Hitachi Group
Sustainability Report 2014
FY 2013 Results

002
CONTENTS

Hitachi Group
Sustainability
Report 2014

004
006
008

Sustainability Report Editorial Policy				010

Executive Officer’s Message
Toshiaki Kuzuoka, Senior Vice President and Executive Officer
Shinichiro Omori, Vice President and Executive Officer
Hidenobu Nakahata, Vice President and Executive Officer

013

VISION: Management Strategies and CSR

Hitachi Group
Sustainability
Report 2014

Hitachi Group Profile
TOP COMMITMENT Message from Management
Hiroaki Nakanishi, Chairman & CEO, Toshiaki Higashihara, President & COO

2015 Mid-term Management Plan: Financial and Non-Financial Highlights /CSR Management / CSR Activities: Results and Plans

021

INNOVATION Hitachi R&D and Intellectual Property Rights
Research and Development Strategy / Intellectual Property

029

FEATURE: Contributing to Society through Business
Hitachi’s Solutions for Social Issues
Key Hitachi Business Segments
Creating a Healthy, Safe Society through Our Healthcare Business
Renewable Energies for the Future
Dialogue: Hitachi’s Social Innovation BusinessWorking with Governments and Public Policymakers

049

Activities by Country and Region
Europe / The Americas / Asia & India / China

059

Governance Report

060

Corporate Governance
Hitachi’s Governance Initiatives / Group Management / Internal Control over Financial
Reporting/ Compensation for Directors and Executive Officers

063

Brand Management
Brand Management Initiatives / Global Campaign /Managing the Hitachi Brand Impression

065

Risk Management
Reinforcing the Risk Management System / Creating BCPs in Key Operations Worldwide /Improving Safety for Employees Sent to Dangerous Regions

067

Compliance
Enhancing Our Compliance Framework / Formulating and Ensuring Awareness of the
Hitachi Group Codes of Conduct /Preventing Corrupt Practices / Implementing Corporate
Ethics and Compliance Month / Preventing Violations of the Antimonopoly Law /Compliance Reporting System / Prevention of Anti-social Transactions / Export Control /Information Security

003
073

Environmental Report

074

Environmental Management Strategies and Initiatives

Hitachi Group
Sustainability
Report 2014

Vision / Environmental Action Plan / Environmental Management Framework /Climate Change: Risks and Opportunities

085

Environmentally Conscious Products and Services
Increasing the Ratio of Eco-Products / Recycling Product Resources /Managing Chemical Substances Contained in Products

Hitachi Group
Sustainability
Report 2014099

Environmentally Conscious Production
Creating Eco-Factories and Office Select / Promoting Global Warming Countermeasures /Calculation of GHG Emissions throughout the ValueChain / Reducing Waste /Water Conservation / Chemical Substance Management / Environmental Compliance /Data on Environmental Load Resulting from Business Operations (FY 2013)/
Environmental Accounting

122

Preserving Ecosystems and Environmental Communication
Preserving Ecosystems / Environmental Education / Environmental Communication

129

Social Report130

Respect for Human Rights
Human Rights Initiatives / Framework / Achievements and Issues

133

Supply Chain Management
CSR Supply Chain Management Framework / Sharing Procurement Policies /CSR Deployment Guidebook / CSR Procurement Initiatives / CSR Monitoring (Self-Checks) /CSR Audits / Creation of Procurement BCPs

138

Diversity Management
Developing Diversity Management / Diversity Development Structure /Developing Women’s Careers / Work-Life Management / Diversity Activities /Employing People with Disabilities /Main Assessments and Awards

151

Employee Health and Safety
Addressing Occupational Health and Safety / Health and Safety Promotion Framework /Information Sharing and the Hitachi Group Health and Safety Portal System

154

Global Human Capital Development
Managing Global Human Capital / Global Recruiting and Globalizing Human Capital /Global Employee Survey / Career Development in the Workplace

158

Quality Assurance Activities
Quality Assurance Activities / Quality and Reliability Education /Strengthening Quality
Assurance (QA) Systems in China and throughout Asia / Handling Product Accidents /Ensuring Hitachi Home Appliance Safety

161

Customer Satisfaction
CS Improvement Activities / Universal Design

167

Communication with Shareholders and Investors
IR Information Disclosure Policy / Proactive IR Approach / General Meeting of Shareholders /Hitachi as an SRI Investment / Fundamental Policy against Takeovers

171

Social Contribution Activities
Philosophy and Policy / Social Contribution Activities in Japan and Asia / Social Contribution
Activities in India and ASEAN / Social Contribution Activities in the U.S. and Europe /Social Contribution Activities in Africa

Symbol Marks Used in This Report* Technical terms, proper nouns,
tables, or diagrams, etc. requiringexplanation
WEB Indicates the title and URL of
the webpage related to the article
Hitachi References in This Report
Hitachi, Ltd.: Information on or
initiatives of Hitachi, Ltd.
Hitachi: Information on or initiativesof all Group companies in andoutside Japan

184
186
189
192

List of Key Indicators
Overview of Financial Results, Board Members and Employee Data
Independent Assurance
Inquiries

Sustainability Report Editorial Policy

Basic Concept
The Hitachi Group Sustainability
Report 2014 presents basic policies,
promotion systems, measures, andkey performance indicators on each
initiative in keeping with related
reporting guidelines. This approach
maintains an honest and transparent
disclosure of information regarding
fiscal 2013 activities and Hitachi’s
stance in addressing social andenvironmental issues that are vitalto the sustainability of corporate
management and society.

Scope of Reporting[Period] The main period covered is fiscal 2013 (April 1, 2013 to March 31, 2014)[Companies] Hitachi, Ltd. and 947 consolidated subsidiaries (including modified entities to which the equity
method of consolidated reporting applies): total 948 companies[Scope of Data]
Financial data: Hitachi, Ltd. and 947 consolidated subsidiaries (including modified entities to which the equity
method of consolidated reporting applies): total 948 companies and 231 affiliated companies that use theequity method
Social data: Scope of data indicated under each item
Environmental data: Hitachi, Ltd. and 947 consolidated subsidiaries (including modified entities to which
the equity method of consolidated reporting applies): total 948 companies. However, for environmental load
data generated through business operations, companies that cover 90 percent of the load (based on Hitachicalculations) are included.
∙ The data for each fiscal year indicates the results according to the scope of data in that fiscal year.
∙ The base fiscal year data has been revised to match the scope of data for fiscal 2013.
Key Guidelines Referred to in Preparing this Report
Environmental Reporting Guidelines (FY 2012 version), Ministry of the Environment, Japan
Environmental Reporting Guidelines 2001—With Focus on Stakeholders, Ministry of Economy, Trade andIndustry, JapanGRI Sustainability Reporting Guidelines (G3.1), Global Reporting Initiative
ISO 26000: 2010, International Organization for Standardization
The Hitachi Group Sustainability Report is published annually.

Disclosure of Financial and
Non-Financial Information

Non-Financial Information Reports
日立グループサステナビリティレポート 2014

Hitachi Ltd., following closely
the deliberations of the EU andthe International Integrated
Reporting Council (IIRC) about
non-financial disclosure, presents
information to match the needs ofstakeholders reading this report.
While financial information is in
the Annual Report, the HitachiGroup Sustainability Report presents
non-financial information andclarifies how sustainability issues
relate to financial activities. The
latest information is available on the
Hitachi Group’s website.

2013 年度実績

WEB CSR (Corporate Social
Responsibility)
http://www.hitachi.com/csr/

WEB Environmental Activities
http://www.hitachi.com/
environment/

Hitachi Group
Sustainability
Report 2014
WEB Global Community Relations andActivities (Social Contribution Activities)
http://www.hitachi.com/csr/sc/

Financial Information Reports
日立製作所
アニュア ル レ ポ ー ト

アニュアルレポート 201320132013 年 3月期

S O C I A L
I T ’ SI N N O V A T I O N

O U RF U T U R E

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

Printed in Japan

Annual Report 2013

Note: We also disclose ﬁnancial information about Hitachi, Ltd. in the
Corporate Governance Report, the Annual Securities Report, and theReport on the 145th Business Term.

Third-Party Assessments
To enhance the credibility of this report, we commissioned third-party environmental, governance, and social
performance assessments in fiscal 2013. Ernst & Young Sustainability Co., Ltd., verified the 2015 Mid-termManagement Plan and Related Non-Financial Activities as well as governance and social performance basedon International Standard on Assurance Engagement (ISAE) 3000. Bureau Veritas Japan Co., Ltd. assessed
environmental performance.
External Evaluations
We were selected in September 2013 for the
Dow Jones Sustainability World Indexes (DJSI
World), one of the world’s leading sustainability
investment fund indexes.

Initiatives That We Participate in
We have been a member of the World BusinessCouncil for Sustainable Development (WBCSD)
since 1995.

We have been a member of theUnited Nations Global Compact
since February 2009.

005
Hitachi Group
Sustainability
Report 2014

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.
We published the Hitachi Group
Sustainability Report 2014, whichemphasizes comprehensiveness andsearchability of information withspecial emphasis on managementtransparency, as a PDF file (A4,000 pages) and the Hitachi Group
Sustainability Report 2014 Digest, asummary of policies, areas of specialsocial interest, and reports on key
management issues, as a booklet (A4,16 pages). We also report on detailed
activities, as well as news releases
and other latest information on our
website.

PDF

Latest information
Reports on
detailed activities
Reports on material issues

Web
PDF

BookletHitachi Group
Sustainability Report
2014

Hitachi Group
Sustainability Report2014 Digest

Reports on Detailed Activities
Hitachi Group Sustainability Report 2014

BookletHitachi Group Proﬁle
Top Commitment

Management Strategies and CSR2015 Mid-term Management Plan Highlights / CSR Management /CSR Activities: Result and Plans / Hitachi R&D and Intellectual Property
RightsFEATURE
Contributing to Society through Business

FEATURE
Contributing to Society through Business / Activities by Country andRegionGovernance Report
Corporate Governance / Brand Management / Risk Management /Compliance
Environmental Report
Environmental Management Strategies and Initiatives / Environmentally
Conscious Products and Services / Environmentally Conscious Production/ Preserving Ecosystems and Environmental Communication

List of Key Indicators / Overview of Financial Results, Board Members
and Employee Data /Independent Assurance

CSR (Corporate Social
Responsibility)
Environmental Activities
Global Community
Relations and Activities(Social Contribution
Activities)

Reports on Material Issues
Hitachi Group Sustainability Report 2014 Digest

Sustainability Report Editorial Policy
Hitachi Group Proﬁle
Top Commitment
Messages from Management

Social Report
Respect for Human Rights / Supply Chain Management / Diversity
Management / Employee Health and Safety / Global Human Capital
Development / Quality Assurance Activities / Customer Satisfaction /Communication with Shareholders and Investors / Social Contribution
Activities

Hitachi, Ltd.
WebsiteVISIONManagement Strategies and CSR

ACTIVITIESFY 2013 Environmental Report / FY 2013 Governance and Social Report
Hitachi Group ProfileWeb

Latest Information
WebsiteCSR Initiatives
The CSR website has a full PDF version of the Hitachi Group Sustainability
Report 2014, as well as the following additional content:
Information Disclosure Policy / Comparative Table with GRI Guidelines/ Comparative Table with ISO 26000 Core Subjects / Comparative Table
with the UN Global Compact / Policy, Vision, and Guidelines / List of Key
Indicators / Highlights Archive (2005-2013)
http://www.hitachi.com/csr/
Environmental Activities
This website adds to the environmental activities section of the HitachiGroup Sustainability Report 2014 (including Supplementary Data and Listof Indicators) and includes special features on environmentally conscious
products and services, Eco-Factories & Offices, and other initiatives related
to the environment.
http://www.hitachi.com/environment/
Social Contribution Activities
Features Hitachi social contribution activities.
http://www.hitachi.com/csr/sc/

Hitachi Group Profile

Company Profile (as of March 31, 2014)
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 (unconsolidated basis)
33,500
Number of employees (consolidated basis)
320,725
Number of consolidated subsidiaries
947(Japan: 283, outside of Japan: 664)
Number of equity-method affiliates
231(Japan: 66, outside of Japan: 165)

Consolidated Business Overview and Results for Fiscal 2013
Capital Expenditure849.8 billion yen (up 14%)
R&D Expenditure351.4 billion yen (up 3%)
Percentage of Revenues amount toOversea Production
24%

9,616.2 billion yen(up 6%, year on year)
532.8 billion yen (up 26%)580.1 billion yen (up 62%)

Revenues
Operating income
EBIT**EBIT: Defined income before income tax less interest income changes

Revenues, Operating Income and EBIT
Revenues(billions of yen)
12,00010,000Operating income(billions of yen)
1,200
9,316

8,969

9,666

9,616

9,041

Revenues

8,000
445
444

6,000
4,000
2,000
0

573
412

422
358

580
533

78
2010

2009

2011

2012

Revenues and Sales Ratio by Region (billions of yen)
Others 526.7 (6%)
Number of companies: 71
Number of employees: 9,925

400
200
0

2013
(FY)

Revenues and Ratio by Segment (billions of yen)
Financial Services
338.5 (3%)

Information &Telecommunication Systems
1,954.9 (18%)

Others (Logistics andOther services)
1,233.6 (12%)

Asia 2,063.5 (21%)
Number of companies: 363
Number of employees: 88,821

Digital Media &Consumer Products
890.8 (8%)

Total Revenues
by Region
9,616.2 billion yen

Automotive Systems
892.1 (8%)

Europe 812.1 (8%)
Number of companies: 146
Number of employees: 10,317
North America 910.2 (10%)
Number of companies: 84
Number of employees: 15,455

800
600

Operatingincome
EBIT

202

1000

Japan 5,303.4 (55%)
Number of companies: 284*
Number of employees: 196,207* Hitachi, Ltd. and 283 consolidated subsidiaries in Japan, total 284 companies

Subtotal of Total
Revenues by segment
10,781.4 billion yen
Total Consolidated
Revenues
9,616.2 billion yen

High Functional
Materials & Components
1,363.2 (13%)
Construction
Machinery767.3 (7%)

Power Systems
777.3 (7%)

Social Infrastructure &Industrial Systems
1,446.6 (14%)

Electronic Systems &Equipment
1,116.7 (10%)

007

Major Fields of Business and Products

Hitachi Group
Sustainability
Report 2014

Information & Telecommunication Systems
Systems Integration, Outsourcing Services, Software, Disk Array Subsystems, Servers,
Mainframes, Telecommunications Equipment, ATMs
Hitachi Information & Telecommunication Engineering, Ltd., Hitachi-Omron Terminal
Solutions, Corp., Hitachi Computer Products (America), Inc., Hitachi Computer Products(Europe) S.A.S., Hitachi Information & Control Solutions, Ltd., Hitachi Solutions, Ltd., Hitachi
Systems, Ltd., Hitachi Consulting Corporation, Hitachi Data Systems Corporation, Hitachi
Information & Telecommunication Systems Global Holding Corporation

Power Systems
Thermal, Nuclear and Renewable Energy
Power Generation Systems, Transmission &Distribution Systems
Hitachi-GE Nuclear Energy, Ltd., Hitachi Power
Solutions Co., Ltd., Horizon Nuclear Power
LimitedSocial Infrastructure &Industrial Systems
Industrial Machinery and Plants, Elevators,
Escalators, Railway Systems
Hitachi Industrial Equipment Systems Co.,
Ltd., Hitachi Elevator (China) Co., Ltd., Hitachi
Building Systems Co., Ltd., Hitachi Plant
Construction, Ltd.

Hitachi Unified
ComputePlatform*

Electronic Systems & Equipment
Semiconductor and LCDs, Manufacturing
Equipment, Test and Measurement Equipment,
Advanced Industrial Products, Medical
Electronics Equipment, Power Tools
Hitachi High-Technologies Corporation, Hitachi
Koki Co., Ltd., Hitachi Kokusai Electric Inc.,
Hitachi Medical Corporation

Photovoltaic Power
Generation System*
Oita Solar Power
Corporation, Oita solar
power (Mega solar
power plant)

Class395 high-speed train (UK)*Construction Machinery
Hydraulic Excavators, Wheel Loaders, Mining
Machinery
Hitachi Construction Machinery Co., Ltd.

Hitachi Construction Machinery’s
Double-arm Working Machine

Digital Media & Consumer Products
Air-Conditioning Equipment, Room Air
Conditioners, Refrigerators, Washing Machines,
Optical Disk Drives, Flat-Panel TVs
Hitachi Appliances, Inc., Hitachi-LG Data
Storage, Inc., Hitachi Consumer Products(Thailand), Ltd., Hitachi Consumer Marketing,Inc.

Hitachi Appliances’ Large
Capacity Refrigerator“Vacuum Compartment
FS” X seriesHigh Functional Materials &Components
Semiconductor and Display Related Materials,
Circuit Boards and Materials, Automotive Parts(Molded Plastics, etc.), Energy Storage Devices,
Specialty Steels, Magnetic Materials andComponents, High Grade Casting Components
and Materials, Wires and Cables
Hitachi Chemical Company, Ltd., Hitachi Metals,
Ltd.

Hitachi Medical’s MRI System

Automotive Systems
Engine Management Systems, ElectricPowertrain Systems, Drive Control
Systems, Car Information Systems
Clarion Co., Ltd., Hitachi Automotive
Systems, Ltd., Hitachi Automotive
Systems Americas, Inc.

Hitachi Automotive
Systems’ SemiActive Suspension
SystemHitachi Chemical’s
Industrial Li-ion Batteries

Others (Logistics and Other services)
Logistics, Property Management
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.

Hitachi Transport System’s truck andMetropolitan East Distribution Center

Financial Services
Leasing, loan guarantees
Hitachi Capital Corporation

Hitachi Capital’s Hitachi
Corporate Card

: Main products and services: Positioning of principal affiliated companies (as of March 31, 2014) *: Products and services of Hitachi, Ltd.
(Notes.) 1. Hitachi America, Ltd., Hitachi Asia Ltd., Hitachi (China), Ltd., Hitachi Europe Ltd. and Hitachi India Pvt. Ltd. are the Hitachi Group’s regional supervising company for
Americas, Asia, China, Europe and India, and they sell the Hitachi Group’s products.
2. Hitachi Information & Control Solutions, Ltd. changed its name to Hitachi Industry & Control Solutions, Ltd. in association with the reorganization of the informationand control solution business for industrial fields, the security system business and the printed-circuit board manufacturing business of the Group as of April 1, 2014.

Top Commitment Message from Management

Leveraging Hitachi’s Strengths to
Resolve Social Issues“Hitachi delivers innovations that answer society’s challenges. With our talented team andproven experience in global markets, We Can Inspire the World.”
Inspire the world—to meet this challenge, set down in the Hitachi Group Vision in fiscal
2013, our emphasis is on winning, maintaining, and growing the trust of global society.
This means not only developing technologically superior products and services to meetcustomer needs, but also observing fair, sound business processes grounded in the law
and corporate ethics, so that we can remain a trustworthy partner in our customers’eyes. In line with the Hitachi Founding Spirit of sincerity, we will pursue integrity andcomplete transparency in our business operations to increase the trust that society placesin us. We will also ensure compliance, product quality, and safety as part of our ongoingcommitment to the principle of Basics and Ethics.

Resolving Social Issues through Business
Global society faces many difficult challenges that cannot be resolved overnight. Whether
it is the worldwide depletion of water resources or climate change, national energy
policies linked to the global political and economic situation, the power shortages comingfrom surging energy demand in emerging countries, the medical and healthcare systems
needed to handle the rapid graying of society or plunging birthrates in the developed
world, be assured that Hitachi’s technologies, experience, and knowhow are alreadyhard at work. We believe that there are two key elements required for Hitachi to provide

009
Hitachi Group
Sustainability
Report 2014

solutions to these social issues for meeting the expectations of global society. The firstis two-way communication with customers and other stakeholders. To find solutions forour customers and for global society, we need a solid grasp of the circumstances in every
country and region as well as the background to their particular ones. The second is theforesight to develop solutions not only for current issues but for potential ones as well.
In addition to rapidly responding to changes in social conditions, our aim is to help build
a sustainable society—finding the optimal energy mix, for example, among coal-fired
thermal power, shale gas, nuclear power, solar power, and wind power. This will requiredeveloping deep insights into global society 50 to 100 years from now, including insights
into demographics and energy and environmental issues. Working together to identify thecomplex issues facing our customers and global society and then leveraging the HitachiGroup’s combined strengths to find solutions—that’s how we will Inspire the World.

Globalizing Management
The 2015 Mid-term Management Plan, our business plan for the three years beginning infiscal 2013, highlights three key policies: Innovation, Global, and Transformation. We havebeen transforming our business portfolio and expanding our service businesses basedon these key policies. In fiscal 2014, we took on the further challenge of globalizing ourmanagement. Over the years we have globalized operations, choosing the best regions
from around the world for procurement and production. We have taken management
closer to our customers to expedite business, including establishing, for the first timein April, a global Chief Executive Officer for our rail systems business in the United
Kingdom. Realizing that global management will also require employing our humancapital worldwide, we have been building a framework for the global deployment ofGroup employees based on a common personnel system and evaluation platform. We willcontinue to expand the scope of this framework to employ people in the right place at theright time to be better partners with our global customers.
As of April 2014, Hitachi established a Chief Operating Officer position to work alongside
our Chief Executive Officer, effectively integrating the implementation of our Mid-termManagement Plan with the speedy delivery of solutions to customers and global society,while bolstering our management framework. Drawing on this enhanced leadership
structure, we will continue to address diverse social issues through our Social Innovation
Business, while fulfilling our responsibility to global society as a corporate citizen byrespecting human rights, as defined by the United Nations Guiding Principles on Businessand Human Rights, while also ensuring sustained protection of the global environment.

Hiroaki Nakanishi
Chairman & CEO

Toshiaki Higashihara
President & COO

WEB

Hitachi to Strengthen Leadership Team to Drive Global Business Expansion in
the Rail Systems Business
http://www.hitachi.com/New/cnews/month/2014/03/140320.html

WEB

Hitachi Announces Changes of Top Managements
http://www.hitachi.com/New/cnews/f_140108.pdf

MESSAGE

Executive Officer's Message: CSR andthe Environment
Meeting Global Challenges with Social Innovation
We are using our Social Innovation Business,
which fuses social infrastructure with IT, to tackle
the many challenges facing global society.
Drawing on the technologies and knowhow
honed on business frontlines, Hitachi products
and services have helped to create the foundation
for the social infrastructure, including waterworks,transportation systems, information
communications, and power stations around theworld—developed and emerging countries
included. At the same time, we realize thatbusiness affects the environment, the social
systems, and governance in local communities.
Corporate social responsibility (CSR) means
finding a balance between minimizing thenegative social impact of business activities
through legal compliance, respect for humanrights, and product safety, as well as developing
new value in local communities by creating jobs,
protecting the environment, and contributing tosociety through business. To achieve that balance,
we have set new organizational targets for CSR
and the environment.

Toshiaki Kuzuoka
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.

Communication is key to identifying exactly what
global society expects from Hitachi and from ournon-financial ESG*1 activities and for responding
to these expectations through our management
strategies and everyday operations. By talking
with a wide range of stakeholders—customers, local communities, suppliers and NGOs—
we can quickly spot and reduce environmental, supply chain, and governance businessrisks.
This communication give us the chance to make sure that our stakeholders understandthe aims of our Social Innovation Business and our CSR and environmental activities, aswell as to check that these are consistent with the expectations of global society and are
helping to resolve social challenges, while improving the quality of our management.

It is our responsibility as a company engaged in a broad spectrum of social infrastructurerelated businesses to address the varied challenges facing global society. Drawing on two-way communication with our stakeholders, we look forward to meeting the social
responsibility of Hitachi as a major global enterprise.
*1 ESG: Environment, Social, Governance

CSR Management Structure
http://www.hitachi.com/csr/strategy/management/system.html

010
Hitachi Group
Sustainability
Report 2014

MESSAGE

011

Executive Officer's Message:
Procurement

Hitachi Group
Sustainability
Report 2014

Working with Suppliers to Address Issues across the Entire Supply Chain
The scope of corporate responsibility for the
supply chain management underpinning ourbusiness has widened in recent years. Allcompanies are now expected to carefully oversee
CSR activities related to the environmental andhuman rights risks and other issues across theentire supply chain—not only tier 1 but also tier 2
and 3 suppliers—and to deal effectively with any
problems.
Hitachi is responding to the broader social
expectations of companies by working as a Groupto identify and mitigate all risks. We have also
begun CSR monitoring, along with external
audits, of selected suppliers from China and therest of Asia.
In September 2013, we created the Hitachi Group
Conflict Minerals Procurement Policy, once again
clearly stating to suppliers that Hitachi as acompany will not be party to human rights
violations or social instability. We will continue todevelop highly transparent supply chain
management and set up sustainable supply
chains.

