Prizes for excellent
energy conservation equipment: room air conditioners, LED lighting units, and home heat-pump water
heaters. The latter two won the prize for the second year straight.
Main Products and Services

Air-Conditioning Equipment, Room Air Conditioners, Refrigerators, Washing Machines

Principal Affiliated Companies (as of March 31, 2015)

Hitachi Appliances, Inc., Hitachi Consumer Marketing, Inc.

Others (Logistics and Other Services)

Hitachi is also active in logistics, including systems logistics, freight, inventory management, andpackaging for shipping, as well as in optical drives and such fields as real estate. We conductbusiness operations in regions including North America, Europe, and Asia.

Eco-car ownership rate:
Hitachi Transport System’s
Metropolitan East Distribution Centerand a large truck.

Sales
1,210.7 billion yen
Operating income
40.4 billion yen

77.8%

In Japan, Hitachi Transport System has a rising eco-car ownership rate, including hybrid, natural gas,
electric, and LPG vehicles, as well as nationally certified, low-emission gas and biofuel vehicles.
Main Products and Services

Logistics, Optical Disk Drives, Property Management

Principal Affiliated Companies (as of March 31, 2015)

Hitachi-LG Data Storage, Inc., Hitachi Life, Ltd., Hitachi Transport System, Ltd., Hitachi Urban Investment, Ltd.,
Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd., Hitachi India Pvt. Ltd.

EBIT
51.3 billion yen

Financial Services

We offer solutions integrating diverse functions including leasing, loan and rental services, card
services and securitization, payment and collections, nonlife insurance, trust, and outsourcing
services. Business operations are focused on the five key areas of Japan, Europe, the Americas,
China, and ASEAN.
Hitachi Capital’s Hitachi Corporate
Card.

Sales
355.5 billion yen
Operating income
38.0 billion yen
EBIT
36.2 billion yen

Power generated in renewable projects:

220% growth

Hitachi Capital finances and operates wind and solar power plants, providing Hitachi’s combined
strengths to find solutions that promote renewable energy use. Our goal is to boost power generated
from renewable energy from 160 MW in fiscal 2012 to 350 MW in fiscal 2015.
Main Products and Services

Leasing, Loan guarantees

Principal Affiliated Companies (as of March 31, 2015)

Hitachi Capital Corporation

For all above segments, Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe
Ltd., and Hitachi India Pvt. Ltd. are the Hitachi Group’s regional headquarters for the Americas, Asia,
China, Europe, and India, respectively, and they sell the Hitachi Group’s products.

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SocialGovernanceContents

Hitachi’s Approach
As a global company, we share our stakeholders’ values and pursue
sustainable growth by integrating management strategies and CSR.
We align our CSR activities with our Mid-term Management Plan to realize
the Hitachi Group Vision, creating both social and economic value.

Trends in Society and Hitachi Group Identity
Society is today undergoing great changes and faces a range of challenges, fromenvironmental issues and natural resource and energy constraints to poverty, inequality in
education, diseases, and population concentration in cities. Hitachi’s Corporate Credo is tocontribute to society through the development of superior, original technology and products.
We created our Group Vision in May 2013, at the start of the 2015 Mid-term Management
Plan, with the aims of delivering innovations that help to answer society’s challenges and ofbuilding a safe, secure, comfortable, and fair society.
The Group Vision indicates the path to the next stage of growth. We draw on the
ethics and values that Hitachi has developed over the past 100 years—encapsulated in
our Corporate Credo and Founding Spirit—while continuously considering the next
generation. We look ahead to the longer term, while promoting corporate activities
informed by sensitivity to the needs of a changing society. Our Mid-term Management Plan
is the action plan we define to realize this vision; by integrating our management and CSR
strategies, we seek to enhance the effectiveness of this approach.
The implementation of our plan is a way for us to fulfill our responsibilities as a good
corporate citizen by promoting Social Innovation Business, and with robust, diverse
governance and a pioneering spirit and a strong ethical stance for our employees. We also
comply with national laws and work in line with the Hitachi Group Codes of Conduct.
In our 2015 Mid-term Management Plan, we have set a target for our overseas
revenue ratio of over 50% and expanded our Social Innovation Business in the global
market. To further accelerate global growth in fiscal 2015, the last year of the plan, on April
1, 2015, we appointed Chief Executives who will function as representatives of the HitachiGroup in interactions with regional societies and customers in four global regions: in theAmericas, in China, in the Asia-Pacific, and in Europe, the Middle East, Africa, and theCommonwealth of Independent States (EMEA/CIS). They will transition Hitachi’s worldwide
operations to an “autonomous decentralized global management” structure in which eachregion, including Japan, leads its business autonomously, maintaining a global outlook
while finding solutions to local issues.
We are expanding the Social Innovation Business globally to successfully complete
the 2015 Mid-term Management Plan and achieve growth prior to its completion.

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Performance Data & AssuranceSocialGovernanceContents

Hitachi’s Approach

Trends in Society and Hitachi Group Identity
Macro Trends in Society

Toward a society centered on
distribution, sharing, andrecycling
Expansion of free trade zones
Global economic growth led byemerging nations
Global market structural changes
based on energy resources

Hitachi Group Identity

Corporate Credo:

Contribute to society through thedevelopment of superior, originaltechnology and products

Hitachi Founding Spirit:

Harmony, Sincerity, Pioneering
SpiritAchieving a Sustainable
Society

Securing water resources, energy,
and food
Replacing aging infrastructure
systems
Reducing CO2 emissions
Improving transportation systems
Dealing with the low birthrate andaging population
Promoting material recycling

Hitachi Group Vision:

Hitachi delivers innovations thatanswer society’s challenges. With
our talented team and provenexperience in global markets, we
can inspire the world.

Direction of our management strategies

Rules for fair corporate behavior

Business plans

Companies’ regulations and standards

Mid-term Management Plan

Codes of Conduct

Hitachi’s Solutions for Social Issues
Combining our wide-ranging business activities with IT solutions helps us resolve social
Social Innovation Businessissues, including global environment problems.

Environment and Energy

Biodiversity, Water,and Other Resources

Energy-Saving Products
and Systems

Water Environment Solutions

Power Generation Systems

Integration Through IT

IT
Healthcare

Health and Aging

Smart Cities
Security Systems for Buildings
Advanced Transportation Systems

Cities andTransportation

Advanced networks, storage,
and cloud computing
technologies connect
infrastructure, products, andpeople. Hitachi provides
optimal solutions to resolve
social issues.

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Hitachi’s Approach

The Environment and Energy

The aim of Hitachi’s environmental management is to “achieve a sustainable society.” For
one key element of this aim, preventing global warming, we are reducing CO2 emissions
through our business operations.
Energy-Saving Products and Systems

We contribute to the reduction of CO2 emissions across society as a whole by providing
products and services with low energy consumption.
Power Generation Systems

We develop wind and solar power and other renewable energy power systems, as well as
reducing CO2 emissions by improving the efficiency of these systems.

Biodiversity, Water, and Other Resources

Ensuring biodiversity for the next generation means preserving ecosystems today. We
help to preserve ecosystems through business operations that clean the air, water,and soil.
Water Environment Solutions

Our water environment solutions—purifying polluted water and desalinating seawater, forexample—enable more efficient use of this limited resource.

Health and Aging

Responding to aging in societies worldwide, our medical solutions maintain and improvehealth. As well as diagnostic and testing equipment for early treatment, we supply
pharmaceutical manufacturing equipment for safe, effective drugs.
Healthcare

We contribute to medical innovation by providing solutions across the healthcare
cycle, including particle beam therapy systems and big data systems for preventive
care and diagnostics.

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Hitachi’s Approach

Cities and Transportation

Our infrastructure solutions increase safety and comfort in cities and remote islands
with limited infrastructure. Solutions include safe, high-speed transportation networks;
highly stable, efficient power equipment and transmission networks for diverse powersources, including renewable energy; and water systems for a safe, constant supplyof water.
Smart Cities

Worldwide, we propose new forms of cities that are safer, more secure, and moreconvenient, and we contribute to the standardization of smart city infrastructures.
Security Systems for Buildings

Our security systems cover exit/entry as well as elevator operations and maintenance.
Advanced Transportation Systems

Our safe, convenient railway and traffic information systems help reduce the environmental
burden and congestion.
2015 Mid-term Management Plan Targets
The 2015 Mid-term Management Plan focuses on three themes: Innovation, Global, andTransformation. To achieve our targets, we will grow and transform through our Social
Innovation Business.

2015 Mid-term Management Plan and Fiscal 2014 Results (Consolidated)
Management Targets
Fiscal 2015 Target*1

Fiscal 2014 Results*2

Revenues

10,000 billion yen

EBIT*3 (operating income) ratio

Over 7% (over 7%)

9,761.9 billion yen
5.6% (6.2%)

Net income attributable to Hitachi, Ltd. stockholders

Over 350 billion yen

241.3 billion yen

Net income attributable to Hitachi, Ltd. stockholders per share

Over 70 yen

49.97 yen

Total Hitachi, Ltd. stockholders’ equity ratio (manufacturing,
services & others)

Over 30%

27.3%

Service revenue ratio (including systems solutions)Over 40%

35%

Overseas revenue ratio

Over 50%

47%

Employees in Japan

200,000

193,000

Employees outside Japan

150,000

139,000

Total up to Fiscal 2015

Total up to Fiscal 2014

400 billion yen

310 billion yen

Service Revenue Ratio, Overseas Revenue Ratio, Number of Employees

Effects of Hitachi Smart Transformation Project * 4
Cost reduction effect
*1
*2
*3
*4

Assumed exchange rate: ¥90/$, ¥115/€
Exchange rate: ¥110/$
EBIT: Earnings before interest and taxes
A project to standardize global operations by optimizing the Group structure, expanding global shared services, and globally
standardizing and centralizing IT and administrative systems.

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Hitachi’s Approach2015 Mid-term Management Plan and Key Issues for Hitachi

In addition to financial activities, improved non-financial performance aimed at addressing
Hitachi’s key issues plays a crucial role in achieving the 2015 Mid-term Management Plan
goals. We set targets for non-financial activities related to key management policies andMaterial Issues for Hitachi

Management Focus

started these activities in fiscal 2013.
Material Issues for Hitachi

Fiscal 2015 Targets

Fiscal 2014 Results
Sustainable Business

Innovation:

Strengthen service businesses
that maximize IT utilization andbring about innovation

Expand R&D centers

Promoted R&D in 7 areas globally (as of June 2015)

Increase R&D staff by 500 people

Japan: about 200 people
Outside Japan: about 300 people

Strengthen Open Innovation

Japan: 246 cases
Outside Japan: 85 cases

Caring for the Environment
Eco-Product sales ratio: 90%

93%

Diversity Management

Global:Deliver innovation to customers
and society globally

Diversity among directors

Outside directors: 8
Non-Japanese: 4 (of which 2 are women)(as of June 2015, out of 12 directors)

Female senior executives

Appointed female head of CSR and Environmental Strategy
Division as senior executive-level director on April 1, 2015
Complete appointment by fiscal 2015

Female managers (Hitachi, Ltd.)Fiscal 2020 target: 1,000 women

434 women

Respect for Human Rights
Implement due diligence on business and human rights

Created guide for conducting human rights due diligenceand shared with Group companies

Public Policy Initiatives
Engage in dialogue with government officials

Policy council participation

Provide forums for stakeholder dialogue

Events held in Europe and Australia

Diversity Management
Promotion of global human capital management strategy

Transformation:

Transform Hitachi: To deliver
innovation by standardized andspeedy operation

Introduction of Global Grading System, which applies to all
managers in the Hitachi Group worldwide, as a common
platform for job evaluations, assessing the value ofmanagement duties against a common standard

Sustainable Business
Promotion of Hitachi Smart Transformation Project
Target outcome (aggregated fiscal 2011–15): 400 billion yen

Total up to fiscal 2014: 310 billion yen

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LeadershipManagement Message

Hiroaki Nakanishi

Toshiaki Higashihara

Hitachi: Creating New Value for Society Together with Our Customers
Humanity today is buffeted by dramatic change. We must tackle deep-reaching issues that impact our society on a global
scale: energy and environmental problems, water-related issues, population explosions, increasing poverty, and the graying
of societies. Companies are called upon to work with diverse stakeholders to find the solutions our society needs.
Technological innovation built on advanced IT is coming to play an ever-greater role in addressing these issues.
Since its foundation, Hitachi has aspired in its business activities to fulfill its mission: to contribute to society through thedevelopment of superior, original technology and products. Today we remain committed to this mission. By integrating theinfrastructural and information technologies we have created during our years of experience, we provide new solutions inareas like transportation and energy systems and water supply systems using our desalination technology. These areas
represent our Social Innovation Business, through which we seek to contribute to solutions to the global issues we all face.

Collaborative Creation with Our Customers

The social issues that we seek to address through our Social Innovation Business are growing more complex all the time, andthere are considerable differences in the needs of our customers and of societies in various countries and regions. To
accurately and swiftly grasp the nature of the problems facing our customers and these societies, we must position ourselvesclose to the customers and consider the needed solutions together with them. Hitachi believes that this “collaborative creation”
is a key way to approach the issues. As our Social Innovation Business expands worldwide, to advance collaborative creation
we must foster mutual trust with national and regional governments, local communities, academic societies, nongovernmentalorganizations, and other stakeholders and address their respective needs surely and reliably.
At Hitachi, we are working to promote diversity from perspectives including gender, nationality, and values—all the
aspects of each person’s individuality. We are also striving to secure the human resources prepared to shine on the global
stage. In these ways we seek to foster global leaders who can drive our innovation into the future. We furthermore strive toshare the principles of “Basics and Ethics,” the foundation of our corporate philosophy, with all our stakeholders. This goesbeyond dedication to corporate ethics, such as compliance with laws and international social standards, to encompass ourbusiness activities that aim to enhance our value as a company.
In addition to raising our economic value as a company, we work together with our customers to create things of true
value to society. In this way we pursue a safer, more secure, more comfortable society for people around the world.

Hiroaki Nakanishi		
Chairman & CEO		

Toshiaki Higashihara
President & COO

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Executive Officer’s Message: CSR and the Environment

Meeting Society’s Expectations
Through Collaboration with Stakeholders

Toshiaki Kuzuoka

Representative Executive Officer;
Senior Vice President and Executive
Officer; General Counsel &Head of Corporate Communication;
Head of Risk Management;
General Manager of Legal andCommunications Group; General
Manager of Risk Management Group;
General Manager of Corporate
Hospital Group
Hitachi, Ltd.

In recent years, there has been a global trend toward greater interest in corporate governanceamong investors and other stakeholders. In Japan, too, there are growing demands fordisclosure of corporate non-financial information and greater communication withstakeholders, including the June 2015 formulation of a corporate governance code. Hitachi,
which aspires to be a major global player, has long been actively involved in non-financial
information disclosure. We also agree with the spirit of the corporate governance code andhave moved to disclose information in our Corporate Governance Report.
Hitachi collaborates with customers in identifying issues of importance and thinking
about ways to resolve them. Communication with customers and our diverse stakeholders
is an effective means of grasping the expectations of global society as we determine
Hitachi’s business policies from a CSR perspective.
In the area of CSR, we formulated the Hitachi Group Human Rights Policy in fiscal
2013 and put it into effect in fiscal 2014. With the aim of understanding the effects of ourbusiness on human rights on a Group-wide basis, we worked together with NPOs andHitachi Group companies to prepare the Human Rights Due Diligence Guidance, which is
now being shared within the Group.
In the environmental field, we are conducting the Hitachi Global Lights-Off Campaign
at 234 locations in 23 countries worldwide. In the coming years we intend to continue
such global efforts together with Hitachi Group employees and local societies. Our
environmental action plan for 2013–15 has played a role in moving toward sustainability forsociety, and we are now working to develop a new action plan to succeed it.
At Hitachi we will continue to conduct our business in a way that reflects the
expectations of society, as seen through communication with stakeholders, and, bydisclosing information on measures and outcomes, to achieve corporate management with

Hitachi Global Lights-Off Campaign

a high level of transparency.

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Leadership

Executive Officer’s Message: Procurement

Working as a Group to Create Innovation ThroughCollaboration with Customers

Shinichiro Omori

Vice President and Executive Officer;
CPO; General Manager of Corporate
Procurement Division; Project Leaderof Direct Materials Cost
Transformation Project and Indirect
Materials Cost Transformation Project,
Smart Transformation Project
Initiatives Division
Hitachi, Ltd.

As Hitachi expands its Social Innovation Business globally to resolve issues throughcollaboration with customers, the need is greater than ever for the company to work
closely with its business partners. A major challenge in procurement is to increase added
value by building partnerships with competitive suppliers around the world, being always
on the lookout for ways to fully optimize the value chain.
We are working as a Group to identify and mitigate risks across the value chain. In
terms of CSR, we continually implement CSR Monitoring (self-checks) and external auditsof suppliers from China and other Asian countries.
At the same time, while we have 25 international procurement offices, the actual taskof placing orders has been consolidated into a professional service company in the HitachiGroup that focuses on key operations like selecting reliable business partners and taking a
globally coordinated approach to purchasing, thus ensuring that each region can add
value in an autonomous fashion.
Moreover, to make full use of the information held by the Hitachi Group, we have built
a database of suppliers, registering reliable business partners and sharing information on
them. This has not only resulted in reduced costs through the expansion of local
procurement but also mitigated supply-chain risks, including those related to CSR.
To ensure the steady implementation of these initiatives, we are developing andreinforcing our global procurement human resources by enhancing various e-learningmaterials and opportunities for on-the-job training. We encourage all procurement
personnel to take on various new challenges so they can better understand theimportance of maintaining a competitive edge from a global perspective.

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Executive Officer’s Message:
Human Capital

Creating Dynamic Workplaces ThroughDiversity and Inclusion

Hidenobu Nakahata

Vice President and Executive Officer;
CHRO; General Manager of Human
Capital Group; Project Leader of
Headquarters Transformation Projectand Global Human Resources
Transformation Project, Smart
Transformation Project Initiatives Division
Hitachi, Ltd.

Hitachi’s global human capital management strategy is designed to optimize individual andorganizational performance toward the goal of transitioning to an “autonomous
decentralized global management” structure.
Diversity and inclusion are important components of this strategy. Hitachi is striving tocreate workplaces that embrace diverse human capital. A good barometer of the progress
made in recent years is the success of our efforts in Japan to maximize the potential of
female employees, as corroborated by the recognition we have received in external
assessments. In July 2014, Hitachi Chairman Emeritus Takashi Kawamura received thePrime Minister’s Commendation for Efforts Toward the Formation of a Gender-Equal
Society, and in March 2015, the Ministry of Economy, Trade, and Industry and the Tokyo
Stock Exchange selected Hitachi, Ltd. for Nadeshiko Brand designation for the second
year running.
Opportunities for non-Japanese human capital are also expanding, as seen in Hitachi,Ltd.’s appointment of two foreign executive officers in April 2015. We will continue topromote diversity and inclusion in the future as we accelerate our efforts to achieve an“autonomous decentralized global management” structure.
Since fiscal 2013 we have been conducting a Group survey called Hitachi Insights,
based on which we are making ongoing workplace improvements worldwide. The survey
was distributed to 194,000 employees in fiscal 2014, and the survey results confirmed that
improvements are being made in a variety of areas.
In fiscal 2015 we will push forward with our global human capital management
strategy and continue creating workplace environments that maximize the potential ofour diverse human capital so we may grow both individually as employees andcollectively as a Group.

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Message from Representative (Europe)

Sustainability is critical for Europe. Hitachi cancontribute through its Social Innovation Business aswell as social contribution and environmental activities,
ensuring a better life for us and future generations.

Klaus Dieter Rennert

Chief Executive for EMEA/CIS
Hitachi, Ltd.
Chairman
Hitachi Europe Ltd.

Europe is midway through its Europe 2020 strategy for smart, sustainable, and inclusive
economic growth that addresses employment, innovation, education, poverty, climate,and energy sustainability. Hitachi can contribute through its Social Innovation Businessas well as its social contribution and environmental activities.
Social Innovation is not just central to Hitachi’s business strategy: it is fundamental toachieving a sustainable society. Successful delivery of Social Innovation requires
integration of a wide range of stakeholders. In Europe, we engage in relevant policy
discussions with and capture the expectations of our local stakeholders. Working withtrusted partners including CSR Europe, we discuss salient social innovation andsustainability issues with experts to gain feedback and hold ourselves accountable fordelivering solutions that answer society’s challenges.
One example is our healthcare business. Hitachi engaged with stakeholders at the
14th Hitachi EU Science and Technology Forum in October 2014 on “Innovative
collaboration for better healthcare” and through a debate on the future of healthcare in the
United Kingdom hosted by The Guardian in November. It is apparent that healthcare
systems not only require ongoing technology innovation but are also becoming morepatient centric. Therefore, Hitachi’s Big Data Research Laboratory, which recently openedin Copenhagen, will—in collaboration with Bispebjerg and Frederiksberg University
Hospital—conduct studies to develop new healthcare solutions.
To support our investments in European infrastructure, Hitachi is partnering with local
and national education institutions. Hitachi Rail Europe recently announced its
collaboration with the University of Sunderland and a local company, Gestamp Tallent
Automotive, to open the first University Technical College in County Durham, the United
Kingdom. Furthermore, many Hitachi employees across Europe are delivering educational
programs focused on science, technology, engineering, and math targeting various ages.
Our aim is to contribute to the future local talent pipeline, supporting employability andmeeting Hitachi’s workforce needs.
Social Innovation will be measured by its positive impact on society. It’s not just about
doing business. It’s about ensuring a better life for us and future generations, in Europe
and beyond.

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Message from Representative (Americas)
In the Americas, we promote CSR activities including
concern for human rights and social contribution
activities based on our guiding principles of doing
business in ways that are innovative, inclusive, andsustainable. Our CSR activities are fueled by our
employees initiative.

Jack Domme

Chief Executive for the Americas
Hitachi, Ltd.
Chief Executive Officer
Hitachi Data Systems

In the Americas, our Social Innovation Business is a strategic growth engine that also
promises to bring lasting benefit to our region. As we expand our business incompetitive global markets, our Social Innovation solutions must be innovative,
inclusive, and sustainable.
• Innovative: Our solutions provide unique answers to societal needs by interlocking our IT
and infrastructure knowledge.
• Inclusive: We bring together all of the vast resources of Hitachi in order to deliver uniquevalue to our customers.
• Sustainable: We always consider the social and environmental impact, as well as thebusiness sustainability, of our solutions.
Hitachi’s approach to corporate social responsibility reflects these principles. We
believe that to create more vibrant communities, we must support and participate in thecommunities where we operate through both philanthropy and volunteerism. And our local
employees are the best people to understand and respond to the needs of theircommunities. This is why we have taken a highly localized approach to CSR. Employee-led
Community Action Committees across Hitachi companies in North America initiate
volunteer activities and make charitable donations on behalf of the company. This year, weare expanding our CSR footprint by increasing the number of committees throughout
North America.
In fiscal 2015, we also will further educate employees on the topic of human rights.
Employees will have the opportunity to participate in e-learning to expand their knowledgeof human rights issues and how to safeguard against unintended infringements across the
supply chain.
Hitachi is committed to delivering technologies, products, and solutions that create asmarter, safer, and healthier global society. Our Social Innovation Business is driven by theimperative to do good for society, and our CSR initiatives demonstrate how our employees
embrace that commitment.

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Message from Representative (Asia-Pacific)

We will continue to contribute to the region by
providing solutions through our Social Innovation
Business in close collaboration with governments
and business partners.

Ichiro Iino

Chief Executive for Asia-Pacific
Hitachi, Ltd.
Chairman
Hitachi Asia Ltd. and Hitachi India
Pvt. Ltd.

The Asia-Pacific region has some of the most promising emerging economies in the world.
In Southeast Asia, regional economic integration is expected by the end of 2015 throughformation of the ASEAN Economic Community (AEC). Since Southeast Asia will effectively
become a single market, we estimate rapid and sustained economic growth that will
support essential infrastructure development and improved governance across the region.
In India, expectations are high for bold structural reforms in response to “Modi-nomics”—
the Indian government’s initiative to fuel dramatic growth. On the other hand, in the AsiaPacific Region, there are various social and environmental issues like the slow
development of infrastructure, climate change, population growth, and urbanization.
We at Hitachi recognize our responsibility to contribute to solving society’s challenges
through our Social Innovation Business. We have made significant achievements andprogress so far in such areas as transportation, urban development, and water treatment
to meet the needs of our diverse markets. Regarding the environment, we strive to do
more than just save energy in our factories. We have installed information technology
systems and equipment to track overall energy use and promote responsible energy
management in our customers’ offices, hotels, shopping malls, hospitals, andmanufacturing sites. We have also promoted the energy management business, which
optimizes the total consumption of energy.
As our contribution to society, Hitachi has sponsored four-year scholarships to three
students attending the Asian University for Women. Hitachi has also been operating sucheducational programs as the Hitachi Young Leaders Initiative and the Hindu-Hitachi
Scholarship Program. We remain strongly aware of the significance and necessity ofnurturing the next generation of leaders.
Hitachi will continue to contribute to the region by providing solutions through its
Social Innovation Business, including social infrastructure and urban development,
together with other necessary services in close collaboration with governments andbusiness partners.

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Message from Representative (China)
We will press ahead with our CSR activities in China
from a broad perspective, including daily business
operations and volunteer activities as part of efforts toachieve our goal of becoming the Most Trusted
Partner in China.

Kenichi Kokubo

Vice President and Executive Officer;
Chief Executive for China
Hitachi, Ltd.

China is currently transitioning from its period of high economic growth, which served as an engine forthe global economy, to a “new normal” set forth by the government that places an increasingemphasis on environmental problems and low carbon energy. Under this transition, particular focus isplaced on the condition of air, water, and other essential resources.
As Hitachi aims to grow and develop together with Chinese society, we need to accurately
understand local needs, including a growing awareness of environmental preservation. By combining
our strengths in infrastructure technology and IT, we believe we can play a crucial role in solving theseissues through our contributions to realizing a low-carbon economy.
In June 2014, we conducted the “Hitachi Group China Business Strategy Comprehensive
Activities 2014” in Beijing to share the goal of unifying the management of the Hitachi Group
companies in China and to set the future direction for our business in this country. In addition to a
Chinese business strategy conference that brought together more than 300 Hitachi executives, theactivities included a technology exchange meeting with the National Development and Reform
Commission drawing 350 participants and a press conference for the major Chinese media. All of theactivities were a great success.
While the success internally and externally showcased our strong determination to contribute to
the development of Chinese society, it has also brought together the 180 Hitachi Group companies in
China and fostered our approach as well as our mind in the same direction.
We also have to understand that compliance is another very important factor for Hitachi todevelop its business in China. To continue our business activities responsibly in Chinese society, it is amust for each of our business partners to carry out its own social responsibilities.
As one of Hitachi’s efforts for compliance, the company conducts supplier audits every year. In
fiscal 2014 we audited about 20 suppliers, scrutinizing their compliance with regulations related to theenvironment, human rights, and safety and health. We will continue these audits and are committed
to fulfilling our social responsibilities together with our suppliers in China.
Hitachi also carries out a variety of activities for the benefit of China’s society. Last year, 2014,
was the third year of the Hitachi Eco Education Classroom program, an original CSR activity of
Hitachi Group companies in China. Over these three years, approximately 3,000 elementary students
have participated in this program, which was highly regarded by schoolteachers.
At Hitachi Hope Elementary School, a school supported by Hitachi, the Hitachi Eco Education
Classroom program was conducted. There we also replaced blackboards in all classrooms to
improve the school environment for students to enjoy their studies. We also continued to nurturechildren through efforts including support for rebuilding a school affected by the earthquake thatstruck Yunnan Province in August 2014.
In fiscal 2015, Hitachi introduced its “autonomous decentralized global management,” which has
been promoted globally. As the head of the Hitachi Group companies in China, I consider my office as
the “control tower” for the region as we work closely with customers to solve the issues they face.
This approach applies to all our CSR and social contribution activities; we are committed toproactively taking initiatives based on a CSR perspective, recognizing the high expectations people
have of Hitachi.

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Hitachi Cars Ready for Use in the Intercity Express

INNOVATION
From 2015 to the Future

As economic globalization continues, modern societies worldwide areconfronting issues from shifting population structures andurbanization to global environmental threats and shortages of energy
and water. Hitachi is integrating the infrastructural and information
technologies created during its years of experience and applying themin the Social Innovation Business, the company’s way of contributing
to solutions for the issues humanity faces and helping to create
societies where people can live in safety, comfort, and peace of mind.

Contents
Energy Solutions

26

Traffic Infrastructure Initiatives

33

Initiatives for Social Infrastructure Security

39

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Energy Solutions
Providing Stable, Sustainable Power to Meet Rising Electricity DemandSocial Issues Involving Energy Infrastructure

The Northeast blackout of August 2003 dealt a heavy economic blow to the United States. (New York City)

Electricity is a vital lifeline that supports virtually all economic activities and has become essential
to the lives of people in modern society. With the urbanization and growing populations ofemerging countries, global demand for electricity is expected to continue rising.
In energy-dependent modern societies, any stoppage in the electricity supply can halt
the functioning of much of our social infrastructure, including medical, transportation, andgovernment services. Problems in recent years include the aging and degradation ofelectric grid facilities in developed countries and the ongoing chronic power shortages inemerging countries. In all parts of the world, the effects of small-scale transmission failures
can give rise to stoppages that affect electric power plants over wider areas. Infrastructure
maintenance and development for the transmission and distribution of electricity, as well as
for generation itself, are urgent tasks for a stable supply of power.
Increasing carbon emissions with global economic development are also a concern as
global warming progresses. Serious problems resulting from this atmospheric warming
include torrential rainfall, cold spells and other abnormal weather patterns, rising sea
levels, floods, and food shortages. To slow the progress of global warming, there are calls
to limit the use of energy obtained from the fossil fuels that are a source of carbon
emissions and to expand the use of renewable energy produced by wind and solar power.
One of the drawbacks of these types of renewable energy, however, is the large variability
in energy produced depending on weather conditions. Introduction of this energy on alarge scale, which may cause fluctuations in power output, will require solutions to
overcome the issue of power grid instability.
MEGATRENDS

Rising electricity demand accompanying population growth in emerging countries
Instability in electricity supply, as seen in major blackouts around the world

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Energy Solutions

Hitachi’s Approach

Integrated Generation/Transmission and Distribution Systems for Stable
Electricity Supply
In balancing the needs for a smaller environmental burden and a stable electricity supply,
both more widespread use of renewable sources for power generation and development of
an infrastructure for stable transmission and distribution are essential for the energy
infrastructure that supplies electricity.
However, energy infrastructure circumstances differ by country and region. In
emerging countries, building infrastructure to provide a stable electricity supply is the main
issue in meeting the growing demand for electric power. As energy infrastructure expands,
the need for greater use of renewable energy is also growing in response to concerns
about air pollution and global warming. In the United States and some European countries,
which are pushing energy market liberalization, challenges include dealing with aging
social infrastructure and maintaining a stable electricity supply as more renewable energy
comes on line. In Japan, where electricity system reform is underway, the accelerating useof renewable energy is bringing about growing needs for grid stabilization and energy
storage solutions.
Resolution of these various issues requires understanding of the problems faced bysocieties and customers, as well as collaboration with customers to find solutions. Hitachi
provides total energy solutions for a stable electricity supply while meeting various needsby taking advantage of its wide-ranging experience and technologies in the energy field,
from generation to transmission, storage, distribution, and energy management.
One such area is wide-area grid stability solutions. The effects of power outages inmodern societies are immeasurable. Preventing large-scale outages and providing a stablesupply of electricity requires the development of grids with robust transmission anddistribution capabilities. Hitachi provides solutions using the latest IT while responding to
the different usage conditions in each part of the world.
The introduction of renewable energy on a large scale will be an essential part of nextgeneration, sustainable energy infrastructure that supports comfortable, convenient lives.
The massive earthquake that struck northeastern Japan in 2011 highlighted problems in
the nation’s energy supply and led to calls for the introduction of more autonomous,
decentralized energy systems. These systems would utilize more renewable energy for
greater resistance to disasters and have smaller environmental impacts. Hitachi is working
to develop basic technology to improve the reliability and competitiveness of wind andsolar power generation. We are trying to make renewable energy more commercially
viable, starting with the world’s first floating offshore wind farm. Other efforts are in theareas of energy storage solutions to maintain the power supply-demand balance when
renewable energy is introduced on a large scale and “smart grids,” next-generation power
supply networks that use IT to control the amount of demand on a system to match thepower generated.
Since Hitachi’s foundation, the company has contributed to constructing energy
infrastructure in countries worldwide, with exports to 67 countries and deployment ofenergy solutions businesses in North America, Europe, and elsewhere.

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Case 1: Storage Solutions for Stable Renewable Energy: “CrystEna”
Power generation systems using renewable energy sources like wind and solar have been
spreading in recent years. With renewable energy, however, the power output fluctuates
depending on weather and other conditions, and disturbances in voltage, current, andfrequency can affect entire power systems, decreasing the quality of electricity or leading
to major blackouts. Balancing supply and demand, such as the need to limit generation
during times with little demand, is therefore essential. Energy storage systems are eyed as
one solution to overcome this issue. Hitachi has a strong record in producing energy
storage system devices and many types of battery—for general consumers, industry, andautomobiles—and is conducting wide-ranging efforts for better energy storage solutions,from research and development to construction, installation, maintenance, and operationof its CrystEna*1 storage systems.
*1 CrystEna: The name was created by combining the “Crystallization” of state-of-the-art technologies in the HitachiGroup and “Energy.”

Hitachi’s All-in-One Container-Type Energy Storage System

The United States has taken steps to increase the use of renewable energy by opening thepower transmission networks and liberalizing electricity retailing, and its wind and solar
power generation are among the top in the world. With the growing adoption of renewableenergy, however, there is concern about instability in the electricity supply. This has givenrise to business opportunities in ancillary services (system operation services provided bypower system operators to maintain the quality of electric power) as a market, in which theadjusting capacity for stabilizing electric power itself can be traded.
Hitachi has developed an all-in-one package system to help stabilize power systems
by storing large amounts of electricity. A demonstration project was begun in New Jersey
in February 2015. It is the result of basic research in energy storage systems over many
years. It contains about 1,600 lithium-ion batteries capable of high power discharge andmore than 8,000 charge/discharge cycles. It is a complete system that includes a control
unit, power conditioning, and other systems all in one 40-foot container. The container
format helps to minimize installation work, setup time, and costs. It also means that alarge system can be configured by installing a number of units in tandem.
Hitachi has also developed a simulator that can predict battery life, using this toestimate a service life of 10 years for this system. Full safety measures also include
disconnection in the event of an emergency and an automatic fire-fighting system. In ademonstration experiment, energy storage was shown to be useful in stabilizing powersystems by rapidly adjusting input and output in a matter of seconds in response tofrequency and voltage change signals, which vary over short time periods. Further
verification results will be used in developing batteries that are more compact, lessexpensive, and longer-lasting.

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The 1-MW container-type energy storage system comes in a standard 40-foot container form.

Large Hybrid Energy Storage Systems for Durability, Low Cost

On Izu Oshima and other islands in Japan, electricity is supplied by independent systems
powered mainly by diesel generators. In such places, early adoption of wind and solar
power generation is seen as a way to reduce fuel costs for this independent energy supply.
Hitachi has developed one promising means to achieve a stable electricity supply withthe use of surplus power from renewable energy: its large, 1.5-MW hybrid energy storage
system combining high input/output, long-life lead-acid batteries with lithium-ion
capacitors that are useful in suppressing short-period voltage and frequency fluctuations.
Energy storage systems connected to energy infrastructure need to have long lives and bedurable, reliable, and inexpensive. This large hybrid energy storage system incorporates
major technological achievements, such as improved battery characteristics (a 1.7-foldincrease in input and output currents compared with Hitachi’s conventional batteries) andan anticipated extension of battery life to 20 years. It was connected to the Izu Oshima
power system in 2015 to test its peak shift response, ability to suppress short-period
fluctuations, and service life.
Other advanced technologies will be introduced at the same time, including a system
to simulate the effects when renewable energy is introduced and the best systemcomposition for stability. Efforts are also underway to make the system suitable for islands
by using remote monitoring to improve operation and maintenance.
Case 2: Applying IT in Wide-Area Grid Stability Solution to Prevent Blackout
Lightning strikes on power lines and other accidents can cause instantaneous voltage
drop, leading to power swings that cause fluctuations in voltage or current. If such swings
continue, the effects can extend to wider areas and in some cases result in major
blackouts. Renewable wind or solar energy is susceptible to changes in output due to theweather, and voltage, current, and frequency disturbances can decrease the quality ofelectricity or cause major blackouts. Hitachi provides total solutions for stable powertransmission, from energy generation, transmission, and distribution equipment to control
systems utilizing IT, including monitoring control and grid stabilization.

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Online Testing of New Grid Control System that Prevents Major Outages

For more stable grids, improvements in electricity quality need to be achieved by constantmonitoring and control of electric flow during transmission. Since 2012 Hitachi has been
conducting joint research with the US Department of Energy’s Bonneville Power
Administration (BPA) on a grid stabilization system that can adapt to the increasing use ofrenewable energy. A demonstration project for the new system for grid control to prevent
major outages was started in October 2014.
Grid status has been monitored in the past by supervisory control and dataacquisition (SCADA) systems, but these systems can measure only voltage and current,
not phasors. The present system adopts phasor measurement units (PMUs), which arecoming into widespread use in the United States. With real-time collection and analysis of
information on phase in addition to voltage and current, this system makes it possible toformulate measures to prevent major power outages. Although PMUs are currently
spreading worldwide, their use is limited to grid status monitoring. Hitachi is also
combining grid analysis technology and IT with the aim of developing a new, integrated
stabilization system that overcomes issues in grid operation.
Optimized Power Control from Generation to Transmission
Hydro power
plant
Thermal power
plant

Transmission grid

Real-time dataacquisition
Distribution
transformers

Grid stability
simulations

Electricity supply data

Control commands

Central processing
server *1

Wind power
plantPower grid*1 Central processing server:
A server or device that plays a corerole in a computerized system.

Generated electricity, including from wind, solar, and other renewables, istransmitted to substations via the grid and distributed to homes andbusinesses. Hitachi is using its technology and experience to design andconstruct systems that stabilize the entire grid, from generation throughtransmission and distribution.

Smart Grids to Deal with Aging Infrastructure and Renewable Energy Introduction
Poland is increasing its wind power generation capacity to meet its ambitious targets ofsupplying 15% of its electricity from renewable sources by 2020 and 19% by 2030. At thesame time, the country must deal with aging infrastructure, more than half of which wasbuilt more than 40 years ago. Upgrading and enhancing energy infrastructure equipment
will require major capital investment and will impose significant management challenges. To
accelerate the use of renewable energy while minimizing capital investment, there is
growing interest in stabilization technology that can maintain reliable grid operation.
Hitachi has been selected by the New Energy and Industrial Technology Development
Organization (NEDO) as a partner in a smart grid demonstration project, which is one of NEDO’s
demonstration projects of international energy consumption efficiency technology and systems,in Poland. By building on the grid stabilization technology that Hitachi has developed over theyears, implementing new control techniques for the real-time curtailment of wind power output
and energy storage systems, the company aims to create grid stabilization systems for Polandthat will help expand the country’s use of renewable energy, minimize its capital investment inenergy infrastructure, and maintain stability in its grid operations.

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Case 3: Large-Volume Renewable Energy from 5-MW Offshore Wind Turbine
There is growing interest in renewable energy as a way to contribute to the preventionof global warming. Among the different types of renewable energy, wind power generation
is now reaching output and cost levels that are on a par with conventional power
generation using fossil fuels and nuclear power. These systems are growing in size andsophistication worldwide.
Hitachi developed a 2-MW downwind turbine for use in Japan’s demanding
conditions, such as typhoon gusts and wind turbulence in its mountainous regions.
Hitachi’s HTW2.0-80, a 2-MW wind power generation system, has been installed at manysites and maintains a top share in Japan. We are also participating in offshore floating windfarm demonstration projects sponsored by agencies including the Ministry of Economy,
Trade, and Industry and the Ministry of the Environment. The first seven fixed-baseoffshore wind turbines built in Japan commenced operation in 2010, with an additionaleight turbines added in 2013.
With this experience, Hitachi has developed a 5-MW offshore wind turbine withdownwind rotor, the HTW5.0-126. Japan is surrounded by large areas of ocean; therefore,
there is much greater potential for wind power generation than on land. Offshore wind
power generation has few restrictions with respect to siting, scenery effects, and noise,but compared with land-based facilities, construction and operation costs are higher andmaintenance is difficult. This makes it necessary to develop offshore wind power
generation systems with high output per unit and high reliability.
The HTW5.0-126, which has recently been completed, meets needs for larger
turbines for the offshore wind farms expected to be built in the future. Compared with
our previous 2-MW offering, this wind power generation system has a rated output of 5-MW,
about 2.5 times higher, and rotor diameter of 126 meters, about 1.5 times greater thanthe previous system’s dimensions. The HTW5.0-126 system uses a unique configuration
developed by Hitachi with the rotor located on the downwind side of the tower. In thisconfiguration, the rotor is maintained in an orientation that does not receive crosswinds
during heavy storms—even the typhoons that frequently affect Japan—thus serving to
reduce the wind load. Moreover, with a new combination of a permanent magnet
synchronous generator and a medium-speed gearbox, Hitachi decreased the weightand size of the entire system with respect to output and improved reliability. It is also
expected to provide better safety and reduced costs of installing the seabedfoundations or floating platforms.
Hitachi will continue to build our business in the growing wind energy field, thereby
contributing to the creation of a low-carbon society.

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Future Outlook

Enriching lives worldwide with advanced energy infrastructure.
Hitachi applies its IT expertise to contribute to infrastructure providing astable electricity supply.
As renewable energy comes into greater use worldwide, a growing number of power
generation facilities are located in land areas or on the sea far from the cities in the
demand area. To secure stable power transmission over long distances, wide-area gridstability solutions are essential. There is also a need to maintain the electricity supply evenwhen generation systems go down due to natural disasters or other causes byinterconnecting grids over a large area.
In many countries, grid operators are pursuing more robust wide-area interconnection
with the aims of energy market liberalization and greater reliability. High-voltage direct
current (HVDC) transmission systems are being looked at as a stabilization solution for
long-distance transmission and wide-area interconnection. These are systems fortransmitting electricity between two different grids. Electricity is converted to direct current
before transmission, reducing electricity losses, facility sizes, and construction costs. Thisapproach is also applicable to systems that cannot be connected directly with alternating
current because of different frequencies. Hitachi has participated in all HVDC projects inJapan, contributing to the stabilization of the nation’s grids.
With growing needs for HVDC in the Japanese market, Hitachi formed a joint venturewith Swiss company ABB, a leading power and automation group, in December 2014,
and signed a formal contract in June 2015 to provide new technology in a timely manner.
Hitachi will provide ABB’s latest technology to HVDC projects on which Hitachi is theprime contractor, taking full responsibility for all aspects of direct current (DC) systems,
from design to engineering and equipment supply as well as after-sales service. The
intention is to contribute to wide-area electric power distribution networks in Japan by
combining Hitachi’s sales network, project management know-how, and quality
assurance processes with leading-edge HVDC technology and system integration
capability from ABB.
Many parts of the world remain without electricity. So that all people can enjoy thericher life supported by power systems, Hitachi seeks to bring electricity to all parts of theworld with one-stop solutions addressing issues from transmission to transformation anddistribution. We will contribute to the stable supply of electricity with social innovation
based on infrastructure that utilizes the latest IT, increasing the reliability of powertransmission and distribution.

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Traffic Infrastructure Initiatives
Addressing Congestion and Aging Infrastructure
Social Issues Surrounding Transportation Infrastructure

The London–Brighton rail line runs atop England’s Balcombe Viaduct, completed in 1841.

Around the world, more and more people are choosing to live in cities. In 2014, 54% of theworld’s population lived in urban areas. By 2050, 66% of the world’s population is
projected to be urban. As populations and economies grow around the world, humanity is
increasingly concentrating in urban centers of development. This presents an opportunity
for societies to create the right transport infrastructure to get people to where they need togo more efficiently than ever before. Creating this complex infrastructure is a challenge,
though, and many developing societies are lagging behind.
By 2050, the world will see a major change in the makeup of the top 10 nations by GDP
size, as established industrial economies contract and emerging economies like India, Brazil,
and Indonesia continue to rise. In many of these growth regions, the development of mobility
infrastructure will be outstripped by the sheer speed of urbanization. As cities grow, they
invariably confront the issues of chronic road congestion and rising numbers of traffic
accidents, as well as worsening environmental problems due to transportation-related air
pollution. Economies will be constrained by these cities’ limited ability to expand and movepeople from A to B.
Infrastructure issues affect the developed world too. In addition to aging of their existing
infrastructure—only to be expected in countries that were leaders in introducing urban
transportation systems long ago—problems include the need for improvement andrearrangement of these existing systems to address demographic shifts and changes to theirindustrial base.
Hitachi offers solutions that help all these economies, developing and developed alike, tokeep their transportation infrastructure effective, efficient, and central to their continued growth.
MEGATRENDS

Urbanization and population concentration around the world
Worsening air quality resulting from economic development

Infrastructure improvements in response to demographic changes

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Hitachi’s Approach

Railway Systems for Sustainable Cities and Development
Today every market around the globe is seeing rising demand for transportation of people
and goods, and for the systems that support it. A successful provider of infrastructure
solutions must have global reach to meet this demand. Each market faces its own set ofissues, including economic factors, regulatory frameworks for safety and other matters,
and environmental concerns.
Hitachi is focused on the specific needs and concerns of its customers around the world,
identifying the issues that they face and developing the solutions that they demand. Our aim is
to provide a tailored response to the issues faced by our customers in order to ensuresustainable development of urban living environments, as well as to bring enhanced comfort
and convenience to the lives of the traveling public.
Hitachi’s Railway Systems provide a full array of products and services. As a leading rail
vehicle manufacturer, we produce the trains that connect the networks we serve. Furthermore,
our traffic management system ensures optimal performance of the rail system as a whole while
ensuring reliable operation of each in-service train. Rail is more than just a commodity. Our aim
is to provide complete turnkey solutions for our target markets, encompassing the track androlling stock, traffic management systems to ensure that the complete network functions safely
and smoothly, and the train maintenance services that keep operating efficiency at peak levels.
The core of Hitachi’s expertise is the cutting-edge technologies that go into our trains.
Most notably, these trains include the Shinkansen, Japan’s famously safe and efficient “bullet
trains.” The company has built an industry-leading track record for the traffic management
systems and mechanical reliability that underpin Japan’s reputation for down-to-the-second
punctuality and a flawless operational safety record.
At Hitachi, safety is our number-one concern. Our railway systems are designed
intelligently to isolate and minimize failures, so that any defects will have minimal or no impact
on the rest of the system. We set safety as our top key performance indicator—not just forthe products that we deliver, but also for our factories and all our other operations as well.
Our dedication to safety ensures not just compliance with regulatory requirements in all themarkets that we serve, but also that we remain the vendor of choice for customers who knowthat the lives and property of their customers come first.
Environmental and quality-of-life considerations are also key drivers of our technologicaland systems innovation. Years of Hitachi research and development have produced train
vehicles that are lighter than ever while meeting safety requirements, make more use ofrecycled materials, and operate more quietly. These innovations minimize the impact on bothpassengers and communities living near the tracks. We are also a market leader in bi-mode/
hybrid systems that run on electricity where it is available and, where no electricity is available,
switch automatically to diesel or to batteries (charged by cutting-edge regeneration systems).
Customers select rail solutions with the “whole-life approach” in mind, considering everythingfrom weight and carbon emissions to serviceability and seamless compatibility withconnected transportation networks. In this respect, Hitachi is a world leader in the technicalintegration of operation and signaling systems, providing expertise in all areas from urban lightrail to city connections and international high-speed railway networks.
With our Railway Systems operations headquartered in the United Kingdom, we are
uniquely positioned to offer globally minded solutions to markets around the world. We
currently conduct rail-related business in 32 countries, and as of fiscal 2014 we are operatingor providing rail systems to 28 countries worldwide.

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Case 1: Renewing the United Kingdom’s Aging Railway Network
As the birthplace of the railway, the United Kingdom has a long history of trains and rail
networks. This was part of the reason that Hitachi chose to run its global Railway Systems
operations from a UK base. This will provide access to important markets in Europe andthe Middle East, and will serve as a platform for expanding our rail capacity globally.
The United Kingdom’s Victorian rail infrastructure has been going through a period ofcontinuous upgrade and regeneration. In addition to an extensive program of electrification
and resignaling, stations, platforms, track, and bridges are all being renewed. This is toensure that the United Kingdom’s railways remain a vital part of its economic activity for many
years to come.
Drawing on our technical expertise built up through work on Japan’s high-speed
Shinkansen “bullet trains” and other rail networks, Hitachi is developing rail vehicles for theUnited Kingdom that flexibly respond to these infrastructure conditions. In developing rollingstock for the British Intercity Express Programme (IEP), extending to Swansea and Plymouthin the west and the major cities of Scotland in the north, Hitachi focuses primarily on safety
and environmental performance.
We have introduced carefully tested safety measures that fully comply with European
regulations. Safety is the primary key performance indicator for Hitachi, not just in the rail
vehicles we build but also in our factories and all of our rail operations. It is also the mostimportant criterion for customers when they select a partner—and a key reason that Hitachi
was chosen to upgrade and maintain the entire IEP fleet in one of the largest rail projects in
British railway history.
To keep the Hitachi trains as environmentally friendly as possible, we have focused on
reducing the weight of the rail vehicles, improving their aerodynamic profile, and increasing
the percentage of recycled materials that goes into them. A quiet train is an energy-efficienttrain: vehicle design that reduces rail noise and air resistance leads to lower carbon output
and operational costs. We are also achieving dramatically shortened travel times: journey timeon the London–Ashford portion of the southeastern Main Line, for instance, has beenshortened from 80 minutes to 37 minutes.
Furthermore, Hitachi is increasing energy efficiency through intelligent interior design, by
maximizing seating capacity without sacrificing passenger comfort. We are working closelywith the authorities and railway operators to ensure that these clever designs also conformwith universal design and other relevant regulations.
A railway is more than just trains. Hitachi is able to offer a complete package to IEP
operators, including rolling stock, repair and maintenance, and IT services allowing smart, fully
networked operation of the trains. Our intelligent systems integrate route signaling andonboard systems to let trains communicate with each other. By keeping track of where theother trains are on the route, our trains can maintain a safe distance with less braking—which
in turn reduces energy loss.
With its development of bi-mode trains allowing travel on both fully electrified lines andunder their own power, Hitachi is providing flexible, adaptable systems with wide applicability.
Our fully integrated approach to the rail business has proven a winning strategy in diversifying
the British transportation market.

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Creating a thoroughly modern, reliable rail network is a fundamental stimulus to thethe British economy, and Hitachi is proud to play a key role. The Ashford Train
Maintenance Centre, completed in 2007, and the new depots being readied for the IEP’s
introduction, are Hitachi’s primary centers for rollout and servicing of new rail vehicles for
British railways. We provide and create several hundred careers for skilled technicians, aswell as the trickle-down effect that boosts the local and national economy. With a similar
eye on the future of the British economy, we are sponsoring a university technical college
in Newton Aycliffe, where we will have our European train factory. Scheduled to launch in2016, this program will train up to 600 young people a year, filling a critical shortfall inengineers, and will help to ensure the future of our industry in the United Kingdom.

The Class 800 carriages Hitachi has unveiled for use on UK rail.

Case 2: Providing Vietnam’s First Urban Railway
Vietnam is in a period of sustained economic growth. The population of its largest city, Ho
Chi Minh, is skyrocketing, leading to chronic and intense traffic congestion. With no public
transit facilities other than buses, many residents ride motorbikes or bicycles, and a rapid
increase in the number of automobiles in recent years has made a difficult road traffic
situation even worse. Problems like traffic accidents and pollution are steadily worsening.
To help protect the environment and provide a sweeping improvement to the traffic
situation, we are constructing Line 1 of the Ho Chi Minh urban rail network, which will beVietnam’s very first urban railway with an underground section. Hitachi earned high marks
for its ability to provide comprehensive railway solutions, winning a contract to provide 11
subsystems including the manufacture of rolling stock, signaling systems,
telecommunication systems, power supply systems, platform screen doors, ticket vending
machines and passenger gates, and depot facilities. Hitachi will also provide maintenanceservice on all of these systems for five years.
Once completed, the railway network will be run by an operation and maintenancecompany to be established by Ho Chi Minh City. However, it is unrealistic to expect local
staff to immediately take care of the maintenance of facilities like signaling systems, track,and overhead contact systems. Hitachi will transfer technology over the course of the
five-year maintenance contract, while also helping to foster human resources. Given the
shortcomings in Ho Chi Minh’s grid infrastructure, Hitachi will give full consideration to
eco-friendly energy efficiency in its construction of electrical facilities, such as by installing
regenerative inverters.

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Planned Route of Line 1 of the Ho Chi Minh Urban Rail Network
14 Suoi Tien Terminal (18.8 km)
13 National University (16.8 km)
12 High Tech Park (15.2 km)

Long Binh Depot (19.5 km)

11 Thu Duc (12.8 km)
10 Binh Thai (11.1 km)

9 Phuoc Long (9.7 km)
7 An Phu (6.5 km)

8 Rach Chiec (8.2 km)

6 Thao Dien (5.6 km)
5 Tan Cang (4.4 km)
4 Van Thanh Park (3.5 km)
3 Ba Son (1.7 km)
2 Opera House (0.7 km)

Elevated rail and stations
Underground rail and stations

1 Ben Thanh (0 km)

Case 3: Easing Congestion with a Safe, Convenient Monorail System
Traffic congestion in South Korea is getting worse due to increased concentration of the
population in the capital of Seoul and in other key cities, as well as a rise in the number of
automobiles on the roads. To address this problem, railway systems—which emit less CO2
than automobiles on a per passenger basis—are being reevaluated, and plans for
introducing light rail networks such as monorails, with relatively low construction costs andsmaller environmental footprints, are proceeding in a number of cities.
The city of Daegu—the urban center of Korea’s southeast region, boasting about 2.5
million residents—has been grappling with these same issues. The municipal government has
settled on a straddle-type monorail system as a means of preserving Daegu’s environment ofrich greenery and rivers and reducing energy use. Hitachi has a global record in providing
monorail solutions, starting with seven systems in Japan including the Tokyo Monorail andextending to systems in Chongqing, China, and in Dubai. Daegu selected us for this project due
to our long record, as well as the high evaluations of our monorail technology and reliability.
Daegu Metro Line 3, Korea’s first urban monorail system, runs nearly 24 kilometers fromthe northwest to the southeast of the city, with 30 stations, and 84 cars in 28 train sets. It
uses a driverless operation system. As a provision for ensuring passenger wellbeing in theevent of an accident, one safety personnel member rides each train, and the cars are all
equipped with safety systems like fire sprinklers and evacuation equipment that makes it easy
for passengers to safely descend from the monorail cars. The monorail’s cutting-edge
technology also includes mist-glass windows in passenger compartments that automaticallyturn opaque when the train runs through a residential area, thus ensuring the privacy ofhomes along the line. This project is proactively employing Korean products thanks tocollaboration with local corporations and Hitachi Korea.
Daegu Metro Line 3 began operation on April 23, 2015. In addition to improving accessto various facilities throughout the city, it is expected to have various spillover effects, such as
the monorail itself becoming a tourist attraction.

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Future Outlook

Hitachi aims to provide fully integrated rail transportation solutions to serveand connect the “smart cities” of tomorrow.
Looking forward, Hitachi Railway Systems will continue advancing its technologies in allareas: railway vehicle manufacturing, safety and environmental technologies that are
central to train functions, and intelligent networks that integrate trains with signaling
systems and railway operation centers. The company continues to prove itself in global
markets at all levels of the industry, providing high-speed and city-connecting rail solutions
as well as turnkey systems that meet fast-growing cities’ urban transportation needs.
Rail transport is a vital part of eco-friendly urban design, and this role will only continue
to grow as urbanization and population growth advance and demand for “smart cities”
rises. Our SCADA (Supervisory Control And Data Acquisition) software systems enabledetailed tracking of flows of people and goods around the clock, turning “big data” into avaluable tool for the transportation sector. We are also working on a full range of onboard
train sensors that send data on component condition and performance to the maintenanceengineers for analysis and tracking. Integrated solutions like these will help maketransportation networks more reliable and cities as a whole greener and more efficient.
The cross-border integration of rail infrastructure is a growing field for our business. To
prepare for this, we have actively moved to acquire key players in the European market,
such as the Railway Engineering Company (TRE) Ltd., a provider of training equipment andautomatic routing systems. Our 2015 acquisition of a significant stake in Ansaldo STS, thesignaling and train control business of Italy’s Finmeccanica, will give us greater capacity
and improve our position to open new markets and expand our business in Europe and therest of the world.
Rail will remain a strong global growth market for the foreseeable future. Our goal is tobe recognized as the best rail supplier in the world—a company that customers aspire to
use to meet their transportation needs. In the past 10 years, we have transformed
ourselves from a rail vehicle manufacturer to a total railway solution provider, offering
maintenance, financing, signaling, traffic management, and much, much more. We are wellon our way to achieving our goal.

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Robust Urban Security for Both Safety and Convenience
Social Issues Related to Social Infrastructure Security

Chicago’s O’Hare International Airport. (USA)

Increasing dangers are now foreseen from climate change, such as abnormal weather andnatural disasters on a global scale. We are also seeing diversification of other threats that
can hinder the operation of social infrastructure, such as frequent cyber attacks as urban
infrastructure becomes increasingly networked and rises in armed terrorism in response to
globalization.
Daily life and business in modern society are supported by an assortment ofservices brought to us by social infrastructure, such as medical care, waterworks,electricity, and transportation. People demand that the provision of services by social
infrastructure operators be continuous and stable, 24 hours a day and 365 days a year.
The networking of infrastructural systems that had previously provided service
independently, tying them into other networks and devices to make cities even moreconvenient, has also been proceeding.
Since there is a danger that damage from a disaster or accident could affect alarger area following the initial outbreak, disaster response has become even more
important. Services provided by social infrastructure depend upon one another, and so
the wide variety of relevant organizations and operators must all work together whilehandling new threats.
Megatrends• Diversifying threats to social infrastructure, such as natural disasters and cyber attacks• Heightened reliance on infrastructure in our daily lives, making continual service
provision vital• Networking of social infrastructure services that increases their convenience but also
potentially the mutual impact when trouble strikes

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Hitachi’s Approach

Addressing Diverse Threats in Adaptive, Responsive, and Cooperative Ways
In order to strengthen the security of social infrastructure, we must implement appropriate
precautionary measures so that services can be maintained even in the event of damage,reducing the expansion of harm and its ripple effects while also being increasingly
proactive about growing risks. All concerned institutions need to work together in acoordinated manner as they strive to enact a swift recovery.
We must realize a society robust enough to handle extreme disasters—one where
people are protected from threats before they are even realized, without impacting theirconvenience or comfort. If an accident or attack happens at a large-scale international
event, institutions need to work together to respond quickly, protect people’s safety andsecurity while continuing to provide services, and continue handling threats as they surface
while safeguarding the convenience of ordinary people.
At Hitachi, we believe that social infrastructure security solutions must be Adaptive,
continually strengthening defenses and precautionary countermeasures for novel anddiversifying threats; Responsive, seeking to minimize damage and speed up recovery timeafter a disaster, attack, or other incident has occurred; and Cooperative, to addressincidents via cooperation and information sharing among different organizations andservice providers so that they can be aware of each other’s circumstances. We grapple
with a broad range of security countermeasures on both the physical and virtual fronts.
Since its founding, Hitachi has cultivated a range of individual technologies in thecourse of providing social infrastructure to the world and worked to integrate them towardfurther protection of safety and security. We continue to provide comprehensive solutions
that cover everything from risk analysis and consulting to system establishment andoperational support.
Case 1: Keeping Major Facilities Both Convenient and Secure Against Diversified Threats
In today’s society, where threats of terrorism and violent crime have risen markedly,
expectations have also grown for security systems that help to ensure societal safety andsecurity. Threats to large-scale facilities like event halls, sports facilities, airports, andstations, where people assemble or transit, are more diverse than simple terrorism. They
also include flooding due to torrential rain, large-scale blackouts, and transit outages.
Providing safety and security requires physical security, employing IT or other advanced
technology, in addition to human security like guards. In environments with high-volume
traffic by people over a large area, more advanced security technologies are also needed
to avoid hindering the convenience of ordinary users.
In the three fields of “personal authentication,” “explosives detection,” and “suspicious
person tracking technology,” Hitachi has been developing security technology that
promotes safety and convenience. Linking this technology with IT systems makes it
possible to detect explosives inside a person’s luggage, identify that person’s movements
within the facility, and keep track of the individual’s location. These Hitachi solutions alsoenable highly convenient security services necessary for safety evaluation by checking
which people and items are safe, based on the results of personal authentication anddetection of explosives.

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Biometric Technology for Smooth and Accurate Personal Authentication

Today attention is focusing on difficult-to-fool biometric authentication technology that canprotect against trespassing by suspicious individuals. One form of biometric technology isfinger vein authentication. By requiring users to place their fingers in a specified location, thiscan cause bottlenecks to the flow of people through a space as they stop at checkpoints. To
improve this situation, Hitachi has developed Finger Vein Authentication Technology for
Smooth and Accurate Walkthrough-style Personal Verification. This allows personalauthentication of users merely by having them hold up their fingers while walking past theequipment. By instantaneously detecting a vein pattern on a finger, this technology eases
congestion by allowing people to pass through gates more quickly, even when they hold upvarying numbers of fingers or present their hands in different positions or orientations.
Large facilities are often equipped with multiple units operated through touchscreens,such as ATMs, ticket vending machines, or check-in stations. Hitachi is now developing
technology that can enable personal authentication while a user is operating the unit, by
taking both a camera image of the user’s face and an infrared image of the finger vein pattern.
This technology could allow for highly accurate control of persons within the space.

Walkthrough-style finger vein authentication gate.

Efficient, Fast Explosive Detection Technology

Hitachi has developed a device that can rapidly detect substances adhering to an object
or person, such as the raw materials for an explosive. This technology uses pipes tocollect air samples from multiple points within the facility at the same time, pulls the air
samples into a material analysis device, and determines the location of raw materials fromthe information obtained by comparing different combinations of those spatially dispersed
samples, among other steps. This allows the quick, efficient detection of dangerous
material without the need to use multiple expensive mass spectrometers.

Tracking Suspicious Persons with Security Camera Imagery

Hitachi has developed tracking technology that can quickly and accurately follow a
suspicious figure inside crowded facilities via fragmentary data, such as the color ofclothing or luggage, or the subject’s movement history—even if a security camera has not
captured the person’s face. The product automatically extracts and stores in a databasedata on the characteristics of different parts of a person’s face or upper body, as well as
information on the route taken. The associated information can be used to track the
movement of a person.

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Case 2: “Defense in Depth” to Protect Against Rising Cyber Attack Threats
Particularly in newly emerging economies, installation is underway of social infrastructurethat forms the basis for economic development. At the same time, demand for renovationof social infrastructure is also growing in developed nations, where such infrastructure is
aging fast. In response to these needs and in order to actualize highly reliable systems at alow price, we have seen increasing usage of general-purpose platforms that can be usedin multiple social infrastructure control systems. And as infrastructure has grown moreconvenient, we have increasingly networked it to other devices or systems, thus increasing
connectivity to the Internet as a whole.
As a result, control systems for social infrastructure have taken the first steps frombeing a closed environment to becoming an open one, due to the global sharing oftechnology and their connections to the digital sphere. Their risk of suffering cyber attack
has increased accordingly. Control systems for social infrastructure are expected tocontinue providing service 24 hours a day, 365 days a year, and if this infrastructure stops
even briefly, the damage could expand and paralyze urban functionality. Particularly in thefield of cybersecurity, where new viruses and software allowing fraudulent operation ofsystems are constantly being developed, it is increasingly difficult to head off all potential
problems during the development stage. In the event of an attack, the key is to issue awarning quickly and respond instantaneously in order to minimize the damage.

“Defense in Depth” to Minimize Damage to Control Systems

Hitachi provides products and solutions to implement security measures for the control
systems that support social infrastructure, taking into consideration the need for thisinfrastructure to operate reliably over the long term and the factor of a rising tide ofcyber attacks.
Hitachi focuses on “defense in depth” when strengthening security for control
systems. For example, we enhance security by establishing defense points in several
layers of a system. If the outermost firewall is pierced then there is still another security
layer after that one, and further layers inside of that. First, an outermost layer guards
against intrusions from the network into control systems, or leaks. For particularly criticalsystems, we provide unidirectional connectivity devices that block off access from theexternal network. We provide units for monitoring and rejecting untrustworthy PCs toquickly detect an attacker or virus that has penetrated the system and to prevent accessto important data or functionality. We are also developing solutions that use special decoy
servers to recognize malware that has penetrated at an early stage, capture it, and analyze
it. Hitachi solutions promote stronger security functionality overall alongside the hardeningof each component of the control system.

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Enhancing Security for Control Systems
Social infrastructure

Personal mobile devices

Personal IT devices

Other social
infrastructure

Facilities

MobilityLines of defense
Information zone

Information control zone

Social infrastructure
Control zone

Defense against intrusion fromexternal networks
Unauthorized intrusion detection
Unauthorized access prevention
Defense against intrusion frominformation control zone
Hardening of control components(control systems, components)

The increasingly networked nature of social infrastructure means that a threat to one type of infrastructure is a threat
to the entire network. All infrastructure areas must equip themselves against attacks from the information zone.
Hitachi develops solutions to swiftly detect unauthorized access and prevent intruders from reaching valuable data
and functions. By hardening each component of a control system, we enhance its security capabilities as a whole.

Contributing to the Establishment of International Standards

As needs for social infrastructure rise around the world, that infrastructure is increasingly
being networked. If the security of improperly configured social infrastructure iscompromised, the effect can be propagated around the world. In order to boost the
security in control systems on a global level, it is an urgent task to establish security
guidelines and countermeasures that can be shared and evaluated globally. Various
governmental bodies, standards organizations, and industry associations are now working
to establish standards for the security of control systems. Hitachi is establishing guidelines
for securely constructing control systems based on the specifications in establishedstandards while also participating proactively in pilot projects to enable operators to obtain
international security certifications in Japan as well. We are contributing to standardization
activities directed at the development of security technology infrastructure.
Furthermore, Hitachi has participated since the beginning in an industry-governmentacademic joint Control System Security Center (CSSC) that was established to safeguard
the security of critical infrastructure control systems. The CSSC performs a comprehensive
range of activities, from R&D, international standardization activities, certification,
personnel development, and public awareness promotion to the validation of security for all
manner of systems. Hitachi is collaborating with the organization to promote theimprovement of control systems’ security, through activities including joint research intomeasures to enhance control system security, the use of simulated plants for control
system training, and the security auditing of control equipment.

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Case 3: Data Integration to Boost Coordination in Disaster Response
As the world faces increasingly serious risks from climate change, threats like natural
disasters and abnormal weather are climbing. Urban functionality is increasingly advanced
and complex today, and the damage resulting from a natural disaster can be higher thanever as a result. In an emergency, when circumstances are shifting from one moment to
the next, minimizing the damage done to social infrastructure and enabling the rapid
restoration to ordinary life, while placing top priority on the saving of lives, requires all
involved organizations to cooperate and make decisions in a swift and sound manner.
To that end, we must first strengthen monitoring functionality across all of society andrapidly collate the needed data. It is also vitally important to organize, categorize, andsynthesize the collected data, so that it can be shared across the relevant organizations inorder to rapidly analyze the situation and predict how it will unfold.
Hitachi develops disaster-prevention and -response solutions that incorporate the“OODA loop” (observe, orient, decide, act)* 1 decision-making concept as an
operational paradigm.
*1 This sequence of steps was originally devised in the 1970s by the US Air Force as a model for real-timedecision making.

Rapid Decision Making with the OODA Loop

The OODA loop is a theory that enables swift and sound decision making, while repeating
the cycle of observe, orient, decide, and act. In the “observe” stage, we rapidly collectdata from various sensors such as seismographs, water level monitors, observation
cameras, satellites, and unmanned aerial vehicles (UAVs) and detect abnormalities. In the“orient” stage, we synthesize the collected data, conduct risk simulations of potential
damage, and provide supplementary data on possible future developments or situations
that may develop in order to grasp the ongoing situation. In the “decide” stage, we
support an efficient, effective command structure for rescue and restoration, enabling rapid
decision making. And in the “act” stage, we provide functionality for managing the logistics
of distribution instructions, inventory control, requests for relief supplies, and community
services like safety verification and management of evacuation sites, all while supporting
rescue and rebuilding operations.

Interagency Cooperation with the Integrated Disaster Management
Information System

The Integrated Disaster Management Information System of Japan’s Cabinet Office is asolution for disaster prevention and disaster response that Hitachi provides. Its main
purpose is to promote the sharing and delivery of disaster readiness and response
information held by national and local government bodies while quickly evaluating thescope of a disaster that has occurred. Its central functionality, utilizing the Geographic
Information System (GIS), is the registration and utilization of disaster-prevention data. This
allows the collection and sharing of disaster-prevention data among organizations involved
in disaster response and provides functionality for the quick evaluation of earthquake
damage by running simulations on the scope of damage when an earthquake has
occurred. Building on the Japanese government’s Fundamental Plan for National
Resilience, Hitachi expects to roll out further improvements in the transmission and sharingof data, not only at the national level but also among local governments, designated public
institutions, and citizens. We are also implementing upgrades to improve information
handling, based on the results of studies by various governmental working groups.

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Hitachi is also extending its observation to data passing through social networking
services like Twitter, blogs, and message boards, in order to improve its grasp of unfolding
disaster situations. We are developing systems to quickly assess these situations bycreating map-based visualizations from data found on social networks and providing datathat will be useful in decision making.
Hitachi will continue pursuing research and development that integrates various datacollected when a disaster occurs and produces usable outcomes as a contribution todisaster-response activities, thereby helping to realize a safe and secure society. We hope
to contribute to disaster mitigation by providing systems that effectively support decision
making and on-the-ground activities when disasters happen.
Future Outlook

Providing total technology solutions covering broad fields, we aim to optimizesocial infrastructure security around the world.
By connecting many different physical components of its society via IT, Japan has
achieved an advanced social infrastructure. Today, though, the threats to social
infrastructure, including natural disasters and cyberterrorism, have become increasingly
diverse and complex. Hitachi provides security technology in a wide range of fields, fromcontrol systems to disaster prevention. By crafting not just individual systems but totalsolutions, we hope to contribute to improving the safety and security of social
infrastructure as a whole. We are advancing services taking the technology we havedeveloped in many business areas and utilizing them holistically in order to maintain the
security of systems as a whole.
The ability to set forth clear directions and management ability that can utilize security
technology appropriately are vital in opposing the rapidly expanding threats we face today.
Standardization aimed at strengthening crisis management has also become indispensable
to the global community. Hitachi is contributing to standardization activities that promoteenhancing and extending security around the world, in accordance with the technicaltrends of the international standards field.
To help ensure social infrastructure security on a global scale, we must havepersonnel with mastery of information, control, and many other systems who candetermine customers’ most pressing needs and address them appropriately. Hitachi willcontinue to improve its cultivation of global human resources who are equipped with theskill and mental acumen to handle the task of social infrastructure security optimization
around the globe.

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FOUNDATION

for Promoting CSR Management
Our society faces a wide range of problems, including global warming,
poverty, and social discrimination. Demand is growing forcorporations to address these problems. Listening to the expectationsof the public and incorporating those voices into our businessactivities is a way to enhance Hitachi’s credibility in society. By sharing
values with all stakeholders and integrating CSR and management
strategies, we will aim to balance the sustainable growth of society
with our economic growth as a global company.

Contents
CSR Management

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Hitachi R&D and Intellectual Property

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Stakeholder Engagement

58

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CSR Management
With our Corporate Credo of contributing to society through thedevelopment of superior, original technology and products, we strive torealize a sustainable society by reflecting social and environmental
aspects of the expectations of global society with our management
through communication with stakeholders.

Hitachi’s CSR Activities
To realize the Hitachi Group Vision, which draws on our Corporate Credo and Founding Spiritthat form the core of our CSR, we have been sharing throughout the Group our CSR policy,
created in 2005, as the basis of our CSR activities. Looking toward the next Mid-termManagement Plan that will start from fiscal 2016, we have shifted the CSR Policy to aframework based on ISO 26000 to further integrate management and CSR strategies. Fromfiscal 2014, we have been further improving communications with our stakeholders torecognize and fulfill our social responsibilities. We will also reinforce the PDCA cycle to ensure
execution of our activities and to improve the quality of our management.
CSR Management Framework
Recognize

Properly recognize our social responsibility

1 Recognition of Social

Responsibility

2 Organizational Governance3 Human Rights

4 Labor Practices

5 The Environment

6 Fair Operating Practices
7 Customers (Consumer

Issues)8 Community Involvement andDevelopment

9 Review and Improvement ofReview and Improve

Confirm and enhance CSR
activities through proactive
communication andstakeholder engagement

CSR Activities

Identify, Prioritize, and Act

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CSR Management

Material Issues for Hitachi
We use a materiality process based on dialogue with stakeholders to identify material
issues. To integrate our management strategies and CSR, we reflect in our activities thematerial issues related to the key management policies in our Mid-term Management Planand seek to materialize CSR in line with our management strategy. Moreover, we are
currently engaged in Group-wide discussion on identifying new material issues in line with
global trends.

Products that Create a Sustainable
Society (Sustainable Business)
2 Caring for the Environment
3 Public Policy Initiatives
4 Respect for Human Rights
5 Supply Chain Management
6 Diversity Management
1

Importance forstakeholders

Influence on businessSelection Process for Material Issues
To select material issues, we evaluate and verify sustainability issues—which are
identified through dialogue with stakeholders, such as international organizations,investors, and NGOs, as well as by monitoring public policy trends—from twodimensions: importance for stakeholders and influence on business. Importance forstakeholders includes human rights, international development, the environment,
reporting, ethics, and regional and international demands. Influences on business areassessed from the global, fusion-related, and environmental perspectives, the main
points of our 2012 Mid-term Management Plan, as well as the perspectives ofinnovation, risk, reputation, and cost effectiveness.

Material Issues and Reporting
The treatment and wording of the six material issues are adjusted flexibly in oursustainability reports in accordance with stakeholder demands and revisions tointernational guidelines, including those issued by the Global Reporting Initiative (GRI).
Given the focus of the GRI G4 guidelines on stakeholder engagement, we reporton public policy initiatives within this framework under the heading “Working with
Governments and Public Policymakers.” Meanwhile, in light of global trends, we reporton diversity management in the section titled “Diversity and Inclusion” to clarify
Hitachi’s position.

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CSR Management

CSR Management Structure
In October 2013, the CSR Division and the Environmental Strategy Office at Hitachi, Ltd.
merged to form the CSR and Environmental Strategy Division. We are sharing the HitachiGroup CSR Statement and Mission, created in fiscal 2014 to lay out the goals of the neworganization, with in-house companies and Group companies.
To promote CSR across the whole Group, the CSR and Environmental Strategy
Division, together with CSR-related departments at Hitachi, Ltd. (the CSR Promotion
Team*1) and CSR departments of in-house companies, Group companies, and regional
headquarters outside Japan, hold regular meetings to share a common direction anddevelop Group-wide CSR programs and initiatives.
To fulfill our social responsibilities, as well as to seek sustainable growth as a global
company, we communicate with stakeholders in and outside of Japan and take a proactive
approach to incorporate global social issues into our management strategy, while
continuously striving to improve the quality of our management.
*1 CSR Promotion Team: Develops CSR initiatives for every CSR-related department and executes these throughout
the Group.

Hitachi Group CSR Statement and Mission
We strive to realize a sustainable society by properly understanding global social andenvironmental expectations through communication with our stakeholders andintegrating those expectations into our management:
CSR and environmental initiatives that contribute to solving social issues
Governance that realizes sustainable management
Communication that fosters mutual understanding with stakeholders

Structure of Hitachi Group CSR Promotion
President

Senior Executive
Committee*1

CSR and
Environmental Strategy
Division (Secretariat)

In-house company
presidents
CSR promotion
officers

Business sites/
PlantsGroup company
presidents
CSR promotion
officers

Group companies

CSR Promotion TeamGroup Management, Corporate Brand Management,
Customer Satisfaction, Overseas Operations,
Employee Relations & Human Capital, Legal Affairs,
Corporate Citizenship, Environmental Conservation,
Compliance, Quality Assurance, Procurement, Public
Relations, Research and Development, Government
and External Relations

Regional headquarters outside Japan
Regional executives
CSR promotion officers
Hitachi, Ltd. and 995 consolidated subsidiaries and261 companies that use the equity method*2*1 Senior Executive Committee: Develops CSR management policies at the executive level.
*2 As of March 2015.

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Hitachi R&D and Intellectual Property
It is Hitachi’s aim to contribute to the creation of a prosperous society by
driving innovation utilizing its advanced technologies. To realize this,three organizations were established to fulfill the missions ofcollaborative creation with customers, technology innovation, andexploratory research. Hitachi will contribute to resolving increasingly
global, complex societal issues through the Social Innovation Business.
Research and Development
Realignment of the R&D Organization and Research Strategy
At Hitachi, R&D is being accelerated as part of a strategy to achieve growth in the global
market, spearheaded by the Social Innovation Business. In April 2015, the Central
Research Laboratory, Hitachi Research Laboratory, Yokohama Research Laboratory,
Design Division, and the overseas research centers were realigned along research strategy
axes resulting in the establishment of four Global Centers for Social Innovation, nine
Centers for Technology Innovation, and the Center for Exploratory Research.
“Contributing to society through the development of superior, original technology andproducts” has been Hitachi’s Corporate Credo since its foundation, and under this Credo,
Hitachi has been pursuing world-leading R&D. The realigned research organization willcontinue to adhere to this Credo and, at the same time, firmly establish a customer-driven
research framework to co-create solutions to resolve issues, by promoting the following:(1) Position researchers close to customers to enhance co-creation(2) Create innovative technology meeting customer needs(3) Address future societal issues together with national governments and regional communities
New growth will be led by R&D that goes beyond generating technology to also
drive innovation.
Establishment of an R&D Organization to Lead Hitachi’s Global Growth

Global Centers for Social Innovation

The Global Centers for Social Innovation (CSI) were formed by integrating the Design Division,
part of the Yokohama Research Laboratory, and overseas research centers. They serve as thefrontline organization with researchers positioned in four regions—the Asia-Pacific, North
America, China, and Europe—to identify issues together with customers and co-create new
solutions. CSI consists of approximately 500 people in total, with about 200 in Japan and 300
in other countries. Together with customers, CSI uses original service design methods tovisualize issues, as well as to discuss and formulate visions toward resolving those issues.
Drawing on the technology platforms from the Centers for Technology Innovation and
Hitachi’s innovative products, CSI will lead the development of solution prototypes andverification of customer value through proof-of-concept tests.

Centers for Technology Innovation

The Centers for Technology Innovation (CTI) were formed by integrating the Hitachi
Research Laboratory, Yokohama Research Laboratory, and a part of the Central ResearchLaboratory, to establish nine centers: Energy, Electronics, Mechanical Engineering,
Materials, Systems Engineering, Information and Telecommunications, Controls,
Production Engineering, and Healthcare. CTI consists of approximately 2,000 people
dedicated to developing technology platforms and convergence for solutions being
developed by CSI, as well as pursuing R&D for innovative products.

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Hitachi R&D and Intellectual Property

Center for Exploratory Research

The Center for Exploratory Research conducts cutting-edge research with a long-term
perspective to realize the continuous sustainable growth of Hitachi, as well as pursuing
open innovation with various research institutes worldwide to create the seeds for the
future Social Innovation Business. Future societal issues are captured through discussion
with customers and regional communities, and a vision is drawn up to resolve thoseissues. This exploratory basic research is carried out by approximately 100 people,
pioneering new frontiers.
Research & Development Group Organization
Until March 2015

From April 2015

Research & Development Group

Research & Development Group

Technology Strategy Office

Technology Strategy OfficeCentral Research Laboratory

Global Centers for Social Innovation

Hitachi Research Laboratory
Yokohama Research Laboratory
Design Division
Overseas research centers

Global Center for Social Innovation ‒ Tokyo
Global Center for Social Innovation ‒ North America
Global Center for Social Innovation ‒ China
Global Center for Social Innovation ‒ Europe
Centers for Technology Innovation
Center for Technology Innovation ‒ Energy
Center for Technology Innovation ‒ Electronics
Center for Technology Innovation ‒ Mechanical Engineering
Center for Technology Innovation ‒ Materials
Center for Technology Innovation ‒ Systems Engineering
Center for Technology Innovation ‒ Information and Telecommunications
Center for Technology Innovation ‒ Controls
Center for Technology Innovation ‒ Production Engineering
Center for Technology Innovation ‒ Healthcare
Center for Exploratory Research

Type of Research Pursued by the New Organization
The new organization leverages Hitachi’s strengths in both infrastructure technology and IT
by combining the two to provide solutions resolving issues that customers face.
Creative innovations will be developed together with customers by globally deploying
cross-functional solutions in Hitachi’s key business areas, such as energy, urban
development, transportation, and healthcare.
Furthermore, Hitachi analyzes how it can contribute to society from both a short- to
medium-term perspective of a few years ahead and a long-term perspective of 100 years
ahead to set its research agenda.

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R&D Planning and Budget
R&D investment remains steady at about 4% of Hitachi Group revenue, and R&D efficiency
as measured by return on investment is used as one Hitachi Group management index.
In Hitachi, Ltd., R&D investment is allocated strategically by target. Research
investment can be broadly divided into two types: Sponsored or Advanced SponsoredResearch, financed by in-house and Hitachi Group companies based on businessroadmaps for current and next-generation businesses, and Frontier and Platform Research,based on the mid- to long-term technology plan developed by the Technology Strategy
Office. The goal of Sponsored and Advanced Sponsored Research is to expand andenhance core businesses, targeting practical application within three to five years. Frontierand Platform Research aims to create innovative technology for future core businesses.
Hitachi will continue to pursue R&D in alignment with management strategy tocontribute to the rapid global deployment and expansion of business.
Key Indicators
R&D Efficiency (Hitachi Group)

R&D Expenditure (Hitachi Group)(billion yen)

（ROI）

500

2.0

1.79
1.5

450

1.52
1.13

1.0
1.00
（Minimum target）

400

1.24

395.1

4.3%

3.8%

412.5
341.3

350

0.5
0

4.2%

3.7%

351.4

3.4%

335.5

300

2010

2011

2012

2013

2014

(FY)

0

2010

2011

Research investments

2012

2013

2014

(FY)

R&D expenditure as a % of revenue

Strengthening Global R&D
The new Global Centers for Social Innovation (CSI) have established sites in the AsiaPacific region, the Americas, China, and Europe, which serve as frontline organizations
with researchers assigned close to the customer base to promote the co-creation of
innovation. In order to be able to fully address regional needs, approximately 300 of the
500 researchers belonging to the CSI are regionally employed non-Japanese nationals.
Customer collaboration methodology developed through design and service research
are used in Tokyo to co-create solutions with key customers in the Asia-Pacific region.
Asia-Pacific research centers also include Bangalore, India and Singapore.
In the Americas, research centers are located in the United States in Santa Clara,
California, and Farmington Hills, Michigan, and in São Paulo, Brazil. These centers are
pursuing collaborative creation with customers for advanced solutions in areas such asenergy, communications, finance, and healthcare, based on big data analytics platforms
developed by Hitachi.
In China, research centers are located in Beijing and Shanghai. Collaborative creation
is being strengthened with key elevator, escalator, ATM, and other customers to realize
new solutions that address government policy, such as China’s “New Urbanization” policy
and industrial policies for low carbon emissions and other goals.
In Europe, research centers are located in the United Kingdom, France, Germany, andDenmark. Researchers here take part in new market creation by participating instandardization activity, which Europe leads, and co-create solutions in collaboration withmajor institutes to help industrialized countries resolve issues facing matured societies.

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Open Innovation
In order to promote innovative technology development that cannot be achieved by one
company alone, Hitachi collaborates with research institutes, universities, and customers
both in and outside of Japan to maintain an open R&D environment.
To date, Hitachi has pursued basic research in physics to lead innovation for futurecomputing, devices, and materials through the Hitachi Cambridge Laboratory, established in1985 within Cambridge University in the United Kingdom, and metallurgic materials throughthe joint research laboratory established with Shanghai Jiao Tong University in fiscal 2012. In
fiscal 2014, Hitachi collaborated with 85 research institutes outside Japan and 246 research
institutes in Japan. Hitachi has also been strengthening ties with researchers overseas
through programs such as the Hitachi Research Visit Programs (HiVIPS), established in fiscal
1985, to invite researchers to work in the labs in Japan under fixed-term employment.
From fiscal 2015, the new Center for Exploratory Research will serve as the hub for open
innovation to generate seeds for Hitachi’s next Social Innovation Business. Basic research will
be further enhanced through contributions from open innovation to resolve societal issues.
R&D Ethics Reviews
Hitachi has established an ethical review committee based on the “Ethical Guidelines for
Human Genome/Gene Analysis Research” from the Ministry of Education, Culture, Sports,
Science, and Technology and the “Ethical Guidelines for Clinical Research” from the Ministryof Health, Labor, and Welfare. This committee reviews new projects before the researchstarts.
The Hitachi ethical review committee*1 was established in September 2000, soon after
we began to handle human genetic analysis information. It was the first ethical review
committee to be established by a private company in Japan. Today this committee, which
has a majority of external experts, carries out reviews prior to human genetic analysis,
activities associated with genetic analysis, and clinical research.
All Hitachi business divisions and Group companies that conduct activities falling under
the supervision of the committee are expected to show a high level of corporate social
responsibility and their researchers and staff to hold high ethical standards.
*1 On October 1, 2015, Hitachi will shift its focus of interpretation, approaching these as “Ethical Guidelines for
Medical and Health Research Involving Human Subjects.”

R&D Case Examples

Holography Electron Microscope with the World’s Highest Point Resolution
Electromagnetic field measurement with atomic resolution is crucial for the development ofhighly functional, next-generation materials such as high-performance magnets, largecapacity secondary batteries, ultra-low-power-consumption memory devices, and hightemperature superconductors. With funding from the Japan Society for Promotion of
Science since March 2010 under the Japanese Cabinet Office’s FIRST Program (Funding
Program for World-Leading Innovative R&D on Science and Technology), Hitachi
Atomic-Resolution Holography
Electron Microscope.

developed an atomic-resolution holography electron microscope accelerated at 1.2
megavolts, enabling atomic-level observation of electromagnetic fields.
This project resulted in the development of a high-speed electron beam with the fullrange of energy to obtain high resolution, an electron gun emitting high-brightness electron
beams with long-term stability, and facilities technology to eliminate noise from vibrations,Hitachi Group
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sounds, and ambient magnetic fields that can affect electron beams and observation
specimens. These technologies enabled the creation of the first ultra-high-voltage electron
microscope with a spherical-aberration corrector to account for focus problems. The
microscope achieves the world’s highest point resolution of 43 picometers (trillionths of ameter). This microscope will contribute to future advances in quantum mechanics andcondensed-matter physics, as well as to the development of new materials that will
support a sustainable society.

Walkthrough-style Finger Vein Authentication for Smooth and Accurate
Personal Verification

Finger vein authentication is a biometric identification technology in which near infrared
light (light under which veins can be clearly seen) is used to observe and authenticate anindividual’s finger vein pattern. In addition to current use cases, such as in ATMs and otherbank terminals, admission control, mobile devices, and automobiles, Hitachi has
Walkthrough-style finger veinauthentication.

developed a highly accurate personal verification walkthrough-style finger veinauthentication system for use at security gates in large-scale facilities with heavy traffic.
With this technology, the position and orientation of several fingers are instantaneously
detected as a person walks up to a gate, allowing him or her to pass smoothly through thegate without worrying about proper presentation of the fingers for scanning. Infrared light isdirected to the fingers from optimal directions according to the position and orientation of
the fingers presented. By combining the vein pattern of each finger, the system achieves

This system is also covered in theInitiatives for Social Infrastructure
Security section of this report.

greater verification accuracy than is possible with conventional single-finger readers.
Hitachi will seek to further expand its security solution business with this core technology.

Intellectual Property
Actions in the Intellectual Property Field
Intellectual property (IP) is a key element of Hitachi’s business strategy. We protect theinnovations emerging from our R&D, as well as the Hitachi brand, on the basis of these IP
rights, while working on international standards to grow our markets.
Building a Global Patent Portfolio
One of the IP activities supporting our global operations is developing a global patentportfolio to ensure worldwide protection for innovations emerging from our R&D and toprevent other companies from using our technologies without authorization. The portfolio
also enables us to demonstrate the advantages of those technologies to customers and tocooperate with other companies through cross-licensing. We boosted our patentapplication ratio outside Japan from 47% in fiscal 2009 to 59% in fiscal 2014. We willcontinue to efficiently build and maintain our global patent portfolio.
In tandem with efforts to globalize our R&D centers, we are also globalizing our IP
hubs. We currently have IP offices in New York and San Francisco in the United States,
Beijing and Shanghai in China, and Munich in Germany to protect the innovations
generated through R&D activities outside Japan.

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Another key issue is developing globally minded IP human resources. Since fiscal
1964, Hitachi’s Intellectual Property Division has operated an international job training
system, sending trainees to IP law firms and Group companies in Europe and the UnitedStates and to study abroad. In fiscal 2014, four trainees went to the United States, two toGermany, and one to the United Kingdom.
Key Indicators
Patent Application Ratios by Country or Region（%）
FY 2010

49

12

11

6

5

17

FY 201145

FY 201243

FY 2013

41

9

9

7

6

28

FY 2014

41

9

9

8

6

27

11

10

9

11

8
8

6
6

20
23

Japan
US
EuropeChina
Other
PCT* 1*1 International applications filed for Patent Cooperation Treaty coverage.

Respect for Intellectual Property
We respect the intellectual property rights (IPRs) of others, as we expect them to respectours. We follow the Hitachi Group Codes of Conduct and conduct preliminary searches ofothers’ patents when undertaking R&D on new products and technologies in order to avoid
IPR infringements. For IPRs that belong to others, we obtain licenses from IPR holders before
Hitachi Group Codes of Conduct,
5.3: Management andPreservation of Company Assets

we use the IP. If any company is found to have infringed Hitachi’s IPRs, we encourage thecounterparty to acquire the necessary license and take legal action if necessary.
Anti-Counterfeiting Activities
Protecting the Hitachi brand is crucial for supporting our global operations. We operate arigorous regime against such infringements as making and selling counterfeit goods carrying
the Hitachi brand and illegally applying for or registering trademarks similar to the Hitachibrand. Until recently, many counterfeit goods were made in China, but in the past several
years counterfeit manufacture has been discovered in other countries as well. In 2014,
counterfeit manufacturers were raided in a large scale in Thailand and Pakistan as the resultof our approach.
We are also educating consumers about these counterfeit goods. In 2014 weparticipated in an event held by customs authorities of the United Arab Emirates and theemirate of Dubai in particular to teach children and students about this problem.
As counterfeit goods and their sales routes have become more sophisticated,
providing information about these goods to local police, customs officers, and other public
officials and garnering their cooperation has become critical for effectively combating
counterfeit products.
In fiscal 2014 we became the first Japanese company to participate in an intensive
border-control operation conducted in Africa by the World Customs Organization,
cooperating to strengthen policing of counterfeit goods distribution in Africa.

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International Standardization Activities
To help create and expand markets as well as to accelerate our global businessexpansion, we are actively involved in developing international standards and are willingto commit employees to serve as international secretaries, chairpersons, or in other key
positions of international standards developing organizations, such as the International
Hitachi President and COO
Toshiaki Higashihara delivering the
keynote address at the 2014 IEC
General Meeting.

Electrotechnical Commission (IEC) and the International Organization forStandardization (ISO).
Hitachi was a leading sponsor of the 2014 IEC General Meeting in Tokyo. Hitachi
President and COO Toshiaki Higashihara delivered the keynote address in the opening
ceremony. His speech asserted that international standardization should be emphasized
as an arena for collaboration among a wide range of stakeholders.
The Hitachi Group Standardization Committee was established to work forcoordination among the Hitachi Group toward international standardization. The steeringcommittee*1 of this body determines priority themes and promotes standardization

Hiromichi Fujisawa, Corporate
Chief Scientist of Hitachi s R&D
Group, received the Prime
Minister s Award for Industrial
Standardization.

activities by creating working groups for each theme.
Our international standardization work is highly regarded outside Hitachi. In fiscal
2014, Dr. Hiromichi Fujisawa, Corporate Chief Scientist of the Research & Development
Group, received the Prime Minister’s Award for Industrial Standardization. The Ministry of
Economy, Trade, and Industry conferred the highest honor on Dr. Fujisawa, who served asvice president of the IEC for six years, in recognition of his achievements in advancing
international standardization.
Hitachi is committed to contributing to international standardization via standarddeveloping organizations like the IEC, ISO, and various consortia to facilitate innovationthat resolves social issues, as well as to providing solutions consistent with international
standards to support the development of sound global markets.
*1 Steering committee: Headed by the executive officer overseeing R&D, this entity includes chief technology
officers of Hitachi in-house companies and Group companies. The committee is responsible for decisions on
cross-departmental and company-wide standardization projects.

Hitachi Group Standardization Committee
Head:
Hitachi, Ltd. executive officer incharge of R&D

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

Steering Committee

Priority Theme 1 Working Group
Priority Theme 2 Working Group
Priority Theme 3 Working Group

Hitachi Group Standardization Committee

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Reward System for Employee Inventions
We motivate employees in the R&D field with an ample reward system for new inventions. To
make this reward system as fair and transparent as possible, we set standards to evaluate
inventions and disclose these standards to employees. We also have a mechanism forreceiving inquiries about the rewards, as well as opinions on the reward system.
We have set up a special division within the Intellectual Property Division to plan andoperate this system. 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. The system includes an invention information channel
to promote communication between inventors and the business divisions implementing theresulting patents. Inventors can ask the business divisions for information about patentimplementation and check the evaluation standards used to calculate the rewards for theirinventions. To ensure transparency and inventor satisfaction, we also set up an Arbitration
Committee for Invention Rewards with the same composition as the Invention
Management Committee. Inventors can appeal to this committee if they disagree with theamount they have been awarded.
From fiscal 2005, we have also given President’s Awards to the top 100
inventors. Since fiscal 2006, we have also awarded the top 50 young inventors (under
35 years old) based on patent application rewards received within five years of theirjoining Hitachi.

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Stakeholder Engagement
We put great importance on communication with our stakeholders at
various areas of our business activities. We are working on developing
more effective means of communication, as well as on information
disclosure to build relationships of greater trust with our stakeholders.
Communication with Stakeholders

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

Stakeholders

Main Issues

Main Divisions

Means of Communication

Customers

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

Quality Assurance
Sales

Customer satisfaction activities
MarketingWebsiteAdvertisement activities

Pages
Quality Assurance
Activities
pp.144–146
Customer Satisfaction

Shareholders andInvestors

Facilitation of capital procurement throughappropriate disclosure of information
required by law and proactive distributionof corporate information

Public Relations
and IR

Announcements of financial results(quarterly)
General shareholders’ meetings (annual)IR events, one-on-one meetings (about
740 times/year)
IR tools: annual reports, business
reports, etc.

Communication with
Shareholders andInvestors
pp.152–155

Suppliers

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

Procurement

Procurement activities
Supplier meetings
CSR monitoring (200 companies/year)
CSR audits (20 companies/year, annual)Supply Chain
Management
pp.118–123

Employees

Active utilization, proper treatment, andpromotion of occupational health andsafety of human capital

Public Relations
Human Capital

Intranet, in-house newsletters
Training(fiscal 2013: average 37.9 hours/person)
Town hall meetings between senior
management and employees(45 times/year)
Employee surveys (annual)

Diversity andInclusion
pp.124–134
Employee Health,
Safety, and Welfare
pp.135–138
Global Human Capital
Development
pp.139–143

National and Local
Governments,
Industrial Associations

Compliance with domestic and foreignlaws and regulations, policy
recommendations, participation inindustry-government-academia
collaborative projects

The Government &External Relations

International conference participation
Policy council participation

Stakeholder
Engagement
pp.58–63

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.156–168

Academic Associations
and ResearchInstitutions

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

Research andDevelopment

Open innovation (joint research):
collaboration with 246 research institutes
in Japan, 85 outside Japan

Hitachi R&D andIntellectual Property
pp.50–57

NGOs and NPOs

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

CSR Promotion

Stakeholder dialogue (2 times/year)
Dialogue through collaboration

Social Contribution
Activities
pp.156–168

Global Environment

Global warming prevention, resource
conservation, and ecosystems
preservation.