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

MESSAGE

Executive Officer's Message: Human
CapitalEnhancing Human Capital Management through Employee Surveys and Career
Development Support
We created the Global Human CapitalManagement Strategy in fiscal 2011 to optimize
individual and organizational performance
toward our goal of becoming a major global
player. In fiscal 2013, we conducted Hitachi
Insights, a survey of around 180,000 employees
worldwide. In fiscal 2014, we will draw on theseinvaluable survey responses to take further
measures toward developing employee-friendly
workplaces and organizations.
Diversity management is another key Hitachi
strategy; we are striving to create workplaces thatembrace diverse human capital. A key focus is toaccelerate support for women in the workplace asa touchstone for diversity promotion, including
announcing indicators for the appointment offemale executives and managers in Japan andholding exchanges of view between the executive
in charge of human capital and female
employees. This work was recognized in March2014 when Hitachi, Ltd. received Nadeshiko Brand
designation from the Ministry of Economy, Tradeand Industry and the Tokyo Stock Exchange.

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

In fiscal 2014, we will proactively support careerdevelopment and will continue to hone ourdiversity management, opening the way for all employees to reach their potential.

012
Hitachi Group
Sustainability
Report 2014

VISION

013

Management Strategies and CSR

Hitachi Group
Sustainability
Report 2014

As a global company, we share society's values and pursue sustainable growthby 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.

For Hitachi, CSR is about realizing theworld we envision in our Group Vision.
That is, to contribute through innovation
to both helping to build a safe, secure,comfortable, and fair society and helping
to tackle global challenges: poverty,
inequality in education, diseases, natural
resource and energy issues, population
concentration in cities, and otherenvironmental issues. CSR is one of thedrivers to achieve the goals in our Midterm Management Plan, our action planfor our vision. By implementing this plan,
we fulfill our responsibilities as a good
corporate citizen by promoting Social
Innovation Business, and with robust,
diverse governance and a pioneering
spirit as well as the strong ethics of ouremployees. We also comply with nationallaws and work in line with the HitachiGroup Codes of Conduct.
We created our Group Vision in May
2013, at the start of 2015 Mid-termManagement Plan, which draws on the
ethics and values that the Group has
developed over the past 100 years—
encapsulated in our Corporate Credo
and Founding Spirit—to lay out a new
mid- to long-term vision. Recognizing
the changing macro trends in society, thevision shows our commitment to help
solve some of the issues facing the global
community and to realize a sustainable
society. We also merged the Corporate
Credo, Founding Spirit, and Hitachi Group
Vision into the Hitachi Group Identity.

Trends in Society and Hitachi Group Identity
Macro Trends in Society

Hitachi Group Identity• Toward a society centered on
distribution, sharing, and recycling• Expansion of free trade zones• Global economic growth led byemerging nations• Global market structural changes
based on energy resources

Corporate Credo:
Contribute to society through thedevelopment of superior, originaltechnology and products

Hitachi Founding Spirit:
Harmony, Sincerity, Pioneering Spirit

Achieving a Sustainable
Society• Securing water resources, energy,
and food• Replacing aging infrastructure systems• Reducing CO2 emissions• Improving transportation systems• Dealing with the low birth rate and an
aging population• Promoting material recycling

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

Direction of our management strategies

Rules for fair corporate behavior

Mid-term Management Plan

Codes of Conduct

Business plans

Companies’ regulations
and standards

0142015 Mid-term Management Plan Highlights

Hitachi Group
Sustainability
Report 2014

The 2015 Mid-term Management Plan focuses on innovation, global, andtransformation. To achieve our targets, we will grow and transform through our Social
Innovation Business.
2015 Mid-term Management Plan and FY 2013 Results (Consolidated)
Management Targets

FY 2013 Results*2

FY 2015 Target*1
Revenues

10 trillion yen

9,616.2 billion yen

EBIT*3 (operating income) ratio

Over 7% (over 7%)

6.0%

Net income attributable to Hitachi, Ltd. stockholders

Over 350 billion yen

264.9 billion yen

Over 70 yen

54.86 yenOver 30%

27.4%

Net income attributable to Hitachi, Ltd. stockholders per share
Total Hitachi, Ltd. stockholders’ equity ratio (manufacturing, services & others)
Service Revenue Ratio, Overseas Revenue Ratio, Number of Employees
Service revenue ratio (including systems solutions)Over 40%

32%

Overseas revenue ratio

Over 50%45%

Employees in Japan

200,000

196,000

Employees outside Japan

150,000

124,000

Effects of Hitachi Smart Transformation Project
Total up to FY 2015
Cost reduction effectTotal up to FY 2013

400 billion yen

220 billion yen*1 Assumed exchange rate: 90 yen/US dollar, 115 yen/euro *2 Exchange rate: 100 yen/US dollar *3 EBIT: Earnings before interest and taxes

2015 Mid-term Management Plan and Related Non-Financial Activities
In addition to financial activities, non-financial activities play a crucial role in achieving the2015 Mid-term Management Plan goals. We set targets for non-financial activities related
to key management policies and started these activities in fiscal 2013.
Material Issues for Hitachi

Management Focus

Related Non-Financial Activities
Sustainable Business

Innovation:
Strengthen service businesses
that maximize the utilization of
IT and bring about innovation

ExpandR&D centersoutside Japan

Promote R&D in 7 areas globally (as of June 2014)
Increase R&D staff FY 2013 Result: approx. 290 people

FY 2015 Target 400 people

Strengthen Open Innovation FY 2013 Result: 80 cases outside Japan, 250 in Japan
Service business sales ratio

FY 2013 Result: 32%

FY 2015 Target Over 40%

Caring for the Environment
Eco-Product sales ratio

FY 2013 Result: 89%

Diversity Management

Global:Deliver innovation to customers
and society globally

FY 2015 Target 90%

Diversity in directors (as of April 2014, out of 14 directors)• Outside directors: 8 • Non-Japanese: 4 • Females: 2
Female managers (Hitachi, Ltd.)
Female senior executives

FY 2013 418 women

FY 2020 Target 1,000 women

Target to be assigned by FY 2015
Respect for Human Rights

Business and human rights

FY 2013 Results: 2 human rights due diligence pilot programs
Public Policy Initiatives

Stakeholder dialogues FY 2013 Results: Regions, themes expanded; held in 3 regions (Europe, US, and China)
Diversity Management

Transformation:
Transform Hitachi: To deliver
innovation by standardized andspeedy operation

Promotion of global human capital management strategy
FY 2013 Results: Introduction of Global Performance Management / Talent development for global
executives / Introduction of Global Leadership Development program
Sustainable Business
Promotion of Hitachi Smart Transformation Project
Total up to FY 2013 220 billion yen

Target outcome (aggregated FY 2011–FY 2015) 400 billion yen

015

CSR Management

Hitachi Group
Sustainability
Report 2014

With our Corporate Credo of contributing to society through the development ofsuperior, original technology and products, we strive to realize a sustainable society
by integrating global social and environmental expectations with our management
through communication with stakeholders.
New CSR Management Framework

Hitachi’s CSR Activities
Looking toward the next Mid-termManagement Plan which will startfrom fiscal 2016, to further integratemanagement strategies and CSR, we arerevising our CSR Policy to a new frameworkusing ISO26000. From fiscal 2014, we willfurther improve communications with our
stakeholders to recognize and fulfill oursocial responsibilities. We will also reinforce
the PDCA cycle to ensure execution of ouractivities and to improve the quality of ourmanagement.

Stakeholder Engagement

Recognize
Properly recognize oursocial responsibility

Review and
Improve
Review and improve
CSR activities
through proactive
communicationand stakeholder
engagement

1. Recognition of Social
Responsibility
2. Organizational Governance
3. Human Rights
4. Labor Practices
5. The Environment
6. Fair Operating Practices
7. Customers (Consumer Issues)
8. Community Involvement andDevelopment
9. Review and Improvement of
CSR Activities

Identify, Prioritize
and Act
Identify relevant
issues, establish
priorities foraddressing issues,
and act

Hitachi puts great importance on communication with our stakeholders at various
areas of our business activities. We will further work on developing more effective
communication tools as well as on information disclosure to build trust relationships
with our stakeholders.
Page(s)Communication
Tools

pp. 161-166 Customer Satisfaction
pp. 063-064 Brand Management • CS activities• Marketing
pp. 085-098 Environmentally
Conscious Products and Services • Website• Ads
pp. 158-160 Quality Assurance
Activities

Stakeholders

Stakeholders
Government,
Municipalities, Industrial
Associations

Customers• Announcement offinancial results• General shareholders’meetings• IR events

Shareholders andInvestors

pp. 133-137
Supply Chain Management• Procurement activities• Supplier meetings• CSR monitoring• CSR audits

Suppliers

Local
Communities

Hitachi

pp. 167-170
Communication with
Shareholders and Investors

Academic Associations
and ResearchInstitutions

NGOs and NPOs
pp. 154-157
Global Human Capital
Development• Intranet• Employee surveys

Communication
Tools• International conference
participation• Policy council
participation

Page(s)pp. 046-048
Working with Governments
and Public Policymakers

pp. 029-048 Contributing to• Contributing to local
Society through Business
communities throughpp. 171-183
business• Participating in volunteer Social Contribution Activities
activities• Open innovation(joint research)

pp. 021-028
Hitachi R&D and Intellectual
Property Rights• Stakeholder dialogue• Dialogue throughcollaboration

pp. 049-058
Activities by Country and Region
pp. 130-132
Respect for Human Rights

Employees
Global Environment

We use a materiality process based on dialogues
with stakeholders to identify material issues. To
integrate our management strategies and CSR,
we reflect, in our activities, material issues related
to the key management policies in our Mid-termManagement Plan and we seek to materialize CSR
in line with our management strategy.

Importance for stakeholders

Material Issues for Hitachi

pp. 073-128
Environmental Report

1. 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

Influence on businessSelection Process for Material Issues
To select our material issues, we evaluate and verify sustainability issues that are identified through dialogues with stakeholders, suchas international organizations, investors, and NGOs as well as by monitoring public policy trends, from two dimensions: importance forstakeholders and influence on business. Importance for stakeholders includes human rights, international development, the environment,
reporting, ethics, and regional and international requirements. Influences on business are assessed from the perspectives of global, fusion, andthe environment, the main points of our 2012 Mid-term Management Plan, as well as the perspectives of innovation, risk, reputation, and costeffectiveness.

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. The goals of the neworganization are laid out in Hitachi Group CSR Statement and Mission. In fiscal 2014, we
will continue to share Hitachi Group CSR Statement and Mission with in-housecompanies and Group companies.

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
To promote CSR in the whole Group, the CSR and Environmental Strategy Division,
together with CSR-related departments at Hitachi, Ltd. (the CSR Promotion Team*1) andCSR departments of in-house companies, Group companies, and regional headquarters
outside Japan, regularly to shares a common direction and develops 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 aproactive approach to incorporate global social issues into our management strategy,
while continuously strive 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.

Structure of Hitachi Group CSR Promotion*2 Senior Executive Committee: Develops CSR management policies at the executive level*3 As of March 2014

016
Hitachi Group
Sustainability
Report 2014

017

CSR Activities: Results and Plans★★★：Achieved★★：Partially achieved

Hitachi Group
Sustainability
Report 2014★：Just Launched

1. Recognition of Our Social Responsibility
Previous CSR policy

FY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Disclosure of Informationand Stakeholder
Engagement

Continue engaging instakeholder dialogues

Held a dialogue in Belgium
on social issues related to big
data in healthcare★★

Continue stakeholder
dialogues to explore ways tosolve social issues throughbusiness

Held a dialogue in the US on
CSR procurement

Pursue partnerships withNGOs

Postponed a planned
dialogue in Japan

2. Organizational GovernancePrevious CSR policy
Commitment to
Corporate Social
Responsibility

FY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Create next CSR
strategy

Worked with CSR
representatives from 11
operations outside Japan andaround 25 Group companies
in Japan to create new CSRManagement Framework (tobe applied from fiscal 2014)★★★

Roll out new CSRManagement Framework
Group-wide

Bolster global CSR
framework

Held meetings with CSR
representatives in Europe
and India, representatives
from around 10 local Group
companies attended in eachcountry★★★

FY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Conduct education on
Business and Human
RightsCreated the Hitachi Group
Human Rights Policy, publicly
disclosed as a company
regulation in May 2013★★★

Introduce Hitachi Group
Human Rights Policy as acompany regulation Groupwide

Ensure that CSR commitment
is shared throughout Hitachi

3. Human Rights
Previous CSR policy
Corporate Ethics andHuman Rights

Create guidance on Human
Rights due diligence

Worldwide rollout of Businessand Human Rights e-learning
course in Japanese, English
and ChineseContinue Human Rights elearning in local subsidiaries
outside Japan

Business and Human Rights
training for all executive
officers
Conduct Human
Rights due diligencepilot programs

Conducted two Human Rights
due diligence pilot programs,
one for specific businesses
and the other from theregional perspective

★★★

018

4. Labour Practices
Previous CSR policy

FY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Working Environment

Promote females to
executive andmanagement
positions (strengthen
top-levelcommitment,
encourage motivationof female employees,
and present rolemodels)Held 5 dialogues between
General Manager of Human
Capital Group and female
employees, 115 females
participated★★★

Continue steps to promote
the appointment of female
executives and managers toretain and develop woman
leaders

Held Hitachi Group survey on
the role of females
employees; KPIs were set forGroup companies on
workplace support for female
employees
Held 13 leadership-related
seminars for female
employees; 355 females
participatedEstablish balanced
working styles bycontinuing WLB (Work-Life Balance)-Up!
Month

Implemented WLB-Up!
Month to help people reach awork-life balance

Ongoing

Strictly follow legal
employment rate forpeople withdisabilities at all
Hitachi Group
companies in Japan

Reached an employment rateof 2.03% as of June 2013 (53companies still below thelegal rate)★★

Strictly follow legal
employment rate for people
with disabilities at all HitachiGroup companies in JapanFY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Raise the Eco-Productsales ratio

Raised from 84% in FY 2012
to 89%★★★

Raise the Eco-Product salesratio

5. The Environment
Previous CSR policy
Environmental
Conservation

Hitachi Group
Sustainability
Report 2014

019

6. Fair Operating Practices
Previous CSR policy
Corporate Ethics andHuman Rights

Responsible Partnerships
with Business Partners

FY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Continue to more
widely implement the
Hitachi Group Codesof Conduct

Provided case studies to
employees via the intranet in
Japanese, English, andChinese for workplace
discussion; 139,038 people
participated in workplace
discussions held worldwide
during Corporate Ethics
Month

★★★

Inform and familiarize all
employees with the HitachiGroup Codes of Conduct toinstill corporate ethics andensure legal complianceContinue complianceeducation andauditing of regional
offices outside Japan

Conducted audits of regional
office in Singapore★★★

Continue CSR audit
suppliers globally

Conducted CSR audits of 16
suppliers in China and therest of Asia★★★

Continue CSR audits ofsuppliers (in China and therest of Asia) to strengthen
global supply chains

Continue distributing
information on
environmental
management to
suppliers

Revised Green Procurement
Guidelines and informed
around 23,000 suppliers★★★

Continue distributing
information on
environmental management
to suppliers

Achievementlevel

FY 2014 goals/plans

7. Customers (Consumer Issues)
Previous CSR policy

FY 2013 goals/plans

Results in FY 2013

Contribution to Society
through Our BusinessContinue
implementing the
Hitachi Group QF(Quality First)
Innovation
Movement* andassess the results

Continued implementing the
Hitachi Group QF Innovation
Movement

Increase the numberof R&D staff at
corporate research
centers outside Japan
to 400 by fiscal 2015

Reached approx. 290 R&D
staff at six research centersoutside Japan*

Ongoing★★★

Continue implementing the
Hitachi Group QF Innovation
Movement and assess theresults

Increase the number of R&D
staff at corporate research
centers outside Japan to 400
by fiscal 2015 to localize R&D
activities

Hitachi Group QF (Quality First) Innovation Movement: Activities to ensure product safety, compliance with laws
and regulations, human resource development, and quality enhancement.

Hitachi Group
Sustainability
Report 2014

020

8. Community Involvement and Development
Previous CSR policy
Corporate Citizenship
Activities

FY 2013 goals/plans

Results in FY 2013

Achievementlevel

FY 2014 goals/plans

Continue social
contribution activities
on the themes of
education, theenvironment, andsocial welfare

Held 43 social contribution
programs (e.g., the Universal
Design (UD) Classroom
Program, the Horqin Desert
Greening Project in China, theHitachi Science Seminar andthe Hitachi Volunteer
Seminar); 2,743 people
participated, including
employee volunteers★★★

Revised the social
contribution activity themes
to include education, theenvironment, and community
support in line with new CSRManagement Framework andcontinue social contribution
programs on these themes

FY 2014 goals/plans

9. Review and Improvement of CSR Activities
Previous CSR policy

FY 2013 goals/plans

Results in FY 2013

Achievement
level

Disclosure of Informationand Stakeholder
Engagement

Continue engaging instakeholder dialogues

Held a dialogue in Beijing on
information disclosure in
China

★★

Continue engaging instakeholder dialogues
Continue to be selected forthe DJSI World Index
Rebuild external website formore effective
communication withstakeholders

External Evaluations

Since 2009 Hitachi has been selected for fiveconsecutive years for the Dow Jones Sustainability
Indices (DJSI) World, one of the world's leading
sustainability investment fund indexes.

Hitachi Group
Sustainability
Report 2014

INNOVATION

Hitachi R&D and Intellectual Property
RightsHitachi has actively pursued research and development (R&D) since
our founding to fulfill our corporate credo of "contributing to society
through the development of superior, original technology andproducts." In the area of intellectual property (IP), we not only inactivities to protect our IP, by preventing imitations, but we also help
set international standards and promote the development of healthy
global markets.

Research and Development Strategy
At Hitachi, R&D is being accelerated as part of a strategy to achieve growth in the global
market spear-headed by Social Innovation Business. In fiscal 2013, the domesticorganization (consisting of the Technology Strategy Office, Central Research Laboratory,
Hitachi Research Laboratory, Yokohama Research Laboratory and the Design Division,and the six overseas research bases) was enhanced as part of a seven hub global
network*1 to cooperate in achieving the goals set out in the 2015 Mid-term Management
Plan: 1) develop world-winning technology supporting Hitachi's core business, 2)
reinforce regional research that contributes to global business expansion, and topromote the Hitachi Smart Transformation Project.*2
Open innovation is being promoted to take advantage of global resources and to resolve
business issues with customers. Joint research with customers and collaborative R&D withpartners are also being pursued to ensure that R&D achievements translate into business.
Participation in industry-academia-government partnerships worldwide is also being
used to lay the foundations for future business.
*1 Seven regional hubs: Japan, China, India, Southeast Asia, USA, Brazil, and Europe*2 Hitachi Smart Transformation Project: A project launched in fiscal 2011 to reform Hitachi's cost structure bythoroughly reviewing cost structure, strengthening our financial position, and generating a cash base for growthinvestments.

Research and Development Plan
R&D investment represents about 4 percent of Hitachi Group revenues. The ratio of
operating profit margin to R&D expenditure is used as a measure of R&D efficiency, and
the Group target is to deliver an ROI*1 of greater than one.
At Hitachi, Ltd., R&D investment is allocated strategically by target. Approximately 70
percent represents Sponsored or Advanced Sponsored Research from internal companies
and Hitachi Group companies based on business roadmaps for current and nextgeneration businesses. The remaining 30 percent represents 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
and advance core businesses, targeting practical application within three to five years.
Frontier and Platform Research aims to create innovative technologies for future corebusinesses. The goal in fiscal 2014 is to start using a customer-driven research approachthat works in tandem with the corporate policy to strengthen Hitachi's service business.
Research in services, which represented only 5 percent of Frontier and Platform Researchin fiscal 2013, will be increased to 15 percent by 2015. Hitachi will contribute to the
expansion of business and accelerating global development by pursuing R&D inalignment with management strategy.

021
Hitachi Group
Sustainability
Report 2014

In 2012, Hitachi together with the IEEE Computer Society co-sponsored theestablishment of the IEEE Technical Field Award for Innovation in Societal Infrastructure
within the IEEE, the world's largest professional association for the advancement oftechnology. Applications for the 2014 inaugural award closed in January 2013, and theinaugural recipient was announced in July 2013. The purpose of this award is to bringrecognition to innovative developments in societal infrastructure technology taking placeworldwide, and to promote the proliferation of Social Innovation Business.
*1 ROI: Return on investment

Key Indicators

Trend in R&D Efficiency (Hitachi Group)

Trend in R&D Expenditure (Hitachi Group)022
Hitachi Group
Sustainability
Report 2014

Strengthening Global R&D
In fiscal 2013, to reinforce our global research capability, the global R&D network was
further improved to strengthen R&D closely linked to regional markets, and that
contributes to business expansion. The Hitachi China Materials Technology Innovation
Center was set up in Shanghai and the Big Data Research Laboratory opened in Santa
Clara in April, followed by the Hitachi Brazil Laboratory in Sao Paulo in June and theEuropean Big Data Laboratory in Manchester in October.
By reinforcing the global R&D organization, not only is R&D dedicated to each region, but
R&D is conducted with a diverse group of global talent. As well, experience and ideas arestimulating creativity and innovation. The number of R&D staff outside Japan working on
IT, infrastructure, and materials research will be increased, raising the total number of
researchers from around 290 in fiscal 2013 to 400 by fiscal 2015. Further, a policy of
appointing locally hired staff as research leaders is being undertaken to accelerateregionally led R&D.
Main Hitachi Group R&D Centers

023
Hitachi Group
Sustainability
Report 2014

Main Research Themes at Overseas Research Centers
Europe(Hitachi Europe Ltd.)

Advanced physics / Rail systems / Automotive systems / Power systems / Design / Big data applications

India(Hitachi India Pvt. Ltd.)

Software / Societal infrastructure systems / Knowledge processing

Asia(Hitachi Asia Ltd.)Big data analytics / Cloud storage / Water treatment

China(Hitachi (China) Research &Development Corporation)

Societal infrastructure systems / Information & telecommunication systems / Medical & Healthcare
systems / Chinese materials & Manufacturing processes / Engine control & hydraulic systems / Design

USA(Hitachi America, Ltd.)

Automotive equipment / Storage systems / Wireless communication systems / Big data analytics /DesignBrazil(Hitachi South America, Ltda.)

IT systems for agriculture and mining / Societal infrastructure systems

Open Innovation
Hitachi maintains an open R&D environment for innovative technology development thatcannot be realized by Hitachi alone, working with research institutes, universities andcustomers both within and outside of Japan. For example, the Hitachi Cambridge
Laboratory was set up within Cambridge University in the United Kingdom in fiscal 1985
to conduct research in advanced physics at the frontier of computing, device, andmaterial innovation. A joint research laboratory was established within Tsinghua
University in 2001 for research on information and telecommunications.
In fiscal 2013, Hitachi R&D cooperated with around 250 research institutes within Japanand 80 research institutes outside of Japan. Further, Hitachi is promoting ties withresearchers overseas through programs such as the Hitachi Research Visit Program, setup in fiscal 1985 to invite researchers to Japan on fixed-term contracts. Hitachi willcontinue to promote regionally led R&D and open innovation contributing to resolving
the issues faced by customers and society.

Examples of R&D Achievement
Remote Work Support System Using AR and 3D Data Processing
Augmented reality (AR) is a technology using special
glasses to superimpose computer-generated words
and images over the wearer's field of view. Hitachi hasdeveloped a work support system using AR and threedimensional (3D) data processing that enables veteranengineers in Japan to provide instructions to operators
at plants outside of Japan, or check that a task has
been completed correctly. The operator can view realworld visual information as 3D data, superimposing
words and images over particular places in real time.
Experiment on remote work support
The supervising engineer can also see the operator'sview to guide work in areas that cannot be seen via
monitoring cameras, such as behind a device or in a shadow. The next step will be
repeated pilot tests before applying the technology to remote work support in plants
outside of Japan.

024
Hitachi Group
Sustainability
Report 2014

Gamma Ray Camera for High Radiation Environments
From February 2012, Hitachi together with Hitachi GE
Nuclear Energy, Ltd., participated in a New Energy
Development Organization (NEDO) project to develop
a gamma ray camera to measure gamma ray intensity
distribution for checking the radiation levels in the
Fukushima Daiichi Power Plant reactor building. To
survey the entire area, the camera had to be capableof operating in extremely high radiation conditions. A
signal processing circuit and a structure to shield theGamma ray camera prototype
core gamma ray detection module from external
gamma rays was used to create a camera capable ofmeasuring gamma ray intensity distribution in a highly
radioactive environment of 300 mSv/h. The prototype has been in use on-site since fiscal
2013. Hitachi will now work with other organizations to put this camera into fulloperation.