Environment
All Business Divisions

pp.147–151

Environment
pp.64–112

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Engagement with Customers

Global Campaign Rollout

It is critical for Hitachi to gain stakeholders’ understanding of its Social Innovation
Business and corporate vision, which aspire to realize a sustainable society. Continuingfrom fiscal 2013, we conducted the Global Brand Campaign in 18 countries. The
campaign uses the slogan “SOCIAL INNOVATION—It’s Our Future,” presenting
examples of how Hitachi’s Social Innovation Business is helping to address the many
issues societies now face globally, such as energy issues, depletion of water resources,
transportation issues linked to urbanization, healthcare issues associated with thegraying of society, advancement of big data and other information technologies, foodsafety, and information security.
To globally enhance the Hitachi brand, we held the Hitachi Social Innovation Forum inlocations worldwide, including India, Brazil, Singapore, Germany, Turkey, and Japan,
showcasing examples of the Social Innovation Business being conducted in each region.
Through speeches, panel discussions, and panel exhibits, we presented a wide range ofstakeholders—including customers and government officials—with solutions to social
issues that countries and regions around the world face today.
Engagement with Employees

Spreading Awareness of the Vision to Employees Group-wide

To help solve social issues by promoting understanding of and acting on the HitachiGroup Identity and to realize the Hitachi Group Vision, our brand management must
engage everyone in the Group. We use channels including our intranet to ensure thatGroup employees are clearly aware of what needs to be done to realize the Group
Vision. To promote understanding of the Hitachi brand, we launched the Inspiration of
the Year Awards in fiscal 2003 to share within Hitachi those activities that have made anoutstanding contribution to our brand value. In fiscal 2012, we began evaluating
applications globally, renaming the program the Inspiration of the Year Global Awards. In
fiscal 2014, the awards saw 255 applications from China, Europe/Africa, India, North
America, Southeast Asia, and Japan. Outstanding activities from each region werehighlighted on the intranet, and the President and COO gave out the awards at aceremony held at our Tokyo headquarters.
To further instill the Hitachi Group Vision in our employees, we shared a behind-thescenes video on the making of the Hitachi Vision Movie, a visual depiction of the HitachiGroup Vision. We also updated the Hitachi Vision Book, a straightforward explanation
using illustrations and photographs, and offered e-learning units setting forth the factorsthat went into the Hitachi Group Identity and Hitachi Group Vision and how they relate to
the Mid-term Management Plan. By raising employee awareness of the Hitachi Group
Vision through these activities, we will continue to strive to become a company that“delivers innovations that answer society’s challenges.”

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Accelerating Management-Employee Communication

Since fiscal 2012, we have been organizing town hall meetings bringing together senior
management and employees. We held around 80 town hall meetings at operations inand outside Japan during the first two years, and in fiscal 2014, the Chairman and CEO
and the President and COO attended 45 meetings in the United States, China, and thePhilippines, as well as in Japan and elsewhere.
Ordinary business meetings and conferences are limited in agenda, and ourcommunications to employees via our intranet and other channels tend to be one-way.
Town hall meetings, meanwhile, are intended as forums for direct dialogue where
employees can gain a real sense of senior management’s way of thinking and what isneeded for Hitachi to make the next leap forward, as well as occasions for reaching ashared understanding of the work in which they are involved.
In the town hall meetings, we believe that it is important for senior management tohear the thoughts of front-line employees and for both sides to share their awareness as
they engage in dialogue on diverse topics, such as how we can grow our business.
Working with Governments and Public Policymakers

External Relations Initiatives

The social infrastructure field draws particularly strong interest from the public sector. In
the task of globally expanding our Social Innovation Business, the government
institutions that are the main agents for social infrastructure represent importantpartners to Hitachi, both as customers and as backers. The Japanese government has
implemented a support structure for infrastructure systems that are being exported withthe goal of strengthening Japan’s industrial competitiveness. Our access to thesesystems and to government advice is enormously helpful.
In our relations with government institutions outside Japan, we gather policy
information from a range of sources, frequently engaging with government officials. Thisdialogue ensures that we have a solid grasp of local social issues and business needs,
allowing us to help build better societies. For Hitachi, relationships with government
institutions in and outside Japan are becoming increasingly important.

Promoting External Relations

The Government & External Relations Division was established within our headquarters
in fiscal 2009 to guide and accelerate the external relations of the entire Hitachi Group.
This was in response to our 2015 Mid-term Management Plan, which focuses on the
global expansion of our Social Innovation Business, as well as the growing support
offered by the Japanese government for infrastructure system exports. Through thisdivision, we are working to strengthen government officials’ dialogue with Hitachi senior
management and with the external relations staff in our business divisions and Group
companies. We intend to provide government institutions with a better understanding ofour business and to offer policy recommendations on key comprehensive policy issues
with the prospect of stimulating the industry as a whole.
Outside Japan, we have offices in Washington DC and Brussels to monitor policy
trends and to manage external relations initiatives in the United States and Europe.
To promote external relations Group-wide, we hold an annual Group meeting to sharecases and issues, with an eye to boosting the efficiency of our activities.

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Policy Council Participation

As part of our dialogue with government officials, Hitachi executives and otherrepresentatives participate in a range of government-sponsored policy councils. In fiscal
2013, while he was still President, Chairman and CEO Hiroaki Nakanishi was appointed toJapan’s Council for Science, Technology, and Innovation (then Japan’s Council for
Science and Technology Policy). He continues to make recommendations as the council
discusses the implementation of Japanese policy in the above areas under the leadershipof the Prime Minister, and also attends and contributes to policy discussions at theGovernment-Labor-Management Meeting for Realizing a Positive Cycle of the Economy.
President and COO Toshiaki Higashihara participates in groups for devising export
strategies for government infrastructure, such as the Management Association
Infrastructure Strategy Council under the auspices of the Cabinet Secretariat, and has
made specific proposals for boosting Japan’s infrastructure exports.
Chairman Emeritus Takashi Kawamura is a member of the Ministry of Economy, Trade,and Industry’s Study Group for the Creation of Japan’s Earning Power, and otherexperienced Hitachi representatives also take part in various meetings and exchange views
regarding policy, making specific recommendations.

Government Support

METI provides a Global Internship Program to support global human resource
development. This promotes important network and cooperative relationships inbusiness development in the host countries as a part of the ministry’s support for
infrastructure system exports. During fiscal 2012, 2013, and 2014, 20 young HitachiGroup employees took part in this program, which sends junior-level employees fromprivate companies to government institutions and local companies in emerging
countries for several months. Participation in this type of program allows Hitachi tomore accurately identify the needs of emerging countries and propose the optimal
solutions for their particular social concerns, helping to resolve them.

Participating in Business and Industry Associations

Membership in business and industry associations is another critical aspect of our external
relations. Hitachi is a member of Keidanren (Japan Business Federation), where Chairman
and CEO Hiroaki Nakanishi has served as vice chair since June 2014, making proposals on
cybersecurity measures, as well as chairing the Committee on South Asia, the Committee
on Information and Telecommunication Policy, and the Committee on Education and Human
Resources Development (as of June 2015). Other executives and employees have roles innumerous other Keidanren committees. As the planning and coordination chair for thesubcommittee on Europe, we also urged the Japanese and European governments topursue early agreement during ongoing negotiations on the Japan-EU Economic
Partnership Agreement.
As a member of the Japan Electronics and Information Technology Industries
Association (JEITA), we are participating in the development of an industry response to theGeneral Data Protection Regulation on personal data protection currently underconsideration in the European Union, as well as the amendments to the Act on theProtection of Personal Information being considered in Japan.

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Within the Japan Electrical Manufacturers’ Association (JEMA), Hitachi is surveying thestatus of the development of the social infrastructure in emerging countries, including
power generation and transmission facilities, to promote infrastructure system exports. We
are also participating in public relations activities—primarily interactions with business
operators in these emerging countries—on how Japanese technologies and products canhelp to solve social issues there.

International Conference Participation

We participate in international conferences to deepen understanding of our business inother countries. For example, in September 2014 we took part in the India-Japan
Business Leaders Forum, held when Prime Minister Narendra Modi was visiting Japan,
conducting exchanges of views aimed at economic development in both countries. In
November 2014, we participated in a meeting of the Japan-US Business Council,
contributing to discussions concerning the Trans-Pacific Partnership and energy policy,
and in January 2015 we took part in the World Economic Forum in Davos, Switzerland.
Additionally, we are participating in the TOMODACHI Initiative, a joint Japan-US culturaland educational exchange program organized by the US Embassy in Japan and the
US-Japan Council.

United States: Hitachi Corporate Office in Washington DC

The Hitachi Corporate Office in Washington DC examines the impact of US government
legislation on our business activities. To promote mutual understanding and improvebusiness opportunities, we communicate to key stakeholders on how Hitachi cancontribute to the growth of US society.
For example, we share information gathered by the Washington office with Group
companies, exchanging reports on key laws and regulations that impact management andbusiness, analyzing their business impact, and responding appropriately. To increase theeffectiveness of these activities, we cooperate with influential external businessassociations, think tanks, and academic groups, exchanging opinions with specialists andresearchers and working through them to make policy proposals.
As part of the global expansion of our Social Innovation Business, we provide
information to policymakers and government representatives on Hitachi’s technologicalexpertise to convey, both directly and indirectly, how Hitachi technologies cancontribute to the United States.
Since 2009, we have been a joint organizer for the annual Eco-Engineering Forum. In
2014, the focus of the gathering, featuring detailed discussion by specialists, was “TheNew Eco-System of Information: Harnessing the Potential of Big Data.” We also shared thecontent through pamphlets and a website, distributing this information to relevant bodies.
This kind of forum allows us to foster broader understanding of Hitachi’s business andtechnological expertise and to expand our human networks.

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Stakeholder Engagement

Europe: Hitachi Corporate Office, Europe (HIBRU)

The Hitachi Corporate Office, Europe, located in Brussels, Belgium, is active in regional
issues, contributing to policy development through business and programs that boost
Hitachi’s profile in Europe. We make proposals to EU institutions regarding energy,
trade, research and development, environmental policy, CSR, and other areas throughbusiness and trade associations like BUSINESSEUROPE, DigitalEurope, and the Japan
Business Council in Europe (JBCE). We also participate in a European Commission
Product Environmental Footprint (PEF) pilot project as part of our environmental policy
activities, exchanging opinions and supporting the development of new policies.
We are involved in ongoing dialogues with representatives responsible for European
policy, business associations, and others, mainly via the JBCE. By leading the activity at
the JBCE, we have contributed to the policy discussions by proposing amendments to
European corporate law covering non-financial information disclosure and conflict minerals
legislation. We also contribute to the revision of European strategies for CSR, an area theEuropean Commission is actively working on, by holding roundtable discussions andplaying a dynamic role in debate concerning the direction of policy.
Since 1998, we have held the EU Hitachi Science & Technology Forum to deepen
understanding of Hitachi’s business. In fiscal 2014, the forum took place in Paris,
addressing the theme of healthcare. We invited a broad range of stakeholders, including
representatives from the French government, corporations, and hospitals, to exchange
views on how science and technology can help to solve healthcare issues and improve
patients’ quality of life through improved cooperation with stakeholders. At the preparatory
stage, we pursued exchanges with such policy makers as the European Commission andcontributed to the public consultation on the Green Paper on Mobile Health (“mHealth”).

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The woods of Hitachi’s Central Research Laboratory, preserving the natural environment of the Musashino area in Tokyo.

Our Ongoing CSR Activities:

ENVIRONMENT
To achieve a more sustainable society, Hitachi has identified theenvironment as an important management focus and is working to
reduce the environmental burden of its business operations. Global
warming prevention, resource conservation, and ecosystems
preservation are the three pillars of our vision.
Committed to helping solve global environmental problems thatface humankind, we combine our wide-ranging business activities with
our IT solutions to promote global production that reduces theenvironmental burden of a product throughout its life cycle.

Contents
Environmental Management Strategies and Initiatives

65

Environmentally Conscious Products and Services

75

Environmentally Conscious Production

85

Preserving Ecosystems

104

Environmental Communication

109

Environmental Engagement

112

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Environmental Management Strategies and Initiatives
Hitachi’s Approach

The world’s population, having passed the 7 billion mark in 2011, is
expected to reach 9.5 billion by 2050.*1 At the same time, worldwide GDP
continues to grow. This economic growth—led by emerging countries—
has led to global warming, caused by a rise in CO2 emissions fromgrowing fossil fuel use. The depletion of energy, water, mineral reserves,and other resources due to increased demand, as well as ecosystem
destruction and other environmental problems, are also worsening.
Hitachi believes that to solve these environmental problems and torealize a sustainable society where humankind can thrive, we must do
everything possible to reduce the burden of human activities on theenvironment. With the environment as an important management focus,
therefore, we are working to reduce the environmental burden of ourbusiness operations, as well as to raise awareness of environmental
issues among all Hitachi Group employees.
Guided by the Environmental Vision, whose aim is the achievement ofa sustainable society, Hitachi’s environmental management seeks toattain the goals of the long-term plan Environmental Vision 2025 and theEnvironmental Action Plan.
*1 According to the United Nations report, World Population Prospects: The 2012 Revision.

Our Actions in Fiscal 2014

In fiscal 2014, the second year of the Environmental Action Plan for 2013 to 2015,
we were able to match or exceed annual targets in all areas, including contributing
to the reduction of CO 2 emissions through products and services, expanding ourlineup of Hitachi Eco-Products, and reducing energy use per unit.
The percentage of Hitachi Eco-Product sales rose to 93%, compared to the fiscal
2014 target of 88%.
We contributed to the reduction of an estimated 32.19 million tonnes of
CO2 emissions through products and services, exceeding the fiscal 2014 target of
28 million tonnes.
The rate of reduction in energy use per unit, one of the indicators for Eco-Factories &Offices, was 16%, surpassing the fiscal 2014 target of 13%.
We began drafting the 2018 Environmental Action Plan for fiscal 2016 to 2018, to be
implemented concurrently with the next Mid-term Management Plan to be decided
in fiscal 2016.

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Environmental Management
Core Policy

The Hitachi Environmental Vision
At Hitachi, we aim to achieve the environmental management described in our Environmental
Vision—which in turn aspires to help create a sustainable society—by employing ourcompany’s resources to reduce the burden of human activities on the environment.
We are committed to global warming prevention, resource conservation, andecosystems preservation as the three pillars of our vision. Our goal is to achieve a moresustainable society by promoting global production that reduces the environmental burdenof a product throughout its life cycle.
Hitachi’s Environmental Vision

Our Long-Term Plan: Environmental Vision 2025

The Intergovernmental Panel on Climate Change (IPCC) concluded in the Synthesis Report ofits Fifth Assessment Report, issued in November 2014, that climate warming is unequivocal
and extremely likely to be caused by human activities. This announcement, which reinforced
arguments that have been made for some time, confirms once again that reducing CO2 andother greenhouse gases is essential for the prevention of global warming.
Accordingly, the Hitachi Group Environmental Vision 2025 is a long-term plan thattargets the prevention of global warming, one of the major issues that the world is facing
today. The Vision states our goal of helping to reduce annual CO2 emissions by 100 million
tonnes by 2025 through improved Hitachi products and services. Our aim is to do our part
toward achieving a major reduction in CO2 emissions by providing our customers withproducts that supply low-carbon energy, as well as energy-efficient products. To reachthese goals, we are working to increase the ratio of Hitachi Eco-Products, which have a
reduced burden on the environment, in our product range. We are expanding business
opportunities further by working with partners in global markets.

Instituting the Hitachi Action Guidelines for Environmental Conservation
The Action Guidelines for Environmental Conservation were drawn up to show thedirection of our business management initiatives for environmental protection as we set out
to realize the Hitachi Environmental Vision.

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Hitachi Action Guidelines for Environmental Conservation
1

Global environmental conservation is a critical challenge shared by all humans. Hitachi iscommitted, therefore, to fulfilling its responsibilities by assisting in the realization of anenvironmentally harmonious and sustainable society as one of its management priorities.

Core Policy

2

Hitachi will make efforts to contribute to society by developing highly reliable technologies
and production processes, while identifying needs considering concerns related to theprevention of global warming, conservation of resources, and preservation of ecosystems.

3

Members of the Board of Directors in charge of environmental conservation are responsible
for facilitating appropriate environmental conservation activities. Departments responsible
for environmental conservation should endeavor to promote and ensure environmental
conservation activities, including improving environment-related rules and regulations andsetting goals for environmental burden reduction. These departments should also confirm
that their environmental conservation activities are conducted in a proper manner andensure that these activities are maintained and improved.

4

Hitachi will promote globally applicable “monozukuri” with the aim of understanding andreducing environmental burdens at every stage, including product research anddevelopment, design, production, distribution, sales, usage, and final disposal.

5

Hitachi will investigate and review the environmental impact caused in the course of its“monozukuri” processes. Hitachi will also introduce excellent technologies and materials
useful to safeguard the environment, in other words, to reduce environmental burdens
through energy and resource saving, recycling, chemical substance management,
consideration for the ecosystem, and other measures.

6

Hitachi’s environmental conservation efforts are not only to be focused on observing
international environmental regulations and those of national and local governments, butalso on conserving the environment by implementing voluntary environmental standards
when necessary.

7

Regarding globally applicable “monozukuri” activities, impact on the local environment andcommunity are to be considered. In addition, measures that meet local communities’
requests should be implemented.

8

Hitachi will educate its employees to take action in order to obey environment-related laws,
raise their global environmental awareness, and encourage their interest in environmental
conservation having a broad overview of society’s activities.

9

Hitachi will evaluate potential environmental problems and prevent them from occurring. In
the event that any environmental problem occurs, Hitachi will take appropriate measures
to minimize the environmental burden.

10

Hitachi will make efforts to disclose information on its environmental conservation activities
to its relevant stakeholders. Hitachi will also actively communicate with thesestakeholders so as to strengthen mutual understanding and forge cooperative
relationships with them.

Promoting the Environmental Action PlanOur Environmental Action Plan was created and designed to carry out the measures in our
Action Guidelines for Environmental Conservation. This plan sets improvement targets for
specific areas, and environmental initiatives are promoted by executing and improving activities
in every area. To give our environmental strategy a more prominent role in our management
strategy, we are promoting the Environmental Action Plan as a three-year plan, aligning it with
the Mid-term Management Plan for the Hitachi Group covering fiscal 2013 to 2015.
We have also begun drafting the 2018 Environmental Action Plan for fiscal 2016 to
2018, to be implemented concurrently with the next Mid-term Management Plan to be
decided in fiscal 2016.

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Environmental Action Plan for 2013 to 2015: Achievements and Targets

In fiscal 2014, the second year of the Environmental Action Plan for 2013 to 2015,
we were able to match or exceed annual targets. We are now accelerating this work toensure that all our targets are achieved by fiscal 2015, the final year of the plan.
Shown in the tables below are the main indicators for Hitachi’s environmental
activities. Initiatives corresponding to each indicator are introduced in the following pages.
Establish environmental management systems
Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

GPs in GREEN 21
Environmental Activity
Evaluation System

576 GPs

602 GPs◆◆◆

640 GPs

Implementation of
ecosystem preservationassessment

Conduct
ecosystem
preservationassessment

Carried out
assessment◆◆◆

Completion of ecosystempreservation assessment

Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

Action goals

Indicators

Raise the level ofenvironmental activities(GPs: green points)
Ecosystem (biodiversity)preservation

Promote Eco-Products
Action goals

Indicators

Expand Hitachi EcoProduct lineup

Percentage of Hitachi
Eco-Product sales

88%

93%

◆◆◆

90%

Number of models in
Eco-Products Selectprogram

220 models

343 models◆◆◆

340 models

Volume of contribution toCO2 emission reductions
through products andservices

28 million
tonnes32.19 million
tonnes◆◆◆35 million tonnes (100million tonnes by 2025)

Contribute to the reductionof 100 million tonnes of
CO2 emissions throughproducts and services

Build industry’s most advanced factories and offices
Action goals

Indicators

Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

Promote Eco-Factories &Offices Select certification

Eco-Factories & Offices
Select certification

Expansion ofcertificationNew
certifications:14
Renewedcertifications:54
Total: 68◆◆◆

Average of one or morecertifications per in-houseand Group company

Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

16%

◆◆◆

15%

Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

Prevent global warming
Action goals

Indicators

Reduce energy use perunit

Rate of reduction in energy 13%
use per unit (base: FY
2005, global)

Use resources efficiently
Action goals

Indicators

Reduce waste andvaluables generation perunit

Rate of reduction in waste
and valuables generation
per unit (base: FY 2005,
global)

21%

25%

◆◆◆

23%

Reduce water use per unit

Rate of reduction in water
use per unit (base: FY
2005, outside Japan)

28%

43%

◆◆◆

30%

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Manage chemical substances
Action goals

Indicators

Reduce volatile organic
compound (VOC)
atmospheric emissions perunit

Rate of reduction in VOC
atmospheric emissions perunit (base: FY 2006,
global)Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

39%

43%

◆◆◆

40%

Global citizenship program
Action goals

Indicators

Fiscal 2014
targets

Fiscal 2014
results

Achievement
level

Final fiscal year (2015)
targets

Make social contributions
through environmental
activities

Promotion of environmental Expansion ofactivities
communication as theflagship activity of eachin-house and Group
company

Expandedactivities◆◆◆

Achieve one or moreflagship activity per
in-house and Group
company◆◆◆：◆◆：

Achieved
Partially achieved

Environmental Management Framework

Frameworks

Our global environmental management system supports environmental decision making andimplementation at Hitachi, Ltd. and 995 consolidated subsidiaries (a total of 996 companies)
and 261 equity-method affiliates.
The CSR and Environmental Strategy Division is responsible for developing Group-wide
environmental policies. The Senior Executive Committee, which is chaired by the president of
Hitachi, considers important items related to environmental initiatives. The Environmental
Strategy Officers Meeting, comprising representatives from in-house companies and majorGroup companies, ensures that the Hitachi Group Environmental Action Plan approved by the
executive officer in charge of environmental concerns is implemented throughout the Group.
The Environmental Committee and committees of working-level experts for each policy area
develop targets and ways to achieve them, as well as promote initiatives to be carried out by
the Group as a whole. Outside Japan, we assign regional specialists to report on the progressof the Environmental Action Plan and share information on the latest environmental
regulations while exchanging views on local environmental issues within each region.
Hitachi’s Environmental Management System (EMS) (as of April 2015)
President
Executive officer in charge of environmental matters

Senior Executive Committee
for Environmental Policy
Environmental Strategy Officers Meeting
Factories and Officers

CSR and Environmental Strategy Division
Environmental Committee

Hitachi, Ltd. In-House Companies

Environmental Strategy Officers
Environmental Promotion Departments

Division Heads
Environmental Management Officers

Group Companies

Presidents
Environmental Management Officers

Eco-Management Committee
Eco-Products Committee

Factories and Officers

Eco-Factory Committee
Major Group Companies

Environmental Strategy Officers
Environmental Promotion Departments

Regional
Environmental
Network Meetings

Division Heads
Environmental Management Officers

Group Companies

Presidents
Environmental Management Officers

Regional Specialists (Europe, the Americas,
China, and the Rest of Asia)

Hitachi, Ltd. and 995 consolidated subsidiaries (a total of 996 companies) and 261 equity-method affiliates.

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Building Environmental Management Systems

We have established environmental management criteria to ensure efficient managementof each business site’s environmental load. There are approximately 250 business sitesthat meet these criteria. The R&D Group, 5 in-house companies, and 11 Group companies
together with the CSR and Environmental Strategy Division have developed andimplemented the Hitachi Group Environmental Promotion Organization EMS (environmental
management system) to promote the consistent implementation of environmental policies.
At the same time, every business site meeting the criteria for environmental management
continues to maintain ISO 14001 certification. Certification is also being pursued atbusiness sites that do not yet meet the criteria.
Criteria for Environmental Management Level (major items)
Number of employees≥ 500

Electric power consumption≥ 6,000 MWh/year

Waste generation≥ 500 t/year

Water use

≥ 600 m3/day

Paper purchase≥ 50 t/year

Status of ISO 14001 Certifications (as of April 2015)
Japan
Number of Certified Sites*1

Outside Japan
157

Total
138

295

*1 Including companies with more than one certified business site.

Americas15Europe13

China
63
Rest of
Asia
47

Japan
157

Monitoring Environmental Performance Data

For effective environmental management, we collect data on the environmental
performance of business operations using the Environmental Load Evaluation System.
This system collects environmental load data from some 250 Hitachi business sites
worldwide on items such as energy use, CO2 emissions, and waste generation, together
with information on awards received and other items. By analyzing this information we
identify environmental management issues, share instructive examples within the Group,
and improve environmental practices. Specifically, we collect and analyze environmental
performance data in the key areas of energy, waste materials, water, and VOCs monthly
and quarterly so that performance levels can be further increased.

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Environmental Activity Evaluation System

We use our own evaluation system, GREEN 21, to improve the level and quality of ourenvironmental activities. It divides environmental activities into eight categories andevaluates achievements and progress toward Action Plan targets by rating 52 items on ascale from 1 to 5. A perfect score for any category is 100 green points (GPs). We
surpassed our fiscal 2014 target of 576 GPs with a score of 602 GPs. As we further raise
the level of environmental activities, we are targeting 640 GPs for fiscal 2015.
Key Indicators
Green Point (GP) Average: FY 2014 Results and Targets
FY 2014 result: 602 GP
FY 2014 target: 576 GP
1 Eco-Management Environmental Management
100

83 GPs8 Worldwide Environmental

Partnerships
76 GPs7 Eco-Factories Resource

2 Eco-Management Product/

Service Strategy
75 GPs50

3 Eco-Management Supply Chain

076 GPsRecycling
70 GPs4 Eco-Mind

6 Eco-Factories Global

79 GPsWarming Prevention
67 GPs5 Eco-Products

76 GPsCategories and Evaluation Items
1 Environmental management, environmental accounting, andcompliance with laws and regulations

2 Progress toward goal of reducing CO2 emissions;environment business strategies

3 Gathering and communicating environmental information

across the supply chain

4 Environmental education and training of environmental experts

5 Assessment of products and services
6 CO2 emission reductions, energy efficiency improvements,and energy savings in transportation

7 Resource recycling and chemical substances management
8 Information disclosure, communication activities, global

citizenship activities, and ecosystems preservation

Hitachi Group Environmental Award Program

We established the GREEN 21 Award program to encourage environmental activities anddisseminate best practices throughout the Group. The awards honor environmentallyconscious products and technologies, various environmental initiatives at business sites
including advanced energy-saving approaches, and environmental activities that promote
communication with society. In fiscal 2014 we presented 14 awards, including those given
to Green Curtain Project achievements, which were previously recognized separately.

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Fiscal 2014 GREEN 21 Awards
Category

Recipient (business site/individual)

Achievement

Environmental Management & Communication
Grand Prize

Hitachi Elevator (Shanghai) Co., Ltd.

Development of environmental activities that disseminate the corporate
philosophy: Implementation of various activities within and outside thecompany

Excellence Prize

Environmental Policy Center, Human Resources and Administration
Department, Group HR Business Partnering Center, Corporate
Communications Department, Hitachi (China) Ltd.

Comprehensive activities of eco-mind promotion in China

Hitachi Construction Machinery (China) Co., Ltd.

“Hitachi Eco Education classroom program” held on school campuses

Hitachi Computer Products（ America）, Inc.

Creation of the Kennedy Elementary School Outdoor Classroom and launchof environmental education activities

Honorable Mention

Eco-Business and Eco-ProductsGrand Prize

Hitachi Construction Machinery Co., Ltd.

Hybrid Hydraulic Excavator ZH200-5B

Excellence Prize

Hitachi Appliances, Inc.

Room Air Conditioner “Stainless-Clean Shirokuma-kun”

Honorable Mention

Hitachi Chemical Co., Ltd.
Nabari Works, Shin-Kobe Electric Machinery Co., Ltd.

LL series stationary valve-regulated lead-acid batteries for power storage

Mito Works, Urban Planning and Development Systems Company, Hitachi, Ltd.
Mito Production Department, Hitachi Building Systems Co., Ltd.

New model Standard Elevator

Eco-Factories and Eco-Offices
Grand Prize

Hitachi Research Laboratory, Research & Development Group, Hitachi, Ltd.

Energy conservation activities by optimization of research equipment layout
and operation and introduction of high-efficiency equipment including LED
lightsExcellence Prize

Asahi Headquarters, Hitachi-Omron Terminal Solutions, Corp.

Improvement on the GREEN 21 score and energy use efficiency

Honorable Mention

Hitachi Construction Machinery Tierra Co., Ltd.

Reduction of environmental burden and communication with society throughenvironmental activities

Ashford Maintenance Depot, Hitachi Rail Europe Ltd.

Energy efficiency improvement

Green Curtains
Grand Prize

Hitachi Consumer Electronics Co., Ltd.
Communication promotion through green curtain creation with local
Yokohama Office, IT Platform Division Group, Information &citizens and Hitachi Yokohama group members as “One Hitachi”
Telecommunication Systems Company, Hitachi, Ltd.
collaboration activities
Yokohama Research Laboratory, Research & Development Group, Hitachi, Ltd.
Yokohama Office, Defense Systems Company, Hitachi, Ltd.
Hitachi Advanced Systems Corporation
Yokohama Office, Hitachi Industry & Control Solutions, Ltd.
Yokohama Office, Nikkyo Create, Ltd.
Hitachi ICT Business Services, Ltd.
Hitachi Urban Investment, Ltd.

Select Excellence Prize Hitachi Kokusai Electric Inc. and its Group companies in Japan

Group-wide green curtain activities

Environmental Education Initiatives
Core Policy

Promoting Environmental Education
Hitachi Group training is offered to all Group employees with a view to raising awarenessand aiding understanding of environmental issues.

Results

Actions and Achievements
In fiscal 2014 we provided basic environmental management courses for employees
working in air, water, and waste management, as well as training in recent
amendments to laws and operational procedures. To respond to China’s stricter
enforcement of environmental laws, in September we held a seminar in Shanghai on
environmental regulations and a workshop on environmental risk management for 77
working-level employees at 48 companies. In addition to Hitachi Group training,
individual companies and units provide education tailored to their own business area.
For general education, we offer Internet-based e-learning courses in Japanese,
English, and Chinese. To date 142,393 employees worldwide, equaling 97.6% oftarget employees, have taken this course.

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Environmental Education and Training System
TargetIntroductory

Beginning

Intermediate

Advanced

Introductory training for new employees
Generaleducation

All employees

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

Working-level
employees

Education for Eco-Factories
Eco-Product development training

Specialized
education

Risk communicator training
Brush-up training for ISO 14001
Internal
environmental
auditors

Core Policy

ISO 14001 auditor certification
training

ISO 14001 senior auditor
certification training

Next Steps

From fiscal 2015, we will continue with environmental education training across all our
global operations to enhance the knowledge and skills of staff in charge of factory
management. We will also update the content of training programs to reflect fiscal 2015
revisions to the ISO 14001 Environmental Management Systems.

Climate Change: Risks and Opportunities
Core Policy

Engaging with the Risks and Opportunities of Climate Change

The Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)
states that “warming of the climate system is unequivocal,” noting evidence of “warming of
the atmosphere and oceans” and “increasing concentrations of greenhouse gases.”
Looking ahead, the report warns that our ability to adapt may be hindered and urges majorinnovations in political, social, economic, and technological systems so that effective
adaptation measures can be implemented. Along with mitigation measures, these steps
will help us move toward achieving a resilient society and sustainable development.
Hitachi recognizes the risks of climate change as a vital management issue. Seeing
opportunities in the mitigation of and adaptation to these risks—the former by reducing
greenhouse gases and the latter by changing how society interacts with nature—we areworking closely with our customers and partners to promote our Social Innovation
Business, which fuses social infrastructure with information technology to tackle the many
challenges facing society.

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Regulatory Risks and Opportunities

The environmental regulations and policies of countries and regions around the world
include measures that affect business activities at manufacturing sites, such as emissions
trading, carbon taxes, and energy efficiency standards, and those that affect product andservice conditions, such as energy efficiency standards for products, carbon footprintlabeling, and the introduction of a feed-in tariff system for renewable energy. We view
these regulations and policies as potential business risks. At the same time, efforts inindividual countries and regions to reduce CO2 emissions are helping to expand ourbusiness in the areas of energy-saving equipment and high-efficiency equipment anddevices. Energy conservation initiatives are growing to encompass entire cities, as
exemplified by smart cities. We will work to further expand our business by providing
environmentally conscious solutions suited to the needs of each country or region.

Risks and Opportunities Presented by Physical Factors

Global warming is leading to extreme weather conditions, such as more powerful typhoons
and heavier rainfall, causing natural disasters worldwide. Hitachi has had its share ofdamage, including flooding of Southeast Asian business sites and submersion of areas
surrounding business sites in Japan due to river embankments giving way. In China, weface challenges in the areas of water quality and procurement of the water needed for
manufacturing. These issues present risks that could reduce production capacity and raise
operational costs, as well as threaten the continuity of our business operations.
Meanwhile, in response to growing worldwide demand for measures against natural
disasters, business is expanding for disaster-prevention information systems and otherdisaster-related products and services. This produces new business opportunities forcompanies that contribute to the development of a sustainable society that can cope withclimate change by using the latest IT to collate and analyze big data. This data includes
the information kept on our daily lives, information continually recorded by the social
infrastructure systems that support our lives, and information on factors like weather andclimate, as well as supplementary data that is updated every day.

Other Risks and Opportunities

If our initiatives to tackle global warming are insufficient, conceivable risks include aloss of reputation and market rejection of products and services that are notenvironmentally conscious.
Measures against droughts related to climate change are now an urgent issue, andinterest is growing toward Hitachi’s water environment solutions business in regions
where water shortages are becoming apparent. Water environment solutions are a key
part of our Social Innovation Business. We help to preserve and improve the global water
environment through such initiatives as seawater desalination, the development of water
infrastructure including water treatment systems, and the greening of deserts byconstructing pump stations.

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Environmentally Conscious Products and Services
Hitachi’s Approach

Demand for products and services is increasing against the backdrop of
megatrends like population growth and advancing urbanizationaccompanying economic development. At the same time, global warming,
resource depletion, ecosystem destruction, and other environmental
problems are worsening.
Hitachi believes that reflecting environmental consciousness in its
products and services is vital to building a sustainable society. To
reduce the environmental burden of products and services throughout
their life cycle, therefore, we are developing and expanding the ratio of
products called Eco-Products, which meet standards for environmental
consciousness, recycling product resources, and managing chemical
substances.
In particular, we have set three key performance indicators (KPIs) to
guide our efforts: Eco-Product sales ratio, number of Eco-Products
Select, and contributions of the products to CO2 emission reductions.

Our Actions in Fiscal 2014

During fiscal 2014, we continued our efforts to reduce the environmental burden of
products and services throughout their life cycle. Also, in regard to design anddevelopment outside Japan, we are moving forward with a planned approach toexpanding the lineup of Eco-Products.
Our Eco-Product sales ratio reached 93%.
The number of Eco-Products Select models increased by 133 from fiscal 2013,
bringing the total to 343 products.
The annual contribution to CO2 reduction through products was an estimated 32.19
million tonnes, exceeding the target of 28 million tonnes.
We collected around 68,000 tonnes of end-of-life home appliances, of which we
recycled approximately 60,000 tonnes. We also collected some 13,000 tonnes of
end-of-life IT and industrial products, recycling about 12,000 tonnes of this.

Promoting Eco-Products
Policies and Frameworks

Increasing the Ratio of Eco-Products
We develop environmentally conscious products called Eco-Products as part of our initiative
to reduce the environmental burden of our products and services as much as possible.
Eco-Products must meet criteria used in the design and development stages, when
we evaluate the extent to which their environmental burden can be reduced. To promote
their development, we have set targets for raising the Eco-Product sales ratio, a figure
measuring Eco-Product sales against total product sales.
Eco-Products that meet even more demanding requirements are designated as EcoProducts Select. We are also working to produce more of these products.

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Hitachi’s Framework for Environmentally
Conscious Products

Products meeting one or more of
the following criteria
Either a global warming prevention
factor or a resource factor of 10 or
more
Industry-leading level for achieving
an energy efficiency standard orsimilar factor
Recipient of an award outside
Hitachi or officially certified forenvironmental excellence
CO2 emissions reduced by at least
50% compared to fiscal 2005
products

Eco-Products
SelectProducts that meet Design forEnvironment assessment criteria

Eco-Products

Designation of Eco-Products

Products

Designation of Eco-Products SelectResults

Actions and Achievements
In fiscal 2014, our Eco-Product sales ratio reached 93% and we increased the number of
Eco-Products Select models by 133, bringing the total to 343 products.
At business sites outside Japan—now with new design and development functions—
we went ahead with a planned approach to expanding the lineup of Eco-Products. This
included improving the eco-design skills of our designers.
Key Indicators
Eco-Product Sales Ratio*1
(%)
100

84

89

Eco-Products Select(number of models)

93

400

75

300

50

200

25

100

343

210

0

2012

2013

2014

(FY)

0

129

2012

2013

2014

(FY)

*1 The ratio of Eco-Product sales to sales of all products,
excluding elements whose environmental impact Hitachicannot control or influence, such as patent income.

Eco-Products by Business Segment (Fiscal 2014 Sales Ratio)
Financial Services, etc.

9%

Smart Life & Ecofriendly Systems

7%

Automotive Systems

11%

High Functional
Materials & Components

16%

Construction Machinery

9%

Information &Telecommunication Systems

19%Power Systems

6%

Social Infrastructure & Industrial
Systems
16%
Electronic Systems & Equipment

7%

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Environmentally Conscious Products and Services

Key Approaches

Designation of Eco-Products
The Hitachi Group evaluates the environmental consciousness of products and services atthe design and development stage, using the Assessment for DfE (Design forEnvironment), and designates ones that meet the criteria as Eco-Products.
In the Assessment for DfE, the environmental load throughout the product life cycle—
from material procurement to production, distribution, use, collection and disassembly, andappropriate disposal or recycle—is assessed using eight DfE criteria, including
environmental protection measures and energy savings. The results are graded on a scaleof 1 to 5. For a product to be designated an Eco-Product, it must score at least level 2,
the reference level before the latest major model change, in all eight assessment criteria,
and its average over all the criteria must be level 3 or higher.
How the Assessment for DfE Is Performed
Implementation of Assessment
for DfE

Design for Environment

Qualifying
products

Eco-ProductNonqualifying products

Product Life Cycle
Material
Procurement

Production

Distribution

Collection
andDisassembly

Use

DisposalReuse or recycling

Eight Assessment Criteria (examples)
1
8
7

Mass and volume reduction

Packing materials

2

Information provision
6

Long-term usability
3

Energy savings
5

4

Environmental
protection

Recyclability

Ease of dismantlingand treatment

Eight Criteria to Quantitatively Assess Environmental LoadDfE assessment criteria(examples)

Life cycle stage(examples)

Assessment(examples)

1

Mass and volume
reduction

Material procurement,
production

Size and weight reduction, yield of parts and materials, assessmentof mass and volume reduction of product2Long-term usability

Use

Upgradability, ease of maintenance and repair, durability, reliability

3

Recyclability

Reuse or recycling

Selection of materials and parts that are reusable or recyclable, useof recycled resources, recyclability rate

4

Ease of dismantling andtreatment

Production, collection anddisassembly

Structure for easy disassembly, ease of separation, reduction ofdisassembly time, ease of collection and transportation, safety during
handling, ease of shredding

5

Environmental protection

Material procurement,
production, collection anddisassembly, disposal

Environmental protection of parts and units, safety of equipment andmaterials for maintenance, environmental protection in manufacturing
process, environmental protection for facilities

6

Energy savings

Production, use, collection
and disassembly, disposal

Energy-saving design of products, energy saving in production
process, energy saving in distribution

7

Information provision

Use, collection anddisassembly

Information provided to requesting parties, mechanism for providing
information

8

Packing materials

Distribution

Reduction in mass and volume of packing materials, recycling of
packing materials, ease of collection and transportation of packing
materials, ease of disposal of packing materials, environmental
protection during treatment, and final disposal of packing materials

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Designation of Eco-Products SelectKey Approaches

Eco-Products that meet even more demanding requirements are designated as EcoProducts Select. These must (1) have either a global warming prevention factor or
resource factor of 10 or more, (2) be leaders in their industry for their energy efficiency
standard achievement rate*1 or similar factors, (3) have received an award outside thecompany or official certification for their environmental excellence, or (4) have a CO2
emission reduction rate at least 50% greater than fiscal 2005 products. “Factor 10 ormore” indicates that the product has a global warming prevention efficiency or resource
efficiency at least 10 times greater than the reference products that were sold in fiscal
2005, in principle.
*1 Energy efficiency standard achievement rate: Based on the Energy Conservation Law (Act on the Rational Use ofEnergy) in Japan, this value indicates the rate of achievement of energy efficiency targets for certain home
appliances. The target values are defined using the most energy-efficient products available at the time.

Global Warming Prevention Factor Calculation

The global warming prevention factor indicates the amount of improvement in efficiency of
global warming prevention compared with a reference product. The efficiency of global
warming prevention is based on a concept of environmental efficiency balancing the valueof products contributing to the quality of life and the reduction of their environmental load.
We measure the improvement in quality of life by product function and life span and use
the amount of greenhouse gases emitted over the product life cycle to calculate thereduced environmental load.
Definition of Efficiency of Global Warming Prevention
Efficiency of global warming prevention

Product function

Product life span

Volume of greenhouse gas emissions throughout the product life cycle

Definition of Factor of Global Warming Prevention
Factor of global warming prevention

Efficiency of global warming prevention of evaluated productEfficiency of global warming prevention of reference productResource Factor Calculation

The resource factor indicates the amount of improvement in resource efficiency comparedwith a reference product. Drawing on the same concept as global warming prevention
efficiency, we measure the improvement in quality of life by product function and life spanand use the amount of resources (both new resources and wasted resources) used overthe product life cycle to calculate the reduced environmental load.
Definition of Resource Efficiency
Resource efficiency

Product function

Product life spanΣ (Life cycle resource use × Value coefficient of each resource)

Definition of Resource Factor
Resource factor

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Key Approaches

Examples of Eco-Products SelectInformation & Telecommunication Systems

Product: Blade Server “Hitachi Compute Blade 2500” (Hitachi Data Systems Corporation,
Information & Telecommunication Systems Company, Hitachi, Ltd.)
Environmentally Conscious Features and Characteristics

Achieves lower power consumption with various energy-saving technologies, including
Blade Server “Hitachi Compute
Blade 2500.”

high-efficiency power supply modules, power capping, and power efficiency optimization.
Can also display the power consumption history of servers for the previous 24 hours; thedata can help enhance energy-saving effects through use in devising energy-saving plans
or in checking the efficacy of implemented energy-saving measures.

Social Infrastructure & Industrial Systems

Product: Package Oil-Free BEBICON NEXTseries (Hitachi Industrial Equipment
Systems Co., Ltd.)
Environmentally Conscious Features and Characteristics

Features ECOMODE, a new control system that automatically adjusts the compressor’s
operating pressure by continuously monitoring the load ratio and computing the optimumpressure, preventing operation under excessive pressure. Consumes approximately 16%
Package Oil-Free BEBICON NEXTseries.

less energy than its predecessor.*1*1 Based on a comparison between the old model POD-7.5MB and new model POD-7.5MN at an air capacity ratioof 50%, when connected to a 230-liter air receiver.

Electronic Systems & Equipment

Product: Digital mobile X-ray system Sirius Starmobile tiara (Hitachi Medical
Corporation)
Environmentally Conscious Features and Characteristics

By employing a DR*1 system equipped with a wireless flat panel detector, enables
additional and multiple images to be taken without the need to replace cartridges. Hitachi’s
original mono-tank X-ray generator makes for a more compact body with approximately
20% less weight compared to its predecessor (released in fiscal 2010), thereby conserving
Digital mobile X-ray system Sirius
Starmobile tiara.

resources.
*1 Digital radiography: A method in which X-ray beams passing through a subject are converted to electric signals
and reconstructed as an X-ray image.

High Functional Materials & Components

Product: LL series stationary valve-regulated lead-acid batteries for power storage(Hitachi Chemical Co., Ltd., Shin-Kobe Electric Machinery Co., Ltd.)
Environmentally Conscious Features and Characteristics

By using technologies like enhanced corrosion resistance, we have extended the life of
Stationary valve-regulated lead-acidbattery for power storage LL1500-W.

power storage batteries for systems that absorb output fluctuations in renewable energy(such as wind and solar) by approximately 100 times in terms of the number of chargedischarge cycles.*1 This eliminates the need to replace lead-acid storage batteries,*2
allowing conservation of resources and reduced running cost for wind power generation
systems with storage batteries.
*1 Compared to conventional products (2005 models).
*2 Based on expected lifetime under recommended conditions of use.

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Smart Life & Ecofriendly Systems

Product: Room Air Conditioner “Stainless-Clean Shirokuma-kun” (Hitachi Appliances, Inc.)
Environmentally Conscious Features and Characteristics

Features original energy-saving technologies, including a large-diameter cross-flow fan
with undulating blades to reduce fan input power and enhance air flow stability, as well as
Room Air Conditioner “Stainless-Clean
Shirokuma-kun.”

improvements in the shape of the propeller fans in the outdoor unit. The 4.0 kW cooling
capacity model achieves an industry-leading*1 annual performance factor of 7.3.*2*1 As of January 19, 2015.
*2 Annual performance factor: Annual energy efficiency as specified in JIS C 9612:2013.

Third-Party Awards

Minister’s Prize, The Ministry of Economy, Trade, and Industry for Product Category &Business Model Category, Grand Prize for Excellence in Energy Efficiency andConservation 2014 (for 15 models including RAS-X40E2)
Key Approaches

Eco-Products Under Hitachi’s Sustainability Practice Scheme
In cooperation with the National Capital Region Office of the National Park Service, Hitachi
Consulting Corporation in the United States has been helping national parks in the
National Capital Region obtain Climate Friendly Park* 1 certification by reducing greenhousegas (GHG) emissions. This project is classified as one of Hitachi Consulting’s Eco-Products
under the Sustainability Practice scheme. The company has been creating GHG inventories

The Gambrill Mill Trail footpath at the
Monocacy National Battlefield.

for each park by collecting data from parks and visitors, planning and facilitating
educational workshops for park staff and partners, and producing educational materials.
As a result, all 13 national parks in the National Capital Region have achieved Climate
Friendly Parks status as of fiscal 2014. All parks have adopted climate action plansincluding GHG reduction goals for transportation, energy, and waste emissions. Throughthese efforts, the National Capital Region Office forecasts that direct emissions such as
those from fossil fuels will be reduced by 12%, energy-related indirect emissions fromelectricity usage by 7%, and other indirect emissions from waste and other sources in thevalue chain by 15%.
*1 Climate Friendly Park certification is part of the Climate Friendly Parks program, originally developed in 2002 by the
US Environmental Protection Agency and the National Park Service.

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Key Approaches

Disclosure of Environmental Information
To display a product’s environmental consciousness with stakeholders, Hitachi’s

Hitachi’s environmental mark.
Lists and datasheets of
Eco-Products
Environmental Efficiency of Hitachi
Products Based on Factor X (PDF)

Key Approaches

environmental mark indicates that the Assessment for DfE has shown the product to be an
Eco-Product or an Eco-Product Select. Our website also discloses environmental
information, introducing case studies on environmentally conscious products and services
as well as datasheets that include the power consumption of each product.
Hitachi Products Helping to Reduce CO2 Emissions
In fiscal 2014, we expect to achieve a reduction in CO2 emissions through products of
32.19 million tonnes, better than the target of 28 million tonnes. Major contributions to thisachievement came from the products and services of our Power Systems Company,
Infrastructure Systems Company, Information & Telecommunication Systems Company,

Contribution of Hitachi products
and services to the reduction
CO2 emissions

Key Approaches

Hitachi Appliances, and Hitachi Construction Machinery. We plan to work even harder todevelop and popularize other products that contribute to CO2 emission reductions.
Addressing Our Carbon Footprint
The carbon footprint of products (CFP) is the CO2 equivalent of the total amount ofgreenhouse gases (GHGs) emitted over the entire life cycle of a product or service—fromprocurement of materials through to disposal and recycling. Making the GHG emission
amount visible in this way boosts consumer interest in buying products with low carbon
emissions and encourages businesses to reduce the amount of carbon emitted by theirproducts over the whole life cycle. A number of countries around the world use the CFP
approach.
We participate in the Carbon Footprint Communication Program of the Japan
Environmental Management Association for Industry (JEMAI) and are working to expand
the number of approved CFP Products.*1 In fiscal 2014, our enterprise storage systems,
PC servers, IP-PBX communication systems, and Wi-Fi relay equipment were verified andapproved by the JEMAI CFP Program. In addition to visualizing CO 2 emission amounts, wequantified the rate of CO2 emission reductions per function*2 from previous models,obtaining data on the quantitative effect of their energy efficiency that we put to use in
explanations on our website and at product shows.
*1 Approved CFP Product: A product subjected to testing according to the CFP quantification rules of the Carbon
Footprint Communication Program, which also passes the CFP quantification verification and undergoes theapplication process for registration and public announcement.
*2 Specifically, the “life cycle GHG emissions per unit function amount,” calculated by dividing “life cycle GHG
emissions per sales unit” by “function amount of applicable product” as specified by performance (orperformance characteristic) and/or use period.

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Products authorized to display the CFP label in fiscal 2014
Enterprise storage

PC servers

IP-PBX communication systems

Wi-Fi relay equipment

Hitachi Virtual Storage
Platform G1000

HA8000/RS110 (M1)

CX-01 type

WA-101J(Previous model)

Hitachi Virtual Storage Platform

HA8000/RS110 (M)CX9000IP type S

WIFI-AP-A

Rate of reduction in CO2emissions

–37%

–11%

–19%

–57%

Products(New model)

Product appearance

Key Approaches

Working with European Environmental Footprint Initiatives
The Product Environmental Footprint (PEF) and Organisation Environmental Footprint (OEF)
initiatives were launched by the Environment Directorate-General of the European
Commission to develop methodologies for measuring the life cycle environmental impact of
products and organizations in up to 15 areas. Three-year pilot studies were started in
November 2013 to establish assessment methods in multiple product and organization
fields.
Hitachi, drawing on experience with Japan’s carbon footprint program and theknowledge gained from calculating and visualizing CO2 emissions in the IT product life
cycle, is participating in a European Environmental Footprint pilot study in the IT
equipment field, for which it serves as the technical secretariat.

Core Policy

Next Steps
We have set the targets for raising the Eco-Product sales ratio to 90% and the number of
Eco-Products Select models to 340 by fiscal 2015. To meet these goals, we are working
on product and service development plans aimed at expanding the number of EcoProducts, as well as working on creating additional value for the products and services bylowering their environmental burden in ways that will help our business to grow.

Resource Recycling Initiatives
Core Policy

Recycling Product Resources
Hitachi is reducing the environmental burden of products at the disposal stage throughefforts that include collecting end-of-life products for use as resources, such as byrecycling and refurbishing parts for reuse. By effectively utilizing these products, we play arole in addressing global environmental issues, including limiting the additional raw
resources that must be extracted from nature, reducing the use of energy and water
resources at extraction sites, and averting the air, water, and soil pollution that
accompanies landfilling, incinerating, and other waste-disposal methods in areas where
end-of-life products are generated.

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Key Approaches

Product Collection and Recycling
In order to comply with the 2001 Home Appliance Recycling Law, Hitachi has taken part incooperative efforts by five companies*1 in the same industry while recycling air
conditioners, televisions, refrigerators, and washing machines at 18 recycling plants
nationwide. In fiscal 2014, we reused and recycled around 60,000 tonnes of the roughly
68,000 tonnes of end-of-life products we collected.
Today we are building on our know-how in recycling home appliances by creating a
recycling network and expanding collection and recycling programs to include IT products
like personal computers, servers, and communication equipment; industrial equipment
including pumps, motors, distribution boards, transformers, refrigeration equipment, andmachine tools; and industrial air conditioners and medical equipment. In fiscal 2014, wereused and recycled around 12,000 tonnes of the roughly 13,000 tonnes of the end-of-life
IT products, industrial equipment, and other items we collected.
*1 Hitachi Appliances, Inc., Sharp Corporation, Sony Corporation, Fujitsu General Limited, and Mitsubishi
Electric Corporation.

Product Recycling Network
Hitachi Group Companies
Hitachi Group (Equity-Method Affiliates)
1 Home Appliance Recycling
2 IT and Industrial Product Recycling
Home Appliance Recycling Plants
Regional Business Partners

Hokkaido Eco Recycle Systems 1 2

Hitachi Industrial Equipment Nakajo Engineering 2
Kanto Eco Recycle 1
Hitachi Capital Services (Osaka) 2

Nichiwa Service 2
Tokyo Eco Recycle 1 2
Hitachi Capital Services (Tokyo) 2
Hitachi ICT Business Services 2

Key Approaches

Medical Equipment Recycling
Hitachi Medical Corporation pursues the effective reuse of metal, plastic, and otherresources by collecting and recycling end-of-life medical equipment, which may also
contain rare metals and other scarce and exhaustible resources. As a manufacturer,
collecting equipment for recycling allows the company to control the need for

Hitachi Medical s end-of-life medical
equipment recycling initiative.
Management of containers andpackagingNumber and rate of recycledconsumer electronics products（ Japanese ）Number of PCs taken backand the resource recycling rate
（ Japanese ）additional natural resources to be extracted and to reduce waste.

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Management of Chemical Substances
Managing Chemical Substances in Our ProductsCore Policy

In fiscal 2005 Hitachi formulated the Regulations for Environmental CSR-Compliant
Monozukuri to manage the chemical substances contained in its products.
We continue to revise the list of applicable substances to ensure compliance with
European REACH*1 and other regulations. In April 2013, we modified the list of Voluntarily
Controlled Chemical (VCC) Substances, so that now 17 prohibited substances (Level 1)
and 20 controlled substances (Level 2) are listed.
*1 REACH regulation: The European Union regulation on Registration, Evaluation, Authorization, and Restrictionof Chemicals.

The Hitachi Group’s VCC SubstancesClassification

Application

Substance (Group) Names

Level 1:
Prohibited Substances

Chemical substances that the HitachiGroup prohibits from being included in
procured products (substances bannedor restricted by domestic or foreign
regulations for use in products,
including packing materials, that may
be used in products procured for the
Hitachi Group)

Cadmium and its compounds, hexavalent chromium compounds, lead and its
compounds, mercury and its compounds, polybrominated biphenyls (PBBs),
polybrominated diphenyl ethers (PBDEs), tri-substituted organostannic compounds,
polychlorinated biphenyls (PCBs), polychlorinated terphenyls (PCTs), polychlorinatednaphthalenes (with 3 or more chlorines), short-chain chlorinated paraffins (C10-C13),
asbestos, ozone layer depleting substances (Class I), perfluorooctanesulfonic acidand its analogous compounds, 2-(2H-1,2,3-benzotriazole-2-yl)-4,6-di-tertbutylphenol, hexachlorobenzene, dimethylfumarate (DMF)

Level 2:Controlled Substances

Substances for which monitoring andcontrol are required by domestic or
foreign regulations, or for which special
consideration for recycling or
appropriate disposal is required,including substance groups whose use
in supplied products may be restricted
for certain uses

Antimony and its compounds, arsenic and its compounds, beryllium and its
compounds, nickel and its compounds, selenium and its compounds, unspecificbrominated flame retardants, polyvinyl chloride (PVC) and its mixture and its
copolymer, phthalate esters, ozone layer depleting substances (Class II: HCFC),
radioactive substances, di-substituted organostannic compounds, cobalt and its
compounds, azodyes and azocolourants which form specified amines, formaldehyde,benzene, fluorine-based greenhouse gases, REACH restriction substances, REACH
authorization substances, REACH SVHC, JAMP declarable substances

Compliance with REACH Regulation

REACH notifications on particular substances in articles were completed by the previous
June and December 2014 deadlines. Hitachi continues its investigations and preparationsin the lead-up to the next round of notifications.

Working with the Supply Chain to Manage Chemical Substances

Working closely with suppliers and customers, we gather and make available information
on chemical substances across the supply chain via the Integrated Management System
for Chemical Substances Contained in Products, which has been in operation since fiscal
2005. As of March 31, 2015, chemical substance information for more than 1.21 million
parts and products was registered under this integrated management system.
Integrated Management System for Chemical Substances Contained in Products
Suppliers
Environmental information

Integrated Management System for Chemical Substances
Contained in Products
Survey/register

Registration database
Manage amounts of designatedchemical substances in a productby material and part

Collection database
Manage total amounts ofdesignated chemical substancesby product and business

Customer/society
Communicate

Environmental
information disclosure

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Environmentally Conscious Production
Hitachi’s Approach

As the economies of emerging countries continue to rapidly develop,
concern is rising over the growing environmental burden due to suchfactors as increases in energy consumption, waste production, andchemical substance emissions. To reduce the environmental burden of
our business activities, factories and offices that show a high level ofenvironmental consciousness and outstanding results in these areas
receive Eco-Factory & Office Select certification. These actors promote
environmentally conscious production as suppliers of energy-efficient
products and services. Hitachi pays particular attention to energy usage,
CO2 emissions, waste volume, water usage, and volatile organic
compound (VOC) atmospheric emissions, and has created key
performance indicators (KPIs) for these areas.
Our Actions in Fiscal 2014

In fiscal 2014 we continued to ensure environmentally conscious production throughproactive efforts to use energy efficiently, reduce GHG (greenhouse gas) emissions
throughout the value chain, and decrease waste production, water usage, and VOC
atmospheric emissions.
Certified 14 new Eco-Factories & Offices Select sites and renewed 54 certifications.
Achieved energy consumption (crude oil equivalent) of 1.68 million kL in fiscal 2014
and a 16% reduction of energy use per unit from the base year of fiscal 2005.
Achieved 810 kt-CO2e of SCOPE 1 (direct) emissions and 3,000 kt-CO2e of SCOPE 2(energy-related indirect) emissions.
Achieved waste and valuables generation of 692 kt and a 25% reduction of waste
and valuables generation per unit from the base year of fiscal 2005.

Eco-Factories & Offices SelectPolicies and Frameworks

Creating Eco-Factories & Offices SelectSince fiscal 2011, we have implemented an Eco-Factories & Offices Select certification
program for locations that show a high level of environmental consciousness.
Certification criteria were developed for our manufacturing (factory) andnonmanufacturing (office) divisions globally. To maintain and raise the level ofenvironmental awareness through Eco-Factories & Offices Select, certified factories andoffices will be re-evaluated every fiscal year to confirm that their performance continues
to meet requirements. In fiscal 2014, 14 facilities obtained new certifications and 54
facilities had their certifications renewed.

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Performance Data & AssuranceSocialGovernanceContents

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Eco-Factories & Offices SelectCertification Criteria

An office or factory that has met atleast one of the following criteria

Eco-Factories &Offices SelectFacilities that have met theirtargets for each fiscal year under
the GREEN 21 evaluation system

Eco-Factories & Offices

Factories and Offices

Key Approaches

Eco-Factory SelectEnergy efficiency
Renewable energy use
High-efficiency lighting
Recycling of waste andother resources
Efficient water recycling
VOC emission reduction
Eco-Office SelectHigh-efficiency lighting
Renewable energy use
Energy savings
Improved office building
environmental performance

Tokyo Works, Hitachi Kokusai Electric Inc.
The Tokyo Works of Hitachi Kokusai Electric Inc. in Kodaira, Tokyo, engages in thedevelopment, design, and manufacture of communication and information, broadcasting,and video system products. The factory introduced electronic manifests to clarify the flowof its waste treatment and achieved a 100% registration rate in fiscal 2013. The Tokyo
Works promotes the reduction and recycling of the waste it produces and has achieved

Tokyo Works, Hitachi Kokusai
Electric Inc.

zero emissions*1 since fiscal 2008. The new production building, constructed in fiscal
2013, is an environmentally conscious Eco-Factory that uses high-efficiency LEDs for all
lighting. A 100 kW photovoltaic power system is installed on the roof; its real-time
operation status is displayed on large monitors set up in three locations. Allowing visiting
customers and employees to see the solar system’s status at all times raises
environmental awareness.
*1 Zero emissions: Defined as a final disposal rate (landfill disposal/waste and valuables) of less than 0.5% in any
given year.

Key Approaches

Clarion Hungary Electronics Kft.
Clarion Hungary Electronics Kft. is a manufacturer of car audio systems and navigation
systems for the European market and is the Clarion Group’s only manufacturing base inEurope. This factory was certified as an Eco-Factory in 2013 for switching all lighting in theautomatic machine area to high-efficiency lighting, saving approximately 450 MWh of

Clarion Hungary Electronics Kft.

electricity per year. In addition to its energy-saving efforts, the factory works to ensure
effective use of resources. It installed a manual separator of the dross that results from thesoldering process and reduced soldering material usage by approximately 60%, leading toenergy and cost reductions. In 2014, a wastewater-recycling device was introduced to thecleaning process. This device separates water and sludge from wastewater and recycles
the water, while the sludge is incinerated as waste. A green curtain was also created

Eco-Factories & Offices

outside the office building windows as a part of environmental activities.

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Core Policy

Next StepsThe Eco-Factories & Offices Select program is being expanded through development of
more efficient energy use, waste recycling, and other measures in Group factories andoffices, reducing the environmental burden of our business activities.
Our goal is for every in-house and Group company to have at least one factory or
office certified by fiscal 2015.

Global Warming Countermeasures
Core Policy

Promoting Global Warming Countermeasures
We are promoting ways to use energy more efficiently and reduce GHG emissions during
production and transportation, in both manufacturing and nonmanufacturing divisions, tohelp prevent global warming.

Results

Actions and Achievements
We are working to reduce the energy use per unit as one way to use energy more
efficiently. In fiscal 2014, we achieved a reduction of 16% (from fiscal 2005, the base year),surpassing the target of 13%. To achieve further reductions, we are systematicallyinstalling high-efficiency equipment and devices, from LED lighting to inverter air
conditioners, and increasing the efficiency of our energy usage by improving
manufacturing processes. We are also visually displaying energy use data at in-house andGroup companies as an incentive to make further improvements.
Key Indicators
Reduction in Energy Use per Unit

16%

From base year

reduction
FY 2005 (base year)
Energy used 1,746 ML
Activity amount*1

100 %FY 2014
Energy used 1,683 ML
Activity amount84 %*1 A value closely related to the emission factor numerators (environmental burden) of energy use from businessactivities (for example, production quantity, output, building floor space, and number of employees).

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CO2 Emissions(kt-CO2/year)
5,000

Breakdown by Region (kt-CO2/year)
(FY)

4,154

4,000

3,447

3,453

3,355

2010

3,311

3,000
2,000
1,000
0

2010

Japan

2011

2012

2013

2014

Rest of Asia

China

Americas

2011

2012

2013

2014

Europe

8

7

4

4

8

Americas

421

295

316

321

358

China

502

287

315

332

305

Rest of Asia

543

357

381

375

423

Japan

2,680

2,501

2,437

2,323

2,217

Total

4,154

3,447

3,453

3,355

3,311

(FY)

Europe* Emissions are calculated based on the 2005 CO2 emission
coefficients for electric power by country published by theInternational Energy Agency in CO 2 Emissions from Fuel
Combustion (2010 edition).

Key Approaches

Saving Energy Through M2M Data Collection Solutions
We make use of M2M*1 data collection solutions provided by Hitachi Information &Telecommunication Engineering Ltd. to increase energy efficiency at our Information &Telecommunication Systems Company offices. The IEEE 1888 is an international
communication standard developed through an open process for controlling building
energy management systems. Applying this standard lets us seamlessly connect existingmachines and sensors with various services, such as for data usage and visualization, andapply them to energy conservation measures throughout entire buildings.
Numerous air-conditioning units are in operation at the Hitachi Omori 2nd Building. The
introduction of M2M data collection solutions through installation of environmental sensors
made it possible to visualize power consumption and environmental impact without
replacing the units. This allowed for integrated management of multiple units at low cost
and with minimal installation time. Furthermore, effective use of the central air-conditioning
system and standalone units maintained comfortable room environments while achieving
energy savings of up to 14%.
Hitachi plans to expand monitoring by machines and equipment beyond its
application in office building energy conservation, extending it to a range of uses infactories, transportation, and logistics.
*1 Machine to machine: systems providing services based on information exchange between devices.

Saving Energy Through M2M Data Collection Solutions

Field
Services

Office/residential buildings

Medicine

Data management

Factories
Visualization

Transportation/logistics
Data use, application

Social infrastructure

Equipment control

coordinate

M2M Data
Collection
SolutionsM2M information platform
Consulting services

System design andconstruction services
collect

Equipment andsensors

Sensors

Vehicles/construction
machinery

Maintenance andoperation services

control

Office and residentialbuilding equipment

Medical equipment

Production
equipment

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Key Approaches

Introducing Renewable Energy
We are promoting the use of solar, wind power, and other forms of renewable energy. In
fiscal 2014, Hitachi produced 3,440 MWh of renewable energy. Hitachi Car Engineering
Co., Ltd., which changed its name to Hitachi Automotive Systems Engineering, Ltd., on
April 1, 2015, uses electricity from its own small wind turbine to power electric installations
to entertain and communicate with area residents and employees. Hitachi Computer

Green Power logo for Green Power
Certification.

Products (America), Inc., proactively uses renewable energy, purchasing 3.992 million kWh(equivalent to 2,567 t-CO2) of wind power annually.
We also contracted for Green Power Certifications for 1,000 MWh/year through Japan
Natural Energy Company Limited, using these to cover power generated for showrooms
and at exhibitions.

Key Approaches

Reducing Transportation Energy Consumption
Reductions in transportation energy consumption per unit are reflected in the individual targetsof each in-house and Group company. This allows additional actions to be taken to further
reduce energy consumption. Business sites are promoting a modal shift to highly efficienttransportation methods, improving truck loading ratios and taking other measures to reduce

Efficient loading of products into
containers.

transportation energy consumption, and switching to the use of eco-cars. CO2 emissions fromtransportation inside Japan for the Hitachi Group in fiscal 2014 were 115 kt-CO2.
Hitachi Koki Co., Ltd., is taking a range of measures to cut transportation energy
usage. These include reducing transportation journeys through shipping and delivery
management, implementation of a modal shift in transportation methods, and loading into
containers at plants to reduce the number of transport vehicles. In fiscal 2014, CO2
emissions per unit were reduced by 15.7% compared with fiscal 2006.

Core Policy

Next Steps
As suppliers of products and services, Hitachi business sites are contributing to the
reduction of energy-related emissions of CO2 and other GHGs by promoting efficientenergy usage and consistently maintaining a high level of improvement activities. In pursuitof these targets, Hitachi continually implements a PDCA (plan, do, check, act) cycle andworks to reduce GHG emissions.

Value Chain Initiatives
Core Policy

Calculation of GHG Emissions Throughout the Value Chain
We calculate greenhouse gas (GHG) emissions throughout the entire value chain to more
effectively reduce these emissions. As over 90% of emissions come from use of the
products we have sold, we are working to reduce emissions by developing Eco-Productsthat meet environmentally conscious criteria throughout their life cycle.

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Categories of GHG Emissions in the Value Chain
Extraction companies, etc.

3

Processors of intermediate
products

Power plants, etc.

Fuel- and energy-related
activities not included in
SCOPE 1 and 2

Indirect emissions due to energy(SCOPE 2)

10 Processing of sold productsElectricity and heating

Shipping companies

Suppliers
1

4

Purchased goods andservices

Shipping companies

Upstream transportation anddistribution

9

Capital goods

Product end users
11 Use of sold products

Waste treatmentcompanies

In-house

Construction companies,
etc.
2

Downstream transportationand distribution

12 End-of-life treatment of soldproducts

Facilities andequipment

Direct emissions(SCOPE 1)
Waste materials

Users of leased assets
13 Downstream leased assets

Franchise members
14 Franchises

Investment destinations
Waste treatmentcompanies
5

Waste generation in
operations

SCOPE 1
Direct GHG emissions by thecompany
In-house:

Leasing companies
8

Upstream leased assets

Transportation companies,
etc.
6
7

SCOPE 2
Indirect emissions from electricity,heat, and steam supplied to andused by the company

15 Investments

Business travel
Employee commuting

SCOPE 3: Upstream

SCOPE 3: Downstream

Other indirect emissions not covered by SCOPE 1 and 2, such as emissions
by other entities related to the company’s activities

Within the scope of the company’s organizational boundaries. In principle, the scope of all business activities of the company itself andactivities 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.

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GHG Emissions Throughout the Hitachi Value Chain
Category

Description

Calculation Results(kt-CO2e)

SCOPE 1*1
Direct emissions

Direct emissions from in-house fuel use and industrial processes

810 (0.3%)

SCOPE 2*2
Energy-related indirect emissions

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

3,000 (1.1%)

SCOPE 3: Upstream (other indirect emissions)1

Purchased goods and services

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

9,120 (3.4%)

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

1,310 (0.5%)

3

Fuel- and energy-related activities
not included in SCOPE 1 and 2

Emissions from procuring fuel necessary for electricity and otherenergy production, including resource extraction, production, andshipping

220 (0.1%)

4

Upstream transportation anddistribution

Emissions from distribution of raw materials, parts, supplied products,
and sales prior to delivery of materials to the company, as well as other
distribution activities of products for which the company bears theexpense140 (0.1%)

5

Waste generated in operations

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

100 (0.0%)

6

Business travel

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

80 (0.0%)

7

Employee commuting

Emissions generated from fuel and electric power used in employee
commuting

80 (0.0%)8

Upstream leased assets

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

Included in SCOPE
1 and 2SCOPE 3: Downstream (other indirect emissions)9

Downstream transportation anddistribution

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

10 (0.0%)

10 Processing of sold products

Emissions by downstream companies during processing ofintermediate products

11 Use of sold products

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

12 End-of-life treatment of soldEmissions from transportation, waste disposal, and treatment of
products by end users, such as consumers and businesses

160 (0.1%)

13 Downstream leased assets

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

30 (0.0%)

products

14 Franchises

Emissions by franchises under SCOPE 1 and 2

15 Investments

Emissions related to management of investments

Total

N/A* 3
251,650 (94.4%)

N/A
100 (0.0%)
266,810 (100%)

Note: Figures in parentheses are percentages of GHGs emitted throughout the value chain.
*1 Includes SF6, PFC, HFC, N2O NF3, and CH4.
*2 The CO2 electrical power conversion factor used to calculate emissions uses the 2005 emission coefficients for individual countries
published by the International Energy Agency (IEA) in the 2010 edition of CO 2 Emissions from Fuel Combustion.
*3 Cannot be determined due to insufficient information on processing.

Waste Reduction Initiatives
Policies and Frameworks

Reducing Waste
Waste management includes such issues as landfilling, incineration, transportation ofwaste material across borders, and handling of hazardous materials. Environmental risks
posed to air, water, and soil, as well as to the health of people near disposal and treatmentsites, require control measures carried out with a global perspective. Waste reduction is an
important part of addressing these issues; Hitachi has set targets for waste and valuables
generation in factories and offices around the world.

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Results

Actions and Achievements
For fiscal 2014, we set a target of a 21% reduction (from the fiscal 2005 base year) for
waste and valuables generated per unit, bettering this by achieving a 25% reduction.
Every factory and office is reducing waste through onsite recycling of byproducts andscrap from the production process and efforts to curb use of raw materials related totransport. Under the Zero Emission initiative, which seeks to minimize landfill disposal, 123

Zero Emission Sites

facilities achieved their zero emission goal*1 as of fiscal 2014.
*1 Defined as a final disposal rate (landfill disposal/waste and valuables) of less than 0.5% in any given year.

Key Indicators
Reduction in Waste and Valuables Generated per Unit

25%

From base year

reduction
FY 2005 (base year)
Amount generated 782 kt
Activity

FY 2014Amount generated 692 kt

100 %Activity

75 %Waste and Valuables Generated(kt/year)
800

738

701

Breakdown by Region (kt/year)
655

692

677

(FY)

2010

600
400
200
0
Japan

Key Approaches

2010

2011

2012

2013

2014

Rest of Asia

China

Americas

2011

2012

2013

2014

Europe

1

3

1

1

2

Americas

54

55

58

56

67

China

80

40

38

62

54

Rest of Asia

78

80

80

93

106

Japan

525

523

478

465

463

Total

738

701

655

677

692

(FY)

EuropeUsing IT for Managing Waste
Hitachi has developed a waste management system aimed at more efficient processes
and reduced compliance risk. This system enables better waste management throughvisualization of waste produced at locations from small offices with lower waste volumes
to larger business sites and contract operations. It is also being used as a tool forkeeping track of waste volume and to share methods for more effective use of resources.
From fiscal 2014, it has also been used at business sites outside of Japan to closely
manage waste. In Japan, we aim to boost the Hitachi Group e-manifest*1 registration ratio
to at least 90% by fiscal 2015. As of fiscal 2014, 154 sites had introduced e-manifest
systems, raising the registration rate to 89%.
*1 The e-manifest is a document that waste generators must issue when commissioning a disposal company tohandle waste disposal.

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Waste Management System
OfficeIntranet

E-manifest

Internet

Data link
JWnet* 1e-manifest

Paper manifest
Valuable materials
General waste
Waste disposal
Contractor
Contract details

Hitachi Group Environmental
Load Audit System

Internet

Industrial waste disposal
company*1 JWnet: The Japan Waste Network is an electronic manifest system operated by the Japan Industrial Waste Information Center under
the auspices of Japan’s Ministry of the Environment.

Key Approaches

Recycling Dust to Reduce Waste
Hitachi Metals, Ltd., manufactures heat-resistant cast-iron and steel automobile engine
components. The company discovered at its Kyushu factory that dust collected during
the casting process contained 25%–55% active clay material. After considering ways toeffectively utilize the dust without affecting product quality, the company was able toHeat-resistant cast-iron and steel
engine components.

Key Approaches

reduce around 140 tonnes of waste annually by reusing it in casting sand.

Reduced Waste Through Production Enhancements
Hitachi Construction Machinery Tierra Co., Ltd., produces the main parts of the Hitachi
mini excavator. When the company relocated its Osaka Production Center, it improved themachining and painting processes as well as other production aspects, increasing part
quality and reducing scrap. Through these and other measures the company reduced

The exterior of the Osaka
Production Center.

Key Approaches

waste by approximately 70% and achieved a zero emission rate of 0.1%, as well as
attaining a 100% e-manifest registration rate.
Boosting Resource Circulation with Better Sorting Practices
Hitachi Automotive Systems Chonburi Ltd. is a Group company in Thailand that
manufactures and sells automotive parts. The company promotes circulative use ofresources by thoroughly sorting and reusing waste materials from production. The
company also recycles coolant for machinery, filtering out water that gets mixed in during

Sorted waste materials fromproduction, ready for reuse.

production. Thanks to these efforts, the company in fiscal 2014 increased circulative useof waste materials from 38% to 69%.

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Key Approaches

Improving Recycling Rates by Collecting and Sorting Packing Materials
Hitachi Transport System, Ltd., is globally expanding its key business concept of “Smart
Logistics” by collecting used packing materials from offices and distribution centers andboosting recycling. The company collects cardboard, plastic stretch film, and other packing
materials, separating and compressing these into bundles to be put back into use as paper

Used packing materials are
separated and compacted.

Key Approaches

and plastic resources. In fiscal 2014, Hitachi Transport System recycled around 31,000
tonnes of packing material across the entire Group, achieving a recycling rate of 99%.
Confirming Proper Waste Disposal Practices in Thailand
Hitachi Chemical Asia (Thailand) Co., Ltd., carries out onsite inspections at subcontracted
waste treatment facilities to ensure that waste materials are being disposed or recycled
appropriately. In Japan, routine inspections are provided for under the law. As no similar
regulations exist in Thailand, however, regular visits are made to contractors to verify proper

An onsite inspection at a waste
treatment company.

Core Policy

processing of materials.
Next StepsIn Japan, Hitachi has significantly reduced waste sent to landfills by reducing the volume ofwaste generated, in some cases eliminating it entirely, and by promoting recycling.
Worldwide economic and population growth are expected to sharply increase theamount of waste materials produced and intensify the depletion of natural resources.
Taking a global perspective, we are committed to reducing waste and finding solutions to
issues including landfilling, incineration, transporting waste materials across borders, andhandling hazardous materials.

Reducing Water Use
Core Policy

Water Conservation
Water-related issues are diverse. They include shortages of domestic-use water due topopulation growth and regional conflict, as well as impact on agricultural crops, land
subsidence from overuse of ground water, and ecological destruction from wastewater. As
water conservation is an essential aspect of resolving these issues, we have set targets forwater conservation, such as by limiting water use during business operations. We areworking across the world to achieve these targets.

Results

Actions and Achievements
In fiscal 2014, we set a target for our business sites outside Japan of a 28% reduction (overthe fiscal 2005 base year) for water use per unit and achieved a 43% reduction. A growing
portion of our production takes place outside Japan, and we are promoting efficient use ofwater through conservation worldwide.

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Key Indicators
Reduction in Water Use per Unit
(Outside Japan)

43%

From base year

reduction
FY 2005 (base year)
Amount used 8.89 million m3
Activity

FY 2014Amount used 7.17 million m3

100 %

57 %

Activity

Water Use Outside Japan(million m3 /year)
20

Breakdown by Region (million m3/year)

16.40

(FY)

15

8.91

10

9.88
7.37

7.17

5
0

2010

Rest of Asia

Key Approaches

2011

2012

China

Americas

2013

2014

2010

2011

2012

2013

2014

Europe

0.02

0.03

0.03

0.02

0.02

Americas

4.05

2.35

3.15

1.20

0.98

China

5.16

2.92

2.85

2.50

2.32

Rest of Asia

7.17

3.61

3.85

3.65

3.85

Total

16.40

8.91

9.88

7.37

7.17

(FY)

EuropeRecycling Water During Production
Hitachi Elevator (China) Co., Ltd., makes elevators and escalators in China. It recycles
wastewater from production and reuses it to water plants on factory grounds, wash down
roadways, and flush toilets, among other uses, at all five production bases. Wastewater isalso collected and treated for reuse in the production processes. The paint line at theA wastewater treatment facility.

Shanghai factory uses wastewater to degrease; the paint line at the Tianjin factory utilizes
wastewater in its water curtain system. As a result of these measures, water use in fiscal
2014 was reduced by around 100,000 m3 at the five production bases.

Key Approaches

Conserving Water by Re-evaluating Piping
Tata Hitachi Construction Machinery Company Private Limited manufactures and sells
construction equipment. As part of water conservation initiatives at its factory in Jamshedpur,
India, the company in fiscal 2014 updated the layout of piping inside the facility to reducewater leakage, removed unnecessary pipes, and restricted unidentified draws on water

A newly installed water pipe.

resources. Other efforts were the determination of appropriate amounts of water for watering
plants within the factory premises and the installation of automatic sensors in toilets. Throughthese methods, the company reduced water use by 7%, or 7,500 m3, compared to theprevious year.

Key Approaches

Reducing Water Use with a Xeriscape Garden
Hitachi Computer Products (America), Inc., produces and sells ICT products in theAmericas. The company introduced a xeriscaping project, a type of environmental
landscaping that requires little or no additional water, with a view to conserving water
resources. Xeriscaping began in the United States and has quickly become a basic

The company s xeriscape garden.

component of environmental landscaping in Western countries. By utilizing native plants tolay out a xeriscape garden at the entrance of the factory grounds, the company was able toreduce water use by around 380 m3 annually.

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Core Policy

Next Steps
Water, as the base for all life on Earth, is an essential and irreplaceable resource. Water
resources, which are crucial for a sustainable society, face a wide variety of risks including
global warming and pollution, as well as growing demand from worldwide population
growth, economic development, and urbanization. We are cooperating with countries andlocal communities to tackle these issues by working to effectively manage water used in
our operations.

Chemical Substance Management Initiatives
Core Policy

Managing Chemical Substances
To deal with chemical risk and to comply with laws and regulations, we assess chemical
substances used in our business operations and manage risk in three ways: prohibition,
reduction, and control. In addition, we reduce risk by educating chemical substancehandlers and managers on laws and regulations and on proper risk assessment.

The CEGNET Chemical Substance Management System

Since 1998, Hitachi has operated a database for chemical substance management called
CEGNET to keep track of the latest laws and regulations and the Company’s own
voluntary regulations, ensuring the management of newly introduced chemical substances.
Chemical substances used in our operations are also registered with CEGNET. By
collecting and aggregating data on the amount of chemical substances handled, emitted,
and transferred, we work to reduce our handling of chemicals.
Chemical Substance Management System
Regulatory/Voluntary Control
Information

Chemical Data

New Chemical Risk
Searches

Network

Registration of Amounts
Handled/Data Collection

Production Facilities

Results

Actions and Achievements
To prevent air pollution, we have cut emissions from 41 volatile organic compounds (VOCs)
designated on the basis of a scheme by the Japanese Ministry of the Environment.
Initiatives in fiscal 2014 to reduce VOC emissions included switching from paints containing
VOCs to water-soluble and powder paints, expanding the use of stainless steel and plated
sheet steel chassis, and altering washing processes. We successfully achieved our targets
through these initiatives. We also monitor and manage emissions of sulfur oxides (SOx) andnitrogen oxides (NOx),*1 which are required to be measured under the laws and regulations
applicable at our business locations.

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We comply with Japan’s Pollutant Release and Transfer Register (PRTR) Law throughGroup-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 to local governments for each office or plant. Although some
substances are exempt from reporting due to their small quantities, our policy is to keep
data on the handling, emission, and transfer of all PRTR substances of 10 kilograms ormore per year, recognizing the need to control these substances as well.
*1 Emissions of SOx and NOx: Calculated as the product of concentration and exhaust air-flow rate.

Key Indicators for Chemical Substance Management
Reduction in VOC Atmospheric Emissions per Unit

43%

From FY 2006
FY 2014(from base year)

reduction
FY 2006 (base year)
Emissions 6,784 t
ActivityJapan

Outside Japan

Overall

26%

17%

43%

FY 2014
Emissions 4,415 t

100 %Activity

57 %Reducing VOC Atmospheric Emissions(t/year)
8,000

6,784
6,000

4,285

4,127

4,216

Breakdown by Region (t/year)

4,415(base year)
2006

4,000

EuropeAmericas
China

2,000

Rest of Asia
Japan
Total

0

2006

2011

2012

2013

Rest of Asia

China

Americas(base year)Japan

Key Approaches

2014

(FY)
2011

2012

2013

8

28

6

8

62

53

76

1,339

427

273

372

232

346

447

4,945

3,536

3,449

3,313

4,285

4,127

4,216

54

438

6,784

2014

12
66

281
604

3,452
4,415

(FY)

EuropeUse of High-Solid Coatings to Reduce VOCs
Since fiscal 2006, Hitachi Construction Machinery Co., Ltd.’s Tsuchiura Works has beenworking to switch to high-solid (low-solvent) coatings for hydraulic excavator
components, enabling VOC content to be reduced to 40%–50% of previous levels.
Tsuchiura Works has gradually expanded the use of these coatings to more components,

Coating the frame ofa hydraulic excavator.

including covers, tanks, weights, and frames. In fiscal 2014, VOC emissions werereduced by approximately 270 tonnes compared to conventional coatings.

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Environmentally Conscious Production

Key Approaches

Electrodeposition Coating to Reduce VOCs
In 2014, Hitachi Elevator (China) Co., Ltd., switched from electrostatic spray coating toelectrodeposition coating for the first coating of elevator parts including hatches and car
tops. This reduced VOC emissions from coatings by 3 tonnes. Hitachi Elevator alsochanged the waste gas treatment method from water curtains to catalytic combustion
and activated carbon adsorption. This improved VOC removal efficiency from 36% toLoading an elevator hatch for coating.

Key Approaches

90% and reduced VOCs in waste gases by 1.7 tonnes.
Managing Storage of Equipment Containing PCBs
We gather and manage information on storing and handling equipment that uses
polychlorinated biphenyls (PCBs) every year, positioning this as one environmental
management item of the Hitachi Group. We furthermore promote the efficient andthorough treatment of these units. Waste materials with high PCB concentrations are

Disposing of waste materials withlow PCB concentrations.

subjected to a treatment program based on requirements set by the national governmentof Japan; we are successfully reducing the amount of PCB-containing equipment instorage. Waste materials with low PCB concentrations are processed by treatmentcompanies that have been certified and have the capacity to handle them. In fiscal 2014,
waste materials containing PCBs stored at 39 business sites were treated.

Core Policy

Next Steps
For painting and coating processes that account for a large percentage of VOC
atmospheric emissions, we are switching to alternative substances with low VOC content
and finding ways to improve the processes. We are aiming for a 40% reduction in VOC
atmospheric emissions per unit by fiscal 2015.

Environmental ComplianceCore Policy

Environmental Compliance Response
Hitachi considers the environmental burden of all business activities and sets voluntary
management criteria that are more stringent than regulatory requirements. We regularly
monitor water quality, noise levels, and other conditions at each business site and work tominimize environmental risks. In addition, we take every possible step to prevent problems
or their recurrence and to strengthen controls by sharing information on environmental laws
and regulations, as well as examples of infringements, throughout the Group.

Results

Actions and Achievements
In fiscal 2014, we received a worldwide total of 9 notices concerning water quality or waste
matter and complaints about noise or odors, all of which were promptly addressed.
Hitachi continues to implement enhanced environmental management in order toprevent repeated or new contamination occurrences.
Global Notices and Complaints
Fiscal 2014 cases

Water quality

Waste matter

Other complaints

3

3

3

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To help prevent pollution of soil and groundwater, we are working to complete
decontamination of soil and water at business sites where chemical substances have beenused or to confirm that they are contamination free. At other business sites, we continue tocarry out cleaning and observation activities as needed.

Environmental Load
Core Policy

Data on Environmental Load from Operations (FY 2014)
The data below shows the resource inputs and the environmental load for Hitachi Group
operations in fiscal 2014.
Total Input of Resources

Total Output of Environmental Load
Products shipped: 3,489 kt (in Japan),
840 kt (outside Japan)

Greenhouse Gas Emissions

Total Energy Input
Energy consumption

Greenhouse gases(crude oil equivalent) 1.68 million kL
Outside Japan 28%

3,357 GWPkt*1

Outside Japan 33%

In Japan 72%

In Japan 67%

Electricity 82%

CO2 emissions 99%

Gas 12%Other 1%

Fuel oil 6%

Total Volume ofWaste and Valuables

Total Input of Materials
Materials

2,692 kt

Waste and valuables generation

Outside Japan 39%

692 ktOutside Japan 33%

Operations

In Japan 61%

In Japan 67%

Metals 77%

Recycle 83%

Plastics 8%

Waste reduction 9%

Rubber 1%

Landfill 8%

Other materials 14%

Total Water Input
Water use

Total Volume of Wastewater

46.86 million m3

Wastewater

46.27 million m3

Outside Japan 15%

Outside Japan 14%

In Japan 85%

In Japan 86%

Industrial water 44%

Public water 66%

Tap water 14%
Groundwater 42%

Sewerage 21%

Water recycling

In Japan:28.49 million m3
Outside Japan: 0.7 million m3

Undergroundinfiltration, etc. 13%*1 Global warming potential: A coefficient derived by conversion into equivalent in tonnes of CO 2.

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Detailed Data on Resource Input and Environmental Load Output
Total Input of Resources
Total resources input from Hitachi Group operations.

Total Energy Input
Energy consumption: (crude oil equivalent) 1.68 million kL
Outside Japan

In Japan

Electricity
Gas

Natural gas

3.9 billion kWh (38,000 TJ)

1.5 billion kWh (15,000 TJ)

70 million m3 (2,900 TJ)

50 million m3 (2,100 TJ)

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

45,000 t (2,300 TJ)

13,000 t (700 TJ)

90,000 kL (3,500 TJ)

5,000 kL (200 TJ)

Total Input of Materials
Materials:

2,692 kt
Outside Japan

In Japan

Metals1,249 kt

822 kt

Plastics

126 kt76 kt

Rubber

4 kt

30 kt

276 kt109 ktOther materials
Chemicals

PRTR substances*1 handled

154 kt38 kt

Ozone-depleting substances
handled9t

8,365 tGreenhouse gas substances
handled

3,877 t1,201 t*1 The 462 chemicals designated in Japan’s Pollutant Release and Transfer Register (PRTR) Law.

Total Water Input
Water use : 46.86 million m 3
Outside Japan

In JapanTap water

4.58 million m 3

1.92 million m3

Industrial water

17.41 million m 3

2.96 million m3

Groundwater, etc.

17.70 million m3

2.29 million m3

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Total Output of Environmental Load
Environmental load output from Hitachi Group operations.

Greenhouse Gas Emissions
Greenhouse gases:

3,357 GWPkt
Outside Japan

In JapanCO2 emissions
Other GHGs

SF 6 (sulfur hexafluoride)2,219 kt

1,094 kt

20 GWPkt

0 GWPkt

PFCs (perfluorocarbons)

2 GWPkt

0 GWPkt

HFCs (hydrofluorocarbons)

17 GWPkt

4 GWPkt

N2O, NF3, CH4

1 GWPkt

0 GWPkt

Total Volume of Waste and Valuables
Waste and valuables generation:

692 ktOutside Japan

In Japan

Waste reduction

56 kt

9 kt

Recycling

387 kt186 kt

4 kt

1 kt

Materials recycled

Reuse

370 kt182 kt

Thermal recovery

13 kt

3 kt

20 kt

34 kt

5 kt

0.3 ktSOx (sulfur oxides)

44 kNm3

5 kNm3NOx (nitrogen oxides)

290 kNm

3

60 kNm3

3 t (0 ODP/t* )0 t (0 ODP/t)

Landfill
Chemicals

PRTR substances discharged
or transferred

Ozone-depleting substances
emitted

1*1 ODP (ozone depletion potential): A coefficient derived by conversion into equivalent in tonnes of CFC-11 (trichlorofluoromethane).

Total Volume of Wastewater
Wastewater:

46.27 million m 3
Outside Japan

In JapanPublic water

28.80 million m3

1.66 million m3

Sewerage

5.47 million m

3

4.09 million m3

Underground infiltration, etc.

5.62 million m

30.63 million m3

BOD (biochemical oxygen
demand)

252 t

105 t

COD (chemical oxygen
demand)

138 t

301 t

Water quality

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Environmentally Conscious Production

Environmental Accounting
Core Policy

Environmental Accounting
Hitachi has adopted and made public a set of environmental accounting procedures
conforming to the Japanese Ministry of the Environment’s 2005 Environmental Accounting
Guidelines. We have used the results of these procedures to raise the efficiency of ourenvironmental investments and activities, more effectively allocating management
resources to our ongoing environmental efforts.

Results

Achievements
Environmental Investments, Environmental Protection Costs, and Economic Effects(billions of yen)
150

127.9

119.7

125

123.3
112.0

96.4

100
75
50

0

9.6

7.6
2010

29.9

29.0

28.1
25

Environmental Investments

5.8

5.3
2011

Environmental Protection Costs

25.8

2012

15.2

4.5
2013

2014

(FY)

Environmental Protection Effects (Economic Effects)

Fiscal 2014 Environmental Investment by Countermeasure
Other

1.6%

Pollution Prevention

38.2%

Global Warming Prevention

58.7%

Waste Reduction

1.5%

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Environmentally Conscious Production

Environmental Investments
Costs (billions of yen)
Description

Total investment

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

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

7.60

9.61

5.28

5.81

4.46

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

Environmental Protection Costs
Costs (billions of yen)
Item

Description

Expenses
Business area

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

27.98

27.78

31.84

38.63

26.90

Upstream/downstream

Green procurement expenses, recovery and recycling ofproducts and packaging, recycling expenses

1.60

1.43

1.38

1.27

1.09

Administration

Labor costs for environmental management, implementationand maintenance of environmental management system

8.61

8.25

7.67

6.77

6.47

Research anddevelopment

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

57.56

79.81

84.71

75.62

76.12

Social activities

Planting, beautification, and other environmental
improvement expenses

0.31

0.45

0.41

0.51

0.36

Environmental
remediation

Environmental mitigation costs, contributions, and charges

Total

0.37

1.94

1.90

0.53

1.03

96.44

119.66127.91

123.34111.96

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

7.54*1 Equipment depreciation costs are calculated using the straight-line method over five years.

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

Major FY 2014 Activities

Net income effects

Recovering value from waste by sorting and recycling

9.62

13.72

17.85

15.98

Reduced expenses effects

Installing high-efficiency equipment (lighting, power supply)

18.45

15.27

12.07

9.82

7.65

28.07

28.98

29.92

25.80

15.19

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

Amount Reduced

Item

Major FY 2014 Activities

Reduction in energy usedduring production

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

Reduction in landfilled waste
incurred during production

Promoting sale of waste material, reducing volume ofliquid waste, recycling, etc.

FY 2010

FY 2011

FY 2012FY 2013

FY 2014129
million kWh

93million kWh107million kWh70million kWh

68million kWh

3,623 t4,754 t3,788 t2,420 t3,979 tFY 2014*1 As with depreciation costs, benefits from equipment investments are calculated using the straight-line method over five years.

Efficiency of Environmental Load Reduction*1
Item

FY 2010

FY 2011

FY 2012FY 2013

Efficiency of energy reduction efforts (million kWh/100 million yen)

2.6

2.0

1.7

1.3

1.2

Efficiency of landfilled waste reduction efforts (t/100 million yen)

121

183

146

95

166.7

*1 Environmental load reduction divided by reduction costs.

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SocialGovernanceContents

Preserving Ecosystems
Hitachi’s ApproachAs economic development and urbanization continue on a global scale,biodiversity faces risks from continued environmental degradation,
pollution, and overuse of natural resources.
Hitachi believes that preservation of ecosystems is vital forsustaining biodiversity and ensuring a vibrant environment for coming
generations. This idea forms a pillar of our Environmental Vision and ourGroup-wide conservation efforts.

Our Actions in Fiscal 2014

In fiscal 2014, we continued carrying out a variety of initiatives with our diverse
stakeholders to preserve ecosystems.
• Business Assessment on the Preservation of Ecosystems conducted at 203 businesssites (excluding the headquarters of each company) in and outside Japan.
• Biodiversity action guidelines established for the electrical and electronics industry bya working group of four Japanese electrical and electronics industry associations,with Hitachi as a member.
• Water management evaluation tool developed for ecosystem-conscious corporations
by the Japan Business Initiative for Biodiversity (JBIB) Water and Ecosystems
Working Group, with Hitachi as a member; proposals made for water management
and collaboration with stakeholders, with a focus on ecosystems preservation andrisk management.

Policies and Frameworks
The Japan Electrical
Manufacturers’ Association
Japan Electronics andInformation Technology Industries
Association
Communications and Information
Network Association of Japan
Japan Business Machine andInformation System Industries
Association
Japan Business Initiative for
Biodiversity (JBIB)

Preserving Ecosystems
We have made the preservation of ecosystems a pillar of our Environmental Vision. An
important aim of our Environmental Action Plan for 2013 to 2015 is carrying out theBusiness Assessment on the Preservation of Ecosystems. We are also active outside theCompany, such as participating in the biodiversity working group of four Japaneseelectrical and electronic industry associations*1 and the Japan Business Initiative for
Biodiversity (JBIB). We continue to raise awareness and knowledge within Hitachi and topromote ecosystem preservation throughout the entire Group while laying the groundworkfor environmental programs through activities outside the Company.
*1 The Japan Electrical Manufacturers’ Association (JEMA), Japan Electronics and Information Technology Industries
Association (JEITA), Communications and Information Network Association of Japan (CIAJ), and Japan Business
Machine and Information System Industries Association (JBMIA).

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Preserving Ecosystems

Policies and Frameworks

Corporate Relationship with Ecosystems
Corporations depend on “ecosystem services,” including the natural supply of materials
like fibers and wood, and the ability of ecosystems to maintain the quality and quantity of
air, water, and soil. Contributing to ecosystem preservation through both business andsocial activities enables companies to continue receiving these benefits and to restore
ecosystems. Through its business activities, Hitachi is promoting designs and production
methods that reduce the impact on ecosystems throughout the product life cycle (material
procurement, production, distribution, use, collection and disassembly, and appropriate
disposal and recycling). We are also increasing the number of products and services for
direct preservation of ecosystems, such as water purification and air pollution prevention
measures. We view chemical substance management as part of ecosystem preservationand continually ensure that it is carried out correctly. To contribute to society, we
encourage employee volunteer programs, such as tree planting and ecological surveys ofrare plants and animals, as well as other programs that preserve ecosystems.