025
Hitachi Group
Sustainability
Report 2014

Intellectual Property
IP is a key element of Hitachi's business strategy. We are protecting the innovations
emerging from our R&D, as well as the Hitachi brand, by using intellectual property
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 provide 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 tocustomers and to cooperate with other companies through cross licensing. We boosted
our patent application ratio outside Japan from 47 percent in fiscal 2009 to 59 percent by
fiscal 2013. To efficiently build and maintain our global patent portfolio, we will continue
filing PCT (Patent Cooperation Treaty) applications as an efficient way to protect ourinventions across multiple countries and regions.
Together with R&D center globalization, we are also globalizing our IP hubs. We currently
have IP offices in Washington, DC, and San Francisco in the United States, Beijing andShanghai in China, and Munich in Germany to protect the innovations generated
through overseas R&D activities.
Another key issue is developing globally minded IP human resources. Since fiscal 1964,
Hitachi's Intellectual Property Division has operated an overseas job training system,
sending trainees to IP law firms in Europe and the United States. In fiscal 2013, four
trainees went to the US, two to Germany, and one to the UK.
Key Indicators

Patent Application Ratios by Country or Region026
Hitachi Group
Sustainability
Report 2014

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 before undertaking R&D on new products and technologies in order toavoid IPR infringements. For IPRs that belong to others, we obtain licenses from IPR
holders before we use their IPRs. If any company is found to have infringed Hitachi's IPRs,
we encourage them to acquire the necessary license, and will take legal action, if
necessary.

Anti-Counterfeiting Activities
Protecting the Hitachi brand is crucial for supporting
our global operations, and we operate a rigorous
regime against infringements such as making andselling counterfeit goods carrying the Hitachi brandand illegally applying for or registering trademarks
similar to the Hitachi brand. We are also educating
consumers about these counterfeit goods.
As counterfeit goods and their sales routes havebecome more sophisticated, providing information
Anti-counterfeiting seminar in Iraq
about these goods to local police, customs officers andother public officials and garnering their cooperation
has become critical for effectively combating counterfeit products. In fiscal 2013, we
strengthened our partnership with government agencies. Our Intellectual Property
Division staff visited customs agencies in Dalian, Shanghai, and Ningbo in China andgovernment offices and authorities in Saudi Arabia and the United Arab Emirates toexchange information. We also held an anti-counterfeiting seminar in Erbil, Iraq, which
was attended by 125 people, primarily from the Iraqi government.

International Standardization Activities
To help create and expand markets as well as accelerate our global business expansion,
we are active in developing international standards, committing our employees to servein key positions within international organizations, such as the IEC (International
Electrotechnical Commission) Vice-President, and a IEC Market Strategy Board member.
We have established a Hitachi Group Standardization Committee to coordinate
international standardization for Group companies. The steering committee*1 for thisbody selects Hitachi Group priority themes and promotes standardization in the working
groups of the committee. One priority theme is smart cities. Japan has been appointed
secretariat for the International Standardization Organization (ISO) Subcommittee on
Smart Community Infrastructures. Yoshiaki Ichikawa from Hitachi Ltd. chairs thesubcommittee, releasing a technical report (ISO TR37150) in February 2014 andcontinuing to work on technical specifications.
Hitachi's international standardization work is also recognized outside the company. In
fiscal 2013, Shigetoyo Nomura, Kyoko Tajima, and Hirotaka Yoshida won Industrial
Science and Technology Policy and Environment Bureau Director-General's Awards from
the Ministry of Economy, Trade and Industry for their contribution to standardization in
the fields of accessibility, the environment, and encryption technology. Yukiyasu
Shirasaka received an IEC 1906 Award from the IEC for his contribution to powertransformer standardization, and Osamu Namikawa received an Encouragement Awardin the ICT Field from the ITU Association of Japan for his service to environment-related
standardization for ITU-T,*2 ISO, and IEC.

027
日立グループサステナビリティ
レポート 2014

Hitachi is committed to contributing to international standardization to realize
innovation that resolves social issues, 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; includes CTOs (chief technology officers)of Hitachi in-house companies and Group companies. The committee is responsible for decision making on crossdepartmental and company-wide projects.
*2 ITU-T: The International Telecommunication Union's Telecommunication Standardization Sector

Hitachi Group Standardization Committee

Reward System for Employee Inventions
We motivate employees on the R&D frontlines with a reward system for new inventions.
To ensure that the reward system operates fairly and transparently, we set standards toevaluate inventions and disclose these standards to employees. We also have amechanism for receiving 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. As part of the system, we have developed aninvention information channel to promote communication between inventors and thebusiness divisions using their inventions. Inventors can ask the business divisions for
information about their patent implementation and check the evaluation standards used
to calculate the rewards for their inventions. To ensure transparency and inventor
satisfaction, we also set up an Arbitration Committee for Invention Rewards with thesame composition as the Invention Management Committee. Inventors can appeal
directly to this arbitration committee if they disagree with the amount they have been
awarded.
From fiscal 2005, we have given President's Awards to the top 100 inventors. As of 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 their joining Hitachi.

028
Hitachi Group
Sustainability
Report 2014

FEATURE

Contributing to Society
through Business
Hitachi’s R&D program focuses on products
and services that help to resolve social issues

Creating value to fulfill our Corporate Credo—
contributing to society through the developmentof superior, original technology and products—hasunderpinned our business development for more thana century.
Environmental issues are becoming global: climatechange and ecosystem degradation as well as energy,
water, resource and food shortages, urban population
growth, graying of societies, and others. To solve thesesocial issues, as a global corporate citizen, we create
both economic and social value for a sustainable
society.

FEATURE

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

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 ourbusiness operations.

We contribute to the reduction of CO2
emissions across society as a whole byproviding products and services with low
energy consumption.

We develop wind and solar power andother renewable energy power systems.
Also, we reduce CO2 emissions byimproving 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 theair, water, and soil.

Our water environment solutions—purifying polluted water and desalinatingseawater, for example—enable more
efficient use of this limited resource.

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Health and Aging
Responding to aging in societies
worldwide, our medical solutions maintainand improve health. As well as diagnostic
and testing equipment for early treatment,
we supply pharmaceutical manufacturing
equipment for safe, effective drugs.

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.

Cities and Transportation
Our infrastructure solutions increase safety
and comfort in cities and remote islands
with limited infrastructures. Solutions
include safe, high-speed transportation
networks; highly stable, efficient power
equipment and transmission networks fordiverse power sources, including renewableenergy; and water systems for a safe,
constant supply of water.

Worldwide, we propose new forms of cities
that are safer, more secure, and moreconvenient, and we contribute to thestandardization of smart city
infrastructures.

Our security systems cover exit / entry as
well as elevator operations andmaintenance.

Our safe, convenient railway and traffic
information systems help reduce theenvironmental burden and congestion.

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FEATURE

Key Hitachi Business Segments
Hitachi contributes to society through a wide array of business operations, including thesocial infrastructure business segment.

Information & Telecommunication Systems
Our expertise, is gained through a broad range of areas,
provides IT services tailored to diverse needs fromconsulting to systems development, operations,maintenance, and support.

We provide total IT solutions—from consulting to systems
development and operations—to assist corporations thatare upgrading social infrastructures and are globalizing
their operations.

1,954.9 billion yen

5.6%

Data Center (Okayama No. 3 Center)

98.5 billion yen

Power Systems
Our highly efficient and reliable thermal, hydro andnuclear power generation equipment, as well as wind,solar, and other renewable energy products, help to createa low-carbon society.

In fiscal 2013, we had the largest share in Japan for wind
power systems. By making these more efficient and by
developing offshore wind farms, we are helping to build alowcarbon society.

777.3 billion yen

2.1%

152.9 billion yen

Wind Power Generation System
Wind Power Kamisu 1st Offshore
Wind Farm,Wind Power Ibaraki, Co., Ltd.

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033

Social Infrastructure & Industrial Systems

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Our railway and traffic systems, elevators and escalators,
and water systems support daily life, and our industrial
machinery and energy-saving solutions reduce theenvironmental burden.

This much water will be supplied to nearby industrial parks
flom Asia's largest desalination plant, to be built by Hitachi
for a seawater desalination project in Dahej, Gujarat, India.

1,446.6 billion yen

3.9%

Monorail (Daegu, South Korea)

59.1 billion yen

Electronic Systems & Equipment
Our semiconductor fabrication equipment, broadcasting
and communications systems, medical care and testing
systems, and electric tools support the Information Age.

As of April 2014, Hitachi Medical's MRI scanners had
approx. 30 percent of the market share in Japan.
Developing this and other medical equipment promotes
better health for everyone.

1,116.7 billion yen

5.3%

Hitachi Kokusai Electricʼs Advanced
Batch Thermal Process System

52.6 billion yen

Construction Machinery
Our technological expertise helps us to develop solutions
in civil engineering and construction, building demolition,mining, and construction machinery sales, service andmaintenance.

This is the fiscal 2013 overseas sales ratio for construction
machinery. Our excavators, wheel loaders, and dump
trucks are used on construction sites and mines around theworld.

767.3 billion yen

9.6%

63.3 billion yen

Hitachi Construction Machineryʼs
Double-Arm Working Machine

034High Functional Materials & Components

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This business segment produces high functional materials
and components for IT, home appliances, and cars,
including semiconductor and display materials, circuitboards and related materials, synthetic resin car parts,
storage devices, advanced special metals, magnetic
materials and parts, advanced molded components, andcable materials.
Hitachi Metalsʼ NEOMAX®
Neodymium-based Sintered Magnets

Hitachi Chemical's ANISOLM, the world's most widely usedhigh functional anisotropic conductive film for LCDs, helps,
through low power consumption, to popularize flat panel
displays.

1,363.2 billion yen

7.5%

96.5 billion yen

Automotive Systems
We supply cutting-edge automotive equipment andsystems globally, including systems for engine
management, electric powertrains, drive control, and car
information.

Hitachi Automotive Systems develops new electronic car
parts for high levels of safety, convenience, and fuelefficiency. The fiscal 2012 ratio of these products to thewhole product line was equivalent to third place in sales
worldwide.

892.1 billion yen

5.3%

Hitachi Automotive Systemsʼ Semi-Active
Suspension System

4.9 billion yen

Digital Media & Consumer Products
Our reduced-energy commercial and domestic
airconditioning systems, home appliances and all-electric
products, as well as digital home appliances, help reduce
the environmental burden.

Responding to the surge of interest in power-saving andlong-lasting LED lighting, Hitachi Appliances will expand
the product line from 1,900 models in fiscal 2013 to 2,500
in fiscal 2014.

890.8 billion yen

0.5%-2.9 billion yen

Hitachi Appliancesʼ Multi-split air
condition "FLEXMULTI"(high-efficiency
model)

035

Others (Logistics, and Other services)

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Hitachi is also active in logistics, including systems logistics,
freight, inventory management, and packaging forshipping, as well as in other fields such as real estate.

This is Hitachi Transport System's eco-car ownership rate,
including hybrid, natural gas, electric and LPG vehicles, aswell as nationally certified, low-emission gas and biofuel
vehicles.

1,233.6 billion yen

3.7%

Hitachi Transport Systemʼs
Metropolitan East Distribution Centerand a large truck

48.1 billion yen

Financial Services
Worldwide, our optimal business solutions cover lease,loan and rental services, card services and securitization,
payment and collections, non-life insurance, trust, andoutsourcing services.

Hitachi Capital finances and operates wind and solar
power plants, providing Hitachi's combined strengths tofind 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.

338.5 billion yen

8.6%

34.6 billion yen

Hitachi Capitalʼs Hitachi Corporate CardFEATURE

Creating a Healthy, Safe Society
through Our Healthcare Business
Building on Hitachiʼs history of contributing to medical care withsuperior technologies, products, and services, we are using IT tocreate advanced healthcare solutions that support peopleʼs healthy
lives and future society.

Providing Optimal Healthcare Solutions
Healthcare stands alongside the environment and energy as an increasingly serious
global social issue. The developed world urgently needs to deal with the graying ofsociety, an increase in chronic diseases, and rising medical spending, while emerging
countries need to boost medical care and healthcare standards to meet their individual
requirements. In addition to medical examinations and treatment, preventive andconvalescent healthcare is becoming more and more important—nursing care included.
We see healthcare as an integral part of the social infrastructure supporting 21st century
society. Hitachi has long provided products and services in the entire healthcare value
chain from disease prevention and medical checkups to examinations, diagnosis,
treatment, convalescent care, and drug development. We will continue to develop
healthcare solutions optimized for the individual, while helping to resolve social issues
using our technologies and solutions for a global roll-out of an IT-enhanced social
infrastructure.

Realizing our Healthcare Group Vision
Hitachi established the Health Care Group in April 2014 as a way to respond swiftly toincreasingly varied global healthcare needs. Hitachiʼs seventh group, the Health Care
Group, will include the new Health Care Company that integrates the healthcare-related
businesses that were previously distributed among Hitachiʼs in-house companies andGroup companies, including Hitachi Medical Corporation, which develops andmanufactures medical equipment and systems.
The new Health Care Group will unify Hitachiʼs many medical technologies and systems
with the goal of helping to build a society where everyone can be healthy, safe, andsecure. These technologies include analytic and forecasting technologies that use big
data from Hitachi Health Insurance Society subscribers to optimize medical spending, anda proton beam therapy system that is garnering global attention as a new cancer
treatment. Whatʼs more, the new group will provide solutions combining medical
equipment and medical services with IT for a care cycle that covers disease prevention
and medical checkups, examinations and diagnosis, treatment, and convalescent care. By
doing this, we will improve our ability to propose solutions for varied healthcare needs
and boost the quality of life (QOL) for everyone, contributing to the realization ofhealthy, safe, and secure societies around the world.

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Hitachi Care Cycle

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Medical Equipment with Hitachi Quality and Reliability
Hitachi Medical Corporation, part of the Health Care Group, drives the Groupʼshealthcare business with diagnostic imaging equipment such as diagnostic ultrasoundsystems, MRI,*1 X-ray CT,*2 and X-ray diagnostic systems.
Hitachi Medicalʼs products are developing based on our patient-friendly productconcept. For example, instead of conventional bore-shaped MRIs, a new shape better
suited to the work flow of medical staff has been developed. The new MRI system also
accommodates varied patient, including the elderly, infants, people with large physiques,
and those who are claustrophobic. The open architecture MRI has magnets that use
limited power for low power consumption. The new MRI system is used in more than 150
countries and regions, including emerging countries and places without a stable power
supply. Hitachi Medicalʼs diagnostic imaging systems are also used in training, helping
medical staff in and outside Japan acquire new skills.
Hitachi is renowned for reliability, from high-quality medical equipment through tomaintenance and repair. Combining products and services with IT, we aim to build aneven more extensive range of healthcare solutions.
*1 MRI：magnetic resonance imaging*2 CT：Computed tomography

Hitachi Medicalʼs magnet-based open architecture AIRIS Soleil MRI system

Integrated Healthcare Platforms
In October 2013, Hitachi and NHS*1 Greater Manchester*2 launched a joint proof-ofconcept project for using IT to improve healthcare services. Together with GPs*3 and the
NHS, Hitachi will develop a system and network infrastructure for centralizing themanagement of local medical institutionsʼ medical records, while safeguarding security
and privacy. Hitachi will also develop IT-based lifestyle disease programs targeting people
at risk for diabetes, using the lifestyle and health coaching skills learned from Hitachi
Health Insurance Societyʼs success with the Harasuma Diet*4 program.

Geared to specific communities, Hitachiʼs IT-based integrated platforms will help toprovide ideal healthcare solutions for everyone, as well as improve the quality of medicalcare and optimize medical spending.
*1 NHS：Britainʼs National Health Service*2 NHS Greater Manchester: The representative body for 10 clinical commissioning groups serving the Manchester
region*3 GPs：General Practitioners (doctors)*4 Harasuma Diet: A diet program designed by Dr. Nakagawa at the Hitachi Health Care Center

Trialing a prototype system for a lifestyle improvement program

TOPICS

Global Rollout of Proton Beam Cancer Therapy System
Hitachiʼs advanced proton beam cancer therapy system
has already been introduced in 11 countries. The
system was launched in 2006 at the Proton Therapy
Center in the 70-year-old University of Texas MD
Anderson Cancer Center in Houston, Texas, and has
treated more than 5,000 patients, as of April 2014. The
unique spotscanning technology, which can direct a
proton beam at a tumor to minimize the impact on
normal cells, has been adopted by top medical
institutions in the US. Through the development oftechnologies like these, Hitachi is contributing to theleading-edge radiation and cancer therapy that
protects patientsʼ quality of life.

Proton beam cancer therapy
system at the MD Anderson
Cancer Center

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FEATURE

Renewable Energy for the Future
Through the global deployment of our latest technology, we will
boost the ratio of renewable energy sources, such as wind and solar
power, to help achieve a sustainable society.

Using Hitachi Technologies and Solutions to Realize a Sustainable
Society
Surging global economic and social activity is raising demand for energy, water, andother resources, as well as increasing the CO2 emissions that cause global warming. To
build a sustainable society and reduce CO2 emissions, we need to limit using increasingly
scarce natural resources, such as fossil fuels, and boost the ratio of renewable energies,
such as wind and solar power.
Renewable energies are both inexhaustible and easy on the environment, but issues
remain for cutting generating costs and ensuring a stable supply. Feed-in tariffs andsimilar programs encouraging renewable energy development began appearing in the
1990s, and are now being used in close to 100 countries and regions. Japan introduced
an energy feed-in tariff in 2012, and demand for large wind and solar power systems is
growing as investors and companies join in.
Hitachiʼs record on renewable energy development includes highly efficient generationand transformation technologies and batteries, as well as the control systems that ensurea reliable supply of power. We will use the power system technologies and knowhowthat we have developed over the years to help resolve global social issues and achieve asustainable society.
Reserves to Production Ratios (Worldwide)*

Ratios for Reserves to Production: Proven reserves divided by annual production
Sources：Oil, natural gas, and coal: BP Statistical Review of World Energy June 2013
Uranium：OECD-NEA Uranium 2011: Resources, Production and Demand039
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Full Suite of Mega-Solar Power System Solutions from Funding to
Maintenance and Repair
Solar power generation fluctuates with the weather and the hours of sunshine. One of
Hitachiʼs strengths is stable generation, due to highly reliable products and control
systems, including our Power Conditioning System (PCS) with its increased efficiency forconversion. We also have a strong track record in large-scale power plant EPC(engineering, procurement, and construction). For example, Hitachi handled the entire
process from engineering through procurement, production, installation, and final
adjustments for Japan's largest-class solar power plant, the Oita Solar Power Plant, whichbegan operating in March 2014. The plant uses a photovoltaic module fault monitoringalgorithm developed by Hitachi's Central Research Laboratory to boost operating
efficiency. This fault monitoring system detects faults and aging at a level beyond thecapacity of conventional monitoring technology.
Building a mega solar plant presents more issues than just equipment selection anddesign—licensing and interconnections with power companies, for example. In fiscal
2013, we launched a solutions business that uses our extensive knowhow and we
combined strengths to supply mega solar system packages from capital funding to EPC(20 years of operation, maintenance, and repair) for local authorities, companies, andindividuals wanting to build megawatt-capacity plants.
Outside Japan too, Hitachi has now launched local PCS production for solar power plants
to meet the expected demand in Asia and other markets. We will continue to supply
mega solar system solutions not only in Japan but across the globe.

This mega solar power plant on a 105-hectare site in Oita City, Oita Prefecture, has around 340,000
solar panels and a capacity of 82,020 kW. It is forecast to generate 87 million kWh per year (theequivalent annual power consumption of around 30,000 households).*1*1 Based on monthly household power consumption of 276.1 kWh in fiscal 2012 (Source: The Federation of ElectricPower Companies of Japan)

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Hitachi Wind Turbine Systems: Stable under the Harshest
Conditions
Large-scale wind farms and other forms of wind power generation have traditionallybeen set in Europe and the United States where winds blow steadily throughout the year
over relatively flat terrain. Japanʼs many mountains and hills, frequent natural disasters,
and erratic wind direction and strength require wind turbine systems geared to a muchharsher environment.
Hitachi wind turbines use a unique system that positions the rotor downwind so that the
turbine can efficiently catch the wind blowing upward along mountains or hills. Thisboosts generating efficiency, as well as reduces the stress on equipment during highwinds. Hitachiʼs power generator produces stable power, even when the wind changes.
As well, our charging technologies and control systems operate under the harshest
conditions. These features will create growing demand for both our land and offshore
wind turbine systems.
The Kamisu Wind Farm, a full-scale offshore operation in Ibaraki Prefecture, had nodamaged despite shocks reaching a JMA seismic intensity of six+ and tsunami waves ofaround five meters during the Great East Japan Earthquake. Hurdles need to be
overcome when building wind farms, including responding to environmental impact
assessments, cutting costs, and getting local peopleʼs approval. However, these massive
structures, made from around 20,000 components, promise to stimulate industry andcreate an economic ripple effect. Our aim is to increase the ratio of renewable energy,
which currently accounts for 1.6 percent*1 of Japanʼs total energy generation (excludinghydro).
Outside Japan, we will begin rolling out safe, reliable wind turbine systems in Taiwan,
Philippines, and other areas of tropical cyclone-prone East Asia from fiscal 2015 onward.
*1 Power Output Ratio by Power Source (FY 2012), The Federation of Electric Power Companies of Japan

Wind Power Ibaraki Co., Ltd., Kamisu Wind Farm The Kamisu Wind Farm, where turbines are fixed tothe seafloor, is offshore of Kamisu City in Ibaraki Prefecture, The 15 downwind turbines making up
Hitachi's 2000 kW wind turbine generation system have a total output of 30,000 kW.

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VOICES

Further Evolution Ahead for Hitachi's wind Turbine Systems
For resource-poor Japan, wind power is an extremely
important power source. Wind power generation is
evolving on all fronts—turbines, construction
technologies, control systems, and maintenancetechnologies—and I feel confident that it will grow into
an even bigger industry.
In Ibaraki Prefecture, the Wind Power Group uses 16
Hitachi turbines to produce a generating capacity of
32,000 kW—the equivalent of power for 16,000
households—at the Hitachi Chemical Wind Power
Station operated by the Wind Power Group, Wind
Power Kamisu DAIICHI Offshore Wind Farm, and Wind
Power Kamisu DAINI Offshore Wind Farm. I was
pleased with the Wind Power Group and Hitachiʼssuccess with the Wind Power Kamisu DAIICHI Offshore
Wind Farm in 2010, a frontrunning project that was thefirst major offshore wind farm to be built in Japan.
Wind farms will shift from sheltered bays and inlets tooffshore areas as wind power systems become more
and more massive. I look forward to the evolution of
Hitachi wind power systems contributing to countries
and regions, and indeed to the global environment.

Mamoru Komatsuzaki
President, Wind Power GroupFEATURE

Dialogue: Hitachi's Social Innovation
Business

In October 2013, former World Bank Vice President Mieko Nishimizu and Yukiko
Araki, Executive General Manager of our CSR and Environmental Strategy Division,
held a dialogue at Hitachi, Ltd. headquarters on how the Hitachi Group should shape
its Social Innovation Business to meet the Group's aim of helping to solve social issues
in global markets.

Mieko Nishimizu

photo:Keiko Suzuki

Graduated in economics from Goucher College in the US in 1970.
Completed a doctorate in economics from The Johns Hopkins University
in 1975 and was appointed Assistant Professor, Economics Department,at the Woodrow Wilson School of Public and International Affairs,
Princeton University. Joined the World Bank in 1980; appointed Regional
Vice President for South Asia in 1997. Since leaving the World Bank in
2003, she has continued her international writing, speaking, and advisory
activities. She has been a senior partner at Think Tank SophiaBank since2007.

What is the "innovation" that society want?
The Hitachi Group Corporate Credo is "to contribute to society through thedevelopment of superior, original technologies and products." Since Hitachi'sfounding more than a century ago, we have remained faithful to that spirit,regarding contributing to society through business as Hitachi's essential
identity. The Hitachi Group Vision outlines what the Hitachi Group aims tobecome in the future. Created in April this year, it states explicitly that "Hitachidelivers innovations that answer society's challenges. With our talented teamand proven experience in global markets, we can inspire the world." Our Social
Innovation Business translates this mission and vision into action.
Dr. Nishimizu, at the World Bank you were engaged in investment projects
supporting sustainable development and social transformation in thedeveloping countries. We define Hitachi's Social Innovation Business as a fieldthat "provides the world with advanced, safe, and secure social infrastructureenhanced by IT," the aim being not just to create social infrastructure but rather
to contribute to society through that infrastructure to change people's lives
and the way that society operates. In that sense, I wonder if there aren't
commonalities with your work over the years?