Corporations and Ecosystems
Ecosystem Services
Ecosystems

Providing and regulating materials (fibers, wood, etc.) and water

Corporations

Contributions through business
Reducing the load on ecosystems arising from corporate activities
Creating products and services that preserve ecosystems
Contributing to society through nature conservation
Production dependent on ecosystems
Minimizing negative impacts (reducing burden on ecosystems)
Expanding positive impacts (contributing to ecosystem preservation)

Key Approaches

Encouraging Action to Preserve Ecosystems
The Hitachi Group Guide to Preservation of Ecosystems is a guidebook for outlining therelationship between corporate activities and ecosystems, introducing trends andexamples of initiatives being taken around the world, and making recommendations.
To deepen employee understanding, in fiscal 2014 we carried out the Business
Assessment on the Preservation of Ecosystems at 203 factories and offices (excluding theheadquarters of each company) in and outside Japan. This is a self-assessment sheet
covering the relationship between operations and ecosystems. Through these assessments
we encourage actions that preserve ecosystems, taking in broad perspectives including
design, procurement, manufacturing, transportation, and product use. We also aim tostimulate thinking about the development of new products and services related toecosystem preservation. With regard to contributions to society through nature
conservation, we are developing a deeper appreciation of ecosystem preservation by
studying the impact on and benefits to local ecosystems.
We will improve each Group company’s initiatives through this assessment programand implementation of action plans from fiscal 2016 onward.

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Preserving Ecosystems

Key Approaches

Developing Learning Materials for Employees
In February 2012, the World Business Council for Sustainable Development (WBCSD)
developed and released Business Ecosystems Training (BET) materials. Hitachi preparedJapanese-language versions of all modules, as well as instructor manuals, and made themavailable on the Company website.
In fiscal 2013–14, the biodiversity working group of four Japanese electrical andelectronic industry associations developed the educational tool Let’s Study Biodiversity(LSB). This tool demonstrates the relationship between the environmental preservation
activities implemented by companies in these industries and the global Aichi

The WBCSD’s Business
Ecosystems Training (BET)
materials
The biodiversity WG of 4
Japanese electrical andelectronic industry associations(Japanese)

Key Approaches

Biodiversity Targets. In fiscal 2014, the working group conducted a pilot project thatprovided training using the LSB to environmental managers of Hitachi Metals Group
companies. In March 2015 it established biodiversity action guidelines for the electricaland electronics industry. In addition, the Hitachi, Ltd. environmental manager
conducted an LSB seminar at the Mito Works.
Ecosystem-Conscious Water Management
The Japan Business Initiative for Biodiversity (JBIB) is an organization that aims to help
preserve ecosystems through joint research conducted by a diverse range of companies.
In pursuit of that goal, the JBIB convenes various working groups to engage inbiodiversity-related activities including voluntary research, development of tools, theirapplication in the workplace, and information sharing.
Hitachi has been taking part in the Water and Ecosystems Working Group. In 2013, thegroup issued its Corporate Water Management Guide to Conserve Biodiversity. This wasfollowed in 2015 by development of the Evaluation Tool for Corporate Water Management toConserve Biodiversity. This is a tool for examining and making proposals for water management
across the value chain, the river basin on which a factory depends, and at company sites, aswell as for collaboration with stakeholders, with a particular focus on ecosystems preservation
and risk management. The working group plans to release the evaluation tool to JBIB members

Japan Business Initiative for
Biodiversity (JBIB)

Preserving Ecosystems

Key Approaches

and seek their input on it while also carrying out case studies and seeking to make the tool evenmore useful. The hope is for even more people to make use of it as a means of expanding thescope of water management to contribute to the preservation of ecosystems.
Building an Onsite Biotope (Japan)
Hitachi Construction Machinery Tierra Co., Ltd., located near Lake Biwa in Shiga
Prefecture, carries out a wide variety of environmental initiatives, including those topreserve ecosystems.
As part of its grounds management, the company regularly updates a map it createdin 2013 detailing the ecosystems on its premises and informs employees about different

The biotope shortly after it wasconstructed.

animals found there. Recently sighted varieties of land and water fauna include Japanesehares, lake prawns, and native species of crayfish and killifish. In 2014, the company
conducted a broad survey of wildlife on the grounds.

The biotope as of May 2015.

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The company has also begun developing a biotope by planting trees along anembankment created with topsoil removed during expansion of a parking area. Roughly 30
trees were planted along the 700 m2 embankment, including bayberry and other species
whose sap attracts stag and rhinoceros beetles and serves as winter food for birds
Hitachi Construction Machinery
Tierra Co., Ltd. CSR Environmental
Activities (Japanese)

Key Approaches

including Japanese white-eyes and Japanese bush warblers. In this way the company isseeking to create a forested area over a 10–20 year timespan.
Helping Survey Wildlife near Kokubunji Station (Japan)
The grounds of the Central Research Laboratory, Hitachi, Ltd., were chosen for awildlife survey as part of the redevelopment of the north side of Kokubunji Station inwestern Tokyo. From June 2014 to January 2015, Information & Telecommunication
Systems Company joined the surveys conducted by Sumitomo Realty & Development
Co., Ltd., and Takenaka Corporation, which were held three times each for insects andA ko-oni yanma (Sieboldius albardae)
dragonfly.

bird life, respectively.
The surveys utilized Hitachi’s voice SNS “talkfield,” a smartphone application allowing
users to post and share voice messages, to instantly register locations and pictures ofwildlife as well as share information via the cloud. The system’s search function also allows
survey results to be reviewed easily. The survey also provided an opportunity to test
Hitachi’s “Keitai Kaisaku,” a web-based ASP service for creating and sharing documents
via mobile devices. The results of the tests of these systems will be used to develop thenext generation of ICT platforms supporting ecosystem preservation.

A pale grass blue butterfly.

The grounds of the Central Research Laboratory are home to a forest boasting
27,000 trees from 120 species, including sawtooth oaks, zelkovas, and Himalayan cedars
that are over 100 years old. A pond has also been created by diverting spring water.
Hitachi intends to preserve the grounds as an example of the natural habitat of theMusashino area in western Tokyo.

Key Approaches

Removing Invasive Species (China)
In June 2014, Hitachi Financial Equipment System (Shen Zhen) Co., Ltd., took action topreserve the ecosystem of nearby Lianhuashan Park by removing invasive species thatwere found living there.
Thirteen employees joined a group of around 50 participants from three Shen Zhen
companies to remove a significant amount of Mikania micrantha, an invasive species ofParticipants removing invasive species.

vine that damages or kills native plants by robbing them of valuable sunlight and water.
The company intends to continue its efforts while working to raise employee awareness ofthe need for ecosystem preservation.

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Preserving Ecosystems

Key Approaches

Nature Conservation Activities Around Subic Bay
Subic Bay, located about 100 kilometers north of Manila Bay in the Philippines, has
unspoiled environs. But at the same time, a number of companies are operating in the freeeconomic zone and the area is being developed as a resort. Situated in this area, Hitachi
Terminals Mechatronics Philippines Corporation (HTMP) is taking various actions
continuously with the cooperation of the Subic Bay Metropolitan Authority (SBMA) to

The International Coastal Clean-Up
campaign.

preserve the diversity of nature.
Firstly, in order to learn from nature and to grasp its status, employees haveparticipated in twice-yearly events since 2011 to count the number of giant fruit bats,which live in the undisturbed forests and play an important part in the forest ecosystem of
the Subic Bay area.
As an action to preserve the beauty of the nature and its ecosystems, the company
has since 2012 been participating in the International Coastal Clean-Up (organized by
SBMA in the Subic Bay area), an annual event led by an American NGO, Ocean
Conservancy, held every September around the world.
Furthermore, to grow the forests, the company took part in a tree-planting activity in

Mahogany sapling planting.

August 2014. In the activity, a total of 300 mahogany seedlings, a local species thattolerates a wide range of soil types, were planted in a grassland area of the Subic Bay
Freeport Zone.
These activities to preserve the forests and beautiful coasts, however, can becontinued for a long time only with positive support of the local communities. Thus, toraise local awareness of the environment, the company has been providing environmental
education for primary school children (average age 11–12) in the nearby city of Olongapo
since fiscal 2010.
HTMP believes that the combination of various activities will have positive impacts
both for the community, including employees, and for the ecosystems in the long run, andintends to continue such efforts.

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Environmental Communication
Hitachi’s Approach

To build a sustainable society, it is vital for a company to provide
information to stakeholders on its activities to reduce the burden on andconserve the environment while also gathering feedback from a wide
range of stakeholders and seeking to deepen mutual understanding.
Hitachi is making a concerted effort to provide such information on
environmental activities, at the same time striving to improve those
activities by promoting mutual communication. In addition, we aim toraise environmental awareness throughout society with this broad-based
communication.

Our Actions in Fiscal 2014

In fiscal 2014, we employed a variety of methods to diffuse environmental information,
including setting up events for direct dialogue with stakeholders. We also promoted
environmental communication to deepen our relationships with stakeholders in andoutside Japan.
Hitachi was selected as one of the companies on the 2014 Climate Performance
Leadership Index compiled by the CDP,*1 a nonprofit organization.
The Hitachi Group Sustainability Report 2014 won the Prize for Excellence inEnvironmental Reporting at the 18th Environmental Communication Awards held by
the Japanese Ministry of the Environment and the Global Environmental Forum.
Hitachi held a special exhibition at the Hitachi Innovation Forum to display information
on its Social Innovation Business activities aimed at addressing societal issues.
*1 The CDP is an international NPO based in London that provides a global system that can be used to gauge,
disclose, manage, and share key environmental information on companies and cities. On behalf of 767
investors, representing US$92 trillion in assets, the CDP sends a survey on climate change to corporations
and then evaluates the results. In 2013, the organization shortened its name from the Carbon Disclosure
Project to CDP.

Core Policy

Promoting Environmental Communication
Hitachi is devoted to further improving its environmental activities by sharing information
with its diverse stakeholders on issues facing the environment, various aspects of thoseissues, and the Company’s performance in addressing them, with an eye to deepening
mutual communication.

Key Approaches

Information Reporting and Third-Party Evaluation
We have published reports every year on our environmental protection initiatives, theirresults, and our plans. The Hitachi Group Environmental Sustainability Report was issued
each year in Japanese starting in fiscal 1998. In fiscal 2011, this report was combined with
the Hitachi Group CSR Report as the Hitachi Group Sustainability Report, in response to
the global need for a sustainability report.

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Environmental Communication

In fiscal 2014, the Hitachi Group Sustainability Report 2014 was awarded the Prize
for Excellence in Environmental Reporting at the 18th Environmental Communication
Awards, presented by the Japanese Ministry of the Environment and the Global
Environmental Forum. This marks the third consecutive year for the report to garner anaward, following the Sustainability Report Award received in fiscal 2012 and a Prize for
Excellence won in fiscal 2013. Moreover, our efforts to curb greenhouse gas emissions andmitigate the risk of climate change have won high praise from the nonprofit organization
CDP, which selected Hitachi for its Climate Performance Leadership Index 2014 (CPLI). In
fiscal 2014, Hitachi won high praise from other outside organizations for its
environmentally conscious products. Hitachi Appliances Inc. won the Grand Prize for
CSR/Environmental reports
published by Hitachi Group
companies
Fiscal 2014 awards for HitachiGroup companies

Key Approaches

Excellence in Energy Efficiency and Conservation for its room air conditioners andInfrastructure Systems Company, Hitachi, Ltd., for its energy-saving spot cooling systemfor data centers. Details on awards received in fiscal 2014 are available on our website.
Sharing Information on Our Website
In addition to the Sustainability Report, the Environmental Activities section of the Hitachi
website provides details about the main environmental services and activities of the HitachiGroup. Hitachi businesses at the forefront of environmentally conscious initiatives areshowcased on the Eco-Factories & Offices section of the website, where 19 organizations
were newly added in fiscal 2014.

Environmental Activities

Key Approaches

Dissemination of Information Through Exhibitions and Forums
Hitachi values the opportunity for direct dialogue with stakeholders and participates in a
number of environment-related exhibitions. At the Hitachi Innovation Forum held in October
2014 in Japan, a special exhibition was presented on the theme of Hitachi’s Social Innovation
Business activities aimed at addressing societal issues. The exhibition presented a range ofHitachi innovations that address issues confronting society, including global warming and

The special exhibits zone at the Hitachi
Innovation Forum.

other environmental challenges. Outside Japan, we took part in the International Greentech &Eco Products Exhibition & Conference Malaysia (IGEM) in October 2014, where we presented
Hitachi’s environmental conservation technologies and solutions. In addition, we also provided
opportunities for discussions with various stakeholders on environmental issues. At the
Hitachi-sponsored sixth Eco-Engineering Forum,*1 held in Washington DC in June 2014,lectures and panel discussions were held on the event’s main focus, “The New Eco-System ofInformation: Harnessing the Potential of Big Data.”*1 Eco-Engineering Forum: An event jointly sponsored by the American Association for the Advancement of Scienceand the Brookings Institution.

Key Approaches

Environmental Communication
Hitachi promotes environmental communications, holds a variety of social contribution
activities on environmental themes, and works to deepen exchanges with local
stakeholders. In fiscal 2014, we carried out environmental education and tree planting, as

Environmental Communication

well as cleanup activities, in areas around the world where we do business.

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Environmental Communication

Cleaning the Banks of the Tone River (Japan)

Every year the Gunma Works of Hitachi Automotive Systems, Ltd., helps clean up theriverbank along the Tone River near the city of Isesaki. The event is held on the Sunday
immediately before or after May 30, which has been designated “No-Garbage Day” inJapan. The activity, launched in 2004, was held for the tenth time in 2014, with 310
employees and family members participating along with volunteers from other local
Volunteers gather to clean the banks of
the Tone River.

companies, for a total of 450 participants. A roughly 3-kilometer area along the river,stretching from Goryo Bridge to Bando Bridge, was cleaned up, resulting in the collection of
1.3 tonnes of garbage. This cleaning effort was recognized by the Ministry of Land,
Infrastructure, Transport, and Tourism and was granted a certificate of appreciation in 2009.

Planting Trees in the Horqin Desert (China)

For the past 10 years, starting in 2004, Hitachi Construction Machinery (Shanghai) Co.,
Ltd., has been involved in a project to plant trees in a 100,000 m2 area of the Horqin
Desert. Volunteers for this “Hitachi Construction Machinery Forest” project, which is being
carried out in cooperation with local residents, have planted over 10,000 trees in the area,
including poplars and sea buckthorn trees, and overseen their growth. This has revived
Participants in the Horqin Desert
tree-planting project.

plant life, which in turn has brought wild rabbits and other small animals to this habitat.
The second 10-year phase of the project began in 2014, with plans calling for thecompany and its dealers in China to collectively plant trees and other vegetation across
130,000 m2 of the desert.

Promoting Environmental Education (China)

Hitachi Air-conditioning & Refrigerating Products (Guangzhou) Co., Ltd., held an event in
December 2014 to raise environmental preservation awareness among company
employees and their family members. At the event, called the Environmental Conservation
Workshop, participating children used microscopes they built themselves to observe thecellular structure of the roots, stems, and other parts of plants. This view of the
The Environmental Conservation
Workshop in China.

relationship between plants and the environment on a microscopic level brought
environmental issues to life for the participants, while also underscoring the vital
importance of preserving the natural environment. The children had the chance to visit the
production facility, including its wastewater treatment facility, to see where their parents
work and learned more about the company’s environmental conservation efforts.

Participation in Forest Cleanup Activity (Europe)

In cooperation with the village of Vacarisses, Spain, Hitachi Air Conditioning Products
Europe (HAPE) participated in the European Cleanup Day by helping to tidy up the forest
surrounding the community. Eighteen people participated in the activity, including 11 from
HAPE, collecting a total of 6 kilograms of garbage, 2 kilograms of used containers, 3.5
kilograms of used bottles and other glassware, and 1.6 kilograms of waste paper. In
A scene from the European Cleanup Day.

addition, as part of the activity, a biologist from a center for hikers in Vacarisses gave a talkon local flora, and a HAPE staff member with a degree in geology spoke about the area’s
geology. HAPE, which was taking part in this activity for the first time, is considering
further participation in the future.

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Environmental Engagement
Engagement Highlight
Hitachi Global Lights-Off Campaign
Hitachi has adopted a policy of turning off lighting at offices on the summer solstice(usually June 20 or 21) and on July 7, the Tanabata festival in Japan. Hitachi also
participates in Earth Hour, the major global environmental campaign hosted by the World
Wide Fund for Nature (WWF). On March 28, 2015, Hitachi turned off its Tsutenkaku LED
neon signboard in Osaka, as well as switching off lights at other signboards and offices
Turning off the LED and neon lights on
the Tsutenkaku signboard in Osaka aspart of the Hitachi Global Lights-Off
Campaign.

worldwide, including in Bangkok, Dubai, Hong Kong, Shanghai, and Sydney. Hitachi
extended its effort by also turning off interior and exterior lighting at production sites andoffice lights during the five days prior to the event. In total, 90 Group companies at 234
locations in 23 countries participated in the effort. Moving forward, Hitachi will continue toHitachi Global Lights-Off Campaign

promote this activity as a part of its awareness-raising initiatives to curb global warming.

In FocusCreating Value by Reducing Environmental Burden
To better position environmental strategy within the Hitachi business strategy, we haveformulated an Environmental Action Plan that corresponds to the Mid-term Management
Plan of the Hitachi Group. We are making steady progress in our environmental activities
by implementing this action plan while steadily making improvements to it.
We set the concrete objective for fiscal 2015 of having environmentally conscious“Eco-Products” make up 90% of our overall sales. Toward that end, we are expanding the
Eco-Product range in line with the development plans for each product and service, in
addition to striving to enhance the value of our products and services by reducing theburden they place on the environment. This helps in the end to grow our business as well.
To reduce the environmental burden of our business activities, we also present
factories and offices that show remarkable consideration for the environment andoutstanding results in this area with our Eco-Factory & Office Select certification. Hitachi
aims to continue promoting environmentally conscious production through these energyefficient suppliers of products and services.
In fiscal 2015, we will work to further promote environmental efforts by formulating thenext Environmental Action Plan, which will correspond to the Mid-term Management Plan
to be decided in fiscal 2016.

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Hitachi Eco Education Classroom Program in China

Our Ongoing CSR Activities:

SOCIAL

Hitachi’s corporate activities are supported by a wide range ofstakeholders, including suppliers, employees, customers,
shareholders and investors, and local community members. As acorporation that conducts business around the globe, we are striving
to contribute to a sustainable society in collaboration with our
stakeholders in each region based on our constant awareness of the
expectations of society toward us and of the responsibilities we bear.

Contents
Respect for Human Rights

114

Quality Assurance Activities

144

Supply Chain Management

118

Customer Satisfaction

147

Diversity and Inclusion

124

Communication with Shareholders and Investors

152

Employee Health, Safety, and Welfare

135

Social Contribution Activities

156

Global Human Capital Development

139

Engagement with Society

169

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Respect for Human Rights
Hitachi’s Approach

As our value chain expands to a global scale, human rights risks haveincreased worldwide in relation to working environments, business practices
in each region, and supplier relations that are different from region to region.
Moreover, corporations are expected to address human rights issues inaccordance with international standards such as the UN Guiding Principles
on Business and Human Rights.
In carrying out our business, Hitachi recognizes human rights as a key
issue related to risk management. On the basis of this awareness, we will
respect the human rights of all stakeholders, including our employees andcommunities in every country and region where we operate, and thosethroughout supply chains.
Toward that end, we are engaged in various initiatives under the HitachiGroup Human Rights Policy, such as our human rights training for employees
and the development of a guidance document on human rights due diligence.
Our Actions in Fiscal 2014

Hitachi has added the perspective of Business and Human Rights to its existing
policies related to human rights, developing a guidance document on human rights
due diligence that explains procedures to embed human rights into everyday businesspractices. We are also working to deepen employee awareness of the issues throughefforts that include President and COO Toshiaki Higashihara delivering a topicalmessage on Human Rights Day and the convening of study groups to explore issues
related to human rights. Additionally, we are working to improve the response tohuman rights risks in China and other Asian countries.
Development of a guidance document for implementing human rights due diligence,in collaboration with the nonprofit organization Shift.
Holding of study meetings to promote a better understanding of LGBT issues, incollaboration with the nonprofit organization Nijiiro Diversity.
Meetings with 9 Group companies in the Philippines, 15 Group companies inIndonesia, and 26 Group companies in Thailand to explain Hitachi’s human rights
initiatives and the potential risks in their countries related to human rights.

Core Policy

Hitachi Group
Codes of Conduct

Human Rights Initiatives
In May 2013, we adopted the Hitachi Group Human Rights Policy to supplement the
Hitachi Group Codes of Conduct, drawn up in fiscal 2010. In this policy, we clarify ourunderstanding of human rights as being, at a minimum, those outlined in the International
Bill of Human Rights and the International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work. This policy shapes Hitachi’s approach tomeeting the responsibility to respect human rights, including implementing human rights
due diligence*1 in line with the UN Guiding Principles on Business and Human Rights,*2
providing appropriate education to employees, adhering to national laws and regulations in
all the regions and countries where we operate, and seeking ways to honor the principles
of international human rights when faced with conflicts between internationally recognizedhuman rights standards and national laws.
In fiscal 2014, Hitachi added the perspective of Business and Human Rights to its
existing structures and policies and developed a guidance document on human rights due
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Hitachi Group
Human Rights Policy

are committed to continuing activities based on our human rights policies to respect thehuman rights of stakeholders, not only our employees but also others linked to ouroperations, products, and services.
*1 Human rights due diligence: An ongoing process to identify and assess potential and actual human rights impacts,
integrate findings, and take appropriate action to prevent or mitigate potential impacts or to provide for or cooperate inremediation of actual impacts. The processes also cover tracking the effectiveness of actions to address impacts andcommunicating externally.
*2 UN Guiding Principles on Business and Human Rights: 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).

Frameworks

Framework for Human Rights
Hitachi, Ltd. established the Corporate Human Rights Promotion Committee in fiscal 1981
to gauge the impact of business activities on stakeholders’ human rights and to deliberate
on mechanisms and policies for preventing human rights violations. The executive officer incharge of human capital chairs this body, whose members include representatives fromsales, procurement, human capital, the CSR Division, and other corporate units. Hitachi isimproving its Group-wide human rights awareness based on the guidelines discussed andwritten by the Corporate Human Rights Promotion Committee. Information fromdeliberations is shared with all employees through company and business site committees,
led by company and division executives.
We also conduct regular group training and seminars and use videos to educate
employees in each business unit. In order to bring a global perspective to the human rights
initiatives of the Hitachi Group as a whole, we incorporate the views of CSR teammembers from our six operating bases*1 and also consider regional issues whendeveloping educational materials to raise awareness of human rights issues and consider
human rights due diligence.
*1 Our six operating bases cover the Americas, Europe, Japan, China, India, and Southeast Asia.

Hitachi, Ltd. Framework for Promoting Respect for Human Rights
Corporate Human Rights Promotion Committee
Chairperson

Executive officer in charge of human capital

Members

Personnel in charge of corporate divisions such as sales, procurement, human capital, and CSR

Company and Business Site Committee
Chairperson

In-house company presidents and division heads

Company and Business Site Committee
Chairperson

In-house company presidents and division heads

Company and Business Site Committee
Chairperson

Key Approaches

In-house company presidents and division heads

Members

Division managers

Members

Division managers

Members

Division managers

Human Rights Message from Hitachi, Ltd. President and COO
In 2014 on Human Rights Day, which takes place every year on December 10 tocommemorate the adoption of the Universal Declaration of Human Rights, Hitachi President
and COO Toshiaki Higashihara issued a human rights message. As well as explaining
Hitachi’s policies and initiatives related to human rights, the message addressed theimportance of respecting human rights of all stakeholders related to our business, including
those of our employees, business partners, and customers. This message went via e-mail toall of the roughly 35,000 Hitachi, Ltd. employees and regional chief executives orrepresentatives in each region, as well as managing directors or presidents of regional
supervising companies outside of Japan. The message was also sent via the Hitachi Group’s
intranet and shared with employees of Group companies through their CSR departments.

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Key Approaches

Human Rights Due Diligence Initiatives
In our Hitachi Group Human Rights Policy, we pledged to continue to develop structures forhuman rights due diligence. Toward that end, in fiscal 2013 some business units implemented
pilot programs for human rights due diligence to identify key issues that need to be clarified
for implementation of the due diligence throughout the Hitachi Group, while also analyzing
and evaluating human rights risks in six of the ASEAN countries. Based on the results ofthese pilot programs, in fiscal 2014 we developed a guidance document for implementing
human rights due diligence in collaboration with the nonprofit organization Shift.

Key Approaches

Raising Awareness About Sexual Minorities (LGBT)As a part of our corporate strategy, we promote diversity and inclusion and pledge torespect and benefit from individuality, viewing differences in sexual orientation as areflection of that individuality. As human capital becomes more diverse, we are striving for
all of our workforce to understand and respect coworkers who are sexual minorities, such

Logo mark of the nonprofit organization
Nijiiro Diversity.

as lesbian, gay, bisexual, or transgender (LGBT).
In December 2014, Maki Muraki, the nonprofit organization Nijiiro Diversity’s leader,*1gave a presentation to staff in charge of human capital. Furthermore, during Human Rights
Week that same month, study meetings were held for personnel in charge of human capitalat Hitachi, Ltd.’s business sites, as well as at Group companies in Japan, in order topromote correct understanding of LGBT issues. These meetings highlighted the need topromote a good working environment where LGBT employees do not have to conceal theirDiversity and Inclusion

sexual orientation.
*1 “Nijiiro” means “rainbow” in Japanese.

Key Approaches

Soliciting Human Rights Awareness Slogans
Every year Hitachi, Ltd. solicits human rights awareness slogans during Human Rights
Week (December 4 to 10 in Japan) as a way of drawing attention to the importance ofhuman rights. In fiscal 2014, a total of 6,089 slogans were gathered (for a participation
rate*1 of 14.5%). Based on the judging process, six of these slogans were awarded theprize for excellence; there were also 12 other prizewinning slogans and 20 honorable
mentions. During Human Rights Week, prizewinners were awarded at their business sites.
The top Hitachi slogans were also entered in a competition held by the Industrial
Federation for Human Rights, Tokyo, where some of them garnered prizes for excellenceand honorable mention in competition against the 527,977 other entries.
*1 Percentage of submissions = submissions divided by number of employees.

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Key Approaches

Human Rights Initiatives in Asia
During fiscal 2013, Hitachi Asia Ltd. implemented a human rights due diligence pilot
program to clarify potential human rights risks in Southeast Asia by creating a risk map. In
fiscal 2014, at the Hitachi-Kai*1 meeting attended by local representatives from 9
Philippine companies, 15 Indonesian companies, and 26 Thai companies, an explanation
was given of potential human rights risks in each country according to the results of thepilot program and of Hitachi’s human rights initiatives. Future plans to deal with such risks
were also outlined. Feedback from participants noted that the explanations covered awide range of issues, from specific examples to hypothetical situations, providing avaluable resource when considering their own business risks. Participants also expressedinterest in learning from shared cases where it is difficult for a company to come up withappropriate responses.
*1 Hitachi-Kai is an event that brings together representatives of local Hitachi Group companies to deepen awarenessabout Group business policies and to exchange information about their respective business situations.

Key Approaches

Hitachi’s Initiatives at Peking University’s Human Rights Seminar
In October 2014, Hitachi representatives participated in a seminar*1 at Peking University on
the topic of corporate responsibility in the era of the UN Guiding Principles on Businessand Human Rights. This gathering was aimed at enhancing knowledge and capabilities
related to the guiding principles of Chinese corporations and also to raise the level ofleadership. At the seminar we introduced Hitachi’s human rights initiatives. The event also

A scene from the seminar.

included presentations by other foreign corporations in China on their own initiatives, aswell as reports on human rights issues Chinese companies have faced when expanding
overseas and the solutions they have devised to deal with such situations. The scope ofthe seminar went beyond the perspective of foreign companies or Chinese corporations
alone to discuss the state of human rights and to confirm a number of issues, such as thehuman rights risks particular to conducting business in China and the stance a company
should take within the community.
*1 The seminar was organized by the Global Compact Network China, Peking University, the Global Business Initiativeon Human Rights (a consulting firm that aims to enhance human rights awareness in the era of businessglobalization), the Institute for Human Rights and Business (an organization that provides a global framework forbusiness and human rights standards), and Tracktwo (a consulting firm specializing in the social responsibility andsustainable development of corporations).

Kashiwa Reysol’s Participation in the Stop Child Labour Campaign
It is said that today about 168 million children are engaged in child labor worldwide, andsome of them are working in football-related industries. In 2014, the professional footballteam Kashiwa Reysol, operated by Hitachi Kashiwa Reysol, assented to the Stop Child
Labour Campaign that was started by the Child Labour Network (CL-Net). Aligned with theInternational Labour Organization’s anti-child-labor promotion, the CL-Net deployed the
Fan Appreciation Day for soccer teamKashiwa Reysol.

Red Card Action throughout Japan, under which members of Kashiwa Reysol and theirfans stood up against child labor by holding up the campaign’s red cards in the stadium inJuly 2014.
Kashiwa Reysol was the first team in the Japan Professional Football League (J.
League) to participate in this global initiative.

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Supply Chain Management
Hitachi’s Approach

Growth in procurement from supply chains in emerging markets has
increased the impact of corporate activities on the economy,
environment, and societies of countries and regions worldwide. It has
also brought to light a number of problems, including the lack of properlabor legislation in some emerging countries.
As with human rights, Hitachi places procurement activities high on
the agenda for managing global risks. We respect basic human and laborrights in our procurement activities and ensure consistent activities
across the supply chain by sharing guidelines and communicating openly
with all of our suppliers—the codrivers of our operations.
We conduct CSR monitoring and audits with our suppliers to gauge how
well they understand Hitachi’s CSR initiatives. We have also createdprocurement BCPs to help us respond to natural disasters and other threats.

Our Actions in Fiscal 2014

Hitachi conducts its procurement activities based on the Hitachi Guidelines for
Procurement Activities, which are shared within the Group. We share these andother guidelines with our growing global network of suppliers, whom we ask tocarry out CSR Monitoring (self-checks), and take remedial action as needed. In
addition, we have procurement business continuity plans (BCPs) in place globallyto minimize the impact of natural disasters and other contingencies.
To ensure that suppliers are fully informed, we distribute the Hitachi Group Supply
Chain CSR Deployment Guidebook to about 23,000 suppliers.
We have asked about 200 companies outside Japan to conduct CSR Monitoring(self-checks) and carried out audits of 20 suppliers.
Group companies in Japan are taking measures to improve procurement BCPs.

Core Policy

Creating and Sharing Procurement Policies
We base our procurement activities on the Hitachi Guidelines for Procurement Activities,
while sharing global supply chain issues within the Group. All Group companies follow
these guidelines. The guidelines were created in line with the United Nations Global
Compact and include the elimination of discrimination in employment and occupation as
well as all forms of child and forced labor.
To help suppliers, as the codrivers of our operations, to understand Hitachi’s supply
chain management philosophy, we have distributed the Hitachi Group Supply Chain CSR
Deployment Guidebook, revised in 2009, which is based on the Supply Chain CSR
Deployment Guidebook issued by JEITA.*1 The guidebook is given out to around 23,000
suppliers of our Group companies.
*1 JEITA (Japan Electronics and Information Technology Industries Association): An industrial association forelectronic technologies, electronic machinery, and information technologies.

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Supply Chain Management

Guidelines for Procurement Activities
These guidelines define business transaction standards which shall be applied to all
HITACHI executives and employees in connection with their activities purchasingnecessary materials, products, services, and information from outside sources.
1

Overall procurement activities of Hitachi shall adhere to the “HITACHI Company
Conduct Standards.”

2

HITACHI shall maintain proper partnerships, mutual understanding, and reliable
relationships with suppliers with a view to the long term results, giving due
consideration to the following:(1) HITACHI shall treat all suppliers impartially and be prohibited from favoritism such as
giving unfair priority to any specific suppliers.
(2) HITACHI respects fair business dealings with suppliers and will avoid any improperact which might cause a loss to a supplier apart from normal and customarybusiness transactions.
(3) HITACHI shall keep suppliers’ trade secrets strictly confidential and prevent them frombeing revealed or improperly used.

3

HITACHI develops suppliers to maintain competitiveness from a worldwide pointof view, with particular attention to the following points:(1) HITACHI responds to all suppliers’ offers sincerely, and is always willing to offer the
information necessary for suppliers to compete on an even playing field.
(2) HITACHI shall periodically check and review suppliers’ performance and will consider
offering more advantageous business opportunities when comparison with otherresources allows.

4

Through a designated selection process, and in compliance with the standards

given below, suppliers shall be evaluated by product quality, reliability, delivery,
price, suppliers’ business stability, technical development ability, fair andtransparent information release, compliance with societies’ rules, regulatorycompliance, respect for human rights, elimination of discrimination in respect of
employment and occupation, elimination of all forms of forced and compulsory
labor, environmental preservation activities, social contributions, good working
environment, and recognition of social responsibilities with business partners.

(1) HITACHI shall not request quotations from suppliers with whom there is no intention toenter into a future business relationship.
(2) In accordance with specified internal procedures, the authority and responsibility forspecifications, terms and conditions, and product acceptance and inspection belong
to each Requester, Procurement Department, and Inspection Department.

Guidelines for Procurement
Activities
Procurement Policy
CSR/Green Procurement(3) Procurement Departments shall represent HITACHI when contracting with suppliers.
5

HITACHI members are prohibited from receiving any personal gifts or offers fromsuppliers.

Revised in 2009

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Supply Chain Management

Frameworks

CSR Supply Chain Management Framework
Given the global reach of Hitachi’s business, there is a growing likelihood of supply chain
risks creating management problems, and we are working hard to identify and mitigate
these risks beforehand as much as possible. We established a CSR/Ecological
Procurement Promotion Center within the Hitachi headquarters in fiscal 2011. We havealso established the Hitachi Group CSR Green Procurement Committee, which includes
committee members from in-house companies and key Group companies. This completesa framework that will enable our CSR supply chain management and green procurement
philosophy and initiatives to be shared throughout the Group.
Number of Hitachi Group suppliers(as of December 2014):

26,000companies(about 60 countries)
Policies and Frameworks

Green Procurement
To procure parts and materials manufactured with reduced environmental impact, so that
suppliers help to protect the environment, it is crucial that we share our commitment toenvironmentally conscious monozukuri craftsmanship throughout our entire supply chain. In
fiscal 1998, we led the industry in developing Green Procurement Guidelines to define ourbasic position on procuring parts and products that do not have a negative impact on the
global environment, as well as our requirements of suppliers, so that we can work together
to promote green procurement. The guidelines set out supplier requirements forenvironmental conservation, including building an environmental management system andacquiring certifications. There are also requirements for reducing the environmental impact
of products supplied to Hitachi, such as conserving resources and energy in production,
recycling, managing chemical substances, and fully disclosing related information.
There is a global trend toward tighter regulations on chemical substances. In fiscal
2013, we reviewed our categories for controlled chemical substances in our Green
Procurement Guidelines to comply with the stipulations on restricted substances,authorized substances, and SVHCs (substances of very high concern) in Europe’s
Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) regulation
for managing chemical substances within the European Union. Specific changes include:

Hitachi Group Green Procurement
Guidelines
Joint Article Management
Promotion Consortium(1) moving some chemicals to the prohibited substances list, (2) further breaking down thecontrolled substances list, and (3) adopting the industry association list. The previous
guidelines were revised to version 7.0 and distributed through in-house and Group
companies to suppliers to ensure that they are fully informed. We have built A Gree’Net, anInternet-based green procurement system, to collect information about chemical
substances contained in products and other environment-related data from suppliers assoon as it becomes available. The goal is to manage chemicals carefully. Under thissystem, we encourage suppliers to use the MSDSPlus*1/AIS*2 reporting templates
published by the Joint Article Management Promotion Consortium.*3 We also encouragethem to use information transmission systems and to minimize the amount of labor.
*1 MSDSPlus: A format for reporting chemical substances contained in products created by upstream companies(chemical manufacturers) for midstream companies (molded product manufacturers, etc.).
*2 AIS: A format for reporting chemical substances contained in products created by midstream companies (molded
product manufacturers, etc.) for downstream companies (assembly manufacturers, etc.).
*3 Joint Article Management Promotion Consortium (JAMP): Established in September 2006 as a cross-industry
promotion association of 17 companies endorsing the idea that “it is essential for the enhancement of industrial
competitiveness to ensure proper management of information on chemical substances contained in articles (partsand final products), and to establish and popularize a concrete mechanism for smooth disclosure andtransmission of such information in supply chains.”

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Supply Chain Management

Core Policy

Response to the Conflict Minerals Issue
The Request to Our Suppliers, based on the Conflict Minerals Procurement Policy that
we released in September 2013, has been put up on our website as a clear statementof our position.

Hitachi Group Conflict Minerals Procurement Policy
The Hitachi Group is committed to responsible procurement practices to mitigate therisk of sourcing conflict minerals (tantalum, tin, tungsten, and gold) that can directly or
indirectly finance armed groups abetting human rights violations in the Democratic
Republic of the Congo (DRC) and adjoining countries. The Hitachi Group Procurement
Division strives to establish a sustainable supply chain that eliminates procurement ofmaterials and/or parts using conflict minerals. Our efforts are to continue procurementof minerals from responsible sources in the region and are not intended to implement aban on procurement of minerals from the DRC and adjoining countries.

Request to Our Suppliers
To do so, it is important to enhance supply chain transparency and to strengthen
responsible procurement of materials and parts. Therefore, we expect our suppliers toagree to our Conflict Minerals Procurement Policy and to cooperate with us in ourefforts to ensure procurement of conflict-free minerals. In accordance with the DoddFrank Act*1 and the OECD Guidelines for Multinational Enterprises,*2 companies are
required to conduct a reasonable country of origin inquiry and to exercise due
diligence covering the entire supply chain to determine whether final products include
conflict minerals which benefit armed groups.
The Hitachi Group will examine its supply chain through a collaborative
industrywide approach by utilizing the tool developed by EICC-GeSI.*3 We expect our
suppliers to adhere to our Conflict Minerals Procurement Policy and to cooperate with
our supply chain investigation.
As improved processes are introduced to eliminate conflict minerals from the
supply chain, we will ask our suppliers to comply with such programs once they aredeveloped, proven, and established (i.e., expansion of the Conflict-Free Smelter*4 list,
Hitachi Group Conflict
Minerals Procurement
Policy and Request to
Our Suppliers

which is under implementation by EICC-GeSI). The Hitachi Group will continue toengage in industry efforts to develop methods to build a stable, conflict-mineral-free
supply chain.
*1 Dodd-Frank Act: The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into federal law
by President Barack Obama on July 21, 2010.
*2 OECD Guidelines for Multinational Enterprises: Government recommendations for multinational corporations
operating in or from the Organisation for Economic Co-operation and Development (OECD) countries toadhere to their guidelines.
*3 EICC-GeSI: Nonprofit organization of members in the information and communications technology(ICT) industry.
*4 Conflict-Free Smelter: A smelter or refinery that does not handle conflict minerals.

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Supply Chain Management

Policies and Frameworks

Strengthening Global Partnerships
A key element of the Hitachi Group Vision is to improve the competitiveness of ourvalue chain based on partnerships with our suppliers. Given our business aim to expand
internationally, we need to extend our procurement globally, looking toward increasing
local production for local consumption. In fiscal 2011, we appointed procurement
officers to oversee local procurement in China, the rest of Asia, Europe, and theAmericas.
By fiscal 2012, our 15 international procurement offices had grown to 25. To expand
the pool of suppliers in emerging markets, we set up the China Asia Pacific Procurement
Headquarters, Hitachi East Asia Ltd., in fiscal 2012 and built a global supply database in
fiscal 2013. In fiscal 2014, moreover, we launched a new global procurement scheme
using professional functions within the Group (Hitachi High-Technologies Corporation,
Hitachi Capital Corporation, and Hitachi Transport System, Ltd.) to reinforce our
responsiveness to CSR risks, a growing concern as the supply chain expands globally.

Key Approaches

Implementation of CSR Monitoring (Self-Checks)
To monitor how well Hitachi’s CSR supply chain management philosophy has been
adopted by our suppliers, since fiscal 2007 we have asked key suppliers to conduct CSR
Monitoring (self-checks) using the JEITA Supply Chain CSR Deployment Guidebook anddetailed checklists. We collect and analyze the results and take any necessary remedialaction. Since fiscal 2011, we have expanded the scope to include suppliers in China andthe rest of Asia. In fiscal 2014, we asked 200 suppliers outside Japan to conduct CSR
Monitoring (self-checks).
Self-Check Results
FY

Suppliers in Japan

Suppliers outside Japan

Total

2009

132

0

132

2011

0

102

102

2012

57

41

98

2013

55

45

100

2014

0

200

200

Total

244

388

632

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Key Approaches

Implementation of CSR Audits
Since July 2012, we have been auditing suppliers in China and the rest of Asia fromamong the suppliers providing CSR Monitoring (self-check) results. In fiscal 2014, we
For these audits, we
conducted CSR audits of 20 suppliers, all of them in China.
engage JACO and DNV,*1 the BSI, *2 and Intertek Certification,*3 experienced CSR auditing
companies. 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 EICC-recognizedauditor checks suppliers’ performances on labor and human rights, health and safety, theenvironment, and ethics. In fiscal 2014, audit results revealed no major infringements atthe 20 companies, but made note of some small areas needing improvement, such as
overtime work exceeding stipulated limits (18 companies), failure to conduct periodic
inspections of machinery and equipment (16), and insufficient management of hazardous
waste (10). We have asked these suppliers to submit improvement action plans and will beworking with and advising them until they complete the planned improvements.
*1 Japan Auditing and Certification Organization for Environment and Quality (JACO) and Det Norske Veritas (DNV):JACO is a Japanese certification institution that provides a range of auditing services. For audits outside Japan,
JACO develops and carries out joint audits with DNV, a third-party certification institution that provides
certification and other services. DNV, with 140 years of experience, is known as a risk management leader.
*2 British Standards Institution (BSI): An independent organization that offers specialized business services. Founded
in 1901 as the Engineering Standards Committee, it is the world’s oldest institute for national standards.
*3 Intertek Certification: With a presence in 40 countries across the globe, the Intertek Group provides a wide arrayof certification services in every industrial field.

Key Approaches

Creation of Procurement BCPs
We have a deep involvement in social infrastructures in places where the suppliers who are
our business partners can be affected by major earthquakes and other natural disasters.
These disasters can heavily impact not only our business operations and those of our
suppliers but also society as a whole. To minimize this impact, the procurement divisions in
key Group and in-house companies in Japan have created procurement business
continuity plans (BCPs) that (1) standardize and use generic parts to make procurement as
flexible as possible; (2) cultivate multiple suppliers; (3) distribute production across several
locations; (4) budget inventory strategically; and (5) consider substitute products. To see
whether or not procurement BCPs would be effective, we held desktop exercises todiscuss in a group what should be done during and after a disaster, making further
improvements as a result. In fiscal 2014, Group companies in Japan took the same steps
to improve procurement BCPs. The initiative will expand to Group companies outside
Japan in fiscal 2015, contributing to the continuation of Hitachi’s global operations.

Key Approaches

Increasing Green Procurement of Office Supplies
We are improving our green procurement rate—the ratio of environmentally conscious
products procured to total office supplies—by using a Group-wide online procurement
system: the E-sourcing Mall. This system has a range of environmentally conscious
products and promotes procurement by clearly labeling these products. In fiscal 2014, ourgreen procurement rate reached 89%.

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Diversity and Inclusion
Hitachi’s Approach

The globalization of markets and labor environments has increased thediversity of our stakeholders, as is evident from aspects like the productand service needs of our customers and the shifting work values of ouremployees. With strong commitment by senior managers, we arepromoting diversity-oriented measures as a management strategy acrossHitachi as part of efforts to boost our competitiveness and securetalented employees to respond to this growing stakeholder diversity.
We aim to enhance our diversity and inclusion, for instance byintroducing key performance indicators (KPIs) to advance women in theworkplace, and to create a management system that takes full advantageof the skills of each member of our multifaceted workforce.
Our Actions in Fiscal 2014

Entering the third stage of our diversity management roadmap, we have broadened
the scope to include gender, age, nationality, disabilities, and lesbian, gay, bisexual,and transgender (LGBT) status. With regard to promoting women in the workforce, weare engaged in direct dialogue with female employees as part of efforts to fulfill ourdual KPIs of appointing female executives and increasing the number of female
managers in Japan to 1,000. We are also pursuing time- and location-free work as
part of efforts to promote work-life management, while also advancing policies toreduce long overtime work hours. The Hitachi Group is working hard to employ people
with disabilities, holding special hiring fairs and study meetings for Group companies
to share information.
Support for career advancement of women through such efforts as the Hitachi Group
Women Leaders’ Meeting and Hitachi Group Career Seminar for Young Women;
achievement of a ratio of 3.7% of Hitachi, Ltd.’s management positions filled by
women.
Promotion of time- and location-free work, such as by establishing satellite offices
and simplifying work-from-home procedures, as part of efforts to improve work-life
management.
Employment ratio of people with disabilities of 2.03% (as of June 2014), topping
Japan’s legally mandated ratio.

Diversity Management
Core Policy

Diversity Statement
Diversity is the wellspring of our innovation and our growth engine. Hitachi regards
personal differences—namely, gender, nationality, work history, age, sexual orientation, andphilosophy—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. With strong
teamwork and broad experience in the global market, we will meet our customers’ needs.

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Diversity Management Initiative: “Diversity for the Next 100”

Core Policy

Since the 1990s, we have been at the social forefront, supporting women and othermembers of our multifaceted workforce. This includes setting up systems to help balance
work with child and nursing care. Entering the third stage of our diversity management
roadmap, we are embracing diversity as a management strategy under the initiative slogan“Diversity for the Next 100.” This means creating an environment where women and othermembers of our varied workforce can use their skills in leadership and business
management.
Roadmap for Developing Diversity Management

Phase 1:
Support for Women’s Career
Advancement

Phase 2:
From “women” to “diversity”

Phase 3:
Diversity promoted as a management
strategy

2012

2009

“Diversity for the Next 100” launched

Diversity & Inclusion Development
Center set up

2000

2006

FF Plan*1

Diversity Promotion Project
FF Plan Ⅱ

Support balance between work and nursing
care, etc.
Strengthen senior management
commitment

Enhance Hitachi Group partnerships
Reduce overtime/Review work styles

Promote time- andlocation-free work

Promote diversity awareness/Reform work environment
Support work-life balance; support women’s career advancement

Strengthen women’s career development

Introduce, expand support systems for work-life management

1990

2000

2006

2009

2012

2015

*1 The Gender-Free and Family-Friendly (FF) Plan is an initiative to create a better work environment by supporting
efforts to balance work and family life and supporting women in the workplace.

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Expanding the Scope of Diversity Management
Gender, etc.

Men and women, family

Nationality, etc.

composition, marital status

Age

Senior, middle-aged, young

Widening Scope ofDiversity

Disabilities

Nationality, race, ethnicity,
languageLGBT

Physical, intellectual,

Lesbian, gay, bisexual,

mental disability

transgender status
Minorities integrated into existingorganizational culture, systems,
methods, customs

Step 1

Integration
Step 2

Legal Compliance
Step 3

Respect for Diversity
Step 4Competitive Advantage

Diversity promoted as management strategy

Discrimination banned through forceof law (Japan’s Equal Employment
Opportunity Act)
Companies, organizations educate staff
about discrimination so differences areactively embraced, respected
Evolution from respect for differences
to organizational reform as part ofstrategy to forge varied strengths into
competitive advantage

Deepening Diversity Management
Frameworks

Development Structure of Diversity Management
The Diversity Promotion Project, launched in fiscal 2006 under the president’s directcontrol, was replaced in fiscal 2009 with the Diversity & Inclusion Development Center,
which currently operates under the direct supervision of the Human Capital Group.
Hitachi, Ltd. and 20 Group companies jointly operate the Advisory Committee and theDiversity Development Council to accelerate awareness across Hitachi as a whole. The
Advisory Committee ensures follow-through on our diversity management policy, while theDiversity Development Council discusses specific activities and shares best practices.
Both meet every six months.
Group companies and business groups/sites have also set up their own projects tobecome organizations that develop the role of women in the workplace and that implement
and enhance initiatives geared to the challenges faced by individual workplaces. We also
hold regular meetings to exchange opinions on diversity with labor unions.
Hitachi Group Diversity Structure
Hitachi, Ltd. President

Advisors: External directors

Advisory Committee:

Chief Human Resource Officer (CHRO)
Executive officers and general managers in charge of personnel affairs and laboradministration in Group companies
General managers in charge of personnel affairs and labor administration in-house companies

Hitachi Group Diversity Development Council

Managers in charge of personnel affairs and labor administration in Group companies,
in-house companies, and business groups/sites

Advancing women in workplace projects in companies
and business groups/sites

50 projects in total

Diversity & Inclusion Development Center(dedicated organization)
Human Capital Group* Participating enterprises (20 companies as of March
2015): Hitachi Metals, Hitachi Chemical, Hitachi Capital,
Hitachi Construction Machinery, Hitachi Kokusai Electric,
Hitachi High-Technologies, Hitachi Transport System,
Hitachi Medical, Clarion, Hitachi Koki, Hitachi Urban
Investment, Hitachi Appliance, Hitachi Automotive
Systems, Hitachi Consumer Marketing, Hitachi Industrial
Equipment Systems, Hitachi Systems, Hitachi Solutions,
Hitachi Insurance Services, Hitachi Maxell, Hitachi Life

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Key Approaches

Diversity Workshops and Management Training
Since fiscal 2010, Hitachi’s unique diversity workshops have been using the World Café
approach*1 to bring together employees, including senior executives and young employees, tofreely exchange opinions on diversity and work-life management.
It is necessary for the workplace as a whole to develop a better understanding of diversity
and put work-life management into practice. Changing the mindsets of managers is aparticularly critical task. Our diversity workshop approach gives managers the opportunity toreflect on their management styles and consider how to optimize their employees’ potential toachieve top results for the organization as a whole.
Since fiscal 2013, in-house companies and Group companies have been using aworkshop handbook created in-house to hold their own workshops, raising the awareness of
individuals, and reform the work environment.
*1 World Café: An approach to discussion bringing participants together in a forum for open, creative talks, allowing
them to share situations and cultural insight across organizations or communities to create new knowledge.

Developing Women’s Careers
Core Policy

KPI of Developing Women’s Careers
Hitachi has created two key performance indicators (KPIs), announced externally in fiscal
2013, to enable as many female employees as possible to take up leadership positions and toparticipate in management decision making. These KPIs signal our commitment bothinternally and to the world to further advance women in the workplace and to improve ourdiversity management.
In addition to reinforcing existing programs, we will use the Hitachi Group Women’s Career
Success Survey to highlight progress with new initiatives and outstanding issues in eachbusiness unit and to set numerical targets for each unit, strengthening our management
commitment. We will also boost women’s individual ambitions and morale through programs
such as the Hitachi Group Women Leaders’ Meeting, which targets female employees at thegeneral manager level and above. We intend to create an environment where as many womenas possible are able to optimize their potential in management positions.

Goals for Hitachi, Ltd. (KPIs)
Appoint female executives by fiscal 2015 by promoting from within. (The CSR andEnvironmental Strategy Division chief appointed as a corporate officer in April 2015).
Increase the number of female managers in Japan to 1,000 by fiscal 2020 (2.5 times
more than at the end of fiscal 2012).
Key Indicators
Number and Ratio of Female Managers(people)(people)

800

3,415

600
400
200
0

5.6%

386

377

401

418

3.3%

3.4%

3.5%

3.8%

434

3,670

4,000

6.0%

3,000
2,000

3.7%

1,000

73
2000

2010

2011

2012

2013

2014

(FY)

0

Female managers, Hitachi, Ltd. (left scale)
Female managers, Hitachi Group (right scale)
Percentage of total, Hitachi, Ltd.
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Key Approaches

Women’s Career Success Survey
Since fiscal 2013, a survey of women’s career success has been conducted annually in
30 in-house and Group companies. We use an external institution’s survey framework toquantify the status of these companies according to four indexes: female management
appointments, work-life balance, gender equality, and advancement of women in theworkplace. Group rankings are accompanied by comparisons with other companies inthe same industry to appropriately understand the results from the wide range ofbusinesses surveyed. To date the survey has revealed both progress and someoutstanding issues. Participating companies use the results to formulate measures,
including creating key performance indicators (KPIs) to accelerate female employees’
advancement in the workplace.

Key Approaches

Women Leaders’ Meeting
The annual Hitachi Group Women Leaders’ Meeting provides career enhancement
opportunities for female employees at the general manager level and above working at
Hitachi Group companies in Japan and serves to strengthen the network of womenleaders. The inaugural meeting in fiscal 2013 was attended by 113 women leaders.
Speakers included then President Hiroaki Nakanishi, then Chairman Takashi Kawamura,

Hitachi Group Women Leaders’ Meeting.

and Yukari Tominaga, the Hitachi Group’s first female executive officer. Participants
engaged in group discussion on such themes as boosting female employees’ own
awareness and changing the mindsets of people in the workplace, with each grouppresenting recommendations to executives.
The fiscal 2014 meeting was held on August 4 and had 125 participants. It kicked off
with a speech by President and COO Toshiaki Higashihara on the theme of what it means
to be a leader, followed by a discussion with participants on topics including cultivating
human capital development and leadership. Input from participants at the 2013 meeting
led to the establishment of the Hitachi Group Career Seminar for Young Women. Following
presentation of a progress report, there was also an introduction of independent activities
led by women leaders.

Key Approaches

Career Seminar for Young Women
Started in fiscal 2014, the Hitachi Group Career Seminar for Young Women advises
employees thinking about their own careers early in life, helping them to dispel vague
concerns about the future and to maintain a balance between work and life events. The
goal is for women themselves to actively carve out their own careers.
The seminar consisted of a lecture about the environment surrounding working

Hitachi Group Career Seminar for
Young Women.

women and a panel discussion hosted by senior female employees. It also provided
methods for understanding how to think about careers and participants engaged ingroup discussions focusing on their own medium- to long-term career plans. The
majority of the roughly 300 participants at the seminar were in their third or fourth year
in career-stream positions.

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Key Approaches

Building Regional Women’s Networks
This initiative looks to support female employees in each region of Japan in directing theircareers by providing opportunities beyond the usual context of work to interact with rolemodels and peers at companies across the Hitachi Group.
In fiscal 2014, events were held for employees in Ibaraki Prefecture and the Chubu

Participants during group work
focusing on future careerdevelopment.

Key Approaches

region that included panel discussions by senior female employees and group work
focusing on future career development. Participants also shared thoughts with theexecutive in charge of human capital.
Career Events for Science-Oriented Female Students
Hitachi participates in career events for junior and senior high school students designed to
inform female students from an early stage of the enjoyment and appeal that work has for
women. In fiscal 2013, then Chairman Takashi Kawamura spoke to junior and senior highschool students and their parents at a symposium at the University of Tokyo entitled “Bring
the Family: On the Frontline of Science and Observing.” In his presentation he stressed

Participants at the “Bring the Family: On
the Frontline of Science and Observing”
symposium.

that women will be a vital force for stimulating the Japanese economy, sharing with women
the appeal of working in science. A female scientist from Hitachi also related to theaudience different aspects highlighting the interesting nature of her job.
We also host field days at the Hitachi Research Laboratory and the Central ResearchLaboratory with the goal of persuading female high school students of the advantages ofworking in science. This is accomplished by giving them the opportunity to observe
research work firsthand and to take part in roundtable meetings with Hitachi employees
who majored in science.

Key Approaches

European Initiatives on Women in the Workplace
As part of efforts to foster diversity and inclusion, Hitachi Group companies in Europe havebegun two key initiatives aimed at providing career development support to women. In
2013, the Women’s Interactive Network (WIN) was launched through the efforts of different
Group companies. “Webinars” presenting the findings of Project 28-40, a survey of the

A session during the second
WIN summit.

working lives of women, were also developed to further raise awareness andunderstanding toward overcoming unconscious biases.
In November 2014, many employees from European Group companies attended thesecond WIN summit. Held under the theme of emboldening women, the summit featured abroad program including a session where Nicky Moffat, the highest ranked woman in the
British army, gave participants career advice. During the event, Diversity & Inclusion
Development Center head Naohiko Tamiya addressed the importance of cooperation
among all Group companies in promoting diversity and inclusion and Chief Executive for
EMEA/CIS Klaus Dieter Rennert stressed how greater diversity is essential to boosting
Hitachi’s competitiveness.
A pilot mentoring program involving six groups from seven Group companies was also
initiated. Each group brought together women in managerial positions or involved incorresponding duties to discuss over a six-month period topics and issues related tocareer development. The results of the program are to be used to advance and broaden
diversity and inclusion.

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Work-Life Management
Core Policy

Hitachi’s Work-Life Management Approach
Our diversity and inclusion management initiatives are designed to enable all employees toreach their full potential, as well as to enhance our organizational capabilities and to createsynergies that will boost productivity and grow our business. This requires building a work
environment that embraces human resource diversity and promotes work style flexibility.
Hitachi looks beyond work-life balance, promoting work-life management that enables
our employees to take charge of improving the quality of both their work and their private
lives. We believe that optimizing time spent in and outside the workplace through work-life
management enhances our employees’ professionalism and builds character, resulting inboth individual and organizational growth over the long term.
Boost productivity and grow business.

Fulfill potential to contribute to business.
Company

Key Approaches

Enable diverse ways of working (employee-friendly workplaces).

Employees

Enhancing Work-Life Management Support Systems
Since the 1990s, we have been introducing and improving an array of programs for
employees to balance work with family, aiming to create a more employee-friendly
work environment.
Work-Life Management Support System (Example of Hitachi, Ltd.)Child Care Support System

Nursing Care Support System

For women
Pregnancy

For menFertility treatment leave

Nursing care leave

Leave for prenatal medical appointments,
pregnancy problem leave, etc.

ChildbirthMaternity leave (8 weeks before and 8 weeks
after childbirth)Paternity leave (total of 5 days)

Child care leave

Child care leave (Up to 3 years until the child completes the first grade of elementary
school; can be taken on nonconsecutive days)

Return to work

Shorter working hours (generally 6, 6.5, or 7 hours)
Work from home (career-stream positions)
Family nursing leave (5 days per year), child nursing leave (5 days per child per year)
Half-day leave (unlimited), leave for overseas spouse transfers

Return to work

Nursing care leave (up to 1
year; can be taken on
nonconsecutive days)

Shorter working hours
Work from home
Nursing care leave
Family nursing leave
Child nursing leave
Half-day leave(unlimited)

Cafeteria Plan*1 (Child care and nursing care menu)*1 Flextime and discretionary labor systems are also available. The Cafeteria Plan is a system in which employees can select the support that they need, when
they need it, according to their “Cafeteria Points.”

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Key Approaches

In-House Child care Centers

Genki ClubIn April 2013, the Genki Club daycare center celebrated its tenth anniversary. Thisin-house facility was set up to help Hitachi’s employees living and working around the
Totsuka area in Yokohama to balance work and child care. The center opened with 14
children; as of March 2015 this has grown to over 70, with the center becoming one of the
Excursion (sweet potato digging).

few large in-house daycare facilities in Japan. The Hitachi Workers Union Soft Branch
operates the center along with Hitachi, Ltd., Group companies, labor unions, and otherorganizations that work together to provide support.
Genki Club

Christmas party.

Established

April 2003

Location

292 Yoshida-cho, Totsuka-ku, Yokohama-shi, Kanagawa, Japan(Yokohama Office, Hitachi, Ltd.)

Capacity

Approximately 70 children

Ages eligible

Infants aged several months to 6 years (children who have not yet
reached elementary school age)

Operating hours

7:30–20:00“Genki Club” Logo

Sakura Hiroba (Hitachi Chemical Group)

Hitachi Chemical Co., Ltd., has a range of programs that ensure an employee-friendly
work environment. These include a program launched in fiscal 2006, and renamed theDiversity Development Project in fiscal 2008, that encourages women in the workplace, as
well as the establishment in fiscal 2007 of a special section aimed at developing diversity.
In addition, Hitachi Chemical has also created a nearby in-house nursery to help
employees balance work and child rearing. Featuring a large play area with playgroundequipment, the nursery’s flexible child care options are designed to meet the full range of
employee needs, including monthly care and drop-ins.
Sakura Hiroba (Hitachi Chemical Group)
Established

April 2008

Location

2-27-22 Higashi-cho, Hitachi-shi, Ibaraki, Japan(near Yamazaki Division, Hitachi Chemical)

Capacity

20 children (can enroll a maximum of 30)

Ages eligible

Infants aged several months to children up to 6 years old who have
not yet entered elementary school (children of Hitachi ChemicalGroup employees who commute to the city of Hitachi)

Operating hours

7:30–20:00

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Key Approaches

Initiation of Pre-maternity Leave and Return-to-Work Support Seminars
At Hitachi, with more employees balancing work and child care, since fiscal 2012 we havebeen running Pre-maternity Leave and Return-to-Work Support Seminars approximately
three times every six months. These address such issues as putting careers on hold forchildbirth and child care and concerns about balancing work with child care. Employees
attend seminars with their managers so that both can share attitudes and approaches

A Pre-maternity Leave andReturn-to-Work Support Seminar.

when returning to work.
The goal is to ensure a woman’s smooth return to work as well as understanding andsupport from her managers and from colleagues. Participation in the seminars is growing
yearly, with around 350 people from various companies in the Hitachi Group taking part in
fiscal 2014.

Key Approaches

Boosting Productivity and Efficiency by Reducing Working Hours
Hitachi is revising working styles, seeking to increase productivity through reduction ofworking hours. Efforts include presenting reports on actual situations of long working
hours and periodic follow-ups at meetings for senior managers of HR, establishing days
where no overtime will be conducted, and sharing and discussing examples of positive
work styles. In addition, each site has its own unique approach to encourage employees toinform their colleagues of the time to leave the office, post calendars to plan theirvacations, take a paid holiday each month, and secure their “Thinking Time” during which
they concentrate on their duties.
IT support has also arranged for the times PCs are turned on and off to berecorded, so that both managers and employees can check their working hours in realtime. Communication is being enhanced to improve work efficiency, such as by helping
employees establish priority for their various tasks. The introduction of secure PCs andtechniques for effectively using travel time have also allowed employees to fully utilize
time they are at work but away from their desks. In addition, Hitachi, Ltd. and labor
unions are collaborating to achieve 100% use of Planned Annual Paid Vacation andSpecial Incentive Leave.

Key Approaches

Time- and Location-Free Work
Hitachi has systems and processes that allow employees to choose flexible and diverse
work styles unrestricted by time or location. This allows our diverse staff to produce results
more efficiently. In addition to discretionary work, flextime, and work from home, these
initiatives include satellite offices, simplified work-from-home procedures and applications,distribution of mobile tools such as smartphones, and a time- and location-free work pageon our intranet providing information on diverse work styles.

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Key Approaches

Work-Life Balance-up! Month
Since fiscal 2010, we have held a Group-wide Work-Life Balance-up! (WLB-up!)
Month each November to inform employees of our work-life balance management
approach. The goal of the program is to improve the quality of employees’ work andpersonal lives by boosting awareness of work-life management, developing a better

The WLB-up! Month mascot.

review of work styles, and promoting understanding of the programs and tools
needed for work-life management.
Group-wide activities include messages from top management, work style review
declarations in workplaces from managers, surveys of work-life management, a weekly
e-mail newsletter sent to all employees, and WLB-up! Month posters. Individual
workplaces also operate their own programs, including WLB-up! meetings, the active useof video and web conferencing to share information, and campaigns encouraging
employees to utilize annual leave.

Employing People with Disabilities
Core Policy

Expanding Hiring of People with Disabilities
Hitachi, Ltd. and Group companies in Japan have worked hard to employ people withdisabilities, such as by holding special hiring fairs and study meetings for Group
companies to share information. As a result, as of June 2014 the employment ratio ofpeople with disabilities was 2.03% at Hitachi, Ltd. and 2.07% for the entire Group in Japan.
Both of these figures topped Japan’s legally required employment rate of 2.0%. We will
maintain our Group-wide drive to hire more people with disabilities.
Key Indicators
Employment of People with Disabilities and Employment Ratio (Hitachi, Ltd.)
Legally required employment rate*1(people)
2,000

2.00

2.02

2.02

（％）
2.1

2.03

2.0

1,600
1,200
800

1.85
981

1,044.5

1,072

1,150.5

1,243

1.9
1.8
1.7

400
0

2000

2011

2012

2013

2014

(FY)

0

Employment of people with disabilities (left scale)
Employment ratio (right scale)*1 Up to fiscal 2012, the legally required employment rate was 1.8%.
Notes: Data compiled in June of each year. Employees with severe disabilities are counted twice.

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Key Approaches

Special Subsidiary Initiative
As of June 2014, the five special subsidiaries*1 within the Hitachi Group employ 254
people with disabilities. These employees work at the parent company and affiliatedcompanies performing such tasks as collecting and delivering mail, cleaning, and providing
clerical assistance, as well as staffing cafeterias and tearooms.

Employees of special subsidiary Hitachi
You and I Co., Ltd. operate shredders
in a Hitachi, Ltd. mailroom.

*1 If an enterprise forms a subsidiary that gives special consideration to employing people with disabilities in order topromote and stabilize the employment of these people, and where certain requirements are met, people
employed at the subsidiary are recognized as being employed at the parent company and can be included in
calculations of the parent company’s employment rate.

Hitachi Group Special Subsidiaries (as of June 2014)
No. of people
with disabilities

Special subsidiary

Parent company

Main tasks

Hitachi You and I Co., Ltd.

Hitachi, Ltd.

119 Cleaning, mail, shredding, cafeteria
work, clerical assistanceHallow

Hitachi Metals, Ltd.

45 Machining, checking, aluminum
wheel grinding, mailHitachi High-Tech Support
Corporation

Hitachi High-Technologies
Corporation

28 Mail collection and delivery, businesscard creation, travel expense
calculations, bookbinding

Builcare Staff Co., Ltd.

Hitachi Building Systems Co., Ltd.

57 Digitizing of documents, office work
assistance, cleaning, shredding

UJKC Social Enterprise Co., Ltd.

Hitachi Automotive Systems
Steering, Ltd.

5 Auto parts assembly

To create jobs for people with disabilities in Hitachi’s home of Ibaraki Prefecture, local
plants and offices as well as Group companies outsource work for around 80 people to the
Ibaraki Sheltered Workshop.*2

Employees working at the Ibaraki
Sheltered Workshop.

Key Approaches*2 Ibaraki Sheltered Workshop was established in 1978 under an agreement with Ibaraki Prefecture, the social
welfare corporation Jiritsuhoushikai, and Hitachi, Ltd. to provide work, guidance, and health supervision for thephysically disabled who are able to work but are prevented from working at other companies because of limited
onsite facilities or structures or long commutes.

Promoting Employment and Understanding for People with Mental Disabilities
In 2009, Hitachi, Ltd. was selected to participate in a model program of the Ministry of
Health, Labor, and Welfare aimed at promoting employment for people with mental
disabilities. Since that time, we have applied the knowledge and know-how gained in thisprogram toward boosting such employment across the entire Hitachi Group in Japan. As
of June 2014, there are 274 people with mental disabilities employed at Group companies.
Hitachi, Ltd. has worked to bring attention to and promote understanding of these
employees by holding workshops providing information on ways to support them. At thesame time, we have provided employees with training necessary to help them manage
their disabilities and keep them working. These Hitachi and Group company initiatives have

WEB Promoting the
Employment of People with
Mental Disabilities (Ministryof Health, Labor, andWelfare) (Japanese only)

received widespread attention through prefectural labor bureau seminars and annual
meetings of the Japan Psychiatric Medical Conference.
We will continue to develop model examples of employing people with mental
disabilities and will communicate this information to society.

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SocialGovernanceContents

Employee Health, Safety, and Welfare
Hitachi’s Approach

Employment trends and work patterns are shifting as the Japanese
population continues to age and urbanize and as companies rapidly
globalize, affecting the overall health and safety of employees in newand complex ways. Hitachi holds the health and safety of employees as
a top priority. We consider it our duty to give our workers anenvironment where they can go about their duties safely and with peaceof mind. We take a Group-wide approach to preventing accidents that
includes sharing the Hitachi Group Health and Safety Policy globally,using a system that tracks information on health and safety
management from all Group companies in Japan, and establishing key
performance indicators (KPIs) for occupational accident rates.

Our Actions in Fiscal 2014

Ensuring the health and safety of all employees is a basic principle shared by all
Hitachi Group companies around the world. We are engaged in improving the level ofhealth and safety through Group-wide initiatives that include accurate tracking ofsafety conditions, using standardized methods for reporting and collecting informationon accidents, as well as implementation of safety standards and other policies. In
Japan, we are introducing measures to comply with new laws and regulations.
In response to the diverse needs of employees, we continue to engage in suchwelfare initiatives as the “cafeteria plan” program and the defined contribution anddefined benefits pension plans.
Occupational accident rate (fatality or work-time loss of more than one day) acrossthe Hitachi Group in Japan of 0.27.*1
Participation by around 120 executive officers and division chiefs in charge of safety
at Hitachi Group companies in Japan in the Hitachi Group Special Safety Conference
headed by President and COO Toshiaki Higashihara, as part of efforts to prevent
work-related accidents.
*1 Occupational accident rate = (total lost-time injury cases ÷ total working hours) × 1 million.

Occupational Health and Safety
Core Policy

Fundamental Idea for Occupational Health and Safety
Ensuring the health and safety of all employees is the basic principle underlining the
Hitachi Group Health and Safety Policy. This policy is shared by Hitachi Group companies
all around the world. Employees work together to create safe, secure work environmentsthat aim to be accident free.

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Hitachi Group Health and Safety Policy
Principle “Health and Safety Comes First.”
Policies In accordance with our mission, “Contribute to society through the development of superior, originaltechnology and products,” the Hitachi Group will endeavor to ensure safe and healthy workplaces under the
principle of “Health and Safety Always Comes First.”
To accomplish this, we will:
1

Continually be involved in health and safety activities in order to prevent work-related injuries and sickness bydesignating 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 own health andtaking 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.

5

Contribute to the creation of a safe and pleasant society by emphasizing activities that make health and safety
a top priority in all of Hitachi’s business activities.
Revised November 2013

Frameworks

Framework for Promoting Health and Safety
Hitachi is promoting a range of Group-wide occupational health and safety activities. These
include preventing workplace accidents by setting and applying minimum safety standards
to be observed by Group manufacturers around the globe and by taking into consideration
the specific conditions at each company. We respond quickly when an accident occurs anduse incidents to make improvements and boost the level of health and safety management.
In fiscal 2011 we introduced the Hitachi Group Key Safety Management Designation
System. This initiative tracks key safety management improvements at Hitachi Group
companies and business sites in Japan that have experienced serious work accidents. Under
the leadership of top executives, these companies and business sites take on managementdriven and bottom-up initiatives to formulate and promote specific improvement plans. We arealso reshaping the Group’s safety management framework and introducing targeted safetymeasures, including extensive investigations of the cause of serious accidents, reviews ofrisks to reduce potential accidents, and engagement of third parties with a high level of healthand safety expertise to diagnose safety issues. We are also working to comply with new
regulatory requirements regarding the Stress Check System and chemical risk assessment
system in Japan, which are slated to go into effect in fiscal 2015 and 2016, respectively.
Key Indicators
Occupational Accident Rates
2.0

1.61

1.62

1.59

1.58

0.98

1.05

1.00

0.94

0.49

0.44

0.39

1.5
1.0
0.5

0.20

0

2010
All industries

0.15
2011
Manufacturing industries

0.19
2012

0.41
0.14

1.66
1.06

0.41
0.27

2013

2014

Electrical machinery sector

Hitachi Group(FY)

Notes: Occupational accidents are defined as those involving fatality or work-time loss of more than one day. Hitachi Group figures are for 90
Group companies in Japan, including Hitachi, Ltd. (to 2011); for 175 Group companies in Japan, including Hitachi, Ltd. (2012); for
195 Group companies in Japan, including Hitachi, Ltd. (2013); and for 251 Group companies in Japan, including Hitachi, Ltd. (2014).

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Employee Health, Safety, and Welfare

In response to an increase in work-related accidents in fiscal 2014, Hitachi President
and COO Toshiaki Higashihara in February 2015 led the Hitachi Group Special Safety
Conference, which included around 120 executive officers and division chiefs in charge ofsafety at Hitachi Group companies in Japan. During the meeting participants consideredways to bolster safety and preventive measures, such as by introducing new initiatives forfiscal 2015, examining Hitachi Group policies, and providing examples of successful efforts
to date. These were then used by Group companies to establish plans for preventing
workplace accidents.
Global Group Safety Figures for Fiscal 2014
Area

Occurrence rate*1

Outside Japan

2.51

In Japan

0.53

Global

1.23*1 Occurrence rate is the rate of workplace accidents per 1,000 employees resulting in
fatality or work-time loss of more than one day.

Core Policy

Cooperating to Improve Health and Safety
Hitachi is dedicated to improving health and safety levels through employee-management
cooperation. This includes signing a collective agreement with the Hitachi Workers Union
on the promotion of, among other things, health and safety mechanisms, a health andsafety commission, education and training programs, and health checks for employees.

Key Approaches

Sharing Health and Safety Information in the Hitachi GroupWe built the Hitachi Group Health and Safety Portal System in 2012 to ensure thatevery Hitachi Group company in Japan can track the health and safety performance ofthe entire Hitachi Group.
Group-wide information on work accidents is registered in the system so thatcompanies can track causes and see what preventive measures have been initiated. To
help prevent recurrences, statistics are kept on types of accidents. Since 2014, wehave carried out initiatives to share information on workplace accidents globally,
including one that tracks and provides feedback on accidents occurring at Group
companies outside of Japan.
Once a year we hold the Hitachi Group Health and Safety Research Presentation
Meeting for Hitachi health and safety officers. The 58th gathering, held in November
2014, attracted around 150 participants, who shared newfound knowledge from casestudies and heard special lectures from outside experts on ways to improve health andsafety activities at companies. Around 70 occupational healthcare workers, including
physicians and nurses, participated in the 14th Hitachi Group Industrial HealthConference in January 2015. Participants presented research results, shared
information on methods for improving occupational health programs at business sites,and discussed training approaches for relevant healthcare workers.

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Key Approaches

The Hitachi Group Health and Safety Award Program
We have implemented the Hitachi Group Health and Safety Award Program to recognize
Group companies in Japan that extend their accident-free records or that receive prizes forhealth and safety from external organizations. One such company is the Information andTelecommunication System Company of the Hitachi Telecommunications and Network
Systems Division. The company, based in Totsuka Ward, Yokohama City, has as ofJanuary 2014 extended its record of accident-free work-time hours to 150 million. By notrecording a single work-time accident for approximately 37 years, it stands as the Group’s
top health and safety performer.

Key Approaches

Fatigue and Stress Checkup System
Hitachi Systems, Ltd. has initiated efforts to support employees returning to work
after mental illness by using the Fatigue and Stress Checkup System. This system
makes it easier for employees to track their fatigue levels, thus allowing better selfcare for their mental and physical health. This system was developed through an
industry-university partnership in fiscal 2012 to care for the mental health of local

The Fatigue and Stress
Checkup System.

residents and local government employees affected by the Great East Japan
Earthquake. This cloud-based system capitalizes on research into fatigue
technologies and utilizes an instrument that measures autonomic nervous system
responses to detect the early signs of fatigue and stress.

Employee Welfare
Policies and Frameworks

Improving Employee Welfare
Hitachi, Ltd. has designed programs to support employees’ self-reliance andindependence. These include housing support, such as dormitories, company housing,and a housing allowance system, as well as an asset-building savings program, an
employee stock ownership program, group insurance, and consolation payments. In fiscal
2000, a new “cafeteria plan” program was introduced, enabling employees to select thebenefits they receive.
Under the initiative employees are able to tailor a plan to their individual lifestyles andneeds by choosing from a list of options, such as skills development, child care, nursing
care, health promotion, and donations. Employees use “cafeteria points” to select the typeof support they need when they need it.
The Hitachi Group has fundamentally revamped its retirement and pension plans toreflect the diversification of postretirement lifestyles, changes in the employment system,
and revisions to the legal system. Defined contribution and defined benefit pension plans
have been introduced across the Group to provide support for employees’ diverse lifeplanning needs. The defined contribution pension plan encourages employees toparticipate in their postretirement planning by providing asset management and investment
education, as well as other support. With the defined benefit pension plan, we increased
the number of benefit options in response to employees’ varied needs.

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Global Human Capital Development
Hitachi’s Approach

As the role of corporations expands with respect to global social issues
like the environment, poverty, and human rights, Hitachi seeks to address
the needs and values of its diverse array of stakeholders, including central
and local governmental bodies, local communities, and customers, withthe goal of developing the Social Innovation Business around the globe.
In order to secure the human resources needed to deal with thoseissues, we are seeking to globalize its human capital by recruiting andtraining employees from a variety of countries, while also building up anarray of facilities around the world so that our diverse employees candemonstrate their full potential and continually develop themselves.
Our Actions in Fiscal 2014

Hitachi has built the Global Human Capital Database to enable visualization ofworldwide human capital throughout the Group, while also introducing a global
grading system as a common platform for Group-wide job evaluations. We havealso introduced and expanded our performance management system tocontinually improve and develop both our business and the individual skills of ouremployees. On top of this, we have introduced common global hiring systems as
a way to secure talented personnel, boost efficiency, and reduce hiring costs.
In fiscal 2015, we hired around 60 foreign nationals who had graduated fromuniversities inside and outside Japan, as well as around 20 Japanese nationals whoearned degrees at universities outside Japan.
A process was implemented to send results from the Hitachi Insights survey of global
employees directly to managers.
In fiscal 2013, employees in Hitachi, Ltd. and 20 Group companies in Japan received
an average of 37.9 hours of training per person, and 85,300 yen per person wasinvested for education.

Core Policy

Advancing Global Human Capital

Our Group-wide global human capital management strategy optimizes both human resourcesand organizational performance in pursuit of Hitachi’s goal of becoming a major global player.
One example of our initiatives is the Global Human Capital Database covering all
Hitachi Group employees, excluding factory workers outside Japan. This databaseenables us to fully ascertain the status of worldwide Group human capital and to assess
macro management data, such as the allocation of human resources. We have also built
a global grading system that applies to all managers in the Hitachi Group worldwide,using it as a common platform for job evaluations throughout the entire Group and as acommon standard for assessing the value of management duties.
In addition, we introduced a performance management system at Hitachi, Ltd. andat some Group companies worldwide to link the operational business goals andindividual skills of both sides, with the aim of mutual sustained improvement andgrowth. This system will be expanded to include more companies. With an eye tosupporting the advancement of employees as our global operations expand, we are
introducing common global hiring systems to secure talented personnel, boost
efficiency, and reduce hiring costs.

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Core Policy

Global Recruiting and Globalizing Human Capital
As a means of opening up global markets, we have been accelerating the globalization ofhuman capital in Japan through three initiatives: (1) recruiting personnel in Japan who canpromote global operations, (2) providing more young Japanese employees with experience

outside Japan, and (3) comprehensively implementing globally unified management training.
We are committed to securing the right personnel for business globalization, andtoward that end we are opening up employment opportunities and strengthening
management diversity. In principle, we categorize all employees graduating fromuniversities and technical colleges as global business personnel who can contribute todriving our global operations. Our priority for employing global business personnel is toattract people who are eager to build their foreign language skills and relish the challengeof working in different cultures, social settings, and work environments.
We also recruit new employees to ensure diversity in and outside Japan. In fiscal
2015, we recruited around 60 non-Japanese from universities in Japan and elsewhere, andaround 20 Japanese graduates from universities outside Japan.

Key Indicators
Non-Japanese Employees (Hitachi, Ltd.)(People)
500

446

400
300

340 ＊1
230

239

257

2010

2011

2012

200
100
0

2013

2014

(FY)

*1 The Hitachi Group Sustainability Report 2014 (p. 155) listed the fiscal
2013 number of non-Japanese employees as 244, rather than thecorrect number, 340.

Providing Young Employees with Global Experience

Hitachi maintains broad programs to systematically cultivate and secure people who can
succeed in global business. To develop the careers of people who can understand andadapt to local cultures and lifestyles, we have offered a program for younger employees tolive outside Japan. We have sent around 3,700 young Group employees over the four
years beginning with fiscal 2011, allowing them to take part in more than 80 programs,
including understanding other cultures, language studies, local field studies, andinternships, as well as opportunities to work with local people to resolve social issues. We
plan to continue these programs in fiscal 2015.

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Global Human Capital Development

Globalizing Management Training

Along with the rollout of global human capital management, we are also globalizing ourhuman capital development programs.
We launched the Global Advanced Program for Leadership Development (GAP-L) in2012 to develop leaders for our Asian operations. In fiscal 2013, 23 participants fromaround the world took part in the program in Singapore. Another 25 people participated in
the Global Leadership Acceleration Program for Key Positions (GAP-K), which targets
management candidates, in Delhi, India, and other locations. These programs focus on
global business expansion by creating customer value and the requisite leadership skills,
moving us closer to our goal of becoming a major global player. In the GAP-K program inparticular, participants learn and discuss strategies for global business expansion with a
special emphasis on emerging markets.
In fiscal 2014, the GAP-L program had 21 participants, while 22 took part in GAP-K.
We also initiated standard training courses for general managers and new managers forroughly 2,000 people across our global Group operations. As global human capitalmanagement evolves to realize Hitachi’s management strategies, we will globalize ourmanagement development programs and continue to cultivate leaders to guide us towardfurther growth.
Core Policy

Career Development Support
There are differences among individual employees with regard to what they find fulfilling intheir lives and careers. Bearing this in mind, Hitachi has developed a broad range of careerdevelopment support that focuses on employees’ “internal careers,” namely, theirindividual values and views on the significance and meaning of their work. In addition toensuring that these individuals can fulfill their potential and maximize their creativity, ouraim is to link that individual growth to the positive outcomes and growth of theorganization, thereby enhancing our corporate value. Along with promoting selfunderstanding and fostering strong individuals with the independence and autonomy
needed to think and act for themselves, we also are providing support to create aframework for the organization to benefit from the engagement and motivation of individual
employees and to enhance mutual understanding as a way of fostering the teamwork
needed to enhance organizational strength and performance.

Core Policy

Future Initiatives for Career Development
In pursuit of becoming a major global player, we are prioritizing individual andorganizational performance. We create value built on employees’ individuality and personal
aspirations by implementing Hitachi’s Global Performance Management (GPM) grounded indiversity and the individual. We are also committed to supporting career development byfostering communication and mutual understanding between employees and theirorganizations based on programs encouraging individual employees to take greater control
of developing their own careers. In these ways, we provide the resources and tools thatenable a wide range of people to work together with enthusiasm.

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Key Approaches

Conducting a Global Employee Survey
In 2013, we conducted our first global employee survey, Hitachi Insights, as a way ofmeasuring employee engagement.*1 In September 2014, the survey was administered forthe second time. Around 190,000 employees worldwide were sent the survey in one of 13
different languages, and roughly 160,000 responses were received.
Overall, among the 13 categories, Hitachi scored well in “pride in your company” and“your supervisor’s management,” suggesting that employees are proud of Hitachi and its
drive to become a major global player underpinned by sustainable growth. A poor score
for “resources and support” indicates that we can do better on the level of staffing as wellas information and resource tools.
Compared to the first survey, there were improvements in all of the categories, which
seems to demonstrate that forward-looking changes were made in each organization
within Hitachi based on studying the results of the survey and implementing
improvements. Looking forward, we intend to continue making improvements while
thoroughly adhering to the PDCA (plan, do, check, act) cycle.
In fiscal 2014, we also introduced a process whereby the survey results are directlysent to section and department heads. These managers can use the results to ascertain
the situations for their respective teams and to improve engagement with the team throughcommunication with the members. The range of employees who will receive this directcommunication is being expanded in 2015, and we will also be providing assistance to thesection and department heads for actions they wish to take based on the survey output,
with an eye to further raising the level of engagement throughout Hitachi.
*1 Hitachi uses the term “engagement” to refer to employees’ understanding of the company’s strategies andpolicies, as well as their job satisfaction and desire to take actions on their own initiative to bring about results.

Key Approaches

Career Development in the Workplace
Because we regard the workplace as the center of career development, our careerdevelopment support emphasizes growth in daily work. Hitachi’s Global Performance
Management (GPM) uses performance planning, with employees and their supervisors
discussing and agreeing on short-term work goals. We also use career consultations for
gaining mutual understanding of medium- to long-term career plans, as well as training
and skills development to boost individual employees’ engagement and motivation and toadvance their careers in the workplace. Repeating the GPM cycle improves individual
performance and further increases motivation and creativity. This in turn spurs individual
growth and improves organizational results.
Hitachi administers the Career Counseling Center to provide work-related advice toemployees as part of our career development support. Trained counselors at the centerengage in dialogue to help employees proactively address their own concerns related totheir careers and relations with colleagues. Some of those concerns include the desire tofind a career path that suits their aptitudes and values or to find a way to better balance
work with their private lives. The counselors at the center are also required to regularly
participate in a training program following a US-certified career counseling curriculum inorder to raise the quality of their counseling.

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Global Human Capital Development

Key Approaches

Promoting Career Development Workshops
Together with workplace career development, we provide direct support for individualcareer development through education and workshops that encourage employee
awareness of their “internal careers”—in other words, their reasons for working and thesignificance they place on it. These programs are geared to individuals’ careerdevelopment and stages, covering everyone from young employees to more senior
workers. The Hitachi Career Development Workshop (H-CDW), launched in fiscal 2002 as
an initiative across Group companies in Japan, is a key program that targets middle-aged
employees who have work experience and who play a central role in the workplace.
In fiscal 2014, Hitachi began recommending that all employees promoted tosupervisory positons attend the H-CDW, with the aim of giving them the opportunity toparticipate in the workshop at an earlier stage in their careers. Participants use selfanalysis to deepen their self-understanding with an emphasis on their “internal careers,”
affirming their career direction, goals, and paths so that they can direct the development of
their own career and skills.
Hitachi is providing career development support to middle-aged employees throughLife Plan Training, made available to employees 50 years or older (or managerial
employees from the age of 45), as well as the Life Plan Briefing for employees who havereached the age of around 58. Life Plan Training is aimed at encouraging employees tothink for themselves about how they can take actions and make preparations for theircareer and life plans, rather than waiting until they reach retirement age. Toward that end,
the training provides various knowledge that is useful when considering styles of working
and living, as well as information on company support systems. For the Life Plan Briefing,prior to selecting their “life plan” regarding working styles after retiring at age 60,
participants receive an explanation about an array of working styles and life environments
for the elderly, while also taking part in workshops to consider those future working styles.
Participants in Career Development Workshops(Hitachi Group in Japan)(People)
800

621

649

2010

2011

600

672

692

2013

2014

560

400
200
0

2012

(FY)

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Quality Assurance Activities
Hitachi’s Approach

Hitachi understands that even a single product defect could pose asignificant business risk, given society’s increasing awareness of safety
and security issues and the growing global reach of businesses, andreflects this in company management. The entire Hitachi Group
contributes to quality assurance as part of the tradition of monozukuri
craftsmanship from the customer’s perspective. These contributions
cover all processes from research and development through to after-sales
service. Moreover, we promote activities to improve quality assurance
centered in the areas of organization and management, technologies, andhuman resources. Regarding the latter in particular, we provide training
for engineers in Japan and work to develop human capital outside Japan.
Our Actions in Fiscal 2014

In fiscal 2014, under the Hitachi Group QF (Quality First) Innovation Movement
launched in fiscal 2010, we continued our initiatives to ensure product safety,
compliance with laws and regulations, human resource development, and quality
improvements. To develop the quality assurance skills of employees around the globe,in particular, we are increasing training opportunities in China and the rest of Asia, as
well as other countries and regions.
More than 70,000 Hitachi engineers went through an e-learning program that drew on
the results of analyses of past product accidents.
We provide reliability training courses in China and Thailand.

Policies and Frameworks

Quality Assurance Activities
Based on the Corporate Credo of contributing to society through the development ofsuperior, original technology and products, Hitachi has engaged in monozukuri
craftsmanship with quality and reliability as top priorities since its founding. To advance
product reliability, our quality assurance activities cover all processes from productplanning and development through to design, manufacturing, delivery, and after-sales
service. Moreover, we are undertaking activities across the Group to improve quality
assurance centered in the areas of organization and management, technologies, andhuman resources.
Under the 2015 Mid-term Management Plan, Hitachi is currently working to secure aleading market position as a major global player. With higher quality standards than ever,
we are enhancing our products from the customer’s perspective and improving quality
management processes. Since fiscal 2010, we have promoted the Hitachi Group QF(Quality First) Innovation Movement to ensure product safety, compliance with laws andregulations, human resource development, and quality improvements. We also
concentrate on quality improvements in China and the rest of Asia, as well as othercountries and regions.

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Quality Assurance Activities

Ochibo Hiroi: Identifying Root Causes of Product Accidents andPreventing Recurrence

Meaning “gleaning” in English, ochibo hiroi identifies the root causes of product accidents
and recurrence prevention measures. The quality assurance executive officer works withrelated divisions to delve deeply into the technical causes as well as the procedures andthe organizational and psychological factors that led to the accident, thereby identifying
root causes and developing measures to prevent recurrence.

Intensive Risk Assessment

Hitachi is committed to quality and reliability, delivering safe products and services bycombining expertise and technologies from such varied areas as planning, research, design,
manufacturing, quality assurance, and maintenance. The safety of our customers’ life, health,and property are the top priorities in product development. Therefore, we verify safety at every
step, from development and production to sales, and conduct risk assessments from a wide
perspective in collaboration with related manufacturing plants and research laboratories.

Complying with Technical Laws

To supply our customers with products that they can use with confidence, we comply with all
product safety and technical laws, including those covering environmental consciousness andsafety labels. We distribute information on product regulations worldwide, along with
amendment trends and enforcement dates, among Hitachi Group companies. We have also
created compliance guidelines to share within the entire Group. The guidelines focus, among
other things, on clarifying product-specific laws (product-specific laws map); on regulatorycompliance activities and continuous improvement of processes, based on our compliancemanagement system, designed to satisfy the 2008 ISO 9001 standards; and on complianceeducation, as well as raising compliance awareness.
Handling Product Accidents

Policies and Frameworks

If there is a product accident, the division responsible acts swiftly to resolve the problem
from the customer’s perspective, coordinating with other Hitachi business units as needed.
For an especially serious accident, we report to government agencies, as we are legallyrequired to do, and publish the incident information on our website and through otherchannels. At the same time, we quickly submit a status report to top management,
ensuring fast and appropriate remedial action not just at the company directly involved but
all companies across the Group.
Response Flow in the Event of Product Accident
Accident
occurrence

Hitachi Group

Information gathering
CustomerliaisonCustomers,
retailers

QA Department

Emergency
response
authorities

Confirmation of accident status
Investigative
committee on serious
product accidents

Investigation of cause
Response andreportingFlow of information

ReportConsumer Affairs
Agency, etc.

Top management

Onsiteinvestigation

Information sharing

Product
investigation

Investigation ofdamage scope

Decision on
seriousness ofaccident

Seriousproduct
accident

Product recall
Notification via web,media

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Quality Assurance Activities

Key Approaches

Quality and Reliability Education
Our training programs for all technical and skill levels at divisions working in design andquality assurance cover reliability (basic and advanced) and product safety. In fiscal 2011,
we reinforced our monozukuri practices by beginning an e-learning program for the morethan 120,000 Hitachi engineers around the world. Since fiscal 2012, we have operated
another e-learning program that draws on the results of analyses of past product accidents
to identify weaknesses that our engineers must be able to ascertain, understand, andovercome in their daily work. Over 70,000 engineers have gone through the program.
Quality assurance (QA) training centers at our manufacturing sites help to increase
production, quality assurance, and maintenance skills through their own specialized
technical courses.

Key Approaches

QA Systems in China and Throughout Asia
As production volume has been increasing in China and other Asian nations, we arereinforcing systems and training to improve product quality from these locations. For
example, we host conferences for QA managers in China and Thailand to improve quality
awareness and to share information and best practices.
To develop employees’ QA skills and to improve their quality awareness and inspection
techniques, we provide reliability training courses at three levels in Beijing, Shanghai, andGuangzhou in China and in Bangkok, Thailand: the Basic Reliability Course,*1 Intermediate
Reliability Course,*2 and Advanced Reliability Course. In the Advanced Reliability Course,managers hold group discussions on past product accidents to identify the root causes,
including the process-related, organizational, and psychological factors. The goals are toboost problem identification and problem-solving skills.
*1 Basic Reliability Course: Deepens understanding of such basic issues as Hitachi’s monozukuri craftsmanship,
quality management, and labor safety.
*2 Intermediate Reliability Course: Improves understanding of more practical issues in, for example, Hitachimonozukuri craftsmanship, ISO 9001 certification, defect elimination, design for reliability, and purchasing andvendor management.

Key Approaches

Ensuring Home Appliance Safety
We are reducing consumer appliance accidents to near zero levels in line with Hitachi’s
Customer Satisfaction (CS) Management Guidelines, which set avoidance of all productaccidents as the baseline. For example, since fiscal 1987 we have been testing worst-casescenarios, such as deliberately setting a fire inside a product to confirm that the fire will not
spread outside it. Since fiscal 2006, we have also been conducting product safety risk
assessments at the development stage, creating “accidents” that might be caused by misuse.
Of the fires in electrical products that occurred in Japan during fiscal 2014, room air
conditioner accidents (including outside units) were the most common, accounting for 64
incidents.*1 No Hitachi air conditioners were involved in these accidents, reflecting the strengthof the Hitachi Group QF Innovation Movement. We will continue to make all our consumer
appliances even safer using our own voluntary action plan for product safety so that customers
can use our products with confidence.
*1 According to the Ministry of Economy, Trade, and Industry’s “Fiscal 2013 Report on Status of Product Safety Policy
Initiatives” (June 30, 2014).

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Customer Satisfaction
Hitachi’s Approach

For the company to grow sustainably, it is vital to respond to diversifying
customer needs and values, as well as to contribute to a society where
everyone—including the young and old, as well as those withdisabilities—can live conveniently and comfortably. As a company thatoffers a broad range of products and services from home appliances tosocial infrastructure, Hitachi believes that it is important to engage incorporate activities with the people at large in mind, not just thecorporate customers and individual consumers with whom it directly
conducts business.
To improve customer satisfaction (CS), we have created Customer
Satisfaction Management Guidelines. We share customers’ voices
obtained through direct dialogue across the whole Group, reflecting themin our management, product, and solution strategies. Furthermore, we
incorporate the views of product users and experts into our universal
design (UD) approach.
Our Actions in Fiscal 2014

Hitachi makes ongoing efforts across the Group to boost CS by building closer
relations with customers, primarily through staff in the sales and marketing
division. In fiscal 2014, we held the Hitachi Innovation Forum and various otherlectures and seminars as opportunities for direct dialogue with customers. Our
website provides comprehensive customer support, and we capitalize on the
feedback we receive to improve our business operations, products, and services.
We have also continued to promote UD with the end goal of a society where
everyone can live conveniently and comfortably.
In fiscal 2014, 85 Hitachi Group company employees took the Web Inquiry
Responsiveness Improvement Course to learn how to better handle inquiries,
bringing the total number of participants to 649 since the course began in 2009.
The Electric Home Appliances Customer Satisfaction Division received approximately
2.3 million instances of customer feedback in fiscal 2014.
We conduct semiannual customer service evaluation surveys at some 90 service
centers in Japan.