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Could you give me some concrete examples of your Social Innovation Business?
Well, for example, power generation technologies and smart grids thatmaintain a stable power supply even as energy demand continues to grow;water systems for efficient water use; desalination and water treatment; andpublic transportation and rail systems that eliminate the traffic jams that gowith urbanization in emerging countries. For healthcare, we provide
equipment and systems for medical care and checkups, as well as support for
disease prevention. Other areas include elevators, construction machinery, andinformation and communications. We see potential for contributing to society
across the whole spectrum of the Hitachi Group's involvement in business.
Ah, so your Social Innovation Business is essentially using Hitachi's technologies
to make a direct contribution to society and to resolve various social issues.
Rather than those so-called social contributions and corporate social
responsibility (CSR) programs that are abandoned as soon as the money runs
out, I gather you're talking about long-term corporate activities with a soundbusiness foundation that will continue to benefit both society and Hitachi.
Exactly. Innovation to us means more than just Hitachi coming up withtechnological improvements that provide superior solutions. We want our
products and services to spur on social innovation and transform lifestyles andsocial systems, creating an unprecedented level of social value for safety,
reliability, comfort, and convenience.
If you're using Hitachi's advanced technologies, does that mean that the focus
will be primarily on developed countries? If you're aiming to become a global
company in the true sense of the word, I think Hitachi needs to view itself asserving all of humanity. More than half of the seven billion people that makeup humanity live in the developing countries. And with populations indeveloping countries continuing to grow quickly in the coming years, their
proportion of the world economy will only increase.
One of the structural issues facing the developing countries is the limited
number of people with the ability to fully exploit current technologies for socialtransformation. Most of these countries lag behind the developed countries,
starting from very basic areas. So, rather than cutting-edge technologies, youneed to start by providing existing technologies and sharing establishedknowhow. For example, using mobile phones as public phones and sharing
information from these devices has meant that rice farmers who once had toaccept unfair low prices offered by brokers can now sell at better prices. Thishas substantially bumped up farm incomes. Areas like this, though, won't makemoney for Hitachi, nor will they have much to do with Hitachi's Social
Innovation Business with its stated aim of using cutting-edge technology toresolve social issues.
Certainly, as a private enterprise, our baseline has to be business viability.
However, it's also important to consider the lifespan of a business. Whilebusiness in the developing countries might not be particularly profitable at theoutset, it still becomes a target for Hitachi's Social Innovation Business from thelong-term perspective, after laying the foundation.
Hitachi is good at long-term development. For example, for more than 40
years, we've been extending scholarships to Asian students and bringing themto Japan for training or have been providing them with local training. Nurturing
human capital like this has laid a number of business foundations for us. Evenin countries where we are still only planning to cultivate operations, we believethat investing first in human capital can open up business prospects in the
future.

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Developing people is always the cornerstone, isn't it? From my experienceoverseas, I know that Japan's education level is among the highest in the world,
and things which we Japanese regard as obvious accomplishments are seenelsewhere as quite amazing. I think more companies, and particularly thoseaiming to become global enterprises, need to realize this, because it might
encourage them to invest in boosting education levels in the countries where
they have serious business interests. In particular, for companies like Hitachi,
which are expected to provide goods and services with an advanced
technological component, it becomes vital to focus on human capital
investment from a technological perspective.

Business Strategy Starts with Visioning
Do you have any other expectations for our Social Innovation Business?
Well, of course I'd like to see Hitachi invest in ways that change society for the
better, but from what I've just heard, I wonder if the scope of your Social
Innovation Business is too wide. As Hitachi technologies have an almost infinite
number of potential applications, if you don't refine your strategic focus, you
may lessen the sustainability and business value of your projects. A tighter
focus may well be on the areas that you outlined earlier, but surely there's
major potential even within those limits.
The business of the World Bank is economic and social development, and that
too is obviously extremely broad—everything from infrastructure to educationand medical care. When the scope is just too wide, no matter how good a job
you do, there is the risk of "shooting yourself in the foot." Hitachi too would bebetter served by not doing everything possible, but instead taking a morestrategic approach.
Hitachi does have a wide range of technologies and an incredibly rich pool ofhuman capital, so in that sense our approach could seem a bit too broad.
Conversely, though, wouldn't the focus naturally be restricted by the nature of
the social issues that present themselves?
I think you'll find the scope almost infinite even then. Basically, it comes down
to whether Hitachi itself has a clear vision for 50 or even 100 years from now.
That vision will help define both your Social Innovation Business strategy andwhere you channel your resources.
By your vision, I don't mean something imposed by top management. You
need all of the Hitachi Group's hundreds of thousands of employees to put
their heads together and paint a picture—a rough one is fine—of how they see
the Hitachi Group in 50 or 100 years from now. Then, you have to imagine
being in that future and looking back to work out what the Hitachi of today
should do to get there. Without that kind of visioning—working backwardfrom the future—you won't be able to see how to change society, and yourSocial Innovation Business too might end up taking the "long way around."For Hitachi, 50 or 100 years is not a long time. Companies that are run on thebasis of a clear future vision think in units of 100 years anyway, and given thatyou're dealing with social infrastructure, a long-term perspective becomesabsolutely essential.
That's great food for thought. Thank you very much.

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FEATURE

Working with Governments and Public
Policymakers
Partnerships with governments and policymakers around the world
are vital for growing our Social Innovation Business to create asustainable society. To deepen government institutions'
understanding of Hitachi, we are strengthening our external relations
globally—policy recommendations included—and feeding back to
management information on social and policy trends.

External Relations Initiatives
The global expansion of our Social Innovation Business, particularly for social
infrastructure with its strong interest from the public, makes those government
institutions who are the main agents for social infrastructure important Hitachi partners
as both customers and backers. The Japanese government has implemented a support
structure for infrastructure systems that are being exported with the goal ofstrengthening Japan's industrial competitiveness. Our access to these systems and to
government advice will be enormously helpful.
In our relations with government institutions outside Japan, we gather policy informationfrom a range of sources and engage with government officials. This dialogue ensuresthat we have a solid grasp of local social issues and business needs and can help build
better societies. For these reasons, our relationships with government institutions in andoutside Japan are becoming increasingly important.

Promoting External Relations
The Government & External Relations Division was established within our headquarters infiscal 2009 to guide and accelerate the external relations of the entire Hitachi Group. Thiswas 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 this division, we areworking to strengthen the dialogue between government officials and Hitachi senior
management as well as 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 US 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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Initiatives in Japan
Policy Recommendations
In fiscal 2013, our then-President Hiroaki Nakanishi was appointed to Japan's Council for
Science and Technology Policy, where he continues to make recommendations.
Established within the Cabinet Office under the leadership of the Prime Minister, thiscouncil serves as the "control tower" for promoting science, technology, and innovation
policy. The council oversees all of the nation's science and technology, creating basic
science and technology plans, while formulating guidelines for allocating funds andother resources for science and technology. Also in fiscal 2013, then-Chairman Takashi
Kawamura attended a "Government-Labor-Management Meeting for Realizing a Positive
Cycle of the Economy" that makes recommendations on developing human capital andthe importance of diversity.
Senior managers proposed specific programs after discussing and exchanging views withstaff from government institutions on yen loans and other policies related toinfrastructure system exports as well as the tax system.

Government Support
METI provides a Global Internship Program, supporting global human resource
development, to promote important network and cooperative relationships in businessdevelopment in the host countries, as a part of its support for infrastructure system
exports. During fiscal 2012 and 2013, 18 young Hitachi Group employees took part in thisprogram, which sends junior-level employees from private companies to government
institutions and local companies in emerging countries for several months. By
participating in this type of program, we will be able to more accurately identify theneeds of emerging countries and propose the best solutions for their particular social
concerns, helping to resolve them.

Participating in Business and Industry Associations
Operating through business and industry associations is another critical aspect of ourexternal relations. Hitachi is a member of Keidanren (Japan Business Federation), serving
as vice chair as well as participating in several committees. In addition to making
proposals on human capital development, education issues, and economic diplomacy, as
the planning and coordination chair for the subcommittee on Europe, we urged theJapanese and European governments to enter into negotiations on a Japan-EU Economic
Partnership Agreement. With these efforts, negotiations were launched in April 2013.
As a member of the Japan Electronics and Information Technology Industries Association(JEITA), we are participating in the development of a Japanese 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.
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 support promoting infrastructure system
exports. We are also participating in public relations activities—primarily interactions
with business operators in these countries—on how Japanese technologies and products
can support to solve social issues in those emerging countries.

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Global Activities
Developing Relationships with Government Institutions outside Japan
We participate in international conferences to deepen other nations' understanding ofour business. We took part in events associated with the "ASEAN-Japan Commemorative
Summit Meeting" held in Tokyo in December 2013, including discussions andconferences with ASEAN leaders by our directors and an exhibit showcasing Hitachi's
products and business services. As part of Keidanren's international dialogue project, ourexecutive officer went to Indonesia to mark the 55th anniversary of the beginning of
diplomatic relations, attending meetings with key ministers. Hitachi also attended the "8thJapan-Colombia Joint Economic Committee Meeting" in Bogotá to strengthen bilateral
economic relations. Additionally, we are participating in the TOMODACHI Initiative, ajoint Japan-US cultural and educational exchange program organized by the UnitedStates Embassy in Japan and the US-Japan Council.

United States: Hitachi Group Corporate Office in Washington, DC
The Hitachi Group Corporate Office in Washington, DC, examines the impact of US
government legislation on our business activities. To promote mutual understanding andimprove business opportunities, we communicate to key stakeholders on how Hitachi
can contribute to the growth of US society.
For example, we launched the Hitachi Government Relations Network (HGRN) in fiscal
2011. Made up of Hitachi Group companies in the US, HGRN serves as a platform forexchanging information on key laws and regulations that impact management andbusiness, and for sharing the business impact of public policy. The HGRN also
communicates with key policymakers in federal and state governments and with othergovernment officials.
As part of the global expansion of our Social Innovation Business, we provide information
to policymakers and government representatives on Hitachi's technological expertise toconvey directly and indirectly how Hitachi technologies can contribute to US society. For
example, with influential institutions such as the Brookings Institution, the American
Association for the Advancement of Science (AAAS), the Center for Strategic andInternational Studies (CSIS), and the Council on Foreign Relations (CFR), we provide
knowledge on the benefits of Hitachi's business and technological capacity, and with thisunderstanding, support policymaking at their institutions.

Europe: Hitachi Corporate Office, Europe (HIBRU)
The Hitachi Corporate Office, Europe, (located in Brussels, Belgium) is active in Europeansocial issues, contributing to European policy development through business andprograms that boost Hitachi's profile in Europe. As of November 2013, we have joined
several of the European Commission's Environmental Footprint pilot projects,
participating in discussions on policy formulation from an early stage. We also submitted
recommendations on proposed amendments to European corporate law covering nonfinancial information disclosure as well as conflict minerals legislation to make certainthat both of these initiatives help to resolve social issues as well as improve corporate
value. In fiscal 2014, we pursue exchanges with policymakers, including workshops with
European Commission staff, ahead of the 2014 healthcare-focused Hitachi Science &Technology Forum.

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Activities by Country and Region
Hitachi's business operations span the globe. Here we introduce key
CSR activities in key countries and regions, along with a review offiscal 2013 from our representative officers.

Activities in Europe

Activities in the Americas"Hitachi Group companies in Europe
contribute to society throughenvironmental and social activities.
In 2014 and beyond, Hitachi in Europe willcontinue to address societal issues throughour Social Innovation Business, using IT tostrengthen our operations."(Europe: Message from Representative)"We have several sustainability projects
that are helping to resolve social issues. In
fiscal 2014, we are harnessing our collectiveenergy and technology to help tackle
several issues facing society." We willcontinue to contribute to the region
through our Social Innovation Business.
(The Americas: Message from
Representative)

Activities in Asia & India

Activities in China"We are strongly aware of the significanceand necessity of contributing to society not
only through business activities but also by
nurturing the next generation of leaders.
We will continue to contribute to theregion through our Social Innovation
Business."(Asia & India: Message from
Representative)"Hitachi's roots in China trace back to the1970s. Our business has supported China's
development and growth, as we havegrown at the same time. We will press
ahead with our CSR activities in China froma wide perspective, tackling daily business
operations through to volunteer activities."(China: Message from Representative)

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050

EuropeHitachi Group
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Message from Representative
Europe is changing rapidly. There are increasingly challenging
and complex societal issues including urbanization, population
growth, shifting demographics, and climate change. These
challenges demand more intelligent, cost-effective solutions
that include, among others, an improved transportation
infrastructure, leading-edge healthcare, improved access toclean water, and more reliable energy supplies.
More and more, society is expecting corporations to contributeto solving these social challenges, and Hitachi responds primarily
through Social Innovation Business.

Klaus Dieter Rennert
Chief Executive for Europe
Chairman of the Board of
Hitachi Europe Ltd.
Chief Executive Officer ofHitachi Power Europe GmbHFor example, in June 2013, Hitachi opened the European Big
Data Laboratory (EBDL) in Manchester, UK. EBDL collaborates on
projects with the National Health Service (NHS) England, making
full use of IT and big data to improve the quality of life, while
holding down healthcare costs. Going forward, EBDL will expand into the energy andtransportation sectors. In addition, in Turkey, Hitachi Infrastructure Systems has been
helping large hotels to recycle water using membrane bioreactor systems.

Hitachi Group companies in Europe contribute to society through environmental andsocial activities. In 2013, the Hitachi Computer Products Europe plant in Orleans, France,
became Hitachi's first European Eco-Factory. By implementing ISO and other standards,
this plant reduced energy and water consumption, as well as waste production andimproved other operations that impact the environment. By 2015, Hitachi Europe plans
to improve other production plants with the aim of eventually having over 50 percent of
the plants classed as Eco-Factories.
To support globalization, Hitachi in Europe is working to become more diverse andinclusive. In 2013, the Women's Interactive Network (WIN) was launched to better enablefemale representatives from different Group companies to discuss tackling the challenges
of diversity and inclusion. A new interactive e-learning course was also developed tofurther raise the awareness and understanding needed to overcome unconscious biases.
In 2014 and beyond, Hitachi in Europe will continue to address societal issues throughour Social Innovation Business, using IT to strengthen our solution offering. We will
provide solutions in the energy, healthcare, and transportation sectors that combine
products, services, and highly sophisticated IT as well as finance to deliver entire packages
that best suit our customers and society.

Key CSR Activities
Poland: Self-Service Banking Using Finger Vein Authentication
The Information Systems Group of Hitachi Europe Ltd.
has come up with a biometric authentication solution
for a Polish bank. In 2013, self-service VTM*1 branches
called Getin Point, which use finger veinauthentication, were delivered to Getin Bank, theretail arm of Getin Noble Bank. Due to the high level of
security provided by finger vein authentication, theVTM branches now support signing of loan
agreements, bill payments, deposits, and transfers, aswell as setting up new accounts and instantly issuing a
new bank card. At any time, the customer can also get
support from a bank employee by video conference.
Getin Bank's VTM is a combination of several of the
Biometric authentication
top innovations on the market, including finger veinbiometric authentication and issuing instant bankcards. Finger vein biometrics is becoming an increasingly popular form of authenticationin Poland. It is already used at ATMs and in bank branches, with over 120,000 bankcustomers now using this technology.
*1 VTM: virtual teller machine: Self-service banking system using finger vein authentication

Belgium: European Stakeholder Dialogue
In March 2014, Hitachi Europe's CSR team,
headquartered in Brussels, held the Fourth European
Stakeholder Dialogue in Brussels. This year's theme,
using IT in healthcare to generate social innovation,
was discussed by 22 people, including Hitachi Group
healthcare personnel, and representatives frommedical companies, industry associations, and the EU.
Participants noted that it is essential to prevent
personal information leaks, and that the emphasis forhealthcare should be on local communities rather than
European Stakeholder Dialogue
on technologies. Hitachi put the highest priority on
examining what is best for the patient, and will
explore possible partnerships with other organizations that have the same point of view.

The Netherlands: New, State-of-the-Art, Environmentally Conscious
Distribution Center
Hitachi Data Systems Corporation (HDS) has
completed the new European Distribution Centre in
Zaltbommel, the Netherlands. Environmentallyconscious technology has been used to reduce CO2
emissions by about 200 tonnes per year. Both thebuilding and the construction method were BREEAM(Building Research Establishment Environmental
Assessment Method) certified. The 6,200 solar panels(17,000 m2) generate 1.4 MW of electricity, while the
HDS European Distribution Centre
building has geothermal air conditioning and in-floor
heating, as well as LED lighting and battery chargers
for employees' electric vehicles and bicycles. In addition rainwater is collected and used in
the toilets. This new center will open the way for efficient Europe-wide distribution of
hundreds of Hitachi solutions, including data storage products such as Hitachi Unified
Storage VM, and Hitachi Content platform and Hitachi Virtual Storage platforms.

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United Kingdom: Supporting Technology Education for University Students
Hitachi Construction Machinery UK Ltd, a wholly
owned subsidiary of Hitachi Construction Machinery
Europe, has formed a partnership with Coleg Menai in
Wales. Together, they are using three of Hitachi'slatest environmentally conscious and highly fuelefficient excavators in the new Heavy Plant Training
Centre (HPTC) at the college's Llangefni Campus. The
training center will provide students with training on
excavators, cranes, and other heavy machinery. The
Heavy Plant Training Centre
new excavators will be used to train people in the skills
needed for large construction projects in many
regions. Hitachi Construction Machiney UK is also working with local organizations tomake sure that an effective supply chain is in place for the major infrastructure projects
proposed for Anglesey over the coming years.

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The Americas
Message from Representative
As I look back on our accomplishments over the first year of ourcurrent Mid-term Management Plan, I am pleased to see thatrevenues from the Americas have increased year over year.
Within that improvement, there are several sustainability
projects that are helping to resolve social issues, and I would liketo highlight a few of these.
One critical sustainability project is overseeing the supply chain.
We held a workshop to discuss the impact of conflict minerals
Takashi Hatchoji
on our supply chain as well as supplier diversity.*1 Experts
Director,
provided guidance on how to correctly respond to customer
Group Chairman for therequests for conflict mineral information using the EICC*2
Americas, Hitachi Ltd.
template, which is the globally accepted reporting format. In
Chairman ofaddition, the team shared best practices in supplier diversity
Hitachi America, Ltd.
programs and looked at methods for increasing the ratio of
procurement from minority suppliers. Initiatives such as these
are crucial for answering requests from our customers and for ensuring a sustainablesupply chain. In addition to overall environmental sustainability compliance, we arebolstering management in the Americas as part of Hitachi's drive for global governanceimprovements. Recently, the first Environmental Network Meetings were held in Brazil
and Mexico, in addition to existing North American meetings, and these focused on
sharing environmental best practices, including collaboration among Group companies
and sharing the latest regulatory trends and risks.
Already in fiscal 2014, we are harnessing our collective energy and technology to help
tackle several issues facing society. We are focusing on combining all of our companies'
expertise and strengths to provide total solutions using innovations that have successful
and sustainable outcomes.
*1 Supplier diversity: An initiative encouraging procurement from companies run by minorities, women, andveterans.
*2 EICC: Electronic Industry Citizenship Coalition053
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054

Key CSR Activities
Hitachi Develops and Installs One of the World's Highest Output Water
Pumps
To help move water along the California Aqueductover the Tehachapi Mountains to Southern California,
Hitachi America, Ltd. collaborated with the Hitachi
Tsuchiura Works to develop and install four four-stage
turbine pumps in the A.D. Edmonston Pumping Plant.
Southern California's dense population and limited
rainfall make water a precious resource. Hitachi
engineers worked closely with the State of California
Department of Water Resources to create a highefficiency pump with the world's highest class of
output. It was the first time that Hitachi had developed
and produced such a large pump. The development
and installation process and the final results won thedevelopment team the customer's total confidence,
boosting Hitachi's reputation as a world-classmanufacturer and providing value to society.
Four-stage turbine pump

Delivering Optimal Energy Solutions
Hitachi Consulting's energy solutions enable customers to rein in their energy spendingby introducing energy-saving products with no upfront capital investment. Drawing on
extensive knowhow and experience developed over many years, Hitachi Consulting
provides customers with optimal energy solutions. The company offers a full suite ofenergy management services including energy performance analyses, improvement
roadmaps, and cost benefit financial planning. Hitachi Consulting chooses the rightHitachi environmentally conscious products and services for customers then pairs thesewith management services, such as plant lighting and air conditioning, data center
optimization, equipment conversion, and smart buildings.

STEM Education Support Program
To help address the shortage of skilled engineers andscientists in the STEM*1 fields in the United States,
Hitachi High Technologies America, Inc. (HTA) has
developed the STEM Education Support Program. In
addition to loaning out TM3000 TableTop scanningelectron microscopes to schools around the country,
HTA has also created a website for educators where
they can download class plans, learning programs, andhundreds of images of what can be observed throughthe TM3000. By providing young people with theexperience of seeing the nano world—visible only
through an electron microscope—and supporting
educators through the website, HTA is helping tointerest the next generation in the STEM disciplines.

Students learning about nanoscience*1 STEM: science, technology, engineering, and mathematics

Inspire STEM Education
http://www.inspirestemeducation.us/

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055

Asia & India

Hitachi Group
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Report 2014

Message from Representative
The Asian countries, including India, have enhanced their global
economic positions and are expected to lead future global
growth. However, there are challenges ahead: building thesocial infrastructure to keep pace with economic growth, forexample, and achieving a good balance between economic
growth and environmental conservation.
Helping to solve these challenges through our Social Innovation
Business is, we believe, the responsibility of Hitachi as acompany with a global reach.

Kiyoaki Iigaya
Chief Executive for
Asia, Hitachi, Ltd.
Chairman of Hitachi Asia Ltd.
and Hitachi India Pvt. Ltd.

We have made some achievements in these areas. Hitachi
received an order of the railway subsystems for Vietnam's firsturban railway in Ho Chi Minh City. In India, a consortium led by
Hitachi and Hyflux signed a Water Purchase Agreement with
Dahej SEZ Ltd. to construct a seawater desalination plant providing a stable supply ofindustrial water for about 30 years within the Dahej Special Economic Zone in Gujarat.

To reduce energy-related CO2 emissions, every Hitachi plant in the region has introduced
LED lighting, inverter air conditioners, and other highly energy-efficient equipment anddevices. In fiscal 2013, we used Hitachi Group knowhow to conduct on-site energy
conservation diagnoses in Thailand and Malaysia, pinpointing potential improvements,
with the goal of achieving greater energy efficiency and improved production processes.
Group companies' energy-saving activities and achievements were shared at an
Environmental Network Meeting.
Business aside, Hitachi has been operating educational programs such as the HitachiYoung Leaders Initiative and The Hindu-Hitachi Scholarship Program. We are strongly
aware of the significance and necessity of contributing to society not only throughbusiness activities but also by nurturing the next generation of leaders.
We anticipate that in 2014 and beyond, the region's economic, political, and businessenvironment will change dramatically. We need to consider how to develop businessstrategies, capitalize on upcoming opportunities, and operate our business successfully
under these challenging conditions. Hitachi needs to establish a full value chain,including R&D, design, manufacturing, sales, and after-sales service, and to create robust
supply chain management systems. We should also ensure respect for human rights
throughout our business activities.
Working closely with governments and business partners, we will continue to contributeto the region through our Social Innovation Business—including social infrastructure andurban development—as well as other necessary services.

056

Key CSR Activities
Vietnam: Hitachi to Receive Order Equipment for Urban Railway Line 1 in
Ho Chi Minh City

Equipment contract signing ceremony

In 2013, Hitachi received an order to supply electricaland mechanical equipment for Urban Railway Line 1 in
Ho Chi Minh City. The rapid increase in traffic volume
created by Vietnam's economic growth has become aserious issue, and the government is looking to public
transportation to help reduce traffic congestion andconserve the environment. Plans have been made forthe construction of several urban railways in Ho Chi
Minh City, and this project represents the first phase.

Hitachi will deliver subsystem including 17 train sets
(total 51 cars) as well as signalling systems, telecommunications system including wirelesstrain radio system, power supply systems, and platform screen doors, automatic farecollection system, and depot facilities. We will also handle maintenance for five years
from the start of commercial operations. A project office was set up in Ho Chi Minh City inAugust 2013.