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Customer Satisfaction

Customer Satisfaction Activities
Core Policy

CS Improvement Activities
Using the Customer Satisfaction Management Guidelines, one of the pillars of ourbusiness management, we continue to improve CS with the goal of creating innovation
through collaboration with customers.
Customer Satisfaction Management Guidelines
1
2
3
4
5

Listen to our customers, who determine the value of products and services
Review information from our customers is another source of improvement
Offer prices and quality that are competitive

Respond rapidly to keep our promises to our customers

Adopt systems that prevent accidents and minimize their impact
Formulated in 1994

Frameworks

Reflecting Customers’ Voices
Our sales and marketing division uses customer input in developing management,
product, and solution strategies. We identify key customers who will help grow ourbusiness, then assign an account manager (AM) to each one. The AMs serve as
customers’ “portals” into Hitachi Group companies in Japan, and the whole Group works
with them to build closer relations with customers and to boost customer satisfaction.
Our Hokkaido, Tohoku, Chubu, and Kansai area operations hold executive seminars for
local customers. Through direct dialogue with customers participating in our seminars andlectures, we incorporate their expectations for Hitachi and their opinions into product strategies.
We also hold the Hitachi Innovation Forum, which includes lectures, business sessions,seminars, and exhibits showcasing new businesses and initiatives targeting social
innovation. Project leaders explain details to customers to deepen their understanding of
Hitachi’s business. We use feedback from this forum to improve our operations.
Our R&D Technology Community program provides opportunities for creation throughcollaboration with customers. Project leaders invite customers to their research labs to see
exhibits of products and systems currently being developed.

Frameworks

Providing Customer Support Online
Hitachi offers comprehensive customer support on its website. This enables us to process
customer inquiries, opinions, requests, and complaints—in collaboration with the customer
support offices of Hitachi Group companies in Japan—to improve our business operations,as well as our products and services. We also conduct training courses to provide better
handling of these inquiries.
As one initiative, we have been holding the Web Inquiry Responsiveness Improvement
Course since fiscal 2009. In fiscal 2014, 85 Hitachi Group company employees took thecourse (bringing the cumulative total to 649 participants), which features case studies on
responses to inquiries. Going forward, we will strengthen coordination among Group
companies to respond more quickly and effectively to customer inquiries, using thewebsite as an important contact tool.

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Customer Satisfaction

Improving Customer Satisfaction in Electric Home Appliances

Frameworks

The Electric Home Appliances Customer Satisfaction Division has enabled the expansion of
Hitachi’s business from electronic and electric equipment to the environment business bydrawing up a vision for environmental value creation, actively promoting various service areas.
Our call center and website handle about 2.3 million customer inquiries, repair requests,
and complaints about washing machines, LCD TVs, and other appliances per year.*1 We haveundertaken a number of initiatives to better respond to inquiries and to reflect customer
feedback in our monozukuri craftsmanship, including improving the contact success rate byusing outsourcing; creating a database of customer feedback, including consultations,inquiries, and complaints; and enhancing our website’s FAQ section.
We also conduct semiannual customer service evaluation surveys at approximately 90
service centers in Japan. Based on the answers, we improve services through CS training
courses and other programs.
With the expansion of Hitachi’s markets outside Japan, sales offices have been
opened in eight countries in Asia and the Middle and Near East. We are also working on
unifying management of operations outside Japan.
*1 Beginning in fiscal 2013, technical inquiries from suppliers and parts orders are excluded from these statistics.

Customer Contact Cases, Call Completion Rate

Results of Evaluation Survey for Customer(12-Month Average)

Repair Services (Customer Satisfaction)(Cases per month)
100,000

84.8

84.0

80.8

82.1

80.5

80,00060,00049,00017,30040,00014,37631,70020,000045,607

2010

40,193

8,720

2011

2012

(%)

100

100

80

95

60

39,782

5,952

37,15833,83031,473

31,231

(%)

2013

2014

95.5

97.1

96.6

97.1

97.2

2011

2012

2013

2014

90
85

4,782

40

32,376

20

75

(FY)

0

0

80

2010

(FY)

Notes: Evaluation survey for 2014 carried out in June–July 2014
(35,400 respondents; 37.8% response rate) and
December 2014–February 2015 (28,800 respondents;
39.0% response rate).

White goods (electric home appliances and other products) (left scale)
Brown goods (electronic equipment) (left scale)
Call completion rate (right scale)

Flow of Customer Service
Repair request

Individual businessgroup

Information on repair service
Repair Contact Center

Customers

RepairInquiry
Response

Response activity

Flow of information

Quality assurance
department

Feedback on improvements
Customer Support
Contact Center(no repair)Information sharing

Input in database

Feedback

Design department

Manufacturing department

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Customer Satisfaction

Universal Design
Policies and Frameworks

Promoting Universal Design
We promote universal design (UD) with a focus on three aspects of our products: their
quality of use, their accessibility, and their entire lifecycle. Quality of use means focusing on
the traits that make people feel that the product is easy and enjoyable to make a part oftheir lives. Accessibility refers to the range of people who can use a product or service.
And the lifecycle covers all the customer-relevant stages of the value chain, from productpurchase through to disposal.
We conduct basic research on users’ behavioral and cognitive characteristics toformulate UD guidelines and reflect these in product development, incorporating input fromusers and experts at every stage. The information obtained during product development
goes into a database shared by our businesses in Japan. We also distribute some of thisinformation externally to promote open-source standardization and education.

Key Approaches

Increasing UD Products in Digital and Home Appliances
We define people as customers as soon as a product interests them, and therefore make apoint of considering UD concepts in all stages, from presales to disposal. Key attributes
are usability, features, harmony with the environment, safety, and maintenance. Our
intention is to provide products that suit the physical capabilities and lifestyles of all
customers and are appreciated for a long time.

Instruction DVD.

Our UD focus extends beyond products to include product manuals. For example, toallow the visually impaired to use our products safely and easily, we are working with the
NPO Kanagawa Information, Employment, and Welfare Network for the Visually Impaired(View-Net Kanagawa) to make our manuals available as audio text files.
The entire manual, including photographs, diagrams, and tables, is converted into atext file that can be played aloud using text-to-speech software (a screen reader for thevisually impaired) and made available online. The text files are created based on feedback

Verifying audio text files for productoperation.

from visually impaired people who have operated and verified product use while listening to
the instructions.
We have also launched a range of measures to improve the accessibility ofincreasingly complex electronic consumer appliances for the elderly and disabled. DVDs
providing clear explanations on product use are included with products, while someproducts have Japanese Braille labeling on their buttons.

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Customer Satisfaction

Key Approaches

Bringing UD to Public Equipment and Systems
Public equipment and systems are used by a large number of people, including children,
either individually or collectively, in public spaces like government buildings, stations,railways, and hospitals. Product design must address not only ease of use but also
security, privacy, and safety.
For example, our automated teller machines (ATMs) include considerations and ideas
based on a human-centric approach aimed at producing a machine that a range of people
can operate in the same way with ease and without any particular concern. The arched guideframe leads hands naturally toward the card, bankbook, and cash slots. The open space
below the user panel has been substantially deepened to improve wheelchair access.
The screen interface, designed to be easier to use regardless of differences in color
vision, has received Color Universal Design certification*1 from the NPO Color Universal
Design Organization (CUDO).
*1 CUDO Color Universal Design certification: Granted where the color schemes used in products and facilities, etc.,
are tested and found to be consistent with CUDO standards for color UD, the concept of designing products
and facilities for universal ease of use, regardless of people’s differences in color perception. The aim of the
CUDO certification system is to contribute to the public good by creating a society that accommodates
individuals’ differences.

AKe-S next-generation ATM.

Key Approaches

An arched guide frame leads hands
naturally toward the slots.

An inset front face below provides
better wheelchair access.

A display screen accommodating color
vision differences.

Increasing UD Products in Web and Information Systems
Web and information systems are essential for gathering information and communicating.
For users with disabilities who have difficulty accessing information, it is particularly
important to make systems accessible, usable, and secure. Hitachi promotes UD that
ensures accessibility in our Web and information systems by using the international Web
Content Accessibility Guidelines (WCAG) 2.0.*1 Examples include screens and layouts that

Screenshot of the Assistance for Color
Generation tool.

are easy to read, compatibility with screen readers that read content out loud, and afeature that allows people to alter font size and color.
The Assistance for Color Generation by CSS3 (CSS3 Generator) tool uses CSS3,*2
enabling the rendering of gradation, shadows, glow effects, font bordering, rounded
corners, and other effects that allow more people to create Web pages efficiently without
factoring in colors or using images. This tool makes it easy to choose colors that can bedifferentiated regardless of color vision. Hitachi has made this tool available for free so thatit can be used by screen designers and systems developers.
*1 WCAG 2.0: Guidelines created by the World Wide Web Consortium (W3C) that form the basis of the JapaneseIndustrial Standard on information communications and Web content. The International Organization forStandardization (ISO) adopted these guidelines as an ISO/IEC 40500:2012 standard on October 12, 2012.
*2 CSS3 (CSS Level 3): An additional specification for the W3C’s Cascading Style Sheets (CSS), a language fordescribing the rendering of HTML and XML documents.

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Communication with Shareholders and Investors
Hitachi’s Approach

Dialogue between corporations and investors is increasingly dynamic. To
promote sustainable corporate growth and to enhance corporate value
over the medium to long term, the Japanese government formulated
Japan’s Stewardship Code in 2014 and the Corporate Governance Codein 2015, the former laying down a set of principles for investors and thelatter for corporations.
In addition to disclosing our management strategies, financial
information, and other information in a fair and appropriate manner basedon our disclosure policy, we communicate with our shareholders andinvestors through one-on-one meetings, investor relations (IR) events,
and the annual general meeting of shareholders. With an eye to pursuing
Hitachi’s sustainable growth, moreover, we disclose non-financial
information to enhance the transparency of our business activities andensure that the company is evaluated from a long-term perspective.

Our Actions in Fiscal 2014

Hitachi engages in a wide range of IR activities, including business strategy meetings
for institutional investors and analysts, tours of plants and research laboratories, andone-on-one meetings. In fiscal 2014, we held briefings on our progress with the 2015
Mid-term Management Plan and hosted an IR event presenting the business strategies
of key businesses under the Plan.
Hosted Hitachi IR Day 2014, where senior management explained their businessstrategies and management policies.
Conducted approximately 740 one-on-one meetings with institutional investors andanalysts worldwide.

Core Policy

Ensuring Information Disclosure
We communicate with shareholders and investors based on our disclosure policy. We
disclose not only information required by laws or regulations, but also information that
promotes deeper stakeholder understanding of our management policies andbusiness activities.

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Disclosure Policy
1

Basic Policy

Hitachi’s Mission is to contribute to society through the development of superior, original technology and products.
With this in mind, Hitachi seeks to maintain and develop trust relationships with its stakeholders, including
shareholders and other investors, customers, business partners, employees, and regional communities. It will fulfill
its responsibility to stakeholders by disclosing information in a fair and highly transparent manner and by
conducting various communication activities.
2

Information Disclosure Standards

Hitachi discloses information as appropriate in a fair and highly transparent manner, in compliance with the law and/or
regulations of the stock exchanges on which the Company is listed. Hitachi discloses not only information requiredby law and/or regulation, but also management and financial information it regards as useful in deepening
stakeholder understanding of Hitachi management policy and business activities. Hitachi also discloses non-financial
information regarding the social and environmental impact of its activities. Hitachi’s stance on disclosure recognizes
that society regards the above information as important.
3

Disclosure Methods

Hitachi uses appropriate means to disclose the information required by law and/or regulations of the stock
exchanges on which the Company is listed. The Company also posts this information on its website immediately
after it is disclosed. Hitachi also discloses information not required by law and/or regulations by distributing news
releases, holding press conferences and presentations, posting information on its website, and conducting otherdisclosure activities in an appropriate, precise, and timely manner.
4

Quiet Period

Hitachi stipulates a quiet period of a certain length prior to earnings announcements to prevent information leaks
and to maintain disclosure fairness. During this period, Hitachi refrains from answering inquiries about businessperformance and related matters.
5

Forward-Looking Statements

In its disclosures, Hitachi may make statements that constitute forward-looking statements that reflect management’s
views with respect to certain future events and financial performance at the time of disclosure and include any
statement that does not directly relate to any historical or current fact. Such statements are based on information
available at the time of disclosure and are subject to various risks and uncertainties. Certain forward-looking statements
are based upon assumptions of future events which may not prove to be accurate. Hitachi discloses the factors that
could cause actual results to differ materially from those projected or implied in forward-looking statements.

Core Policy

Fundamental Policy Against Takeovers
The Group invests a great deal of business resources in fundamental research and in
the development of market-leading products and businesses that will bear fruit in the
future, and realizing the benefits from these management policies requires that they
be continued for a set period of time. For this purpose, the Company keeps its
shareholders and investors well informed of not just the business results for eachperiod but also of the Company’s business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities
and performance that can be brought about through a change in management control, but
it recognizes the necessity of determining the impact on company value and the interestsof all shareholders of the buying activities and buyout proposals of parties attempting toacquire a large share of stock of the Company or a Group company by duly examining thebusiness description, future business plans, past investment activities, and othernecessary aspects of such a party.

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Communication with Shareholders and Investors

There is no party that is currently attempting to acquire a large share of theCompany’s stocks nor is there a specific threat, neither does the Company intend to
implement specified so-called anti-takeover measures in advance of the appearance ofsuch a party, but the Company does understand that it is one of the natural duties
bestowed upon it by the shareholders and investors to continuously monitor the state of
trading of the Company’s stock and then to immediately take what the Company deems tobe the best action in the event of the appearance of a party attempting to purchase a large
share of the Company’s stock. In particular, together with outside experts, the Company
will evaluate the buyout proposal of the party and hold negotiations with the buyer, and if
the Company deems that said buyout will not maintain the Company’s value and is not in
the best interest of the shareholders, then the Company will quickly determine thenecessity, content, etc., of specific countermeasures and prepare to implement them. The
same response will also be taken in the event a party attempts to acquire a large
percentage of the shares of a Group company.
Key Approaches

Promoting Dialogue Through the General Meeting of Shareholders
At the Ordinary General Meeting of Shareholders, we provide audiovisual reports
designed to give shareholders a thorough understanding of our situation. After thegeneral meeting of shareholders, we disclose management policy explanations fromour president for shareholders and investors via our website. To give stakeholders
ample time to consider our proposals, we post notices of annual general meetings ofshareholders earlier than legally required on our website, as well as delivering them toReport on the 146th
Business Termshareholders by postal mail. Supplementary information on the proposals is also
made available on our website.
Shareholder Composition
March 2011
March 2012
March 2013
March 2014
March 2015

30.36
33.04
31.50

(%)

29.69
27.03
25.13

37.69
37.80
41.38

30.27

22.38

45.44

30.60

22.53

44.96

Financial institutions and securities companies
Individuals and others
Foreign investors
Other institutions
National and local governments
Source: Report on the 146th Business Term.

0.00
2.26
0.00
2.13
0.00
1.99
0.00
1.91
0.00
1.91

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Communication with Shareholders and Investors

Key Approaches

Promoting a Proactive IR Approach
Our investor relations (IR) activities include business strategy meetings for institutional
investors and analysts, tours of plants and R&D facilities, participation in brokeragesponsored investor meetings, and one-on-one meetings with investors and analysts.
In fiscal 2014, we held quarterly financial results briefings and corporate strategy
meetings on our progress with the 2015 Mid-term Management Plan. Following on fromfiscal 2013, we hosted Hitachi IR Day 2014, where senior management explained theirbusiness strategies and management policies under the Plan. Feedback from institutional
investors and analysts was positive. Their comments included, “I was able to really seethat the Hitachi Group aspires to being a global company,” and “It was a productive day inthat we were able to hear about the essence of Hitachi’s business strategies and direction
in a short period of time.”
We also held a tour of Kasado Works to deepen understanding of our railway systems
business, in addition to conducting approximately 740 one-on-one meetings withinstitutional investors and analysts worldwide. Senior managers visit institutional investors
in North America, Europe, and Asia twice a year to explain management policies andbusiness directions. We are doing our best to share IR feedback in-house and reflect thisin management and operations.
We are committed to timely disclosure, and we post briefing materials and business

IR Libraryperformance as well as stock price trend charts on our IR website.
Disclosure Tools
Financial results

Annual securities/quarterly reports in accordance with the Financial Instruments
and Exchange Act of Japan
Annual reports

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Hitachi’s Approach

Modern society faces a wide range of societal issues, including theenvironment, poverty, and human rights infringement, and it requires thepower of society as a whole to solve these issues. As business activities
are becoming increasingly globalized, we believe that an important role
for a company is not only to contribute to society through its businessactivities but also to get involved as a community member in the local
communities where it does its business.
We promote activities in the key areas on which our policy on social
contribution activities focuses: human development, the environment, andcommunity support. Through our technologies and know-how, we alsoseek to contribute to solving societal issues together with otherorganizations, including municipalities and NPOs.

Our Actions in Fiscal 2014

In fiscal 2014, we revised our policy on social contribution activities based on our own
CSR management framework. Many of our employees proactively organized andparticipated in community-oriented events and activities in various places worldwide
where Hitachi has operations.
On April 1, 2015, the five foundations in Japan long supported by Hitachi merged
into a new foundation, the Hitachi Global Foundation, to further develop theiractivities together.
Provided 2,327 million yen in funding for social contribution activities.
Launch of the Hitachi Global Foundation.

Core Policy

Revision of Policy on Social Contribution Activities
In fiscal 2014, we revised our policy on social contribution activities based on our own CSR
management framework. With the new Group-wide policy on social contribution activities, wewill proactively promote our activities. The engine of our various businesses including social
innovation is not only driven by Hitachi’s efforts to build a relationship with communities as acorporate citizen but also by our employees’ flexible mindset and motivation brought about by
volunteer activities. We believe that these initiatives enable us to contribute to thedevelopment of sustainability in both our business and society as a whole.
As one of Hitachi’s global efforts, we introduced the Hitachi Volunteer Day in 2012. To
mark the International Volunteer Day on December 5 each year, we set every November
and December as a period during which we further encourage our employees to organize
and take part in a broad range of volunteer activities to contribute to their communities.
In fiscal 2014, the total funding of the social contribution activities implemented
worldwide by Hitachi and the five foundations in Japan was approximately 2,327 million yen.

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Policy on Social Contribution Activities and Statement
Policy on Social Contribution Activities

Hitachi promotes interactive communication with local society through social
contribution activities related to business activities, employee volunteers, andcharitable activities in the key fields of human development, the environment, andcommunity support.
Statement“Nurturing People, Connecting to the Future”

The statement was set down to succinctly express and convey the meaning of theSocial Contribution Activity

policy to as many people as possible.

Key Indicators
Breakdown of Funding for Social Contribution Activities
Social welfare

7.3%

Others26.2%(including disaster relief at 4.1%)

2,327 million yen*

1

The environment

Scholarships and education

6.6%

42.9%

Culture and the arts

17.0%

*1 Japan: Hitachi, Ltd., 137 Group companies (including variable interest entities), and five foundations.
Outside Japan: 199 Group companies.

Policies and Frameworks

Launch of the Hitachi Global Foundation
On April 1, 2015, five foundations in Japan long supported by Hitachi, namely, the Odaira
Memorial Hitachi Education Foundation, the Kurata Memorial Hitachi Science andTechnology Foundation, the Hitachi Environment Foundation, the Hitachi ScholarshipFoundation, and the Hitachi Mirai Foundation, merged into a new single foundation called
the Hitachi Global Foundation. The aim of this launch is for the Hitachi Global Foundation
to develop the activities respectively undertaken by each of the five foundations to further
meet societal needs.
While inheriting the philosophies of the five foundations, the Hitachi Global Foundationplans to promote activities in three key areas: (1) human development, (2) promotion ofacademic research, science and technology, and environmental preservation, and(3) support of local communities, utilizing Hitachi’s experience and know-how.

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Social Contribution Activities in Japan

Supporting Young People’s Curiosity at the Ibaraki Children’s University

Hitachi Research Laboratory, Hitachi, Ltd., has been dispatching researchers to serve as
instructors at the Ibaraki Children’s University, a program run by the North Ibaraki Lifelong
Learning Center. The company is providing support by having these instructors give
upper-grade elementary school students easy-to-understand explanations of highly
specialized technologies and know-how. Ibaraki Children’s University was launched infiscal 2014 by Ibaraki Prefecture as a consortium that expands children’s intellectual
horizons by sparking their curiosity and answering their questions. Instructors include
university professors and company researchers. The aim is to give participating students
comprehensive knowledge through their studies, thereby fostering their creative power andhelping them develop the ability to solve problems themselves.
In November 2014, a course titled “Learning About New Technologies that Will OpenUp the Future” was offered at the Omika site of the Hitachi Research Laboratory. Six Hitachi
employees participated, including one as course instructor. The employees provided theroughly 80 students gathered for the course with instruction on the topics of radiation andnuclear power generation, as well as related technologies. Elementary school participants in
Ibaraki Children’s University praised the course for explaining these topics in a way that was
fun and easy to understand. Plans call for this activity to continue for three years.

The Black Jack Seminar: Deepening Understanding of Medical Work

Since 2013, Hitachi General Hospital and Johnson & Johnson K.K. have teamed up tooffer the annual Black Jack Seminar that provides junior high school students in Hitachi
City with hands-on experience related to the work of medical professionals. The aim is toraise the students’ interest in medicine by giving them the chance to manipulate the actual
medical equipment used for surgery. The lack of medical staff at hospitals has been
The Black Jack Seminar held at Hitachi
General Hospital.

identified as a major issue facing Japan’s medical field, and the role of the seminar is toconvey to students the importance of the profession so that area students will have more
knowledge to draw on when later deciding their own career paths.
At the seminar held at Hitachi General Hospital in August 2014, 36 junior high school
students received training in suture techniques, ultrasound scalpel operation, and the useof laparoscopes, as well as the chance to conduct simulated surgeries, tour the operating
room, and learn about first-aid techniques.
Feedback from participating students included the comments that the seminarprovided “a valuable experience that can’t be gained in daily life” and that it was an“opportunity to think about my future.”

Supporting the Visually Impaired with Matching Gifts

Since 1993, Hitachi Building Systems Co., Ltd. (HBS) has been providing donations to
support the effort to train guide dogs. The company introduced a matching-gift system in1997 under which it has been providing donations every year to 11 support organizations*1
for the visually impaired in Japan. The matching-gift system deducts 100 yen from themonthly paychecks of employees who endorse the program and matches that donation
Holding a workshop for new employees
on issues related to the visually
impaired.

with another 100 yen from the company. Around half of the workforce has joined thissystem, which provides a framework for building up donations.
HBS sets aside time every April during new-employee orientation to teach about thecompany’s social contribution activities, including a workshop on issues related to the visually
impaired. During fiscal 2014, 253 new employees at HBS and its affiliated companies

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participated in a lecture conducted by staff from a guide dog training center and users ofguide dogs. The participants wore eye patches and walked around while being escorted by
the dogs or using white canes. Through this experience the employees, who had not had
many opportunities during their student days to learn more about what life is like for thevisually impaired, were able to gain a deeper understanding of the company’s social
contribution activities and of issues facing the visually impaired. Plans call for these activities
to continue in 2015 as a way to provide support to people with visual impairments.
*1 The 11 support organizations for the visually impaired are the Japan Braille Library and the 10 guide dog training
centers certified by the National Public Safety Commission.

Wind Power Information at Eco Carnival ’14 in Shibata

In September 2014, Hitachi, Ltd. and Hitachi Capital Corp. participated in the Eco Carnival’14 in Shibata event at the Aeon Shopping Mall in Shibata, Niigata Prefecture. The event,which is hosted every year by the cities of Shibata and Tainai, showcases theenvironmental activities of businesses, governmental bodies, and schools in the area to the
public. The two companies began participating in the event as a result of their joint project
Announcing environmental activities at
the Eco Carnival ’14 in Shibata.

with Hitachi Wind Power Ltd. to create the Nakajo Wind Power Station in Tainai. The
power station was set up on the grounds of Hitachi Industrial Equipment Systems Co.,
Ltd., and became operational in March of that year.
The Hitachi booth at the event included a model of the wind power plant, panels
explaining the wind power system specifications, and photographs from the facility underconstruction, as well as a quiz for kids visiting the event. Around a hundred children took
the quiz as a fun way to learn more about wind power.

Efforts to Foster Future Scientists

We are engaged in a diverse array of initiatives aimed at fostering future scientists thatdraw on the resources of each company within the Hitachi Group.
Hitachi Science Seminar
Since fiscal 2011, the Hitachi Science Seminar program has been encouraging children’sinterest in science. In hands-on programs, Hitachi Group companies involve children inscience experiments and projects in an enjoyable way, sharing with the next generation theskills and know-how developed through our long monozukuri tradition. The seminarcourses cover a wide range of topics, from materials familiar to children in their daily lives
A scene from the hands-on program,
Hitachi Science Seminar.

to technologies and products that are vital to the world today.
In fiscal 2014, Hitachi Group companies held seven Hitachi Science Seminars at the
Science Museum in Tokyo. The seminars drew 135 elementary and junior high school
students. The Hitachi organizations involved in running the seminars included the Central
Research Laboratory of Hitachi, Ltd., Infrastructure Systems Company, and Hitachi
Chemical Co., Ltd. For its seminar, Hitachi Chemical invited Kazuhiro Miyamoto, a teacher
at Kaisei Academy, a junior and senior high school in Tokyo, to conduct experiments that
included creating bath powder from citric acid and baking powder and making a super ballby adding salt to laundry starch containing polyvinyl alcohol. In the sphere of biology, guest
instructor Tatsuo Motokawa, professor emeritus at the Tokyo Institute of Technology,
presented a seminar on fun ways to learn about the biological mechanisms of living
creatures. Hitachi will continue to draw on the technologies and strengths of Group
companies for educational support programs that address diverse themes to foster
children's curiosity.

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Workshops with Sumida Aquarium to Nurture Students’ Scientific Minds
Hitachi Chemical Co., Ltd. has teamed up with Sumida Aquarium in Tokyo since 2013 tohold a series of small-group workshops titled “Discovering the Mysteries of Water
Creatures.” In fiscal 2014, nine workshops were held, with around 60 elementary school
students participating.
Observers note that elementary school teachers in Japan tend to have backgrounds in
Participants in the “Discovering the
Mysteries of Water Creatures” event at
Sumida Aquarium.

the humanities, rather than science, so there are few teachers able to teach science andconduct experiments in a proactive, creative way. This lack of teachers specializing inscience is thought to be one of the reasons that interest in science has been declining
among Japanese children. The workshop series was brought about by the collaboration
between Hitachi Chemical, which has experience in planning and conducting sciencerelated programs, and Sumida Aquarium, which is interested in offering programs that canspark participants’ interest in science. The workshops give children an opportunity toencounter science outside of school, in the hope that these events will spark their interestand lead some of them to later pursue a scientific career. We plan to continue these kindsof efforts to nurture children’s scientific minds and understanding of the value of life.
Supporting Science and Math Education in Hitachi City
The city of Hitachi’s educational objectives are to foster an interest in science and tocultivate the creativity and originality of children on an international stage. Hitachi, Ltd.
approves of these objectives, and in fiscal 2009 concluded a basic agreement to work withthe city on programs that enrich science and mathematics education. The Hitachi Science
Club, an NPO established by former employees of Hitachi, is involved in this effort toA scene from the monozukuri workshop
conducted by the Hitachi Science Club.

improve education in science and mathematics. In fiscal 2014, the club conducted six
different programs.
The club dispatches volunteers called Rika-shitsu no Ojisan (Mr. Science) to teach an
experiment-based course two times a week to elementary school students in Hitachi City,
offering them a fun way to learn about science. Another program is the Super Science andMath Academy held on school holidays, providing high-level instruction to junior highschool students with a strong interest in science and mathematics. A particularly popular
aspect of the program is the monozukuri workshops, where students and former Hitachi
engineers build devices like water-powered rockets made from plastic bottles, windmills,
and propeller-driven cars.
These initiatives are based on the view that children naturally tend to be familiar withnature and science, but are moving away from science because of a lack of first-hand
opportunities. This makes it important for them to be exposed to science while inelementary school in order to foster their scientific dreams.

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Hitachi Volunteer Seminars: The First Step in Social Contribution

Since 2002, Hitachi, Ltd. has been holding Hitachi Volunteer Seminars for Group
employees and their families for them to experience volunteering and regularly participate
in volunteer activities. In fiscal 2014, 148 people participated in the five workshops, which
included information about rice planting and harvesting in the town of Motegi in Tochigi
Prefecture and about volunteer work at the Setagaya Museum of Art.
Harvesting rice as part of the Hitachi
Volunteer Seminar activities.

The seminars were designed around three main points: (1) ease of participation,(2) small size for deeper interaction with the instructors, and (3) content that leads
participants to actually engage in volunteer work. In collaboration with the Tokyo Voluntary
Action Center, the seminars introduced a variety of activities that suit the social
contribution activities policies of Hitachi, which are centered on education, theenvironment, and community support. To let as many Hitachi employees as possible
participate despite their busy schedules, the seminars were scheduled on the evenings of
no-overtime days or on holidays so that family members could also participate.
Feedback from employees who participated in the seminars included the following
comments: “I’m interested in volunteer work, but until now I haven’t had an opportunity to get
involved. I’m really grateful for this chance”; “Since I don’t have any volunteer experience I
was worried that I wouldn’t be of much help, but participating in the seminar made me moreaware of the situation for farmers in Japan today. This has changed my outlook.”
As of the workshop in September 2014, a total of 50 seminars have been held since
the program was launched. The program will be extended to fiscal 2015 and beyond as away for participants to learn new things while experiencing volunteer work, encouraging
them to take the first step toward getting involved in volunteer work.

Special Sales Event to Support the Disabled and Contribute toLocal Communities

Hitachi, Ltd. and its Group companies have invited NPOs involved in a wide range ofactivities to use company facilities to sell products or put up displays about their activities.
These NPOs include international organizations that handle fair-trade products andorganizations involved in social-welfare activities. Purchasing the products offered by these
NPOs is an easy way for Hitachi employees to get involved in social contribution activities,
as the sales sustain the organizations’ activities. These direct sales on Hitachi premisesalso assist the livelihoods of disabled persons in the area by boosting their income, while
deepening employees’ understanding of those with disabilities.
“Buy and Help Society! Bazaar” Events
At its head offices in Tokyo’s Marunouchi and Akihabara districts, Hitachi, Ltd. held a totalof seven “Buy and Help Society! Bazaar” events from fiscal 2010 to 2014. Starting in
2012, we invited NPOs active in the recovery effort in Japan’s Tohoku region following theearthquake and tsunami of the previous year to visit our head offices for recovery-themed
events. These efforts have included the sale of special products from the disaster area and
Hitachi employees buy products madein areas affected by the 2011
earthquake at a “Buy and Help
Society! Bazaar” event.

of candy and other products created at social welfare centers, as well as the diffusion of
information about the organizations’ activities via the Hitachi intranet and e-mailnewsletters. We plan to continue to provide this sort of support in the future.

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Charity Concert and Sales to Promote Disaster Recovery
In November 2014, three Hitachi companies—Hitachi Plant Construction, Ltd., Hitachi
Plant Services Co., Ltd., and Hitachi Plant Mechanics Co., Ltd.— jointly hosted a charity
concert and sales event to promote disaster recovery in Tohoku. The event was held at theSunshine City complex in Tokyo’s Toshima Ward. In the Sunshine City fountain plaza,
students from the Tokyo College of Music, which is located in the area, gave a musical
Event in Tokyo’s Toshima Ward to sellgoods from Tohoku to assist disasterrecovery efforts there.

performance, and artists with connections to northeast Japan displayed their works.
Elderly residents of a social welfare facility in Toshima Ward were also invited to the event.
This community-rooted undertaking was a huge success thanks in part to the roughly 30
employees from the three Hitachi companies who volunteered to coordinate it. This charity
concert has been held since 2012.
Special Sales Event for Products Made at Facilities for the Disabled
Since 2009, Hitachi Solutions, Ltd. has held “1 Day Shop,” a special event set up for salesof products created at facilities for the disabled. The aim of the sales event is to support
disabled persons who are producing goods at welfare facilities in Tokyo. In fiscal 2014,
vendors from 13 facilities attended the event, offering shoppers a variety of products, suchas tasty handmade cookies, pound cakes, and karinto snacks, as well as leather goods,“1 Day Shop” event to sell products
made by disabled from the training
facilities.

wooden toys, and accessories.

Putting IT to Use for Society

As part of Hitachi’s social innovation business, the Digital Imaging Systems (DIS) Project has
been launched by Hitachi, Ltd.’s internal company, Information and Telecommunications
Systems Company. The key concept is to convey beauty and inspiration to people in a waythat transcends time and place. This involves using the power of IT to digitize cultural
assets for future generations. The DIS Project uses its unique divisional shooting and image
Digital life-size representations of
The Birth of Venus by Sandro Botticelli,and many other Italian masterpieces,are exhibited at the DIS Digital
Museum.

processing procedure to capture artworks in high quality. Currently this technology is being
used in Florence, Italy, to digitize masterpieces including Annunciation by Leonardo daVinci. Other projects include digitization of the Picture Scroll of the Tale of Genji, one ofJapan’s national treasures, as well as digital restorations of the lost screen paintings at the
Ninomaru Palace of Nijo Castle and of the lost dragon painting on the ceiling at Togakushi
Shrine, the latter of which had been completely destroyed by fire.
In addition, beginning in 2012, we provided IT-based support to the Goshogawara
Agriculture and Forestry High School, a prefectural school in Aomori Prefecture that isfostering human resources to revive the local area and contributing to so-called “sixth
industry” initiatives for agriculture. By connecting producers (the students) and consumers
in Goshogawara with IT, this project aims to enhance the ability of both sides to share
information, as well as to promote community-based activities. A facility called My Farm
Center has been established to connect producers and consumers, and practical testingof the initiatives is now underway. When My Farm Center was launched, Hitachi, Ltd.
provided support including explanations of how the center’s systems worked and how to
input data. Thanks to this program, Hitachi is also now involved in Goshogawara initiatives
to train human resources and promote the local economy.

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Social Contribution Activities in China

Hitachi Eco Education Classroom Program in China

Hitachi (China) Ltd. has been implementing the Hitachi Eco Education Classroom Program
since fiscal 2012, targeting elementary schools in the areas where Hitachi Group
companies are located in China. The program involves Hitachi employees volunteering tovisit and give lessons on the environment to schoolchildren. The aim of the program is toraise awareness of the need for environmental conservation among the pupils, asStudents enjoying the lesson at Hitachi
Hope Elementary School.

environmental issues are becoming severe in China today. In fiscal 2014, 16 lessons were
held and around 1,200 children participated.
In the lessons, pupils used an optical microscope to examine plants to better
understand the mechanism of photosynthesis and enjoyed a play on environmental
protection by Hitachi volunteers. The lessons helped the pupils gain practical knowledge ofwater conservation and trash sorting while they also had fun with a quiz. It was a good
program to raise the pupils’ environmental awareness and a great opportunity for theschools to get connected to society, according to teachers from the schools where thelessons were carried out.

Disaster Relief for Victims of the Yunnan Earthquake

Hitachi, Ltd. and Hitachi (China) Ltd. donated 1 million yuan (approximately 16.5 million
yen) through the China Development Research Foundation in December 2014 for Yunnan
Province, China, and those affected by the earthquake that occurred in August of thatyear. The donation fund is to be used to rebuild the Xitu Elementary School in Huize
County of Yunnan, which was damaged by the disaster. The school officials and local
The affected elementary schoolsupported by Hitachi.

residents expressed thanks and noted that they would have the school reconstructed withthe donation from Hitachi. The new school building is to be completed by around thesummer of 2015 and children will be able to go back to school in the fall.

Key Approaches

Social Contribution Activities in the Asia-Pacific

Helping to Rebuild Homes in South Korea

In April 2014, employees of Kokusai Electric Korea Co., Ltd., an overseas Group company
of Hitachi Kokusai Electric Inc., teamed up with a volunteer organization to visit somehomes of physically challenged persons in Anseong City, Gyeonggi-do, South Korea, torepair houses that were in danger of collapsing. The residents of the houses expressed
great appreciation for this effort, in which 24 employees participated. This experience
Volunteers of Kokusai Electric Korea
repairing housing.

helped the participants realize the importance of volunteer activities and become more
motivated to take part in other volunteer projects in the future.
In addition, 44 employees of Kokusai Electric Korea volunteered to participate in a
blood donation campaign to assist children suffering from a cardiac disease. In South
Korea, blood donors receive a donation certificate that exempts them from the cost of ablood transfusion, should it be necessary. As gratuitous transfers are allowed, all thevolunteer blood donors transferred their certificates to children in need of bloodtransfusions due to the cardiac disease.

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Providing Unemployed People with Construction Skills

In 2013, Hitachi Power Tools Australia Pty. Ltd. began a partnership with the Governmentof Australia and Skill Hire, a company that provides unemployment solutions and technicaltraining to apprentices and trainees. This partnership aims to train unemployed people inWestern Australia in tradesman power tool skills for the construction industry. Hitachi
Power Tools Australia has been providing Skill Hire’s training center with innovative trade
An employee of Hitachi Power Tools
Australia offering instruction to trainees.

tools and equipment, and company employees have offered technical assistance on how
to use them.
In 2014, 1,000 trainees participated in the joint training in this highly valued program.
Some of them will even start their own businesses after the training. Through this initiative,
Hitachi Power Tools Australia has been able to address a local societal need with apartnership model bringing together the private and governmental sectors. The company iscommitted to growing the program beyond Western Australia and ensuring long-lastingsustainability for the partnership.

Promoting Recycling of Decommissioned Projectors

Hitachi Australia Pty. Ltd. launched “Project Green” in May 2013 as a way of promoting
recycling of decommissioned projectors in the education sector. Up to 97% of projector
The “Project Green” logo.

components and materials, such as plastic, metal, and glass, are recyclable. To encourageschools to recycle their old projectors, Hitachi Australia offers cash back when new Hitachi
projectors are purchased. In 2014, the project was expanded and executed across all ofAustralia. So far, over 50 schools have participated in the project, and roughly 680
kilograms of projector parts have been recycled. Hitachi Australia aims to reach the targetof 1,000 kilograms of recycled parts for fiscal 2015.

Donating Pediatric Equipment via Charity

Hitachi Construction Machinery (Australia) Pty. Ltd. began a partnership in 2012 with the
Humpty Dumpty Foundation, an organization that provides life-saving medical equipment
to pediatric wards in the country. The aim of this effort is to carry out activities that help
“put kids back together.” In 2014, Hitachi Construction Machinery (Australia) donatedover 20 pieces of equipment across six states of Australia, which represents a total value
Medical equipment donated to apediatrics hospital in Australia.

of over AU$98,000.
The company also participated in charity events such as the Balmoral Burn hillrunning race for the foundation. The foundation states that the continued support by
Hitachi has been of immeasurable value to the life-saving activities it conducts in Australia.
Additionally, 75 employees of Hitachi Group companies in Australia participated as“Team Hitachi” in the August 2014 “City2Surf.” This 14-kilometer road-running charity
event in Sydney attracts over 80,000 participants every year, making it the world’s largest
charity race. The Hitachi runners raised a total of AU$21,000, all of which was donated forthree pieces of medical equipment for child patients through the Humpty Dumpty
Foundation. Team Hitachi has run in the race for six consecutive years since 2009.

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Social Contribution Activities

Key Approaches

Social Contribution Activities in India and the ASEAN Region
Employability Program for Indian Students

The Confederation of Indian Industry (CII), of which Hitachi Data Systems India Pvt. Ltd. isa pivotal member, launched an employability training program for affirmative action in 2014
for students from scheduled caste or tribe communities in India’s Karnataka State.
Although the caste system was legally abolished in the 1950s, the communities are still
suffering socially and financially, which constricts their members’ job opportunities.
Participants in the employability training.

In the first year of the program, the program provided 15 deserving university students
from the communities concerned with training in design engineering, including practicalskills using CAD/CAM. In addition to Hitachi Data Systems India’s contribution to theprogram design and execution, Hitachi Data Systems Corporation in the United States andother member companies of the CII donated US$2,000 for the training costs. As of theend of April 2015, three students have received job offers and two students are shortlisted
in one company’s hiring process.
Hitachi Data Systems India and the CII continue to raise awareness among potential
hiring companies to recruit the group of trained engineering students. The CII willcontinue the program in fiscal 2015, and is planning to expand the program to between
100 and 500 students.

Teaming Up to Provide Free Breast Cancer Screening in India

In India, corporation laws were revised in 2014 to require companies to donate 2% of theirpretax earnings to CSR activities. In response, Hitachi India Pvt. Ltd. partnered with ROKO
Cancer,*1 an NGO that has been active in promoting cancer screening, to offer free breast
cancer screening at 31 locations in and around Delhi. The vehicle used for the screening
featured the Hitachi corporate logo; its color was pink to match the pink ribbons that have
The vehicle used for free cancer
screening for women.

become the international symbol of breast-cancer awareness. The doctors and other staff
performing the checks were mainly women, so that those receiving the screenings could
feel at ease. Hitachi India Pvt. Ltd. was presented as the sponsor of this initiative at thefree screening held at a temple in New Delhi on January 20, 2015, and many people
expressed their appreciation for this effort.
*1 ROKO Cancer: An organization involved in providing free cancer screenings; the word “roko” in the name means “stop.”

Universal Design Educational Program in Malaysia

In 2011, the Malaysia office of Hitachi Asia Ltd. began the Universal Design (UD)
Educational Program for public junior high school students in Malaysia. The program
involves volunteers from Hitachi Group companies who visit schools and provide
workshops to introduce UD. The program was started in Japan in 2005, and now isconducted in the United States and United Kingdom, as well as in Japan and Malaysia.
Students designing a new product with
the UD concept.

The aim of the program is to teach students about the importance of designing productsthat could make life easier for all users, regardless of age, gender, cultural background, or
physical conditions.
In October 2014, eight volunteers gave a lecture on UD to 71 students. The students
were divided into groups and asked to design new products based on the UD principles.
The feedback from the students was positive, with some saying that they hoped toparticipate in future classes of the program and that they would tell their friends and family
members about UD. Hitachi Asia’s Malaysia office plans to continue the program to nurturethe youth for a better society.

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Social Contribution Activities

Supporting Degree Studies on Heavy Equipment Engineering in Indonesia
PT Hexindo Adiperkasa Tbk (Hexindo), a Group company of Hitachi Construction

Machinery in Indonesia, has been teaming up with Gadjah Mada University (UGM) since2012 to provide a degree program on heavy equipment engineering. After taking a basic
course in the first year, the students take a specialized course taught by UGM professors
and Hexindo lecturers in the second year. From the third year, the students have theopportunity to participate in on-the-job training at Hexindo’s project sites and they obtain a
diploma in heavy equipment engineering upon graduation.
Students studying in thespecialized course.

A total of 30 students enrolled in the program in its first year and 60 in the second andthird years, respectively. In 2014, some of the program students were accepted by
Hexindo as trainees for a year. Hexindo plans to continue to nurture young engineers in the
country with UGM.

Educational Support Program in Thailand

In December 2014, 12 employees of Hitachi Capital (Thailand) Co., Ltd. visited anddonated educational aids to a suburban school outside of Bangkok that has 89 pupils
ranging from pre-kindergarten to elementary school ages. The donation included 13 used
PCs, four cartons of stationery supplies, books, drinks, and snacks, in addition to a
25,000 baht monetary donation from both the company and its employees. During theirvisit, the employees toured the school and had lunch with the students.
Pupils of the school that received
the donation.

Started in 2014, the program aims to enhance the educational level of Thai students inrural areas. The teachers expressed their gratitude for the donation as well as their hopefor further assistance, such as encyclopedias and books for the school library. The
company intends to hold a social contribution activity each year with focus on educational
support or environmental conservation.

Key Approaches

Social Contribution Activities in the Americas

Hitachi Food Drive in North America

Hitachi Group companies in North America held their 15th Food Drive in July 2014. The
annual drive, launched in 1999, aims to respond to local needs related to hunger incommunities where Hitachi has offices. In 2014, the Food Drive was conducted at 53 sites
located in 27 states and Washington DC, and involved the participation of 8,153
employees from 23 Hitachi Group companies. As a result of the Drive, local food banks,
Employees from Hitachi America, Ltd. in
Tarrytown, NY, packing some of thefood they collected.

soup kitchens, and other organizations tackling hunger received over 20 tonnes (morethan 44,000 pounds) of food and monetary donations of approximately US$125,000.
Since 2000, Hitachi has collected over 260 tonnes (nearly 580,000 pounds) of food anddonated approximately US$800,000 in the fight against hunger. Representatives from theFood Bank for Westchester, one of the local organizations that receives donations from
Hitachi’s Food Drive, say that they always look forward to the donations from Hitachi’s
Drive since it takes place in the summer, when the need for the Food Bank’s services ishigher. Plans call for the Food Drive in North America to continue in fiscal 2015.

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Social Contribution Activities

Hitachi Celebrates Science for Kids

For the fourth year in a row, the Hitachi Southern California Regional Community Action
Committee (SCRCAC) sponsored “Hitachi Celebrates Science” Day at the Boys and Girls
Clubs of San Pedro. Held in April 2014, the SCRCAC partnered with the California Science
Center and Hitachi Consulting to provide science workshops to underprivileged children
throughout the Los Angeles area. More than 140 elementary school students aged 6 to 11
Elementary school students taking partin an experiment in the workshop.

attended this event.
Under the guidance of instructors from the California Science Center and the Hitachi
Chemical Research Center, the children engaged in various experiments related to thenanotechnology theme. Many of the students look forward to this event every year.
SCRCAC’s hope is to continue this event for years to come and to encourage the youth oftoday to pursue careers in science and technology.

Holiday Gift Donations by Hitachi Group Companies in North America

Every year in November and December, Hitachi Group companies in North America
share holiday joy with disadvantaged children and adults in their communities. The
companies participate in various programs and many of their employees are involved
with gift donations.
For example, Hitachi Metals America, LLC partners with the NPO New York Cares toHappy children receive gifts forthe holidays.

make “winter wishes” of children and seniors come true. In 2014, the NPO collected over
40,000 letters from schoolchildren and adults that included their “winter wishes” gift
requests. Employees from Hitachi Metals America took responsibility for fulfilling 40 of thewishes. A total of 27 employees purchased presents for 20 fifth-graders and 20 seniors
who live in a nursing home. They also delivered the gifts to the students and seniors inperson. Hitachi Metals America is eager to involve a greater number of employees in thisprogram in 2015.
Other Hitachi Group companies in North America took part in similar activities. Hitachi
Computer Products (America), Inc. and Hitachi Metals Automotive Components USA, LLC,
respectively, worked with their local organizations to collect gifts through the Angel Tree
Gift program. About 15 employees from Hitachi High Technologies America, Inc.
volunteered to make over 250 boxes of food and wrapped gifts for local children and theelderly. All who received or gave gifts were very happy with these activities, and HitachiGroup companies plan to continue this effort in 2015 and beyond.

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Key Approaches

Social Contribution Activities in EMEA/CIS

Supporting the Japanese Speech Contest

The Moscow Office of Hitachi, Ltd. supported the 27th Moscow International Students
Japanese Speech Contest in October 2014. This annual speech contest targets university
students studying Japanese in Russia and the CIS countries. The Moscow Office has been
supporting the speech contest every year since 2010. The Japanese ambassador to
Russia expressed his appreciation for this support, which the Moscow Office plans toParticipants in the 27th speech contest.

continue in 2015.

Organizing Charity Events for Macmillan Cancer Support

In 2014, the Fundraising Committee of Hitachi Europe Ltd. held various charity events
every three months beginning in June to raise donations for Macmillan Cancer Support, anorganization that assists cancer patients and their family members. The fun and engaging
events ranged from a table-tennis tournament, cake-baking contest, and Christmas
activities to a lecture by nurses on breast cancer. In June, GBP2,490 was raised by
Hitachi Europe employees
selling cakes.

employees from not only Hitachi Europe but also Hitachi High Technologies and Hitachi Air
Conditioning in the Maidenhead area in the United Kingdom.
The fourth event, where participants enjoyed a fun evening with a quiz and an
employee raffle, was held in May 2015, and raised about GBP430, bringing the annual
fundraising and company matched giving total to over GBP11,300. The donations will help
the charity provide nursing care and support for people living with cancer. Hitachi Europe
in the United Kingdom plans to continue support for local charitable organizations, and in2015 will hold an employee vote to determine which charity to support.

Pink Hitachi Excavator Raising Breast Cancer Donations

Hitachi Construction Machinery (UK) Ltd. and Hitachi Capital (UK) PLC enabled a customer
to support an important health charity through their business. Cosham Plant, an
equipment rental company located in Hampshire, the United Kingdom, commissioned abright pink version of a Hitachi Construction Machinery excavator in November 2014 to
fundraise for Breast Cancer Care, a cancer patient support charity. Pink was chosen
Hitachi’s pink excavator for
raising donations.

because it is the internationally recognized color associated with breast cancer awareness.
The target is for the excavator to raise GBP100,000 through its rental by the end of
2018, after which it will be sold, with the proceeds from the sale added to the total
amount raised.