Thailand: Wide Range of Energy-Saving Activities
Hitachi Consumer Products (Thailand), Ltd. has
pursued energy efficiency on many of fronts, and in
fiscal 2013 succeeded in cutting annual CO2 emissions
by 378.6 tonnes. High-efficiency boilers and otherequipment replaced old models, and invertercontrolled fans were introduced for the coatingprocess. To boost energy-saving awareness among
employees, the company held an energy-saving
exhibition, and introduced noontime automatic power
Energy saving in action-off announcements and energy patrols. To ensurethat energy saving continues, an internal EnergySaving Committee conducts a monthly energy survey, and auditors selected by thepresident conduct energy audits.

12th Hitachi Young Leaders Initiative
Hitachi, Ltd. and Hitachi Asia Ltd. held the 12th HitachiYoung Leaders Initiative (HYLI) in Bangkok in July
2013. Launched in 1996, the HYLI, a five-day event,has been offering university students from Indonesia,
Malaysia, the Philippines, Singapore, Thailand,
Vietnam, and Japan an opportunity to discuss andraise their awareness of common issues in Asia. The
theme of the twelfth event was The Road Ahead:
ASEAN's Role in Asia and the Global Economy. The first
HYLI students and speakers
and second days featured speeches and discussions byprominent guest speakers including Thailand's deputy
prime minister, minister of finance, and ASEAN's secretary-general. The event drew about
400 participants, including people from local media and universities.

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China

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Message from Representative
In recent years, the world's second largest economic power,
China, has seen consistently high economic growth and has
become an engine for global economic development. At thesame time, this country is facing challenges, including dealing
with environmental issues, developing their infrastructure, andreshaping the nation's industrial base to meet the demands ofstrong economic growth. Under the 12th Five-Year Plan,announced in March 2011, China's leadership is aspiring togrow their economy centered on industrial structural reform,
urbanization, and the expansion of domestic demand, as well as
realizing a low-carbon, environmentally conscious society with agreen economy. With a direct impact on Chinese people's lives,
these issues require urgent action.

Kenichi Kokubo
Vice President andExecutive Officer
Chief Executive for China
Hitachi, Ltd.

The Hitachi Group, having both world-leading IT andinfrastructure technology, is in a unique position as a global enterprise. Our proud
mission is to use this uniqueness, along with our many other strengths, global experience,and knowhow in countries around the world to support their growth and development.
China is no exception.
Hitachi's roots in China go back to the 1970s. Our business has supported China's
development and growth, as we have grown at the same time. Today, we have 177
companies in China, employing some 46,400 people. We are keenly aware of the highexpectations of the Chinese government and other stakeholders for Hitachi to help
resolve their many challenges. Our corporate management has had a strong spirit ofcorporate social responsibility (CSR) since our founding. The Hitachi Group in China has
carried on that spirit, contributing to the development of Chinese society through our key
strength: Social Innovation Business. In other words, bringing the Group's collective
power to bear in growing our business in tandem with market needs is in itself an
expression of our CSR. We will forge ahead with our business in China with the goal of
creating an affluent society and comfortable lifestyles for the Chinese people.
With growing business and local purchasing on the rise in China, CSR risk management insupply chains has become crucial. Since 2012, we have been conducting CSR audits at
more than 10 suppliers from China every year, checking their human rights, labor, andenvironmental performance while ensuring their compliance with the Hitachi Group
Code of Conduct. One China-only CSR initiative is the Hitachi Eco Education Classroom
program, run mainly by Hitachi volunteers for elementary school students. In the last two
years, around 20 Group companies have taken part in this program by explaining theimportance of the environment to around 2,000 children in a friendly, easy-tounderstand way. These activities have received high praise from elementary school
students and the schools that have adopted the program. We will continue to assist the
Hitachi Hope Elementary School in Jiangxi Province. In addition to donating books andother supplies, we aided in the construction of the dormitory and cafeteria, creating apleasing environment where children, with their futures ahead of them, can play to theirheart's content.
We will press ahead with our CSR activities in China from a wide perspective, tackling
daily business operations through to volunteer activities, striving to achieve our goal of
becoming "the Most Trusted Partner in China."

CSR Activities in China
Stakeholder Dialogues
Every year in China, Hitachi (China) Ltd., in cooperation
with other Group companies, releases a Chineseversion of the Hitachi Group Sustainability Report. In
addition to global articles, the report delves deep into
Hitachi's activities in China, disclosing valuable
information. In March 2014, we held our firststakeholder dialogue in China in Beijing. There weagain outlined the governance, environmental, andFirst stakeholder dialogue in China
social activities that we carry out in China to contributeto the development of their society. We also invited
frank views from Chinese CSR experts working for think tanks, government agencies, andthe business press on Chinese society's expectations for CSR and information disclosure.
We will continue to focus on social challenges though direct dialogues, nationally andlocally, and reflect the insights gained through our business operations as well as our CSR
and environmental initiatives.

Leading-Edge Technologies and Equipment: Creating an Environmentally
Conscious Factory
Hitachi Elevator Motor (Guangzhou) Co., Ltd.
manufactures the traction machines and equipmentthat move elevators. In 2013, leading-edge
technologies and equipment were used to create a
new environmentally conscious factory. The
production line employs the latest machines toimprove productivity and to use energy efficiently. To
minimize VOC*1 emissions from the coating line, water-soluble paints with low VOC content and a VOC
adsorption system were used. Ceilings were designed
Hitachi Elevator Motor
to take in natural light and about 2,600 LED lights are(Guangzhou) Co., Ltd.
being used throughout the building. As well, a central
control for high-efficiency air conditioning systems
reduces power use across the plant. Moreover, the factory uses resources effectively:
wastewater is collected and reused, while waste is recycled. Even the residue from thewaste is passed on to a contractor to be made into bricks.
*1 VOC: volatile organic compounds

Hitachi Eco Education Classroom
Since fiscal 2012, we have been running the Hitachi
Eco Education Classroom program in China to teachelementary school children about the environment,
raise their awareness about conservation, andcommunicate the importance of changing theirattitudes to what they can do for the environment. In
fiscal 2013, 19 classes were held. In addition tocompany volunteers acting out a story, we used a newactivity craft kit to stimulate children's interest. 187
Elementary school children
volunteers from 16 Group companies assisted 844
learn about the environment
elementary school children, with classes held again in
Beijing, Shanghai, and Guangzhou, and for the firsttime in Shenzhen, Suzhou, Hefei, Fuzhou, Wuxi, and Jiangxi.

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Governance Report

145th General Meeting of Shareholders (Hitachi, Ltd.)Chapter1 Governance Report

060

Corporate Governance
Hitachi has adopted the committee system to ensure highly
transparent corporate governance. Our J-SOX Committee maintains
and evaluates the effectiveness of our internal control over financial
reporting. We will continue to improve corporate governance acrossthe Group to meet the expectations of stakeholders as a business thatmerits the public's trust.

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Hitachi's Governance Initiatives
Hitachi has adopted the committee system.*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. We
have formulated and published Corporate Governance Guidelines outlining theframework of corporate governance, such as the function and composition of the Boardof Directors, qualifications for outside directors, and the criteria for assessing theindependence of outside directors.
*1 Committee system: 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 theexecutive officers, appointed by the board of directors, execute the company's business affairs. Hitachi, Ltd. andits seven major listed subsidiaries have adopted the committee system.

Governance Structure of Hitachi, Ltd.
The Majority of our Board of Directors are outside directors, including non-Japanese. Our
goals are to reflect global and diverse viewpoints as well as to reinforce management
supervisory functions.
Governance Structure of Hitachi, Ltd.

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061

Group Management
Hitachi instituted an in-house company system in fiscal 2009 to optimize business
operations. By maintaining the independence of in-house and Group companies, wehave clarified responsibilities and authority, while respecting management independence
and original innovation. This has speeded up management and enhanced
competitiveness. Since fiscal 2010, we have rated each company and transferredauthority to ensure swift, independent management.

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Seven-Group Management Structure
In April 2012, we reorganized the entire Hitachi Group into five groups to achieve an
increased focus on growing fields. This move was designed for a rapid response to theworldwide dynamic changes in business models and services centered on our Social
Infrastructure Business. In April 2013, the automotive equipment business, which was anelement of the Infrastructure Systems Group, was split off to form the new Automotive
Systems Group, for quicker management decision making. In April 2014, we created the
Healthcare Group to integrate our customer response, to boost our ability to propose
solutions geared to diversifying market needs, and to enhance our global
competitiveness.
We will continue to promptly and carefully adapt our management structure in responseto the particular features of the markets, customers, and regions where we operate, as
well as to make changes when necessary.
Seven-Group Management Structure*1 Big data: A collection of the massive volumes of the unstructured data that conventional systems could notprocess, or the technology handling that data
*2 SI (systems integration): Integrated information system services that include planning through implementation
to operation responding to customer needs

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062

Internal Control over Financial Reporting
To ensure the reliability of consolidated financial reporting, every company uses
assessment documents, company-level controls, and business process controls based on
the guidelines determined by our J-SOX Committee.*1

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Our in-house companies and major Group companies have been developing mechanisms
to objectively perform assessments. Assessment results are reported to the J-SOX
Committee's Office to evaluate the effectiveness of internal controls.
*1 J-SOX: A system for the development of the internal controls required under Japan's Financial Instruments andExchange Act (FIEA) that ensure the reliability of corporate disclosure.

Hitachi Internal Control Assessment System

Compensation for Directors and Executive Officers
Compensation for every director and executive officer is determined by theCompensation 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 fixed, the performance-linked
component for executive officers is set within a range equivalent to about thirty percentof the executive officer's annual income, adjusted based on Company and individual
performance. Beginning with compensation for fiscal 2008, the system for directors andexecutive officers was revised to abolish retirement allowances. The payment of
retirement allowances to directors and executive officers due to the abolition of theretirement allowance system will be in an amount determined by the Compensation
Committee at the time of the retirement of those directors or executive officers. In fiscal
2013, the amount of compensation for directors and executive officers is shown below.
FY 2013 Compensation for Directors and Executive Officers
Category

Recipients (number)

Total amount (millions of yen)

Directors(outside directors)

14
（9）

376
（215）

Executive officers

31

1,989

Total

45

2,366

*
*
*

The number of directors indicated excludes one director who concurrently serves as an executive officer.
Compensation to directors includes the monthly salaries of one outside director who retired due to expiration of
his term of office at the close of the 144th Ordinary General Meeting of Shareholders held on June 21, 2013.
In addition to the above, there are retirement allowances of 21 million yen for three directors (of which, 5 million
yen is for two outside directors) who retired on June 20, 2014, and of 16 million yen for one executive officer
who retired on March 31, 2014.
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Brand Management
The global expansion of our Social Innovation Business requires us toclearly express the Hitachi identity and vision to our stakeholders.
Hitachi's brand management activities are designed to enhance thebrand value for stakeholders both inside and outside the company.

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Brand Management Initiatives
Hitachi's brand management brings the Hitachi Group Vision to life. Our Global Brand
Campaign introduces to stakeholders our vision of realizing a sustainable society andshowcases the ways that our Social Innovation Business is helping to solve social issues.
Internally, we are working to raise awareness of the Hitachi Group Vision among theGroup's over 320,000 employees.

Global Campaign
Social Innovation—It's Our Future
It is critical that we gain our stakeholders' understanding of
our corporate vision of realizing a sustainable society and of
our globally-based Social Innovation Business. In fiscal 2013,
we launched the Global Brand Campaign in 17 countries.
Based on the 2015 Mid-term Management Plan, thecampaign uses the slogan Social Innovation—It's Our Future,presenting examples of how Hitachi's Social Innovation
Business is helping to address universal social issues such as
shortages of energy, water, transportation, and healthcare.
To enrich the Hitachi brand in emerging markets, in fiscal
2013 we took the Global Brand Campaign as well as the
Hitachi Group Exhibition to India, Brazil, and the Middle East.
We showcased solutions to the social issues facing those
Global Brand Campaign advertisingcountries and region, including harm to the environment
and lack of water resources and transportation. We provided
information on our Social Innovation Business to a wide range of stakeholders—
government officials included—through speeches and panel discussions, as well as
solutions and panel exhibits related to Social Innovation Business.

Achieving Group-wide Penetration
To realize the Hitachi Group Vision, our brand management must engage everyone in theGroup in retaining our spirit of challenge in the face of social issues and meetingstakeholders' expectations. We use channels such as our intranet to ensure that Group
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 YearAwards in fiscal 2003 to share within Hitachi those activities that have made anoutstanding contribution to boosting our brand value. In fiscal 2012, we started
evaluating applications globally, renaming them the Inspiration of the Year Global
Awards. In fiscal 2013, the awards attracted 244 applications throughout the world,
including from China, Europe, Africa, India, North America, Southeast Asia, and Japan.
Outstanding activities from each region were highlighted on the intranet and awards
were given out by the president at a ceremony held in our Tokyo headquarters.
We have also placed on the intranet Japanese, English, and Chinese versions of the
Hitachi Vision Movie, a visual depiction of the Hitachi Group Vision, and the Hitachi Vision
Book, a straight-forward explanation using illustrations and photographs, to instill the
Hitachi Group Vision in our employees.

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Through these initiatives, we intend to raise employee awareness of the Hitachi Group
Vision and become a company that responds with innovation to the challenges facing
society.

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Managing the Hitachi Brand Impression
To safeguard the credibility of the Hitachi brand andto accurately communicate our brand value tostakeholders, we have created a global manual
showing the correct presentation and use of ourlogo and trademark to ensure a consistent visual
impression.
We provide legal protection for the Hitachi brand by working hard to eliminate
counterfeit products and parts in high-risk regions. In regions where counterfeit products
are particularly widespread, we collaborate with local companies to step up anticounterfeiting programs.

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065

Risk Management

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Our broad-ranging business activities take place all over the world.
We are strengthening risk management, including developing aframework for managing Group-wide compliance, to prevent risks
that hold back business continuity.

Reinforcing the Risk Management System
The entire Hitachi Group is reinforcing management systems to address increasingly
global and complex risks. In fiscal 2009, we formulated the Hitachi Global Compliance
Program (HGCP), our basis for audits and for educating employees. In fiscal 2013, we
appointed a Hitachi Group Chief Compliance Officer (CCO) to manage compliance for thewhole Group. As well, we appointed CCOs in all our business units.
In October 2013, we set up a Risk Management Group, bringing functions such as
internal audits, compliance, and risk management (BCP),*1 which were previously handled
separately by risk management officers. We will develop a comprehensive enterprise risk
management framework to provide standards and systems for determining all risks to
Hitachi—business and other risks—that will be examined at the management level.
*1 BCPs: Business continuity plans for early restoration and continuation of key business processes during an
emergency.

Creating BCPs in Key Operations Worldwide
Being deeply committed to the social infrastructure, we are enhancing our BCPs to guard
against risks that could cause disruptions to business operations that severely impacts
society. For example, we issued the Hitachi Group Guidelines for Developing BusinessContinuity Plans in December 2006, and in fiscal 2010 translated this into English andChinese for distribution to all Hitachi Group companies worldwide to ensure our
response readiness for large disasters and other risks.
When the Great East Japan Earthquake struck in March 2011, our BCPs enabled quick
responses and swift decision making. However, issues emerged included identification of
secondary and other suppliers, cloud storage and multiplexing of production
information, as well as securing alternate transportation and fuel sources. Based on thelessons learned from this disaster, in October 2011 we released and distributed 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 andnovel strains of influenza have been prepared for 49 Hitachi, Ltd. business sites and 96
Group companies. Outside Japan, 303 companies are preparing BCPs with the goal ofcompleting them for key operations by the end of fiscal 2013. These BCPs will strengthen
our ability to respond to business risks, including large disasters, novel strains ofinfluenza, political instability and social disruption, as well as acts of terrorism.
Since fiscal 1998, Hitachi, Ltd. has held annual earthquake simulation drills at key
operations in Japan. In February 2014, our Chubu Area Operation held a drill simulating
three large earthquakes hitting at the same time: the Tokai, Tonankai, and Nankai
earthquakes. Directed by the General Manager of Area Operations, managers in chargeof their divisions confirmed the action plans in emergency situations based on the Chubu
Area Operation BCP.

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Hitachi Group Guidelines for Developing Business Continuity Plans(department version)

Earthquake simulation drill

Improving Safety for Employees Sent to Dangerous Regions
Responding to the hostage incident in Algeria in January 2013, President Nakanishi
reinforced his policy in February 2013 of ensuring the safety of employees sent outside
Japan. Survey missions by in-house and outside experts are now sent beforehand to areas
at high risk of war, terrorism, and other threats. Additional surveys are to be conducted
every six months after that to check on their safety and other measures. In fiscal 2013,
survey missions were sent to several countries in Africa and the Middle East, underscoring
our commitment to making certain that our employees working around the globe aresafe.
Hitachi is also contributing to safety measures at other Japanese corporations operating
outside Japan. Hitachi, Ltd. participated in a government-organized round-tableconference, launched in February 2013, to consider the protection of Japanese citizens
and Japanese companies operating in other countries, making safety recommendations
to the Chief Cabinet Secretary. Hitachi, Ltd. also sent a lecturer to all four sessions of theIntensive Public-Private Joint Seminar on Overseas Safety Measures held by the Ministryof Foreign Affairs in fiscal 2013 in response to the round-table recommendations.

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Compliance

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Our business activities are subject to government regulations in the
countries where we operate. As we expand internationally, we are
deepening compliance knowledge and awareness among HitachiGroup companies worldwide to ensure fair competition.

Enhancing Our Compliance Framework
To enhance our compliance framework, we have appointed a senior vice president andexecutive officer to oversee risk management for Hitachi as a whole. Every in-housecompany and key Group company also has an executive handling risk management,
assisted by a Compliance Manager (CM).
The Compliance Management Conference, made up of risk management executives fromin-house companies and key Group companies, and the Hitachi Group Compliance
Conference, all CMs, meet regularly to provide information on compliance and to makecertain that actions, such as monitoring and education, are being implemented.

Formulating and Ensuring Awareness of the Hitachi Group Codesof Conduct
Hitachi, Ltd. formulated the Hitachi Group Codes of Conduct as a specific common
conduct code for the Hitachi Group. This was in line with the shift to a new Groupmanagement structure to mark Hitachi's centennial. To educate employees on the codes,
we issued the Hitachi Group Codes of Conduct Handbook in fiscal 2011, with more than
240,000 copies distributed to employees in Japan, as of March 2014. We ask managers to
submit a written statement confirming that they have taken the course and that theypledge to comply with the Hitachi Group Codes of Conduct. To broaden awareness of thecodes throughout our global operations, we have produced English and Chinese versionsof a Japanese-language e-learning tool that shows appropriate behavior and presents
specific examples for use in Hitachi Group companies, within and outside Japan. We also
conduct compliance training that includes Group companies outside Japan.

Preventing Corrupt Practices
To deal with global corruption risks, in fiscal 2013 we used the US Foreign Corrupt
Practices Act*1 Resource Guide as a reference when developing various corruption risk
scenarios, using these as the basis for a survey conducted with Hitachi Group companies
outside Japan. By analyzing the survey results, we identified some companies at potential
risk. We will now monitor and work with those companies with the goal of reducing
corruption worldwide.
*1 US Foreign Corrupt Practices Act covers the anti-bribery and transparent 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 toshow transactions fairly and accurately in their accounting records and to maintain effective internal control overaccounting.

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Implementing Corporate Ethics and Compliance Month
Corporate ethics and compliance are the bedrock of all our activities. Since fiscal 2009,
we have held Ethics and Compliance Month throughout the Hitachi Group each October.
In fiscal 2013, we revised the set of case studies created in fiscal 2012 for workplace
discussions on issues relevant to particular workplaces, and put this up on our intranet.
The 63 case studies match chapters in the Hitachi Group Codes of Conduct Handbook. We
also translated case studies into English and Chinese for use in our global operations,drawing 139,038 employees around the world into workplace discussions during fiscal
2013's Corporate Ethics and Compliance Month.

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Group companies also held their own activities, including lectures, requests for senryu(satirical poetry), putting up posters, conducting compliance awareness surveys, andidentifying risks.

Preventing Violations of the Antimonopoly Law
The Hitachi Group engages in business based on the principles of "conformance with thelaw and business ethics" and "fair and disciplined competition." However, regrettably
Hitachi, Ltd. was penalized for impairing the fairness of a public bid in fiscal 2002, and we
received administrative orders in September 2006, October 2008, and March 2009 forviolating Japan's Antimonopoly Law.
In November 2012, a subsidiary dealing in automotive components received
administrative orders from the Japan Fair Trade Commission for violating the
Antimonopoly Law. In September 2013, the same company was prosecuted by the US
Department of Justice for violating US antitrust laws, resulting in a plea bargain.
We are working in several ways to prevent further such violations and to broaden
awareness of compliance issues, including publicizing messages from top executives,
developing company regulations, conducting regular audits, and providing educationand training to employees based on a compliance manual. In fiscal 2013, we held group
education sessions on the Antimonopoly Law for all Hitachi, Ltd. sales managers in June
and July, with 851 taking part.
During Corporate Ethics and Compliance Month, education sessions were also held in
every Hitachi, Ltd. area operation, with 1,669 employees attending.
We will continue working to improve and enhance our compliance framework.

Compliance Reporting System
We instituted a Group-wide whistle-blowing system to prevent illegal and unethicalbehavior, to promptly address infractions, and to enhance our ability to self-regulate.
People can report 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 business partners. Another system—Channel to theBoard of Directors—was been introduced to allow employees to report problems
anonymously directly to Hitachi's board of directors.
We investigate and check the facts of all reports. People who have signed their names totheir reports are informed of the investigation results, and we deal with the situation
appropriately, including taking remedial action where necessary.

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Prevention of Anti-social 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:

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1. We will have no relations whatsoever with anti-social forces such as organized crimegroups, 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 inpartnership with, where necessary, the police, external specialist institutions (the National
Center for the Elimination of Boryokudan and the Special Violence Prevention Measures
Association (Tokubouren) under the control of the Metropolitan Police Department), andlawyers. We include an organized crime elimination clause in contracts so that if wedetermine that a business partner belongs to an antisocial group, we can void thecontract and break off the relationship.

Export Control
For basic export control policies, we adopt the Hitachi Standards of Corporate Conduct,*1
which states "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, and we
conduct screenings for such factors as destination countries and regions, as well as theend-use and end-users of all goods and technologies intended for export as strict export
control practices according to laws and regulations. The guidance is provided to HitachiGroup companies, and we also provide educational support to make certain that all
Group companies follow the same export control policies. In fiscal 2013, we held aworkshop for Group companies in the United States, providing practical training onexport control. We also set up e-learning programs on export control basics and U.S. reexport controls at 111 Group companies worldwide for around 20,000 employees.
*1 Hitachi Standards of Corporate Conduct: Created by Hitachi, Ltd. to ensure full awareness of Hitachi's mission
and role and to enable Hitachi to continue to grow as a truly global enterprise.

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Information Security
Hitachi maintains information in a secure way that respects all regulations. We use ourinformation security management system to safeguard the business and personal
information of our customers, Hitachi Group technical information, and otherconfidential information. We maintain and improve security in several ways: extensive
information handling procedures, security education for employees, and information
security audits, among others.

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Framework for 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 Hitachi Group
companies. Information security officers at business sites and companies ensure thatthese 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 thatthese 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 are working to raise
the prevailing sense of ethics and security awareness through Group-wide e-learning. We are also
conducting audits to identify and address problems early on.

Basic Approach to Information Security GovernancePreventing Information Leaks
We formulated the Three Principles for Preventing Leakage of Confidential Information
to ensure the highest level of care for confidential information and to prevent leaks andaccidents. Our policies make certain that, when an accident occurs, we minimize damage
by promptly contacting customers, reporting to government agencies, investigating
causes, and acting to prevent recurrences.

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Hitachi Group companies take the following IT steps to prevent information leaks: using
encryption software and secure PCs; employing electronic document access control andexpiration processing software; maintaining ID management and access control bybuilding an authentication infrastructure; and using e-mail and website filtering. In
response to the recent spate of targeted e-mail attacks and other cyberattacks, 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 ourleak prevention procedures with both entry and exit countermeasures.

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To ensure a secure exchange of information with our suppliers, we review theirinformation security measures based on Hitachi's information security standards before
allowing them access to confidential information. We have provided tools toapproximately 11,500 suppliers (procurement partners) for security education and forchecking business information on computers. In addition, we require them to check andremove 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 the Company's premises.
Principle 2
Any person taking Confidential Information out of the Company's premises due to businessnecessity shall obtain prior approval from the Information Assets Manager.
Principle 3
Any person taking Confidential Information out of the Company's premises due to businessnecessity shall put in place relevant and appropriate measures against information leakage.

Global Information Security Management
Hitachi Group companies worldwide are reinforcing information security in line with our
Global Information Security Administration Rules, which conform to the international
ISO/IEC 27001 standard. We distribute these rules from our 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.

Education on Information Security
To consistently maintain information security, it is crucial for everyone to continuallydevelop their knowledge of information handling and to remain strongly aware of theissues. For this reason, we hold annual e-learning programs on information security andpersonal information protection for all directors, employees, and temporary employees.
At Hitachi, Ltd., nearly 100 percent of the approximately 40,000 employees take these
programs. We provide specific additional training with clear goals, especially for new
employees and managers, and information system administrators. In 2012, we alsobegan simulation training to educate employees about increasingly targeted e-mailattacks and other cyberattacks. Employees are sent simulated targeted e-mail toheighten their awareness of security through direct experience.
Our educational programs, available to Hitachi Group companies in and outside Japan,
provide Group-wide education on information security and personal information
protection.

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Information Security Audits and Inspections
The Hitachi Group has developed information security based on the PDCA (plan-do-check-act) cycle of our information security management system. We conduct annual
information security and personal information protection audits at all Group companies
and business units.

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The president appoints officers to conduct independent audits. These officers are notallowed to audit their own units, underlining our commitment to fairness and objectivity
in auditing. We implemented audits at 247 domestic Hitachi Group companies, and weare in the process of confirming the results. For 649 Hitachi Group companies outside
Japan, we use the Global Security Self Check to ensure Group-wide auditing andinspections. We implement Confirmation of Personal Information Protection andInformation Security Management annually for the voluntary inspection of business unit
workplaces. We conduct monthly Confirmation of Personal Information Protection andInformation Security Management assessments at approximately 450 operations that
handle important personal information. This regular control mechanism ensurescomplete safety management and implementation.

Protecting Personal Information
We established a personal information protection management system based on our
Personal Information Protection Policy. Through the roll-out of this system, as well as safe
handling of personal information, e-learning programs for all employees, and periodic
audits, we ensure the company-wide protection of personal information.
Personal Information Protection Policy
http://www.hitachi.com/privacy-e/index.html

Privacy Mark Certification
Hitachi, Ltd. received Privacy Mark*1 certification in March 2007, and maintained a highlevel of privacy protection for the fourth time in March 2015. The entire Hitachi Group iscommitted to personal information protection, with 59 Hitachi Group companies inJapan receiving the Privacy Mark as of March 2014. In July 2009, the Ibaraki HospitalCenter, a corporate hospital in Japan, became Privacy Mark certified, and is working hardto protect and carefully handle the personal information of 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 applicablelaws and regulations, including social requirements.
*1 Privacy Mark: A third party certification granted to businesses approved by an assessment institution as taking
appropriate security management and protection measures on personal information (granting institution: Japan
Information Processing Development Corporation). Effective since April 1998.

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Environmental Report

Malé Water and Sewerage Company Pvt. Ltd. Desalination Plant

Chapter2 Environmental Report

Environmental Management Strategies
and Initiatives

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With the environment as an important management focus, we areworking to reduce the environmental burden of our business
operations.
Guided by the Environmental Vision, aimed at achieving a sustainable
society, Hitachi Group environmental management is determined toachieve the goals of the long-term plan Environmental Vision 2025
and our Environmental Action Plan.

VisionThe Hitachi Environmental Vision
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
and social growth has led to global warming, caused by a rise in CO2 emissions fromgrowing fossil fuel use. The depletion of energy, water, mineral reserves and otherresources due to increased demand, as well as ecosystem destruction and otherenvironmental problems, are also worsening.
To solve these environmental problems and to realize a sustainable society where
humankind can thrive, we must do everything possible to reduce the burden of humanactivities on the environment. As a company engaged in the Social Innovation Business,
we aim to achieve the environmental management described in our Environmental
Vision or achieving a sustainable society by employing our company's resources to reducethe burden of human activities on the environment.
The Hitachi Environmental Vision

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http://www.hitachi.com/environment/We are committed to global warming prevention, resource conservation, and ecosystems
preservation as the three pillars of our vision. Our goal is to achieve a more sustainable
society by promoting global production that reduces the environmental burden of a
product throughout its life cycle. As a milestone on the way to realizing thisEnvironmental Vision, we created our long-term plan Environmental Vision 2025 thatlooks ahead to fiscal 2025.

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*1 According to the United Nations report, World Population Prospects: The 2012 Revision

Long-Term Plan Environmental Vision 2025
The Intergovernmental Panel on Climate Change (IPCC) concluded in its Fifth Assessment
Report, issued September 2013 (WG I report), that climate warming is unequivocal andextremely 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
and other greenhouse gases is essential for the prevention of global warming.
Accordingly, the long-term plan Hitachi Group Environmental Vision 2025 targets theprevention of global warming, one of the issues the world is facing today, and states ourgoal of helping to reduce annual CO2 emissions by 100 million tonnes by 2025 throughimproved Hitachi products and services. Our aim is to do our part toward achieving amajor reduction in CO2 emissions by providing our customers with low-carbon energy
supplying products and energy-efficient products. To reach these goals, we are working
to increase the ratio of our products that are Hitachi Eco-Products, with a reduced burden
on the environment. We are expanding business opportunities further by working withpartners in global markets.

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.
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.
2. Hitachi will make efforts to contribute to society by developing highly reliable technologies andproduction processes, while identifying needs considering concerns related to the prevention of
global warming, conservation of resources, and preservation of ecosystems.
3. Members of the board 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 and setting goals for environmental
burden reduction. These departments should also confirm that their environmental conservation
activities are conducted in a proper manner and ensure that these activities are maintained andimproved.
4. Hitachi will promote globally applicable 'MONOZUKURI' with the aim of understanding andreducing environmental burdens at every stage, including product research and development,
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 tosafeguard the environment, in other words, to reduce environmental burdens through energy andresource saving, recycling, chemical substance management, consideration for the ecosystem, andother 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, but also 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.

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http://www.hitachi.com/environment/9. Hitachi will evaluate potential environmental problems and prevent them from occurring. In theevent 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 these stakeholders so as tostrengthen mutual understanding and forge cooperative relationships with them.

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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 improvementtargets for specific areas, and environmental initiatives are promoted by executing andimproving activities in the every area. Prior to fiscal 2013, the Environmental Action Plan
was a five-year plan. Beginning in fiscal 2013, to give our environmental strategy a more
prominent role in our management strategy, it was changed to a three-year plan, whichaligns with the Mid-term Management Plan for the Hitachi Group covering fiscal 2013 to2015.

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Third Environmental Action Plan for 2013 to 2015: Achievements andTargets
In fiscal 2013, the first year of the Third Environmental Action Plan, we were able tomatch or exceed that year's targets. We are now accelerating this work to ensure that all
our targets are achieved by fiscal 2015, the final year of the plan.
The following tables show the main indicators for each of the action items, and theinitiatives in each area are introduced on the corresponding pages.
Become an environmental value-creation company
Action goals

Indicators

Fiscal 2013
targets

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

CO2 emission reductions
through products andservices

24 million tonnes

Fiscal 2013
results
27.47 million
tonnesAchievement
level

Final fiscal year
(2015) targets◆◆◆

35 million tonnes(100 million tonnes
per year by 2025)

Achievement
level

Final fiscal year
(2015) targets

Establish environmental management systems
Action goals

Indicators

Raise the level ofenvironmental activities(GPs: green points)

GPs in GREEN 21
Environmental Activity
Evaluation System

Ecosystem (biodiversity)preservation

Conduct assessment of
ecosystem preservation

Fiscal 2013
targets

Fiscal 2013
results

512 GPs

540 GPs

640 GPs◆◆◆

Carry out
assessment

Conducted
ecosystem
preservationassessment◆◆◆

Completion of
ecosystem
preservationassessment

Promote Eco-Products
Action goals
Expand Hitachi EcoProducts lineup

Indicators

Fiscal 2013
targets

Fiscal 2013
results

Achievement
level

Final fiscal year
(2015) targets

Percentage of Hitachi EcoProduct sales

84%

89%

◆◆◆

90%

Number of models in EcoProducts Select program

140 models

210 models◆◆◆

240 models

Build industry's most advanced factories and offices
Action goals
Promote Eco-Factory &Offices Select certification

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Eco-Factories & Offices
Select certification

Fiscal 2013
targets
Expansion ofcertification

Fiscal 2013
results

Achievement
level

Final fiscal year
(2015) targets

New certifications:19
Renewedcertifications: 36
Total: 55◆◆◆

Average of one ormore certifications
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078

Prevent global warming
Action goals

Indicators

Reduce energy use per unit

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

Fiscal 2013
targets

Fiscal 2013
results

11%

14%

Achievement
level

Final fiscal year
(2015) targets◆◆◆

Hitachi Group
Sustainability
Report 201415%

Use resources efficiently
Action goals

Indicators

Fiscal 2013
targets

Fiscal 2013
results

Achievement
level

Final fiscal year
(2015) targets

Reduce waste andvaluables generation perunit

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

19%

24%

◆◆◆

23%

Reduce water use per unit

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

26%

39%

◆◆◆

30%

Manage chemical substances
Action goals

Indicators

Reduce VOC atmosphericemissions per unit

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

Fiscal 2013
targets

Fiscal 2013
results

38%

43%

Achievement
level

Final fiscal year
(2015) targets

◆◆◆

40%

Global citizenship program
Action goals
Social contributions
through environmental
activities

Indicators
Carry out environmental
communication as theflagship activity of each inhouse and Group company

Fiscal 2013
targets
Expansion ofactivities

Fiscal 2013
results
Expandedactivities

Achievement
level

Final fiscal year
(2015) targets◆◆◆

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

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079

Environmental Management Framework
Our global environmental management system supports environmental decision making
and implementation at Hitachi, Ltd., 947 consolidated subsidiaries, and 231 equitymethod affiliates.
The CSR and Environmental Strategy Division is responsible for developing Group-wide
environmental policies. Important items related to environmental initiatives are
considered by the Senior Executive Committee, chaired by the president. The
Environmental Strategy Officers Meeting, made up of representatives from in-housecompanies and major Group companies, ensures that Hitachi Group Environmental
Action Plan that has been approved by the executive officer in charge of environmental
concerns is implemented throughout the Group. The Environmental Committee andcommittees of working-level experts for each policy area develop targets and ways toachieve 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 progress of theEnvironmental Action Plan and to share information on the latest environmental
regulations, while exchanging views on local environmental issues within each region.

Hitachi Group
Sustainability
Report 2014

Hitachi's Environmental Management System (EMS) (as of April 2014)

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080

Building Environmental Management Systems
For efficient management of each businesssite's environmental load, we have set
criteria for environmental management.
There are approximately 250 business sitesthat meet these criteria. The R&D Group,
five in-house companies, and 11 Group
companies, together with the CSR andEnvironmental Strategy Division, havedeveloped and implemented the HitachiGroup Environmental Promotion
Organization EMS (environmental
management system) to promote theconsistent implementation ofenvironmental policies. At the same time,
every business site meeting the criteria forenvironmental management continues tomaintain ISO 14001 certification.
Certification is also being pursued atbusiness sites that do not yet meet thecriteria.

Criteria for Environmental Management
Level(major items)
Number of employees

Hitachi Group
Sustainability
Report 2014

≥ 500

Electric power consumption≥ 6,000 MWh/year

Waste generation≥ 500 tonnes/year

Water use

≥ 600 m3/day

Paper purchase≥ 50 tonnes/year

Status of ISO 14001 Certifications (as of April 2014)

Number of Certified Sites*1

Japan

Outside Japan

Total

171

148

319

*1 Including companies with more than one certified business site

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081

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, environmental performance data in
the key areas of energy, waste materials, water, and VOCs is collected and analyzed
monthly or quarterly so that performance levels can be further increased.

Hitachi Group
Sustainability
Report 2014

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. For any category, a perfect score is 100 green points (GPs). We
surpassed our fiscal 2013 target of 512 GPs with a score of 540 GPs. As we further raise
the level of environmental activities, we are aiming at a target of 640 GPs for fiscal 2015.
Key Indicators

Green Point (GP) Average : Results and Targets

Categories and Evaluation Items

1. Environmental management,
environmental accounting,compliance with laws andregulations
2. Progress toward goal of reducing
CO2 emissions by 100 million
tonnes; environment businessstrategies
3. Gathering and communicating
environmental information acrossthe supply chain
4. Environmental education, training
environmental experts

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5. Assessment of products and services
6. Reducing CO2 emissions, improving
energy efficiency, energy savings intransportation
7. Resource recycling, chemical
substances management
8. Information disclosure,communication activities, global
citizenship activities, preserving
ecosystems

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082

Hitachi Group Environmental Award Program
To encourage environmental activities and disseminate best practices throughout theGroup, we established the GREEN 21 Award program, honoring environmentallyconscious products and technologies, examples of advanced energy savings and otherinitiatives at business sites, and communication with society through environmental
activities. In fiscal 2013, 16 awards were given out.

Hitachi Group
Sustainability
Report 2014

Fiscal 2013 GREEN 21 Awards
Category

Recipient (business site/individual)

Achievement

Environmental Management & Communication
Grand Prize

Hitachi Construction Machinery Co., Ltd.

Emission credit activities for construction machinery

Excellence Prize

Hitachi Electronic Products (Malaysia) Sdn. Bhd.

Prime Minister's Hibiscus Award for achievements in theenvironmental area

Honorable
Mention

Hitachi Construction Machinery (Shanghai) Co.,
Ltd.

Greening of the Horqin Desert in the Inner Mongolia Autonomous
Region of China

Yokohama Area Operation, Hitachi, Ltd.

Environmental Summit for children in Kanagawa, 2013

Eco-Business and Eco-ProductsGrand Prize

Information & Telecommunication Systems
Company, Hitachi, Ltd., Government & Public
Corporation Information Systems Division

ADWORLD, Long-term care insurance office support system

Excellence Prize

Clarion Co., Ltd.

Full-digital Speaker Z17F

Honorable
Mention

Hitachi Consulting Corporation

Hitachi Consulting Energy Solutions

Hitachi Appliances, Inc.

Developing the large-capacity refrigerator Vacuum-chilled FS series

Hitachi Metals, Ltd.

Amorphous Metal Materials Metglas® 2605HB1M

Eco-Factories and Eco-Offices
Grand Prize

Hitachi Data Systems Netherlands BV

Reducing environmental burden, including installing a 1.6 MW
photovoltaic power generation system in distribution center

Select Excellence
Prize

Hitachi Elevator Motor (Guangzhou) Co., Ltd.

Making plant environmentally conscious by measures including
recycling manufacturing wastewater and reducing VOC emissions

Infrastructure Systems Company, Hitachi, Ltd.,
Omika Works

Omika Smart Factory project and visualizing the waste discharge
volumeInformation & Telecommunication Systems
Company, Hitachi, Ltd., IT Platform Division
Group, Yokohama Office

Reducing energy use by building an Eco-OfficeHitachi Industrial Equipment Systems, Ltd.,
Narashino Works

Reducing environmental burden by developing an IH varnish curingsystemHitachi Kokusai Electric Inc., Tokyo Works

Building a new environmentally conscious production wing, andreducing energy use and amount sent to landfills

Hitachi Life Group

Providing energy-conscious environment, and environmental
programs for products and buildings

Honorable
Mention

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083

Climate Change: Risks and Opportunities
The Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)
states that "warming of the climate system is unequivocal," noting evidence of "warmingof 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
major innovations 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 Group
Sustainability
Report 2014

We recognize the risks of climate change as a vital management issue, while seeing
opportunities for challenging these risks through mitigation or reducing greenhousegases, and through adaptation or changing the ways that society interacts with nature.
Aware of the importance of considering and implementing specific proposals in theGroup as a whole, we intend to bring together and use the diverse technologies thathave been developed up to now.
We recognize these risk factors related to climate change:
1. Measures such as emissions trading, carbon taxes, and energy efficiency standards,
adopted as regulations or policies in each country, will affect business activities atmanufacturing sites.
2. Product and service conditions, such as energy efficiency standards for products,
carbon footprint labeling, and the introduction of a feed-in tariff system forrenewable energy, will affect market trends.
3. Damage to facilities from frequent large typhoons and flooding as well as water
shortages due to reduced rainfall will increase the cost of countermeasures, and thesenatural events will temporarily interrupt operations, including those in our supply
chains.
All these risks restrict or place burdens on business activities and product development,
but they can also be seen as opportunities for raising market competitiveness. We needan effective strategy that includes meeting all regulations, and we are devoting new
management resources to deal with these issues.
A prime example of Hitachi creating opportunities is the use of IT (information
technology) for exploiting big data (massive amounts of digital information). Big data
includes the information kept on our daily lives as well as information continually
recorded by the social infrastructure systems that support our lives, and otherinformation such as weather and climate, as well as supplementary data that is updated
every day. Big data challenges us to link together the latest information technologies,
creating new opportunities for contributing to the development of a sustainable societythat can cope with climate change.
Electric power systems must be made resilient to adapt to climate change. The risks
include water runoff and flooding caused by rising temperatures and extreme weather
from global warming. Hitachi takes part in the Electric Utilities group of the World
Business Council for Sustainable Development (WBCSD), and has contributed to issuing
the Building a Resilient Power Sector report (March 2014) that analyzed the impact ofclimate change on power systems, pointing out the need to manage and counter risks.
This report describes the risks faced by power systems and introduces initiatives byHitachi and other companies. It also offers proposals on building up specialized
knowledge for recording climate data for the earth as a whole and distilling it down to
the regional level, as well as risk management and a cost benefit analysis on effective
countermeasures, cooperation with government bodies, research and development, andmutual cooperation.

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084
Hitachi Group
Sustainability
Report 2014

Building a Resilient Power Sector

WBCSD Building a Resilient Power Sector
http://www.wbcsd.org/resilience.aspx

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http://www.hitachi.com/environment/Chapter2 Environmental Report

Environmentally Conscious Products
and Services

085
Hitachi Group
Sustainability
Report 2014

To reduce the environmental burden of products and services
throughout their life cycle, we are developing and expanding theratio of products called Eco-Products that meet standards forenvironmental consciousness, recycling product resources, andmanaging chemical substances.

Increasing the Ratio of Eco-Products
We develop environmentally conscious products called Eco-Products as part of ourinitiative to reduce, as much as possible, the burden on the environment of our products
and services.
Eco-Products must meet criteria used for the design and development of products andservices. These criteria are set out in our Assessment for DfE (Design for Environment),
where we evaluate the extent to which the environmental burden of products andservices is reduced throughout their life cycle. To promote their development, we have
set targets for raising the Eco-Product sales ratio, which is the ratio of Eco-Product sales
to 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.
Hitachi's Framework for Environmentally Conscious Products

Designation of Eco-Products
http://www.hitachi.com/environment/activities/ecoproducts/promote.html#promote02

Designation of Eco-Products Selecthttp://www.hitachi.com/environment/activities/ecoproducts/promote.html#promote03

Activities and Results
In fiscal 2013, our Eco-Product sales ratio reached 89 percent, and we increased thenumber of Eco-Products Select models by 81, totaling 210 products.
At business sites outside Japan—now with new design and development functions—wewent ahead with a planned approach to expanding the lineup of Eco-Products. This
included improving the eco-design skills of our designers.

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086

Key Indicators

Hitachi Group
Sustainability
Report 2014

Eco-Product Sales Ratio*1 Eco-Product Sales Ratio: The ratio of Eco-Product sales to sales of all products, but excluding those elements that
Hitachi cannot control or influence for environmental impact, including patent income, for example.

Fiscal 2013 Breakdown of Eco-Products by Business Segment (Sales Ratio)

Number of Eco-Products SelectDesignation of Eco-Products
The Hitachi Group evaluates the environmental consciousness of products and services atthe design and development stage, using Assessment for DfE (Design for Environment),
and designates ones as Eco-Products that meet the criteria.

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In Assessment for DfE, the environmental load throughout the product life cycle-frommaterial procurement to production, distribution, use, collection and disassembly, andappropriate disposal-is assessed using eight DfE criteria, including environmental
protection measures and energy savings. The results are recorded as 1 through 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.

087
Hitachi Group
Sustainability
Report 2014

How Assessment for DfE Is Performed

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088

Designation of Eco-Products SelectEco-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, or (2) be leaders in their industry for their energy efficiency
standard achievement rate*1 or similar factors, or (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 percent greater than fiscal 2005 products. "Factor 10
or more" indicates that the product has a global warming prevention efficiency or
resource efficiency at least ten times greater than the reference products that were soldin fiscal 2005, in principle.

Hitachi Group
Sustainability
Report 2014

*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 for energy efficiency targets of 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 efficiencyof global warming prevention compared with a reference product. The efficiency of
global warming prevention is based on the concept of environmental efficiency thatbalances the value of products contributing to the quality of life and the reduction of
their environmental load. We measure the improvement in quality of life by productfunction and life span, and use the amount of greenhouse gases emitted over the
product life cycle to calculate the reduced environmental load.

Resource Factor Calculation
The resource factor indicates the amount of improvement in resource efficiency
compared with 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 span, and use the amount of resources used over the product life cycle*1 tocalculate the reduced environmental load.
*1 Amount of resources used over the product's life cycle: amount of new resources + wasted resources

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089

Examples of Eco-Products SelectHitachi Group
Sustainability
Report 2014

Information & Telecommunication Systems
Product

Environmentally
Conscious
Features andCharacteristics

Hitachi Unified Storage VM(Information & Telecommunication Systems Company, Hitachi, Ltd.)

Controlled fan speed for reduced power consumption
High-capacity 3.5-inch/2.5-inch hard disc drives improve energy
efficiency by around 40%*1

Hitachi Unified Storage VM*1 Compared with earlier Hitachi Virtual Storage Platform (September 2010 model with 640 3.5-inch drives)
Product

ADWORLD, Long-term care insurance office support system(Information & Telecommunication Systems Company, Hitachi, Ltd.)

Environmentally
Conscious
Features andCharacteristics

Raising the efficiency of long-term care insurance procedures by
local government workers; reduces CO2 emissions by 80% fromlevels prior to system introduction

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Enabling up to 20 organizations to share the server system neededfor operations; reduces CO2 emissions by around 90% comparedwith municipalities using individual servers
Green IT Award 2013
"Savings in Society's Energy
Consumption by IT" category Green IT
Award, Review Board Special Award

Typical services of Long-term care insurance
office support system of ADWORLD

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090

Social Infrastructure and Industrial Systems
Product
Environmentally
Conscious
Features andCharacteristics

Ref Assist, energy-saving spot cooling system for data centers(Infrastructure Systems Company, Hitachi, Ltd.)
Refrigerants circulated naturally using specific gravity differences,along with using spot cooling units installed above servers, reduce
the power needed for fans.
This design, combined with high-efficiency heat sources and freecooling, reduces power consumption by up to 60% compared withconventional underfloor air conditioning systems.
In recognition of these advantages, the criteria for selecting data
center cooling systems demonstrated by Hitachi were adopted by
the ITU in its international standards for Energy Efficiency andGreen Data Centers.

Third-Party
AwardsHitachi Group
Sustainability
Report 2014

Cooling unit of ceiling-suspension
type for Ref Assist energy-saving
spot cooling system

Main prize at the 53rd (2010) Best 10 New Product Awards
sponsored by Nikkan Kogyo Shimbun
FY 2012 Regional Invention Awards, Chiba Invention Association
Chairman’s Prize*1 ITU (International Telecommunication Union): It is a professional organization of the United Nations and one of
the three major international standards organizations. Among its purposes are promoting standardization in theelectrical and radio communication fields, developing telecommunication technologies and allocating
communication frequencies.
*2 Products are selected for their contribution to the development of the manufacturing industry and for making
Japan more globally competitive. The main prize is awarded to ten new products.

Electronic Equipment and Systems
Product

Environmentally
Conscious
Features andCharacteristics

Noblus Digital Diagnostic Ultrasound System(Hitachi Medical Corporation, Hitachi Aloka Medical, Ltd.)

By reducing the number of parts, including circuit boards, power
consumption is cut by around 67% from the earlier cart-mounted
model introduced in fiscal 2009.
By revising the chassis shape and materials to reduce the amountof iron and ferrous alloys, which accounted for 70% of the earlier
equipment weight, a 90% decrease in weight was achieved.

Noblus Digital Diagnostic UltrasoundScanner

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091

High Functional Materials
Product

Hitachi Group
Sustainability
Report 2014

Metglas® 2605HB1M Amorphous Alloy(Hitachi Metals, Ltd.)

Environmentally
Conscious
Features andCharacteristics

Standby power (no-load-loss) of transformers using Metglas®
2605HB1M alloy is approximately one-third compared to that ofcold rolled grain oriented electrical steel.

Third-Party
AwardsMain prize at the 56th (2013) Best 10 New Product Awards sponsoredby Nikkan Kogyo Shimbun

The higher saturation flux density（Bs) than conventional
amorphous alloy (Metglas® 2605SA1) is achieved along with thislow loss.
Amorphous transformers using this alloy can be smaller and lessnoisy than those using conventional alloy.