South African Engineers Participate in Training in Japan

Since fiscal 2009, Hitachi, Ltd. has teamed up with South Africa’s Department of Scienceand Technology to provide young South African engineers with an opportunity toparticipate in technical training on power in Japan. Every year, two or three engineers are
selected for the three-month training course, including on-the-job training at Hitachi’svarious factories and relevant site visits in Japan. In fiscal 2014, two engineers participated
The 2014 engineers receiving acompletion certificate at the
final presentation.

and learned about Hitachi’s smart grid technologies and power transmission anddistribution. So far 15 engineers have participated, and they have said that the programgave them a better idea of the basic and advanced technologies related to power in Japan
as well as Hitachi’s operations. In fiscal 2015, the theme of the program will be changed
from power to water treatment.

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Engagement with Society
Engagement Highlight
Human Capital Executive Visits Female Employees
Since fiscal 2013, our executive in charge of human capital has been visiting female
employees around Japan to directly communicate Hitachi’s positions on diversity andwomen’s career success. This has produced vigorous discussion on issues like developing
better work-life management and reviewing work styles. To date, our executive has visited
Hokkaido, Ibaraki, Kanagawa, Tokyo, and Aichi Prefectures, and he will continue to work
Workplace visit by our humancapital executive.

his way around the country for more direct exchanges of views with female employees.
Improving the Environment with a Chinese NGO
In fiscal 2014, the Hitachi Group began working with the IPE,*1 a Chinese
nongovernmental organization focused on environmental issues. With the help of the IPE,
we urge suppliers in China whose operations may be polluting the environment to improvetheir environmental performance. Following interviews with these suppliers, the Group
companies being supplied, the Procurement Departments of the Hitachi head andShanghai offices, and the Environment Department of the Beijing office have worked
together to take appropriate measures and provide support in consultation with the IPE.
We will continue to monitor our suppliers and take necessary measures, receiving updated
lists from the IPE every six months, to help improve China’s environment.
*1 Institute of Public and Environmental Affairs (IPE): An environmental nonprofit organization founded by Ma Jun to“eliminate businesses that pollute the environment in China.” It obtains data on corporations that are potentiallyharming the environment from the environmental authorities and releases the data on its website.

In Focus
Building Trust and Strengthening Global Human Capital
Establishing trust with such diverse stakeholders as governments, local authorities,
regional communities, and nongovernmental organizations enables Hitachi to respond tothe changing global society and is the base of all CSR activities. At the same time, as a
global company, it is imperative that Hitachi uphold the rights of all stakeholders.
We integrate diversity into our use of human capital and work to enhance recruitment
and development of global human capital. We also conduct a global employee survey,
Hitachi Insights, to assess employee engagement. In fiscal 2015, we broadened the rangeof sharing of survey results to include managers. By helping managers apply these results
toward concrete actions, we are improving engagement across the Group.
In May 2013, we adopted the Hitachi Group Human Rights Policy to supplement
the Hitachi Group Codes of Conduct, drawn up in fiscal 2010. These serve as the basefor ongoing activities to respect the human rights of all stakeholders, including HitachiGroup employees as well as everyone involved in Hitachi business activities, products,
and services.

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146th Annual General Meeting of Shareholders (Hitachi, Ltd.)Our Ongoing CSR Activities:

GOVERNANCE
Effective corporate governance is essential to cultivating
stakeholders’ trust and maximizing company value. In addition toestablishing a highly transparent system of business operations,
Hitachi is working to ensure that every employee carries out
compliance according to a strict moral code and to implement
effective risk management across the entire Group.

Contents
Corporate Governance

171

Risk Management

175

Compliance

177

Governance Engagement

184

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Corporate Governance
Hitachi’s Approach

In many overseas markets, there are recognized corporate governancecodes that have been established to prevent corporate corruption andprotect the rights of shareholders. The Japanese government applied a
corporate governance code to all companies listed on the Tokyo Stock
Exchange in June 2015 with the aim of bolstering sustained growth andimproving corporate value over the medium and long terms.
Hitachi is pursuing corporate governance as a vital aspect ofbusiness operations, with the goal of bolstering value, realizing
transparent and efficient management, and establishing a relationship oftrust that meets stakeholder expectations. Hitachi, Ltd. and its eight
major listed subsidiaries have adopted the committee system to realize ahighly transparent governance system. Through our J-SOX Committee
and other efforts, we maintain and evaluate the effectiveness of ourinternal control over financial reporting.
Our Actions in Fiscal 2014

Hitachi is working to implement a Group-wide system of governance covering each
aspect of its global operations. As part of these efforts we reorganized the HitachiGroup into six areas of focus with the goal of boosting overall governance. We are also
working to transition to an “autonomous decentralized global management” structurein which each region leads its business autonomously to accelerate proper decision
making and effectively use management resources.
Combined the Power System Group and the Infrastructure System Group under a
new management structure to form the Power and Infrastructure Systems Group.
Began implementing a shift to an “autonomous decentralized global management”
structure by appointing Group representatives in the four global regions of theAmericas, China, Asia-Pacific, and EMEA/CIS.

Policies and Frameworks

Driving Hitachi’s Governance
Hitachi, Ltd. has adopted the committee system, which has nominating, audit, andcompensation committees.*1 We aim to establish a framework for quick business
operations and to realize highly transparent management by separating the responsibilities
for management oversight from the execution of business operations. The majority of our
Board of Directors are outside directors, including non-Japanese. Our goals are to reflect
diverse and global viewpoints as well as to reinforce management supervisory functions.
We have formulated and published Corporate Governance Guidelines outlining theframework of corporate governance, such as the function and composition of the Board of

Corporate Governance
Guidelines

Directors, qualifications for outside directors, and the criteria for assessing theindependence of outside directors.
*1 A corporate governance system under the Companies Act of Japan, where a board of directors makes basic policy
decisions and oversees the execution of business by executive officers, while the executive officers, appointed by
the board of directors, execute the company’s business affairs via a set of statutory committees. Hitachi, Ltd. andits eight major listed subsidiaries have adopted this system.

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Corporate Governance

Governance Structure of Hitachi, Ltd.

The Board of Directors comprises a majority of outside directors and includes four nonJapanese directors, two of whom are women. This represents an effort to reflect global,
diverse viewpoints in company management, as well as to reinforce management
supervisory functions.
General Meeting of Shareholders
Election

Board of Directors(12 members, including 8 from outside)

Nominating Committee(4 members, including 3 from outside)

Audit Committee(5 members, including 3 from outside)

Appoint

Compensation Committee(4 members, including 3 from outside)
Supervise

Executive Officers: Quick execution of company business

Policies and Frameworks

Reorganized Group Management for Stronger GovernanceWe reorganized the Hitachi Group into six areas of focus under our market-driven
management, with the goal of speeding up services centered on our Social Innovation
Business and strengthening competitiveness in global markets related to social
infrastructure. This move was designed for a rapid response to the worldwide dynamicchanges in business models and services and to enable the entire Hitachi Group topresent solutions to social issues as well as those faced by our customers.

Six-Group Management Structure

In April 2012, we reorganized our existing group management system into five groups: theInformation and Information & Telecommunication Systems Group, the Infrastructure
Systems Group, the Power Systems Group, the Construction Machinery Group, and theHigh Functional Materials and Components Group. Following this, we established theAutomotive Systems Group in April 2013 and then the Healthcare Group in April 2014. We
established our current six-group management system in April 2015 by merging the Power
Systems Group and Infrastructure Systems Group into the Power and Infrastructure
Systems Group. Our six-group management structure enables us to integrate closely
related business, providing maximum value to our customers by allowing for faster
decision making, optimization of Group business portfolios, and enhanced global
competitiveness. We will continue to introduce initiatives that strengthen our Social
Innovation Business as well as improve efficiency of our business operations with the goalof staying ahead of our competitors by becoming a major global player.
Six-Group Management Structure
President and
COO of Hitachi, Ltd.
*1 Big data: A collection of the massive
volumes of unstructured data thatconventional systems cannot process, orthe technology handling that data.
*2 SI (systems integration): Integrated
information system services including
steps from planning throughimplementation and operation
responding to customer needs.

Power and Infrastructure Systems Group

Nuclear and renewable energy power generation systems/
Transmission and distribution systems/Power generation
solutions/Industrial machinery and plants/Elevators/Escalators/
Railway systems

Construction Machinery Group
Construction machinery

Automotive Systems Group
Automotive components

Information and Telecommunication Systems Group

Cloud computing/Consulting/Big data*1/SI*2/Platforms, such as
storage systems

High Functional Materials and Components GroupHigh functional materials and components/Key devices

Healthcare Group
Healthcare

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Corporate GovernanceTransition to an Autonomous Decentralized Global Management System
To accelerate growth in the global market, Hitachi in April 2015 appointed chief

executives who represent the Hitachi Group in interactions with regional communities
and customers in the four global regions of the Americas, China, the Asia-Pacific, and
EMEA/CIS.* 1 In addition to creating regional growth strategies, promoting localization,and effectively utilizing management resources, the chief executives have authority tomake investments in new business areas where growth is expected and areaccountable for the returns or losses on these investments. The system implements atransition to an autonomous decentralized global management structure in which eachregion leads its business independently.
Hitachi aims to transition to an “autonomous decentralized global management”
structure, providing services and solutions that leverage our strengths. Toward thegoal of thorough compliance, we are also promoting coordinated global
management of our operations that use management resources most efficiently. In
this way, Hitachi provides innovation at the highest level and establishes firm
governance as a global company.
In the Americas, where economic growth is expected, big data analytics will provide
new solutions in a variety of industries, including energy, communications, finance, andhealthcare. Strategies in China, which is expected to see stable, sustained growth, will be
kept in line with the goals of achieving a low-carbon society and expanding internal
demand in preparation for the “new urbanization” promoted by the Chinese government.
Social-infrastructure-related demand is very strong in the Asia-Pacific, where the focus
will be on promoting solutions targeting the healthcare industry through collaborations
with local partners in the region and advancing new financial solutions targeting
Japanese-affiliated banks that are expanding their regional operations. In the EMEA/CIS
region, where demand for upgrades in social infrastructure and market expansion in thehealthcare field are expected, the focus will be on rolling out our solutions business aimed
at increasing efficiency in production and supply chains. In all these regions, the chief
executives will act as regional “control towers,” developing and building solutions withManagement
Message

Hitachi customers to resolve a variety of global issues that are becoming increasingly
complex and borderless.
*1 EMEA/CIS: Europe, the Middle East, Africa, and the Commonwealth of Independent States.

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Policies and Frameworks

Internal Control over Financial Reporting
To ensure the reliability of consolidated financial reporting, every company develops anduses assessment documents for company-level controls, and business process controls
based on the guidelines determined by our J-SOX Committee.*1
Our in-house companies and major Group companies have developed mechanisms toobjectively perform assessments. Assessment results are reported to the J-SOX
Committee’s Office to assess the effectiveness of internal control.
*1 J-SOX: A system for the development of the internal control required under Japan’s Financial Instruments andExchange Act (FIEA) that ensure the reliability of financial reporting.

Hitachi Internal Control Assessment System
Financial Services Agency

Hitachi, Ltd. President and CFO
Internal
ControlReportReportReportJ-SOX Committee
Committee’s Office

ReportAudit Committee

Independent
Auditors

Collaboration

Internal Auditing Office

ReportIn-house andmajor Group companies

External
Audit

ReportSubsidiaries

Policies and Frameworks

Compensation for Directors and Executive Officers
Compensation for every director and executive officer is determined by the Compensation
Committee based on the provisions of the Companies Act of Japan.
Compensation for directors and executive officers consists of monthly salaries together
with year-end allowances for directors and a performance-linked component for executive
officers. While compensation for directors is basically fixed, the performance-linked
component for executive officers is set within a range equivalent to about 40% of theexecutive officer’s annual income, adjusted based on Company and individual performance.
Beginning with compensation for fiscal 2008, the system for directors and executive officers
was revised to abolish retirement allowances. The payment of retirement allowances todirectors and executive officers due to the abolition of the retirement allowance system will
be in an amount determined by the Compensation Committee at the time of the retirementof those directors or executive officers. The amount of compensation for directors andexecutive officers in fiscal 2014 is shown below.
FY 2014 Compensation for Directors and Executive Officers
Category

Recipients (number)

Total amount (millions of yen)15（ 9）

375（ 247）

Executive officers

29

1,946

Total

44

2,322

Directors (outside directors)* The number of directors indicated excludes two directors who concurrently serve as executive officers.
* Compensation to directors includes the monthly salaries of five directors, including two outside directors, who retired due to expirationof their terms of office at the close of the 145th Annual General Meeting of Shareholders held on June 20, 2014.
* In addition to the above, there are retirement allowances of 35 million yen for one executive officer who retired on March 31, 2015.

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Risk Management
Hitachi’s Approach

Risks that may threaten business operations can be categorized into
“hazard risks” (natural disasters, war and terror, crimes, etc.),“operational risks” (illegal conduct and corruption, quality problems, etc.),“financial risks,” and “strategic risks.”
Hitachi strives to identify various risks and to evaluate vulnerability inorder to prevent disruption and minimize damage these risks may cause
to its business operations.
Our business is deeply concerned with developing and maintaining
social infrastructure in each and every part of the world. Therefore, we
commit to making the best effort to strengthen our risk management andenhance our business continuity plans (BCPs) to mitigate disruptions ofand damage to business that may severely affect social infrastructure.
Our Actions in Fiscal 2014

A comprehensive risk management system was implemented across the entire
Hitachi Group. BCPs were developed and enhanced in key operations in Japan andoverseas as well. Research and risk analysis are undertaken and risk information andalerts are distributed to secure the safety of employees who work in high-risk areas ofwar and terror.
Risk Officers are assigned in about 200 business operations of in-house companies
and Group companies. About 300 Group companies implemented and enhanced
their BCPs.
Research and survey missions were sent to several countries in the Middle East andAfrica. Timely travel alerts and warnings were distributed promptly to all business
operations around the world.

Policies and Frameworks

Reinforcement of Risk Management System
The entire Hitachi Group is reinforcing its risk management system to addressincreasingly globalized and complex risks.
Under Hitachi, Ltd.’s Head of Risk Management, each business operation assigns an
executive as its risk management officer to manage risks mainly concerned withcompliance, export control, disasters, and crime, and to respond adequately incoordination among the entire Group. Furthermore, Hitachi has started to build acomprehensive risk management system that contains standards and procedures forevaluating any risks that may affect business.

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Risk Management

Key Approaches

Creating BCPs in Key Operations Worldwide
Given the close relation of our business to social infrastructure, we are enhancing our
BCPs to ensure that the impact of risks does not disrupt our business and thereby
significantly affect society. In December 2006, we issued the Hitachi Group Guidelines forDeveloping Business Continuity Plans in Japanese. In fiscal 2010 these were translated
into English and Chinese for distribution to all Hitachi Group companies worldwide to

Hitachi Group Guidelines for Developing
Business Continuity Plans(department version).

ensure our response readiness for large disasters and other risks.
When the Great East Japan Earthquake struck in March 2011, our BCPs enabledquick responses and swift decision making. However, issues emerged including
identification of secondary and other suppliers, cloud storage and multiplexing ofproduction information, and the need to secure alternate transportation and fuel sources.
Based on the lessons learned from this disaster, in October 2011 we released anddistributed new BCP guidelines for departmental implementation to further improve our
BCPs. Hitachi Group operations in Japan completed their preparation and review of BCPs,
based on applicability to their operations, by the end of fiscal 2011. BCPs for large
earthquakes and novel strains of influenza have been prepared for 49 Hitachi, Ltd.
business sites and 96 Group companies.
On top of these efforts, since fiscal 1998, Hitachi, Ltd. has held annual earthquake
simulation drills at key operations in Japan. In March 2015, Hitachi High-Technologies
Corporation in the Naka area of Ibaraki Prefecture held a drill simulating a potential largescale earthquake. Directed by the head of the Naka area, managers in charge of their

Earthquake simulation drill.

divisions confirmed the action plans in emergency situations based on BCPs.
In fiscal 2013, Hitachi appointed personnel in charge of risk-response policies at its
main overseas bases and around 300 companies prepared BCPs with the goal ofcompleting them for key operations by the end of fiscal 2013. These BCPs are aimed atstrengthening our ability to respond to business risks, including large disasters, novel
strains of influenza, political instability, and social disruption, as well as acts of terrorism.
Moving forward, we intend to further expand the scope of our BCPs.

Key Approaches

Improving Safety for Employees Sent to Dangerous Regions
Responding to the hostage incident in Algeria in January 2013, President Hiroaki Nakanishi
reinforced his policy in February 2013 of ensuring the safety of employees sent outside
Japan. Survey missions of in-house and outside experts are now sent beforehand to areas
at high risk of war, terrorism, and other threats. Even after employees are dispatched tosuch areas, we conduct additional local surveys every six months as a means of confirming
the effectiveness of our safety policies. In fiscal 2014, survey missions were sent to several
countries in Africa and the Middle East. In addition, we have introduced a range of safetymeasures in the light of recent terrorist incidents involving Japanese and other nationals,
including providing timely alerts to employees. These and other steps underscore ourcommitment to ensuring the safety of our employees working around the globe.
Hitachi is also contributing to safety measures at other Japanese corporations
operating outside Japan. To help enhance collaboration between the private andpublic sectors in this area, Hitachi executives participated in the Council for PublicPrivate Cooperation for Overseas Safety organized by Japan’s Ministry of Foreign
Affairs, and in June 2014 Hitachi took part in a public-private kidnap incident
preparatory training exercise.

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Compliance
Hitachi’s Approach

As a global company, upholding the laws and regulations of the countries
and regions where we do business is a basic premise of our operations.
We have enhanced our compliance framework by appointing an executive
officer to oversee the implementation of risk management initiatives
Group-wide and by putting top executives at key Group companies incharge of handling risk management.
We also promote sincere and fair business practices by bolstering
measures against bribery and other corrupt practices, upholding faircompetition laws, pursuing greater information security, anddeepening compliance knowledge and awareness among HitachiGroup companies worldwide.
Our Actions in Fiscal 2014

We are strengthening compliance and information security initiatives, such as holding
the Compliance Management Conference and the Hitachi Group Compliance
Conference as well as establishing the Advisory Committee and the Information
Security Promotion Council. We also hold Group-wide education and training sessions
to build employee awareness of the Hitachi Group Codes of Conduct, fair competition
laws, export control policies, and information security.
Over 250,000 copies of the Hitachi Group Codes of Conduct Handbook distributed
to employees at Group companies in Japan (as of March 2015).
Group education sessions on the Japanese Antimonopoly Law held for all Hitachi,Ltd. sales managers.
E-learning programs on export control basics and US re-export controls introduced andtaken by around 22,000 employees at 106 Group companies worldwide.
E-learning programs held on information security and personal information protection;
information security and personal information protection audits conducted at all
Group companies and business units.

Implementing Our Compliance Framework
Frameworks

Enhancing Our Compliance Framework
To comprehensively implement our compliance framework, we have appointed a senior
executive as the head of risk management for the entire Hitachi Group. Every in-housecompany and key Group company also has an executive handling risk management,
assisted by a compliance manager (CM).
Under this system, policies and measures are shared through the ComplianceManagement Conference, composed of risk management executives from in-housecompanies and key Group companies. In addition, all CMs meet regularly at the HitachiGroup Compliance Conference to provide information on compliance and to confirm
implementation of required actions.

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Compliance

The Advisory Committee, consisting of outside experts, convenes regularly to
exchange views on the state of compliance initiatives. The insights provided bycommittee members are utilized to improve policies and actions.
The internal audit section regularly conducts Group-wide reviews to verify that eacharea of compliance is being appropriately operated. In cases where the reviews identify
necessary improvements, corrective measures are swiftly implemented.
Core Policy

Ensuring Awareness of the Hitachi Group Codes of Conduct
Hitachi, Ltd. formulated the Hitachi Group Codes of Conduct as a common conduct
code for the Hitachi Group in fiscal 2010. We issued the Hitachi Group Codes ofConduct Handbook in fiscal 2011 as a guidebook for all employees; as of March 2015,
more than 250,000 copies have been distributed to employees in Japan. We ask
managers to submit a written pledge to comply with the Hitachi Group Codes ofConduct. To deepen awareness of the codes throughout our global operations, we haveproduced English and Chinese versions of a Japanese-language e-learning tool
showing appropriate behavior and presenting specific examples for use in Hitachi Group

Hitachi Group
Codes of Conduct

Key Approaches

companies within and outside Japan. We also conduct compliance training that
includes Group companies outside Japan.
Compliance Reporting System
Hitachi has instituted a Group-wide whistleblowing system to prevent illegal andunethical behavior, to promptly address infractions, and to enhance our ability to
self-regulate.
In this system, reports go directly to the Compliance Department at Hitachi or to an
outside attorney. This system can be used not only by Hitachi employees but also by
former employees, temporary staff, and suppliers. In addition, we have implemented theChannel to the Board of Directors system to allow employees to directly report problems
anonymously to Hitachi directors. The facts related to all reports are subject to thoroughinvestigation and checking, and people who have identified themselves in the reports are
informed of the investigation results. We make every effort to appropriately deal withsituations, including taking remedial action where necessary.

Key Approaches

Preventing Bribery and Corrupt Practices
To deal with global bribery and corruption risks, in fiscal 2013 we referred to the US
Foreign Corrupt Practices Act Resource Guide*1 and other documents to develop various
corruption risk scenarios. These were used as the basis for a survey conducted at HitachiGroup companies outside Japan. By analyzing the survey results, we identified several
companies at risk from corruption. We are monitoring and working with those companies
with the goal of reducing corruption worldwide.
*1 The US Foreign Corrupt Practices Act consists of antibribery provisions regarding foreign government officials andtransparent accounting provisions within the Securities Exchange Act. Enforced by the Department of Justice, it
prohibits bribes to foreign government officials. Transparent accounting, enforced by the Securities and Exchange
Commission, requires companies to show transactions fairly and accurately in their accounting records and tomaintain effective internal control over accounting.

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Compliance

Key Approaches

Preventing Violations of Fair Competition Laws
Hitachi engages in business based on the principles of conformance with the law andbusiness ethics and fair and disciplined competition. However, Hitachi, Ltd. was foundto have impaired the fairness of a public bid in fiscal 2002 and was penalized in
September 2006, October 2008, and March 2009 for violating the Japanese
Antimonopoly Law.
In November 2012, a subsidiary dealing in automotive components was penalized
by the Japan Fair Trade Commission for violating the Antimonopoly Law. In
September 2013, the same company was prosecuted by the US Department ofJustice for violating American antitrust laws, resulting in a plea bargain.
We are working to prevent further violations and to broaden awareness ofcompliance issues, including publicizing messages from top executives, developing
company regulations, conducting regular audits, and providing education andtraining to employees based on a compliance manual. In fiscal 2014, we held group
education sessions on the Antimonopoly Law for all Hitachi sales managers, with
957 taking part.
Through these initiatives we will continue working to improve and enhance ourcompliance framework.

Key Approaches

Prevention of Antisocial Transactions
To cut off all relationships with organized crime groups and other antisocial forces, weobserve the following three provisions laid out in the Hitachi Group Codes of Conduct:
1. We will have no relations whatsoever with antisocial forces such as organizedcrime groups, and we will never engage in antisocial transactions under any
circumstances.
2. We will prevent antisocial transactions through self-inspection of our transactions.
3. We will oppose antisocial forces such as organized crime groups with firm resolve,
and refuse any improper demands.
The entire Hitachi Group acts decisively to eliminate approaches from antisocial
forces in partnership with, where necessary, the police, external specialist institutions(the National Center for the Elimination of Boryokudan and Tokuboren, the Federationon Special Organized Crimes Within Jurisdiction of the Metropolitan Police
Department), and lawyers. We include an organized crime elimination clause incontracts so that if it is determined that a business partner belongs to an antisocialgroup, we can void the contract and break off the relationship.

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Compliance

Key Approaches

Thorough Export Controls
For basic export control policies, we adopt the Hitachi Standards of Corporate
Conduct,*1 which state: “We shall help maintain international peace and security throughcompliance with trade-related laws and regulations.” We established the Corporate
Regulations concerning Security Export Control based on this policy in 1987. We carryout strict export control practices according to laws and regulations, screening all goods
and technologies intended for export for such factors as destination countries andregions as well as intended end use and end users. We provide guidance and educational
support to Hitachi Group companies to ensure that all Group companies follow the same
export control policies. In fiscal 2014, we held workshops for Group companies in the
United States, Europe, and China and other Asian countries providing practical training onexport control. E-learning programs on export control basics and US re-export controls wereintroduced and taken by around 22,000 employees at 106 Group companies worldwide.
*1 Hitachi Standards of Corporate Conduct: Created by Hitachi, Ltd. to ensure full awareness of Hitachi’s mission androle and to enable Hitachi to continue to grow as a truly global enterprise.

Promoting Information Security
Policies and Frameworks

Implementing Rigorous Information Security
The Information Security Committee, chaired by the Chief Information Security Officer,
determines our information security policies and procedures. The Information Security
Promotion Council and other bodies convey decisions internally and to other companies inthe Hitachi Group. Information security officers at business sites and companies ensurethat these decisions are implemented in the workplace.
The Hitachi Group emphasizes two points in information security and personal
information protection:
1

Precautionary measures and prompt security responses

We classify assets to be secured and take safeguarding measures based on
vulnerability and risk analyses. We also have an emergency manual for security
breaches, based on the assumption that these are inevitable, and not just possible.
2

Promoting stronger ethical and security awareness among data users

We have prepared a program tailored to Hitachi’s various personnel levels and areworking to raise the prevailing sense of ethics and security awareness throughGroup-wide e-learning. We are also conducting audits to identify and address
problems early on.

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Compliance

Basic Approach to Information Security Governance
Clearly designate assets to be protected
Evaluate information assets and conduct
risk analysis

Improve user literacy
Supply security education materials
Educate managers and staff

Information
assets to beprotected

Implement preventive techniques
Widely implement administrative
measures
Deploy technological processes

Establish information security system
Develop rules (security policy)
Create managerial framework
Establish audit and follow-up system
Ensure solid feedback through extensive
PDCA cycles for prevention andaccident response

Policies and Frameworks

Protecting Personal Information
We established a personal information protection management system based on our
Personal Information Protection Policy. Through the rollout of this system, as well as the

Personal Information
Protection Policy

safe handling of personal information, e-learning programs for all employees, and periodic
audits, we are ensuring protection of personal information throughout the company.

Privacy Mark*1 Certification

Hitachi, Ltd. first received Privacy Mark certification in March 2007. We have maintained
the high level of privacy protection needed to renew this certification five subsequent
times, most recently in March 2015. The entire Hitachi Group is committed to personal
information protection, with 61 Hitachi Group companies in Japan having received thePrivacy Mark as of May 2015. In July 2009, the Corporate Hospital Group in Japan also
gained Privacy Mark certification. This group is working hard to protect and carefully
handle the personal information of its patients and others. Hitachi also strives to safeguard
personal information globally at Group companies outside Japan based on the Personal
Information Protection Policy and by adhering to all applicable laws and regulations,
including social requirements.
*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.

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Compliance

Policies and Frameworks

Preventing Information Leaks
Hitachi, Ltd. has formulated the Three Principles for Preventing Leakage of Confidential
Information to ensure the highest level of care for such information and to prevent leaks
and other incidents involving it. Our policies ensure that if an incident does occur, damageis promptly minimized by contacting customers, reporting to government agencies,
investigating causes, and acting to prevent any recurrence.
Hitachi Group companies take the following IT steps to prevent information leaks:
using encryption software and secure PCs; employing electronic document access control
and expiration processing software; maintaining ID management and access control bybuilding an authentication infrastructure; and filtering e-mail and visited websites. In
response to the recent spate of targeted e-mail attacks and other cyber attacks, we areparticipating in an initiative to share information between the private sector and thegovernment. We are also enhancing our IT organization by adding more layers to our leakprevention procedures, including both entry and exit countermeasures.
To ensure the secure exchange of information with our suppliers, we review theirinformation security measures based on Hitachi’s own standards before allowing themaccess to confidential information. We have provided tools to suppliers (procurement
partners) for security education and for checking business information on computers. In
addition, we require suppliers to check and remove business information from personal
computers to prevent leaks.

Three Principles for Preventing Leakage of Confidential Information
Principle 1

As a general principle nobody can take Confidential Information out of theCompany’s premises.

Principle 2

Any person taking Confidential Information out of the Company’s premises
due to business necessity shall obtain prior approval from the Information
Assets Manager.

Principle 3

Any person taking Confidential Information out of the Company’s premises
due to business necessity shall put in place relevant and appropriate
measures against information leakage.

Key Approaches

Global Information Security Management
Hitachi Group companies worldwide reinforce their information security in line with our
Global Information Security Administration Rules, which conform to the international ISO/IEC 27001 standard. These rules are distributed from the parent company in Japan toGroup companies around the world. Other security measures include secure sharedservices and support from our regional headquarters in the Americas, Europe, Southeast
Asia, China, and India.

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Compliance

Key Approaches

Education on Information Security
Consistently maintaining information security requires all parties to continually develop theirknowledge of information handling and to remain strongly aware of the issues. For thisreason, we hold annual e-learning programs on information security and personal
information protection for all directors, employees, and temporary employees.
Nearly all of the roughly 40,000 employees at Hitachi, Ltd. participate in these
programs. We provide specific additional training, with clear goals, that is geared to new
employees and managers, and to information system administrators in particular. In 2012,
we also began simulation training to educate employees about the increasing trend towardtargeted e-mail attacks and other cyberattacks. Employees are sent examples of targetede-mail to heighten their awareness of security through direct experience.
Our educational programs, available to Hitachi Group companies in Japan andoverseas, provide Group-wide education on information security and personal
information protection.

Key Approaches

Thorough Information Security Audits and Inspections
The Hitachi Group has developed its approach to security based on the “plan-do-checkact” (PDCA) cycle for its information security management system. We conduct annual
information security and personal information protection audits at all Group companies andbusiness units.
The president appoints officers to conduct independent audits. These officers are
not allowed to audit their own units, underlining our commitment to fairness andobjectivity in auditing. Hitachi Group companies in Japan 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 and Information Security Management annually for the voluntary
inspection of business unit workplaces. We conduct monthly Confirmation of Personal
Information Protection and Information Security Management assessments with respect
to approximately 420 operations that handle important personal information. This
regular control mechanism ensures ample safety management and implementation.

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Governance Engagement
Engagement Highlight
Campaign for Corporate Ethics and Compliance Month
Corporate ethics and compliance are the bedrock of all our activities. To cultivate andenhance awareness of corporate ethics we have since fiscal 2009 designated October as
Ethics and Compliance Month throughout the Hitachi Group.
The CEO of Hitachi, Ltd. shares messages with employees during this period,
which serves as an important opportunity to reexamine the importance of corporate
ethics. We have also created and put up on our intranet a set of case studies forworkplace discussions on issues relevant to particular workplaces. All of these casestudies match chapters in the Hitachi Group Codes of Conduct Handbook and havebeen translated into English and Chinese for use in our global operations. In addition,company-based activities such as lectures, presentations of satirical senryu poems, andthe display of themed posters are being used to instill and foster awareness ofcorporate ethics among employees.

In Focus
Optimal Social Innovation and Governance as a Global Company
As a major global player, Hitachi is focused on implementing an “autonomous
decentralized global management” system to accelerate growth and play a role inproviding regionally appropriate solutions to issues around the world. To place
responsibility for regional business operations more solidly in the hands of eachindividual region, we have appointed Chief Executives to serve as control towers in thefour global regions of the Americas, China, Asia-Pacific, and EMEA/CIS, as well asJapan. Around the world we are building innovative and lasting relationships withstakeholders to quickly and accurately identify needs of communities and customers ineach region and to provide services and solutions that leverage our strengths in close
coordination with our customers.
At the same time, Hitachi is promoting uniform global operations to enable theefficient use of management resources in such areas as R&D, procurement, brandstrategies, human capital development, accounting systems, and thorough compliance. In
this way, we will provide optimal innovations at the highest level and establish governanceas a global company.

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PERFORMANCE DATA &ASSURANCE

Contents
List of Key Indicators

186

Overview of Financial Results, Board Members, and Employee Data

188

Main Assessments and Awards

190

Third-Party Assurance and Verification

193

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Environment

Performance Data & AssuranceSocialGovernanceContents

List of Key Indicators
The Key Indicators reported in the Hitachi Group Sustainability Report 2015 are listed below.
Comparative tables with the GRI Content Index, as well as our Policy, Vision, and Guidelines, are only
available on our website.
Comparative Tables withGRI Content Index
Policy, Vision, and Guidelines

Foundation for Promoting CSR Management

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

Ratio of R&D Efficiency (ROI)

1.13

1.00

1.24

1.52

1.79

Ratio of R&D Expenditures to Revenues

4.2

4.3

3.8

3.7

3.4

Number of R&D Staff outside Japan

150

150

—

290

300

51

55

57

59

59

Research and Development

Intellectual Property
Patent Application Ratios outside Japan

Scope of Data
Hitachi, Ltd. and consolidated subsidiaries (including variable interest entities)
Number of companies: FY 2010: 914; FY 2011: 940; FY 2012: 964; FY 2013: 948;
FY 2014: 996

Environment

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

Environmentally Conscious Products and Services

Eco-Product Sales Ratio
Eco-Product Sales Ratio Contributions to CO2 Emission
Reduction (million tonnes)
Environmentally Conscious Production
CO2 Emissions (kt CO2)
Waste and Valuables Generation (kt)
Water Use (outside Japan) (million m3)
VOC Atmospheric Emissions (t)

—

80

84

89

93

15.51

19.04

22.74

27.47

32.19

4,154

3,447

3,453

3,355

3,311

738

701

655

677

692

16.40

8.91

9.88

7.37

7.17

3,653

4,285

4,127

4,216

4,415

Scope of Data
For data on environmentally conscious products: Hitachi, Ltd., and consolidated
subsidiaries (including variable interest entities)
Number of companies: FY 2010: 914; FY 2011: 940; FY 2012: 964; FY 2013: 948;
FY 2014: 996
Environmental performance data associated with Hitachi’s business operations: HitachiGroup companies whose environmental load comprises 90% of the total (based on Hitachicalculations); data for each fiscal year indicates performance within the given scope for the
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Performance Data & AssuranceSocialGovernanceContents

List of Key Indicators

Social

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

Social Contribution Activities		
Funding for Social Contribution Activities*1 (million yen)

1,607

—

—

1,806

1,218

Funding for Social Contribution Activities*2 (million yen)

—

3,471

3,284

3,076

2,327

Number of CSR Monitoring (Self-Checks)

—

102

98

100

200

Number of Audits by External Auditing Organizations

—

—

12

16

20

84:16

84:16

84:16

83:17

84:16
3,670
(6.0)
2.03

Supply Chain Management

Diversity Management
Ratio of Male and Female Employees*3
Number and Global Ratio of Female Managers
Disabled Employment Ratio*3

—

—

—

3,415
(5.6)

2.05

2.00

2.02

2.02

Global Human Capital Development*3
Number of Non-Japanese Employees

230

239

257

340

446

—

1,064

1,202

747

720

Occupational Accident Rate*6

0.07

0.10

0.14

0.10

0.09

Occupational Accident Rate*7

0.20

0.15

0.19

0.14

0.27

Number of Young Employees Participating in Training
outside Japan*4
Occupational Health and Safety*5

Scope of Data
*1 Hitachi, Ltd., and five foundations in Japan*2 Japan: Hitachi, Ltd., and Group companies (including variable interest entities): 137 companies and five foundations
Outside Japan: 199 Group Companies*3 Hitachi, Ltd.
*4 Hitachi, Ltd., and Group companies in Japan*5 January to December each year
*6 Hitachi, Ltd.
*7 90 major Hitachi Group companies in Japan including Hitachi, Ltd., through to 2011; 175 major Hitachi Group
companies in Japan including Hitachi, Ltd., for 2012; 195 major Hitachi Group companies in Japan including
Hitachi, Ltd., for 2013; 251 major Hitachi Group companies in Japan including Hitachi, Ltd., for 2014

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Performance Data & AssuranceSocialGovernanceContents

Overview of Financial Results, Board Members, and Employee Data
An overview of the Financial results (consolidated), board member and employee data are listed below.
Most data are Hitachi, Ltd. figures.
Financial Results (Consolidated)
Revenues(billion yen)
FY 2010

FY 2011

FY 2012FY 2013

FY 20149,315.8

9,665.8

9,041.0

9,616.2

9,761.9
600.4

Operating Income

444.5

412.2

422.0

532.8

EBIT*1

443.8

573.2

358.0

585.6

551.0

Income before Income Taxes

432.2

557.7

344.5

573.6

535.6

Capital Investment (completion basis)

556.8

649.2

742.5

849.8

374.3

R&D Spending

395.1

412.5

341.3

351.4

335.5

Net Income Attributable to Hitachi, Ltd. Stockholders

238.8

347.1

175.3

264.9

241.3

Total

Male

FemaleJapan

Directors*1

11

9

2*2

7

4

Executive Officers*1

31

31

0

29

2

FY 2014*1 EBIT: Defined income before income tax less interest income changes

Board Members

GenderNationality
Outside Japan*1 As of June 2015
*2 External directors (two from outside Japan)

Composition of Employees

FY 2010

FY 2011

FY 2012FY 2013

Number of Employees*1

31,24332,90833,66533,50031,375

Male

26,39927,80528,43728,273

26,428
4,947

Female

4,844

5,103

5,228

5,227

Ratio of Female Employees

16.0

15.9

16.0

16.6

16.3

Average Age (years)

39.9

40.0

40.2

40.7

41.0

Male

40.6

40.6

40.8

41.3

41.6

Female

36.3

36.8

37.1

37.6

38.0

Average Service (years)

17.9

17.9

18.0

18.3

18.4

Male

18.6

18.6

18.7

19.0

19.0

FemaleNumber and Ratio of Female Managers*2

14.0

14.2

14.5

15.0

15.4

386 (3.3)

377 (3.4)

401 (3.5)

418 (3.8)434 (3.7)

General Manager or Above—

54 (1.9)68 (2.3)

77 (2.7)

87 (2.8)

Section Chief—

323 (4.0)

333 (4.0)

341 (4.3)

347 (4.1)

2.05

2.00

2.02

2.02

2.03

Employment Ratio of People with Disabilities*1 Number of full-time employees*2 See List of Key Indicators for Group global figures

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Overview of Financial Results, Board Members, and Employee Data

Hiring Ratios

April 2011

April 2012

April 2013

April 2014

18.3

20.3

18.0

19.4

21.7

Technical

13.5

14.7

11.6

14.7

18.3

Administrative

39.3

43.9

43.4

43.4

41.0

FY 2012FY 2013

FY 2014

Ratio of New Female Graduates Hired*1

April 2015

*1 Graduates from universities or colleges (including postgraduate schools and technical colleges)

Number of Employees Using Work-Life Balance Support Systems
FY 2010

FY 2011

Number of Employees Taking Child Care Leave/
Spouse Child Care Leave
Female

525

518

525

539

508

Male

173

224

245

238

236

Female

528

608

617

683

663

Male

3

6

8

5

4

Number of Employees Using Shorter Working Hours
for Child Care

Number of Employees Taking Nursing Care Leave
Female

7

6

10

8

8

Male

3

6

7

12

9

Number of Employees Using Reduced Working
Hours for Nursing Care
Female

7

6

7

4

7

Male

1

2

3

2

3

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

Working Conditions
Paid Leave
Average Number of Days

16.1

15.9

15.3

15.5

15.4

Ratio

66.4

66.8

64.0

64.7

64.3

12.3

12.8

14.1

13.5

12.2

1

1

3

1

1

FY 2010

FY 2011

FY 2012FY 2013

FY 2014

Number of Voluntary
Social Contribution Programs

32

32

34

43

39

Participants in Voluntary
Social Contribution Programs

2,567

2,087

2,479

2,744

2,344

Average Overtime Hours/Month
Occupational Health and Safety
Number of Fatal Accidents

Social Contribution Activities
Social Contribution Activities

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Performance Data & Assurance

Environment

SocialGovernanceContents

Main Assessments and Awards
Hitachi actively pursues a range of CSR activities aimed at developing amore sustainable society. These activities have earned the Hitachi Grouphigh marks from numerous external organizations.

Actively Courting Socially Responsible Investment
The Hitachi Group welcomes external assessments as a target for socially responsible
investment (SRI)* 1 and sustainability-oriented investment. For six years in a row since
fiscal 2009, the Dow Jones Sustainability World Index (DJSI World),* 2 a leading global
sustainability investment index, has listed Hitachi, Ltd. as a component stock.
RobecoSAM, which handles survey and analysis for the DJSI listings, also gave its
Bronze Class and Industry Mover designations to Hitachi, Ltd. in its 2014 CSR
rankings. Four Group companies, including Hitachi Chemical Co., Ltd. and Hitachi
Capital Corp., were selected for the FTSE4Good Index Series.* 3 Five Group companies,
including Hitachi Construction Machinery Co., Ltd. and Hitachi High-Technologies
Corp., were chosen for the Morningstar SRI Index,* 4 with the Group performing welloverall in these external assessments. Hitachi Chemical was also selected for the MSCI
Global Sustainability Indexes.* 5*1 SRI: Investment in which funds evaluate companies and select stocks from a CSR perspective.
*2 DJSI: A family of SRI 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, and Australia.
*3 FTSE4Good Index Series: One of the indexes calculated by the London Stock Exchange–owned FTSE Group that
selects component stocks based on their environmental, social, and governance (ESG) performance, specificallyenvironmental management, climate change mitigation, human rights and workers’ rights, supply chain labor
standards, bribery and corruption prevention, and corporate governance.
*4 Morningstar SRI Index: An SRI index for Japanese stocks developed by Morningstar Japan K.K. with the Center
for Public Resources Development.
*5 MSCI Global Sustainability Indexes: A family of indexes developed by US-based Morgan Stanley CapitalInternational comprising companies with high ESG ratings relative to sector peers.

Results of SRI Assessments in Fiscal 2014
Institution

Index

Companies selected

RobecoSAM

Dow Jones Sustainability World Index

Hitachi, Ltd.

Dow Jones Sustainability Asia Pacific Index

Hitachi, Ltd.
Hitachi Chemical Co., Ltd.

FTSE GroupFTSE4Good Index Series

Hitachi Chemical Co., Ltd.
Hitachi Capital Corp.
Hitachi Construction Machinery Co., Ltd.
Hitachi High-Technologies Corp.

Morningstar

SRI Index

Hitachi, Ltd.
Hitachi Chemical Co., Ltd.
Hitachi Construction Machinery Co., Ltd.
Hitachi High-Technologies Corp.
Hitachi Kokusai Electric Inc.

MSCIMSCI Global Sustainability Indexes

Hitachi Chemical Co., Ltd.

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SocialGovernanceContents

Main Assessments and Awards

Selection for the Climate Performance Leadership Index 2014
Hitachi’s efforts to curb greenhouse gas emissions and mitigate the risk of climate change
have won high praise from the nonprofit organization CDP,*1 which selected Hitachi for its
2014 Climate Performance Leadership Index (CPLI).
*1 The CDP is an international NPO based in London that provides a global system used to gauge, disclose, manage,
and share key environmental information on companies and cities. On behalf of 767 investors, representing
US$92 trillion in assets, the CDP sends a survey on climate change to corporations and then evaluates theresults. In 2013, the organization shortened its name from the Carbon Disclosure Project to CDP.

Nadeshiko Brand Designation
On March 18, 2015, Hitachi, Ltd. was selected as a 2015 Nadeshiko Brand, making it thesecond year in a row the company received the honor. Hitachi was recognized fordeveloping environments where women in management positions are able to maximize
their potential.
Since fiscal 2012, the Ministry of Economy, Trade, and Industry (METI) and the Tokyo
Stock Exchange (TSE) have jointly selected, on an industry basis, enterprises from among
those listed on the first section of the TSE that are considered to encourage women toplay active roles in the workplace, including the development of environments where
women are able to further their careers. Companies are assessed on two factors:
providing career support for women and supporting women in balancing work and life. Of
the top scoring companies, those also meeting return on equity requirements receive theNadeshiko Brand designation. Hitachi, Ltd. was one of 40 enterprises chosen in fiscal
2014, the third round of selections.
Diversity Management Selection 100
On March 22, 2013, Japan’s Ministry of Economy, Trade, and Industry (METI) held aceremony to celebrate Diversity Management Selection 100. Hitachi, Ltd. was one of
43 companies receiving awards in Japan. The Diversity Management Selection 100
system chooses and recognizes companies that achieve high results in such areas asimproving innovation and productivity by using the talents of diverse employees,
including women, different nationalities, older employees, and people with disabilities.
Hitachi was lauded for going beyond simply introducing diversity programs to promote
diversity management Group-wide as a corporate strategy backed by strong
management commitment.
On March 18, 2015, Hitachi Group companies Hitachi Transport System, Ltd. andHitachi Solutions, Ltd. were chosen also for the Diversity Management Selection 100.

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Performance Data & Assurance

Environment

SocialGovernanceContents

Main Assessments and Awards

Kurumin Certification
Kurumin certification is granted under Japan’s 2005 Act on Advancement of Measures to
Support Raising Next-Generation Children to companies that create action plans for childcare support in line with this legislation and that meet performance requirements. In
February 2011, we acquired this certification*1 in recognition of our achievements indeveloping and implementing action plans supporting child care so that our employees
can work with the peace of mind that comes from a good work-life balance.
*1 Hitachi Group companies receiving Kurumin certification: Hitachi Construction Machinery, Hitachi Kokusai Electric,
Hitachi High-Technologies, Hitachi Transport System, Hitachi Systems, Hitachi Maxell, Hitachi SC, Hitachi
Solutions East Japan, Hitachi INS Software, Hitachi Government & Public Sector Systems, Hitachi Architects &Engineers, and Hitachi Aloka Medical.

Chairman Emeritus Awarded Prime Minister’s Commendation
On June 27, 2014, Chairman Emeritus Takashi Kawamura received the Prime Minister’sCommendation for Efforts Toward the Formation of a Gender-Equal Society, an award for
efforts including supporting active roles for women in the workplace.
The award is presented by the Prime Minister of Japan to organizations in recognition
The ceremony for the Prime
Minister s Commendation for
Efforts Toward the Formation of a
Gender-Equal Society.

of their efforts toward realizing a gender-equal society. As Hitachi President and Chairman,
Kawamura promoted diversity management as a corporate strategy Group-wide to
improve innovation and productivity by utilizing employee diversity, boosting the awarenessof all employees, and changing the mindsets of people in the workplace. ThroughKawamura’s role as vice chair at the Japan Business Federation (Keidanren), these
initiatives went beyond Hitachi to benefit the greater business community.
On behalf of Prime Minister Shinzo Abe, Chief Cabinet Secretary Yoshihide Suga
presented the commendation to Kawamura and 11 other recipients at a ceremony at the
Cabinet Office in Tokyo.

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Performance Data & Assurance

Environment

SocialGovernanceContents

Third-Party Assurance and Verification
To enhance the reliability of the data disclosed in the Hitachi Group
Sustainability Report 2015, we have received third-party assurance
and verification.
Social and Governance Sections
The key indicators and data in the Social (pp. 113–169) and Governance (pp. 170–184)
report sections have received reviews by KPMG AZSA Sustainability Co., Ltd. The key.
indicators and data that were subject to this review are marked with a

Third-Party Assurance Report on Social and Governance Sections

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Performance Data & Assurance

Environment

SocialGovernanceContents

Third-Party Assurance and Verification

Environment Section
Regarding the fiscal 2014 results in the Environmental (pp. 64–112) report section, we haveCalculation methods forenvironmental load data

received verification from Bureau Veritas Japan Co., Ltd. The data that were subject to this
. The standards, guidelines, and calculation methods usedverification are marked with ain collecting data are posted on our website.

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SocialGovernanceContents

Third-Party Assurance and Verification

Greenhouse Gas Emissions Verification Statement

Inquiries

CSR and Environmental Strategy Division
1-6-1 Marunouchi, Chiyoda-ku, Tokyo 100-8220, Japan
Tel: +81-3-4235-5800 Fax: +81-3-4235-5835
http://www.hitachi.com/csr/