Metglas® 2605HB1M Amorphous Alloy

Automotive Systems
Product

Z17F Full-digital Car Speaker System (Clarion Co., Ltd.)

Environmentally
Conscious
Features andCharacteristics

Full digital processing from the audio source to speakers without
using an amplifier, cuts drive voltage to half that of conventional
analog speakers and lowers power consumption to one-fifth or
one-sixth.

Third-Party
AwardsATTT (Automotive Telecommunication Technology Tokyo) Award
for Excellence, Products and Hardware Division

Z17F Full-digital Car Speaker System

Car Audio/Visual division award in 2013 (26th) Car Accessory
Awards sponsored by Nikkan Jidosha Shimbun

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092

Digital Media and Consumer Products
Product
Environmentally
Conscious
Features andCharacteristics

Third-Party
AwardsHitachi Group
Sustainability
Report 2014

EcoCute, heat pump water heater for home use (Hitachi Appliances,
Inc.)
Already meets the fiscal 2017 energy efficiency standard*1 (target
year fiscal 2017)
Six models of the "NIAGARA SYUTTO" Series with standard highefficiency tank (BHP-FV46ND, etc.), adopting a dedicated highly
efficient heat pump unit consisting of a newly developed
evaporator, scroll compressor, and water-refrigerant heatexchanger, have achieved among the best energy efficiency in theindustry.*2
Director-General's Prize, The Agency for Natural
Resources and Energy for products and business models (Energy
Conservation Grand Prize 2013)

EcoCute BHP-FV46ND*1 Targets set for energy efficiency performance of residential heat pump water heaters, based on the Energy
Conservation Law (Act on the Rational Use of Energy) in Japan*2 As of June 24, 2014. Applies to residential heat pump water heaters for general specification areas, with tankcapacities of 460 to less than 550 liters or 320 to less than 460 liters.

Disclosure of Environmental Information
To let stakeholders know that a product is environmentally conscious, Hitachi's
environmental mark indicates that 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's environmental markHitachi Products Helping to Reduce CO2 Emissions
In fiscal 2013, we expect to achieve a reduction in CO2 emissions through products of
27.47 million tonnes, better than the target of 24 million tonnes. Major contributions tothis achievement were made by the products and services of our Power Systems
Company, Infrastructure Systems Company, Hitachi Appliances, and Information &Telecommunication Systems Company. We plan to work even harder to develop andpopularize other products that contribute to CO2 emission reductions.

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093

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.

Hitachi Group
Sustainability
Report 2014

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 2013, our servers, ATMs (automatedteller machines), tape array equipment,*2 and a WiMAX-WiFi relay equipment are verified
and approved by the JEMAI CFP Program.*3 For servers, ATMs, and tape array equipmentaside from the visual display of CO2 emission amounts-we quantified the rate of CO2
emissions reduction per function*4 from previous models to quantitatively indicate saving-energy effect of these products.
Products with the CFP label were shown at the Hitachi Innovation Forum held in October
2013 and at Eco-Products 2013 in December. These exhibits were intended to explain our
CFP initiative to visitors and further their interest in Hitachi's work to develop
environmentally conscious products.
*1 Approved CFP Products: 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 for whichapplications to register and publicize are made.
*2 Tape array equipment: Equipment for backing up data in storage*3 WiMAX-WiFi relay equipment: Equipment providing an Internet connection to wireless LAN terminals*4 "Life cycle GHG emissions in a unit of function amount" calculated by dividing "life cycle GHG emissions in asales unit" by "function amount of applicable product" specified by performance (or performance characteristic)
and/or use period.

Products authorized to display the CFP label in fiscal 2013
Products

Hitachi ATM

Hitachi Storage Solutions
Tape Array Equipment

Hitachi WiMAX-WiFi relay
equipment

Hitachi Advanced Server HA8000(new model)

AKe-S

TF1100

WIFI-AP-A

RS110xM(Previous model)

AK-1

TF850E–

RS110xL2

Rate of Reduction in
CO2 Emissions*1

-31%

-40%

–

-61%

Product Appearance*1 Quantified only for approved CFP products which have previous models

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094

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 14 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, and serves as the technical secretariat.

Hitachi Group
Sustainability
Report 2014

Next Steps
We have set the targets for raising the Eco-Product sales ratio to 90 percent and thenumber of Eco-Products Select models to 240 by fiscal 2015. To meet these goals, we areworking on product and service development plans aimed at expanding the number of
Eco-Products, and are also working on additional product and service value creation bylowering their environmental burden in ways that will help our business to grow.

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095

Recycling Product Resources
Through recycling that includes collecting end-of-life products and refurbishing parts forreuse, Hitachi is reducing the environmental burden of products at the disposal stage,
preserving the environment through recycling, and making more effective use ofresources.

Hitachi Group
Sustainability
Report 2014

Product Collection and Recycling
We are building on the knowhow gained from recycling end-of-life home appliances,
begun in 2001, based on the Home Appliance Recycling Law. We are now expanding
collection and recycling programs to include IT products and industrial equipment, suchas pumps, motors, distribution boards, transformers, refrigeration equipment, andmachine tools. In fiscal 2013, we established a network in Japan for recovering rare earthmagnets used in hard disc drives, as well as industrial equipment used in building
construction. These are several of our ongoing recycling programs.

Collecting and shipping end-of-life products

Product Recycling Network

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096

Refurbishing Construction Machinery Parts
Hitachi Construction Machinery (Shanghai) co., Ltd has been refurbishing and sellingparts from hydraulic excavators and other equipment since 2003, based on the conceptof resource recycling. After refurbishing by highly skilled workers to the same standards
and with the same expertise as in Japan, the parts-with the same functionality andperformance as authorized Hitachi parts-are listed in catalogs and given a manufacturer's
guarantee. The refurbished parts are provided to customers at reasonable prices, helping
to reduce resource consumption and promoting more effective use.

Plant where parts are refurbished

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Sustainability
Report 2014

Parts refurbishing

Management of Containers and Packaging
http://www.hitachi.com/environment/activities/data/wrapping.html

Number and rate of recycled consumer electronics products
http://www.hitachi-ap.co.jp/company/environment/kankyo/recycle_kaden/

Number of PCs taken back and the resource recycling rate
http://www.hitachi.co.jp/Prod/comp/OSD/pc/flora/environment/recycle.htm

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097Managing Chemical Substances Contained in Products
To manage the chemical substances contained in products, we created Regulations forEnvironmental CSR-Compliant Monozukuri in fiscal 2005.
We continue to revise the list of applicable substances to ensure compliance with theEuropean REACH*1 and other regulations. In April 2013, we modified the list of
Voluntarily Controlled Chemical (VCC) Substances; 17 prohibited substances (Level 1) and
20 controlled substances (Level 2) are now listed.

Hitachi Group
Sustainability
Report 2014

*1 REACH regulation: The European Union regulation on Registration, Evaluation, Authorization and Restriction ofChemicals.

Hitachi Group's Voluntarily Controlled Chemical (VCC) SubstancesClassification

Application

Substance (Group) Names

Level1:
Prohibited
Substances

Chemical substances that the Hitachi Group prohibits
from being included in procured products (chemical
substances banned or restricted for use in products,
including packing materials, by domestic or foreign
regulations and potentially used for procured products
for the Hitachi Group)

Cadmium and its compounds, hexavalent chromium
compounds, lead and its compounds, mercury and its
compounds, polybrominated biphenyls (PBBs), polybrominateddiphenyl ethers (PBDEs), tri-substituted organostannic
compounds, polychlorinated biphenyls (PCBs), polychlorinatedterphenyls (PCTs), polychlorinated naphthalenes (with 3 ormore chlorines), short-chain chlorinated paraffins (C10-C13),
asbestos, ozone layer depleting substances (Class I),
perfluorooctanesulfonic acid and its analogous compounds, 2(2H-1,2,3-benzotriazole-2-yl)-4,6-di-tert-butylphenol,
hexachlorobenzene, dimethylfumarate (DMF)

Level2:Controlled
Substances

Substances for which monitoring and control are
required by domestic or foreign regulations, or forwhich special consideration for recycling or appropriate
disposal is required. This level includes substancegroups 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, un-specific brominated flame
retardants, polyvinyl chloride (PVC) and its mixture and its
copolymer, phthalate esters, ozone layer depleting substances(Class II: HCFC), radioactive substances, di-substitutedorganostannic compounds, cobalt and its compounds, azodyes
and azocolourants which form specified amines, formaldehyde,benzene, fluorine-based greenhouse gasses, 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 June andDecember 2013 deadlines. Investigations and preparations are also continuing in thelead-up to the next round of notifications.

Working with the Supply Chain (Integrated Management System for
Chemical Substances Contained in Products)
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, 2014, chemical substance information for more than 1.13 million
parts and products was registered in this integrated management system.

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098
Integrated Management System for Chemical Substances Contained in Products

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http://www.hitachi.com/environment/Chapter2 Environmental Report

Environmentally Conscious Production
We have set targets for efficient energy use, waste amounts, chemical
substance emissions, and water use to reduce the environmental
burden of our business activities. Factories and offices that show ahigh level of environmental consciousness as well as outstanding
results in these areas receive Eco-Factory & Office Select certification
as a way of promoting environmentally conscious production andencouraging effective environmental action.

099
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Sustainability
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Creating Eco-Factories & Offices SelectWe have been implementing an Eco-Factories & Offices Select certification program since
fiscal 2011. Certification criteria were developed for our manufacturing (factory) and non-manufacturing (office) divisions globally. To maintain and raise the level ofenvironmental awareness in Eco-Factories & Offices Select, certified factories and offices
will be re-evaluated every fiscal year to confirm that their performance continues to meetthe certification criteria. In fiscal 2013, 19 facilities obtained new certifications and 36
facilities had their certifications renewed.
Eco-Factories & Offices Select Certification Criteria

Examples of Eco-Factories & Offices SelectHitachi High-Technologies Corporation, Ibaraki, JapanThe Naka Division of Hitachi High-Technologies
Corporation designs, develops, and manufactures
semiconductor measuring and inspection equipment,
as well as electron microscopes and clinical analyzers
for use in medicine.
At this facility, recycling show employees the need forconservation and ensures that waste materials areproperly recovered and reused. For more efficient
Production wing at Hitachienergy use, the division is also conserving energy,
High-Technologies Corporation
including upgrading to high-efficiency air conditioning
systems, installing LED lighting, and installing motion
detectors in common areas. A new building completed in 2011 was also designed to beenvironmentally conscious, featuring energy-efficient equipment, rooftop greenery, andsolar power systems.

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Hitachi Building Equipment Manufacturing (Tianjin) Co., Ltd., Tianjin, China

100
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Report 2014

Hitachi Building Equipment Manufacturing (Tianjin)
Co., Ltd. manufactures elevators and related
components.
Reducing the environmental burden was a goal forthis factory from the beginning. Skylights let in natural
Hitachi Building Equipment
light, and a management system automatically
Manufacturing (Tianjin) Co., Ltd.
controls the air conditioning for maximum efficiency.
Every employee conserves energy in other ways,
including turning off lights and PC displays in the administrative wing during lunchtime.
Water used during manufacturing is recovered by a wastewater treatment system,
treated, and then reused in the factory.
Eco-Factories & Offices
http://www.hitachi.com/environment/showcase/select/index.html

Next StepsThe Eco-Factories & Offices Select program is being expanded by developing more
efficient energy use, recycling waste, and other measures in Group factories and offices,
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 officecertified by fiscal 2015.

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101

Promoting Global Warming Countermeasures
We are promoting ways to use energy more efficiently during production andtransportation to help prevent global warming.

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Report 2014

Actions and Achievements
We are working to reduce the energy use per unit as one way to use energy more
efficiently. In fiscal 2013, we achieved a reduction of 14 percent, surpassing the target of
11 percent (from fiscal 2005, the base year). For further reductions, we are continuing toinstall high-efficiency equipment and devices, from LED lighting to inverter air
conditioners, and are reducing energy consumption by improving manufacturing
processes. We are also visually displaying energy use data at in-house and Group
companies as an incentive to make further improvements.
Key Indicators

Reduction in Energy Use per Unit*

A value closely related to the emission factor numerators (environmental burden) of energy use from businessactivities, etc. (For example, production quantity, output, building floor space, number of employees, etc.)

Trend in CO2 Emissions

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102

Breakdown by Region (kt CO2/year)*

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Europe

5

8

7

4

4

Americas

318

421

295

316

321

China

444

502

287

315

332

Rest of Asia

437

543

357

381

375

Japan

2,547

2,680

2,501

2,437

2,323

Total

3,751

4,154

3,447

3,453

3,355

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Report 2014

Emissions were calculated based on the 2005 CO2 emission coefficients for electric power by country publishedby the International Energy Agency (IEA: CO2 Emissions from Fuel Combustion, 2010 Edition).

Using an Electric Storage System to Smooth Out Demand Peaks
At Shin-Kobe Electric Machinery Co., Ltd., an electric
storage system developed in-house was introduced at
the Hikone Works (converter output: 400 kW) and theSaitama Works (converter output: 100 kW) to reduce
peak power demand. The system uses lithium-ion
batteries which are light and have a space-saving
design. In addition to everyday efforts to conserve
energy, recently there has been a need for energy
management geared to a demand and supply balance
for power. To equalize demand, electricity generated
at night (during times of low use) is stored in batteries,
and then made available during heavy use periods
during the day, helping to reduce peak energy
demand.
Lithium-ion storage system

System Outline

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103

Introducing Renewable Energy
We are promoting the use of solar, wind power, and other forms ofrenewable energy. The Tokyo Works of Hitachi Kokusai Electric Inc.
in fiscal 2013 built a new production wing equipped with a 100 kW
solar power system. The electricity generated by this system is used
to drive production equipment. In the Netherlands, Hitachi Data
Systems Netherlands BV installed a 1.6 MW solar power system in its
distribution center, a move to reduce conventional energy use. We
also contracted for Green Power Certifications for 1,000 MWh
through Japan Natural Energy Company Limited, using these tocover power generated for offices and at exhibitions.

Hitachi Group
Sustainability
Report 2014

Green Power logo forGreen Power Certification

Green Curtain Project
To conserve electricity, since fiscal 2011 we have been planting climbing vines alongbuilding windows and walls, creating green curtains that lower the room temperatureinside the buildings. In fiscal 2013, the third year of this project, green curtains have beenplanted at 175 Hitachi Group sites and at the homes of some employees. A contest wasalso held to promote this project, with awards being presented to groups and individuals
for outstanding achievements.

Gunma Works, Hitachi Automotive Systems, Ltd.

Hitachi Chemicals Group (Hikone Works, Shin-Kobe Electric Machinery Co., Ltd.)

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104

Reducing Transportation Energy
Reductions in transportation energy consumption per unit are reflected in the individual
targets of each in-house and Group company, so that additional actions can be taken tofurther reduce energy consumption. CO2 emissions from transportation inside Japan for
the Hitachi Group in fiscal 2013 were 125 kt CO2/year.

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Report 2014

Examples: Promoting Green Logistics
At Hitachi Transport System, Ltd., Green Logistics is helping to reduce global warming
through environmentally conscious logistics. Building and operating distribution centers
are using renewable energy, natural light, and high-efficiency lighting to the maximum
extent possible to reduce energy use. The introduction of fuel-efficient and low-pollution
eco-cars, vehicles used for transportation, is being carried out with the goal of 100
percent adoption by fiscal 2015. For transporting products, a modal shift*1 is being
promoted in cooperation with business sites, using medium-range trains between Kantoand Hyogo, and ships between Kanto and Kyushu.
*1 Modal shift: Switching to a more efficient way to ship goods. In general, this means switching from trucks totrains and domestic ships, which are large-volume transportation with a smaller environmental burden thantrucks.

Tosu Distribution Center 3 introducing natural light and solar
power generation

Natural gas truck

Next Steps
Our initiatives to reduce energy-related CO2 emissions include the scheduled introductionof LED lighting, inverter air conditioners and other high-efficiency equipment anddevices. We also use energy efficiency diagnoses to determine the potential for
improvement, as we aim for a high level of energy conservation including improvements
in production processes. Target achievement is tracked visually, and individual reduction
measures are supported based on the extent of progress, as we work to raise the overalllevel of reduction by the Group.

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http://www.hitachi.com/environment/Calculation of GHG Emissions throughout the Value Chain
We calculate GHG (greenhouse gas) emissions throughout the entire value chain to more
effectively reduce these emissions. For emissions from the products that we have sold,accounting for more than 90 percent of emissions, we are developing Eco-Products thatmeet environmentally conscious criteria throughout the entire product lifecycle forcontinuing reductions.

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Categories of GHG Emissions in the Value Chain

SCOPE 1: Direct GHG emissions by the company
SCOPE 2: Indirect emissions from electricity, heat, and steam supplied to and used by the company
SCOPE 3: Indirect emissions other than SCOPE 1 and 2 (emissions by others related to the company's activities)
In-house:

Within the scope of the company's organizational boundaries, in principle the scope of all businessactivities of the company itself and activities within or controlled by its consolidated subsidiaries
Upstream: In principle, activities related to purchased products and services
Downstream: In principle, activities related to sold products and services

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106

GHG Emissions throughout the Hitachi Value Chain
Category

Category Description

Notes

Calculation
Results(kt-CO2e)

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Sustainability
Report 2014

SCOPE 1
Direct emissions

Direct emissions from in-house fuel use and industrial processes

830 (0.3%)

Indirect emissions from using electricity and heat purchased by thecompany

2,610 (1.1%)

SCOPE 2
Energy-related indirectemissions

SCOPE 3: Upstream (other indirect emissions)
1 Purchased goods andservices

Emissions from activities on raw materials, parts, supplied products andsales from the resource extraction stage to the manufacturing stage

10,200 (4.1%)

2 Capital goods

Emissions generated in the construction, manufacture and shipping of thecompany's own capital goods (equipment, devices, buildings, facilities,
vehicles, etc.)

1,360 （0.6%）

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

Emissions from procuring the fuel (resource extraction, production andshipping) necessary for producing electricity and heat, etc., procured fromother suppliers

220 （0.1%）

4 Upstream transportationand distribution

Emissions due to distribution activities until materials involved in raw
materials, parts, supplied products and sales have been delivered to thecompany, and other distribution activities of products for which thecompany bears the expense

250 (0.1%)

5 Waste generated inoperations

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

100 (0.0%)

6 Business travel

Emissions generated from using fuel and electric power in transportationof employees for business travel

90 (0.0%)

7 Employee commuting

Emissions generated from using fuel and electric power for transportationof employees between their homes and their worksites

60 (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)
Emissions from transportation, storage, loading and unloading, and retailsales of products

20 （0.0%）

0 Processing of sold products

Emissions by downstream companies during processing of intermediate
products

7 （0.0%）Use of sold products

Emissions from use of products by end users (consumers and businesses)

229,933(93.5%)

Excluding power
generationequipment

2 End-of-life treatment of soldproducts

Emissions from transportation, waste disposal and treatment of products
by end users (consumers and businesses)

180 (0.1%)

Excluding power
generationequipment

3 Downstream leased assets

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

30 （0.0%）

4 Franchises(SCOPE 1 and 2) emissions by franchises

5 Investments

Emissions related to management of investments

9 Downstream
transportation anddistribution

Total

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N/A

180 （0.1%）
246,070(100%)

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107

Reducing Waste
Waste issues, from pollution to illegal dumping and disposal of waste materials, arecommon across the globe. We have set targets for waste generation in factories andoffices around the world, working hard to meet these targets while developing more
effective use of resources as well as solutions to landfill issues.

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Sustainability
Report 2014

Activities and Results
In fiscal 2013, we set a target of a 19 percent reduction (from the base year) for waste
and valuables generation per unit, and bettered this by achieving a 24 percent reduction.
Every factory and office is recycling waste materials onsite and, in cooperation withcustomers, is reducing waste related to transportation. Under the Zero Emission*1
initiative, which minimizes landfill disposal as close to zero as possible, 121 facilities
achieved their zero emission goal, as of fiscal 2013.
*1 Zero emission: Defined as a final disposal rate (landfill disposal/waste) of less than 0.5 percent in any given year

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

Key Indicators

Reduction in Waste and Valuables Generation per Unit

Trend in Amount of Waste and Valuables Generation

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108

Breakdown by Region (kt/year)
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Europe

1

1

3

1

1

Americas

38

54

55

58

56

China

51

80

40

38

62

Rest of Asia

54

78

80

80

93

Japan

464

525

523

478

465

Total

608

738

701

655

677

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Report 2014

Using IT for Managing Waste
Making use of our Group-wide network, we have developed and now operate a waste
management system aimed at both more efficient processes and at reducing compliancerisk. This system makes it possible for small offices with small waste volumes and businesssites without a dedicated waste manager to visualize operations at the site, lending
support for better management. It is also being used as a tool for keeping track of thewaste generated in the entire Group and to share ways to more effectively use resources.
We intend to boost the Hitachi Group e-manifest*1 registration ratio to at least 90 percent
by fiscal 2015. As of fiscal 2013, 128 sites had introduced e-manifest systems, raising theregistration rate to 78 percent.
*1 E-manifest: An evidence document that the waste generator must issue when waste disposal is commissioned toa disposal company

Waste Management System

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109

Examples: Waste Reduction
Zero Emission Initiative
Hitachi Elevator (China) Co., Ltd., a manufacturer of elevators and escalators, and its
Group companies in Guangzhou, Guangdong Province, have achieved zero emissions byrecycling waste and outsourcing the resulting scrap to a vendor with advanced
technology for making bricks.

Scrap after processing

Hitachi Group
Sustainability
Report 2014

Recycled as bricks

Shipping Pallets Made from Bamboo
Hitachi-Omron Terminal Solutions Corp. is promoting the more effective use of resources
by adopting bamboo for the pallets used for shipping products. A manufacturer ofATMs*1 and other financial industry products, the company, when developing a new ATM
product for use in Japan, with environmental awareness as one of its key ideas, decided
to switch from wooden to bamboo pallets. Bamboo is a plentiful natural material thatgrows rapidly and has the advantages of being both light and strong. While wood fromforest thinning is used for most packing materials, using bamboo not only helps toprotect forests but it also has a longer life than wooden pallets, which reduces costs andthe environmental burden.
*1 ATM: automated teller machine

Bamboo pallet

Used for shipping an ATM

Office Waste Reduction Program
Hitachi Consulting Corporation (USA) is reducing waste generated in offices, so that lesswaste will be sent to landfills. The main measures are composting leftover food, reusing
packaging paper, donating old electronic equipment to schools, switching from
disposable to reusable products, and purchasing items that either have long usable
lifetimes or are recyclable. The company is also reducing the number of wastebaskets inoffices. As a result, the volume of recycled materials grew by 45 percent in fiscal 2013
over the previous year. The company also received an Eco Leadership Award from the
NPO Alliance for Workplace Excellence.

Next StepsIn Japan, the volume of waste sent to landfills was significantly reduced by either
eliminating or reducing the volume of waste generated and by promoting recycling.
Worldwide economic growth and population increases are expected to sharply increase
the amount of waste materials. We, taking a global perspective, are committed to further
reducing waste and effectively disposing hazardous materials and landfill waste.

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110

Water Conservation
Issues over water, whether droughts or floods, have an impact on people's lives andaffect the business operations of companies. The consequences can be far-reaching,extending to regional conflict, biodiversity, and agricultural production. We have set
targets for water conservation to reduce the water use in production, and we areworking across the world to achieve these targets.

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Report 2014

Activities and Results
In fiscal 2013, we set a target for our business sites outside Japan of a 26 percent
reduction (over the base year) for water use per unit, and achieved a 39 percent
reduction. With the growing amount of production outside Japan, we are promoting
efficient use of water by reducing the water use.
Key Indicators

Reduction in Water Use per Unit (Outside Japan)

Trend in Water Use outside Japan

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111

Breakdown by Region (million m3/year)
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Europe

0.01

0.02

0.03

0.03

0.02

Americas

3.71

4.05

2.35

3.15

1.20

China

4.94

5.16

2.92

2.85

2.50

Rest of Asia

4.24

7.17

3.61

3.85

3.65

Total

12.90

16.40

8.91

9.88

7.37

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Examples：Water Conservation
Recycling Factory Wastewater
Hitachi Automotive Systems Kyushu, Ltd., which makes automotive parts, has been
reducing the amount of wastewater discharged from manufacturing plants since 2008.
Actions include increasing the capacity of wastewater treatment from production lines
for better recycling and installing evaporation-type decompression-dehydration dryers
along with advanced water treatment equipment. By reusing the recycled water as
industrial water, the volume of pumped well water used as industrial water has been
reduced by more than 60 percent.
Water treatment flow

Next Steps
Climate change, one of the major items on the list of global environmental problems, has
an impact not only on global warming but also on water resources. As traditional rainfall
patterns change, the number of droughts and floods is expected to grow. By effectively
managing the water resources used in our business operations, and carrying out
conservation and recycling, we are tackling global environmental issues.

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Chemical Substance Management
To deal with chemical risk and to comply with laws and regulations, we assess chemical
substances used in production processes, managing risk in three ways: prohibition,
reduction, and control. In addition, we educate chemical substance managers on laws
and regulations and on how to assess risks to prevent problems from arising.

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Sustainability
Report 2014

CEGNET Chemical Substance Management System
Since 1998, we have operated a database for chemical substance management called
CEGNET to keep track of the latest laws and regulations and our own voluntary
regulations, ensuring the management of newly introduced chemical substances.
Chemical substances used in our operations are also registered with CEGNET. Collecting
and aggregating data on the amount of chemical substances used, emitted, ortransferred helps to reduce our use of chemicals.

Activities and Results
To prevent air pollution, we have cut emissions from 41 volatile organic compounds(VOCs) based on a program of the Ministry of the Environment in Japan. Initiatives infiscal 2013 to reduce VOC emissions included switching to high-solid coatings with theirlower VOC content, and installing equipment for recovery and recycling. We also
strengthened the PDCA (plan, do, check, act) cycle to achieve our targets.
We comply with Japan's PRTR Law*1 through Group-wide monitoring of chemical
substances released into the atmosphere or into public waters, removed outside ourplants 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 all PRTR substancesof 10 kilograms or more per year, recognizing the need to control these substances as
well.
*1 PRTR Law: Japan's Pollutant Release and Transfer Register Law

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Key Indicators

Hitachi Group
Sustainability
Report 2014

Reduction in VOC Atmospheric Emissions per Unit

FY 2013(frombase year)

Japan

OutsideJapan

Overall

26%

17%

43%

Trend in Reducing VOC Atmospheric Emissions

Breakdown by Region (t/year)
FY 2006(base year)

FY 2010

FY 2011

FY 2012FY 2013

Europe

8

9

28

6

8

Americas

54

41

62

53

76

China

1,339

131

427

273

372

Rest of Asia

438

258

232

346

447

Japan

4,945

3,214

3,536

3,449

3,313

Total

6,784

3,653

4,285

4,127

4,216

The coverage of data for outside Japan differs before fiscal year 2010.

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IH Varnish Curing System Reduces VOCs

Hitachi Group
Sustainability
Report 2014

Hitachi Industrial Equipment Systems co.,Ltd.developed and is using an IH*1 varnish*2 curingmachine for motor varnishing. The new system
automatically and continuously applies varnish andcures it.
Since this machine uses a non-solvent varnish
containing no VOCs, it reduces by 100 percent thevolume of VOCs handled and released into the
Varnish curing system (protective covers
atmosphere. Moreover, by applying the varnish byhave been removed for this photo)dripping instead of immersing, the amount of varnish
is reduced and VOC emissions from the immersion
tank used in the conventional approach are totally eliminated.
In addition, with the introduction of this machine varnish curing was changed fromindirect steam heating to direct IH heating, which saves energy by reducing thermal loss.
An advantage of automatic operation is that processing can be done at night, reducing
peak energy demand.
*1 IH: Induction heating*2 Varnish: A resin coating for insulating coils in electrical and electronic equipment

Managing PCB*1 Storage
Information on storing and handling equipment thatuses PCBs is gathered and continually managed as anenvironmental management item of the HitachiGroup. Waste materials with high PCB concentrations
are subjected to a treatment program based onrequirements set by the national government ofJapan. Waste materials with low PCB concentrations
are processed by treatment companies that have beencertified and have the capacity to handle them. In thecase of discarded electrical equipment contaminated
Removing oil from electrical equipmentwith low PCB concentrations that might leak if moved,
contaminated with low PCB concentrations
and that cannot be kept in a container, the PCB oil isdrained from the equipment and processed following
government guidelines, giving the highest priority to safety.
*1 PCB: Polychlorinated biphenyl

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

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Environmental Compliance
Considering the environmental burden of all our business activities, we set voluntary
management criteria that are more stringent than regulatory requirements. At every
business site, we regularly monitor water quality and noise, for example, and work tominimize environmental risks. In addition, we share information on environmental laws
and regulations throughout the Group, along with examples of infringements, while
taking every possible step to prevent recurrences and to strengthen controls.

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Report 2014

Activities and Results
Worldwide in fiscal 2013, globally, we received eight notices or complaints concerning
water quality, noise, or odors, all of which were promptly resolved. To prevent
recurrences or new occurrences of these problems, we will continue implementing
programs that strengthen environmental management.

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Data on Environmental Load Resulting from Business Operations(FY 2013)

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The data below shows the resource inputs and the environmental load (impact instatistical terms) for Hitachi Group business operations in fiscal 2013.

*1 GWP (Global Warming Potential): A coefficient derived by converting the global warming potential into CO2
equivalent tonnes

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Detailed Data on Input of Resources and Output of Environmental Load

Hitachi Group
Sustainability
Report 2014

Total Input of Resources
The total amount of resources input from Hitachi Group business operations.

Energy consumption (crude oil equivalent): 1.71 million kL
Total Energy Input
In Japan
Electricity
Gas

Outside Japan

4.1 billion kWh （39,000 TJ）

1.4 billion kWh （14,000 TJ）

80 million m3 （3,500 TJ）

50 million m3 （2,100 TJ）

45,000 t （2,300 TJ）

14,000 t （800 TJ）

90,000 kL （3,500 TJ）

5,000 kL （200 TJ）

Natural gas
LPG, etc.

Fuel oil (heavy oil, kerosene, etc.)

Materials: 2,581 kt
Total Input of Materials
In Japan

Outside Japan

Metals1,214 kt

725 kt

Plastics

148 kt66 kt

Rubber

8 kt

26 kt

297 kt97 kt

PRTR substances*1 handled

156 kt23 kt

Ozone-depleting substances
handled6t

7,222 tGreenhouse gas substances
handled

4,187 t1,335 tOther materials
Chemicals*1 The 462 chemicals designated in Japan's Act on Confirmation, etc. of Release Amount of Specific Chemical
Substances in the Environment and Promotion of Improvements to the Management Thereof

Water use: 49.55 million m3
Total Water Input
In Japan

Outside Japan

Tap water

5.23 million m3

1.5 million m3

Industrial water

18.08 million m3

4.12 million m3

Groundwater

18.88 million m3

1.74 million m3

Total Output of Environmental Load
The amount of environmental load output from Hitachi Group business operations.

Greenhouse gases: 3,436 GWP / kt
Greenhouse Gas Emissions
In JapanCO2 emissions
Other GHGs

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2,323 kt

1,032 kt

SF6 (sulfur hexafluoride)

46 GWP / kt

0

PFCs (perfluorocarbons)

15 GWP / kt

0

HFCs (hydrofluorocarbons)

19 GWP / kt

1 GWP / kt

N2O, NF3

0 GWP / kt

0 GWP / kt

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Hitachi Group
Sustainability
Report 2014

Waste generation: 677 kt
Total Volume of Waste
In Japan

Outside Japan

Waste reduction

31 kt

9 kt

Recycling

415 kt160 kt

Reuse

55 kt

7 kt

Materials recycled

334 kt151 kt

Thermal recovery

26 kt

2 kt

18 kt

45 kt

5 kt

3 kt

SOx (sulfur oxides)

41 kNm3

6 kNm3NOx (nitrogen oxides)

362 kNm3

34 kNm3

2.9 t (0 ODP*1t)

0 t (0 ODPt)

Landfill
Chemicals

PRTR substances discharged ortransferred

Ozone-depleting substances
emitted*1 ODP: Ozone Depletion Potential. A coefficient derived by converting the global depletion potential into
equivalent tonnes CFC-11 (trichlorofluoromethane)

Wastewater: 48.54 million m3
Total Volume of Wastewater
In Japan

Outside Japan

Public water

30.63 million m3

1.78 million m3

Sewerage

6.76 million m3

4.75 million m3

Underground infiltration, etc.

4.20 million m3

0.42 million m3

BOD (biochemical oxygen
demand)

285 t

281 t

COD (chemical oxygen
demand)

160 t

735 t

Water quality

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Environmental Accounting
We have adopted, and are making public, environmental accounting procedures that
conform to the Environmental Accounting Guidelines issued by the Japanese Ministry of
the Environment in 2005. The results help us to raise the efficiency of environmental
investments and activities by more effectively allocating management resources to ourongoing efforts that benefit the environment.

Hitachi Group
Sustainability
Report 2014

Achievements
Trends in Environmental Investments, Environmental Protection Costs, and Economic
Effects

Fiscal 2013 Environmental Investment Ratio by Countermeasure

Environmental Investments
Description

Total investment

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Costs (billions of yen)
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

7.95

7.60

9.61

5.28

5.81

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

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120

Environmental Protection Costs
Item

Expenses

Description

Costs (billions of yen)
FY
2009

FY
2010

FY
2011

FY
2012

FY 2013

Business area

Costs of maintaining equipment with low
environmental load, depreciation, etc.

28.20

27.98

27.78

31.84

38.63

Upstream/downstream

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

1.70

1.60

1.43

1.38

1.27

Administration

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

8.92

8.61

8.25

7.67

6.77

Research anddevelopment

R&D for the reduction of environmental
burden caused by products and production
processes; product design expenses

52.81

57.56

79.81

84.71

75.62

Social activities

Planting, beautification, and otherenvironmental improvement expenses

0.25

0.31

0.45

0.41

0.51

Environmental
remediation

Environmental mitigation costs,
contributions, and charges

0.68

0.37

1.94

1.90

0.53

92.56

96.44

119.66127.91

123.34

Total

Hitachi Group
Sustainability
Report 2014

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

Environmental Protection Effects
Economic Effects*1
Item

Costs (billions of yen)

Major FY 2013 Activities

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Net income
effects

8.30

9.62

13.72

17.85

15.98

Recovering value from waste by sorting andrecycling

Reducedexpenses effects

15.00

18.45

15.27

12.07

9.82

Reducing waste disposal costs through waste
reduction

Total

23.30

28.07

28.98

29.92

25.80

*1 Economic effects include the following items:
Net income effects: Benefits with real incomes, including incomes from the sale of resalable materials andincomes from environmental technology patents
Reduced expenses effects: Reduction in electricity, waste treatment expenses, and others by environmental load
reduction activities

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Physical Effects
Item

Reduction inenergy usedduringproduction
Reduction inamount of waste
for landfill during
production

Amount Reduced

Hitachi Group
Sustainability
Report 2014

Major FY 2013 Activities

FY 2009

FY 2010

FY 2011

FY 2012FY 2013191 millionkWh

129 million
kWh

93 million
kWh

107 million
kWh

70 million
kWh5,955 t3,623 t4,754 t3,788 t2,420 tUpgrading air conditioning equipment,
installing motion sensors, etc.

Encouraging disposal by sale, reducing volume
or recycling of liquid waste, etc.

* Benefits from equipment investments are calculated using the straight-line method over five years, as withcosts.

Efficiency of Environmental Load Reduction*2
Item

FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Efficiency of reduction in energy consumption (million
kWh/100 million yen)

4.2

2.6

2.0

1.7

1.3

Efficiency of reduction in amount of waste for landfill(t/100 million yen)

229

121

183

146

95

*2 The amount of environmental load reduction divided by the cost of the reduction.

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Preserving Ecosystems andEnvironmental Communication

Hitachi Group
Sustainability
Report 2014

Having made the preservation of ecosystems a pillar of ourenvironmental vision, the entire Hitachi Group is now taking action.
We are also working to deepen stakeholders' understanding of ourenvironmental activities by disclosing information, and we areencouraging two-way communication to improve those activities.

Preserving Ecosystems
We have made the preservation of ecosystems a pillar of our environmental vision andincorporated it into our Action Guidelines for Environmental Conservation. In fiscal 2013,
we conducted the Business Assessment on the Preservation of Ecosystems. We were also
active outside the company, taking part in the Ecosystems Focus Area of the World
Business Council for Sustainable Development (WBCSD).
We will continue working to raise awareness and knowledge in the company and topromote ecosystem preservation throughout the entire Group, while laying the
groundwork for ecosystem preservation programs through activities outside thecompany.

Corporate Relationship with Ecosystems
Corporations depend on "ecosystem services," or the benefits received from ecosystems,
including materials such as fibers and wood, and the ability of the ecosystem to maintainthe quality and quantity of air, water, and soil. To continue receiving these benefits andto restore ecosystems, we believe that we can contribute to ecosystem preservation
through both business and social activities. Specifically, for contributions throughbusiness, we are promoting designs and production that reduce the impact on
ecosystems throughout the product life cycle (material procurement, production,transportation, use, collection and disassembly, and appropriate disposal), as well as
increasing the number of products and services for direct preservation of ecosystems
through water and air purification. Viewing chemical substance management as part ofecosystem preservation, we continue to ensure that it is carried out correctly. For
contributions to society, we encourage tree planting and ecological surveys of rare plants
and animals by employees through volunteer programs, along with other programs that
preserve ecosystems.
Corporations and Ecosystems

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Encouraging Action
Following the first edition of the Hitachi Group Guide to Preservation of Ecosystems issued
in fiscal 2011, we issued a second edition in fiscal 2012, presenting employees with ourthinking on the relationship between corporate activities and ecosystems, while
introducing trends and examples of initiatives being taken around the world. To further
improve our employees' understanding, in fiscal 2013 we carried out the Business
Assessment on the Preservation of Ecosystems at 229 factories and offices in and outside
Japan. This is the start of a program of self-assessment on the relationship between
business operations and ecosystems. Through these assessments, we hope to encourage
actions that will help preserve ecosystems from many aspects, including design,
procurement, manufacturing, transportation, and product use. We intend to stimulate
thinking about the development of new products and services related to ecosystempreservation as well. For contributions to society through nature conservation and by
studying the impact on and benefits to local ecosystems, we are developing a deeper
appreciation of ecosystem preservation. We will continue to review this assessment
program and improve each Group company's initiatives.

Hitachi Group
Sustainability
Report 2014

In fiscal 2013, we again held internal training sessions within the Group on preserving
ecosystems, and we invited experts from NGOs and government agencies to describe
policy trends and thinking. We also held discussions on using Business Ecosystems
Training (BET), new course materials developed by the WBCSD for teaching company
employees about the relationship between corporate activities and preserving
ecosystems.
Contribution to the Development and Spread of Learning Materials for Employees
For the BET learning materials developed and released by the WBCSD in February 2012,
Hitachi prepared Japanese-language versions of all modules and of the instructormanuals and made them available on the Web.
The biodiversity working group of four Japanese electrical and electronic industry
associations,*1 of which Hitachi is a member, developed an educational tool, Let's Study
Biodiversity, that demonstrates the relationship between the environmental protection
programs from companies in these industries and the global Aichi Biodiversity Targets.
*1 JEMA (Japan Electrical Manufacturers' Association), JEITA (Japan Electronics & Information Technology Industries
Association), CIAJ (Communications and Information Network Association of Japan), and JBMIA (Japan Business
Machine and Information System Industries Association)

Laying the Groundwork for Ecosystem Preservation by Society
Employee Participation in IT for Ecosystem Preservation at the IT Eco Experimental
Village
The IT Eco Experimental Village, established in Hadano, Kanagawa Prefecture, in April
2011, is being used for trials and studies to determine how IT can be used to promoteecosystem preservation. The site is a satoyama（natural woodland）area of approximately
7,000 m2 on the outskirts of the city, consisting of fallow farmland, bamboo groves, andforests, etc. In cooperation with the local community, local government, and schools, rice
fields are being restored, helping to preserve the ecosystem in this area. IT systems arebeing used to gather information on flora and fauna. In fiscal 2013, the third year of the
program, some new initiatives were launched. For example, information on the naturalenvironment (photos, voice data, location information, etc.) is being compiled in achapter

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database, using various Hitachi technologies such as the Hitachi voice SNS "talkfield"*1
application for smart devices, and a system using AR technology*2 for on-sitevisualization.*3 We are now studying the best ways to take advantage of this information.
We are also active in the Research Group for Future City Design, an industry-academiagovernment collaboration led by Yokohama National University, which is conducting
research on urban innovations for solving global environmental issues. The IT Eco
Experimental Village is being used for field studies and analysis on how to build and use
the next-generation integrated ITC*4 platforms that will be essential to future city design.

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Sustainability
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*1 Hitachi voice SNS "talkfield ": A digital social service using a dedicated application to post and share voicemessages among users.
*2 AR technology (Augmented reality technology): Technology augmented reality. technology that superimposes
layers of digital information over a real-world environment that's displayed in real time.
*3 AR-based On-site Visualization System: A product from Hitachi Solutions that uses AR technology. It presents
location-based information along with live images and operational data on an Android device.
*4 ICT: information and communication technology

Planting rice with people from the local community

Field survey using "talkfield "Participation in the IPBES International Workshop (Representing the WBCSD)
In September 2013, the Asia-Pacific Regional Workshop on Regional Interpretation of the
IPBES (Intergovernmental Platform on Biodiversity and Ecosystem Services) Conceptual
Framework and Knowledge Sharing was held in South Korea. As the sole participantfrom industry, Hitachi reported on corporate initiatives for ecosystem preservation in the
WBCSD. The results of the symposium discussions were summarized and made public in
an official United Nations document (IPBES/2/INF/12), in which it was proposed that the
WBCSD approach to ecosystem preservation by industry be incorporated info the IPBES.
This document was presented at the IPBES second plenary session held in Antalya,
Turkey, in December 2013.
Report on Asia-Pacific Workshop
http://isp.unu.edu/events/2013/ipbes_workshop_korea.html

IPBES Second Plenary Session Report (IPBES/2/INF/12)
http://www.ipbes.net/images/K1353757.pdf

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

Hitachi Group
Sustainability
Report 2014

Activities and Results
In fiscal 2013 we trained employees who work in air and water quality or waste
management to provide them with basic knowledge and to inform them of recent
amendments to laws and operational procedures. 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 three languages:
Japanese, English, and Chinese. To date 157,379 employees worldwide (97 percent oftarget employees) have taken this course.
Environmental Education and Training System

Next Steps
From fiscal 2014, we will continue with environmental education training to enhance theknowledge and skills of staff in charge of factory management.

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Environmental Communication
We have published reports every year on our environmental protection initiatives, theirresults, and our plans. The Hitachi Group Environmental Report, issued each year inJapanese starting in fiscal 1998, was first published in English in fiscal 2000 and in
Chinese starting in fiscal 2005. In fiscal 2011, this report was combined with the HitachiGroup Corporate Social Responsibility Report as the Hitachi Group Sustainability Report, in
response to the global need for a sustainability report. The Sustainability Report 2013,
issued for fiscal 2013, was awarded a Prize for Excellence in the 17th Environmental
Communication Awards sponsored by the Japanese Ministry of the Environment andothers. This is the second consecutive award, following the Sustainability ReportingAward for the fiscal 2012 report. We also cooperate with SRI*1 ratings and otherenvironmental surveys.

Hitachi Group
Sustainability
Report 2014

*1 SRI: Socially Responsible Investment. An approach to investing where shares are selected partly on the basis of
criteria related to CSR

CSR/Environmental reports published by Hitachi Group companies
http://www.hitachi.com/csr/link/index.html

Website Communication
In addition to the Sustainability Report, the Environmental Activities section of the Hitachi
website provides more detailed information about the main environmental services andactivities of the Hitachi Group. In fiscal 2013, two new sections were added-"Working tosecure societies future through innovation and environmental technology" and "To
Create a Sustainable Future"-to visually introduce our environmentally conscious
products and services, as well as pages introducing the 34 business sites certified in the
Eco-Factories & Offices Select program.
Environmental Activities
http://www.hitachi.com/environment/index.html

External Environmental Awards
We received outside recognition for our environmental activities again in fiscal 2013,
including many awards, among them were the Energy Conservation Grand Prize 2013 fora next-generation smart factory project at Omika Works, and awards for our Heat Pump
Water Heater "EcoCute" , and other products and services. Click on the following link forthe list of awards received in fiscal 2013.
External environmental awards
http://www.hitachi.com/environment/activities/data/commendation.html

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Dissemination of Information through Exhibitions and Forums
Valuing the opportunity for direct dialogue with stakeholders, we participate inenvironment-related exhibitions. In Japan, we presented a special exhibit on the themeof Hitachi's Solutions for Social Issues at the Hitachi Innovation Forum (October 2013).
Outside Japan, we took part in the International Greentech & Eco Products Exhibition &Conference (IGEM) in Malaysia in October 2013, the China International Green Innovative
Products & Technologies Show 2013 in Guangzhou in November 2013. In addition, we
presented booths on environment-related themes at the Hitachi Social Innovation Forum
held in Rio de Janeiro, Brazil (November 2013), in New Delhi, India (December 2013), andin Riyadh, Saudi Arabia (February 2014).

Hitachi Group
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Report 2014

We also provided opportunities for discussions with stakeholders on environmental
issues. The theme of our 5th Eco-Engineering Forum,*1 which was held in Washington,
D.C.,USA in October 2013, was shale gas. At the WBCSD, we discussed ecosystempreservation and electric power projects.
*1 Eco-Engineering Forum: An event jointly sponsored by the American Association for the Advancement of Scienceand the Brookings Institution

Special exhibits zone at the Hitachi Innovation Forum

Eco-Engineering Forum

Worldwide Environmental Partnerships
We are promoting environmental communications, holding social contribution activities
on environmental themes, and deepening exchanges with local stakeholders. In fiscal
2013, we carried out environmental education and tree planting as well as cleanup
activities in regions around the world.
Environmental Communication
http://www.hitachi.com/environment/showcase/employee/index.html

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Forest Preservation (Philippines)
For an area around Subic Bay, we have beencommissioned by a local government agency to help
preserve a 1,700 m2 area of forest. In fiscal 2013, ouremployees planted 200 mahogany saplings. In
recognition, the company received a Good Corporate
Governance Award from the local government.
(Hitachi Terminals Mechatronics Philippines
Corporation)

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Sustainability
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Environmental Education (USA)The company designed and built an outdoor classroom for local elementary school
children to learn about the environment. A rock garden, human sundial, vegetablegarden, and other items were created and used as learning tools for environmental
classes, furthering students' knowledge and understanding of the environment. (Hitachi
Computer Products (America), Inc.)

Tree Planting (China)
Approximately 100 employees and their family
members planted 50 fern pines, able to withstandstrong winds, with the goal of increasing greenery andcreating "life surrounded by green." (Hitachi Airconditioning & Refrigerating Products (Guangzhou)Co., Ltd.; Hitachi Compressor Products (Guangzhou)Co., Ltd.)
Clean Nogawa Strategy (Japan)
The source of the Nogawa River, a class A river with amajor influence on local ecosystems, is on the groundsof the Central Research Laboratory of Hitachi, Ltd.
Every year since 2011, we have taken part in the Clean
Nogawa Strategy for preserving this river. This
program is sponsored by the local region. In 2013 ouremployees helped clean up the riverside, working
under the early summer sun. (Central ResearchLaboratory, Hitachi, Ltd.)

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Social Report

Working with an NPO to preserve terraced paddy fields and satoyama (natural woodlands)

Chapter3 Social Report130

Respect for Human Rights
Hitachi views meeting the responsibility to respect the human rights
of all stakeholders including employees, communities and thosethroughout supply chains as key to operating as a responsible
business. Respect for human rights is accepted to be a baseline
expectation for all companies. In fiscal 2013, we released the HitachiGroup Human Rights Policy and undertook a range of initiatives
including educating employees and preparing to institute humanrights due diligence processes.

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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 to be, 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 andregulations in all the regions and countries where we operate, and respecting
international human rights when faced with conflicts between internationally recognizedhuman rights standards and national laws. In fiscal 2013, we began developing
procedures for human rights due diligence.
Using the Hitachi Group Human Rights Policy, Hitachi strives to respect the human rights
not only of Hitachi Group employees but of everyone involved in Hitachi businessactivities, products, and services.
*1 Human rights due diligence: An on-going 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 foror cooperate in remediation of actual impacts. The processes also cover tracking the effectiveness of actions toaddress impacts and communicating externally.
*2 UN Guiding Principles on Business and Human Rights: Report on the Issue of Human Rights and Transnational
Corporations and Other Business Enterprises by the then-UN Secretary-General's Special Representative on
Business and Human Rights Professor John Ruggie.

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Framework
Hitachi, Ltd. established the Corporate Human Rights Promotion Committee in fiscal
1981 to gauge the impact of business activities on stakeholders' human rights anddeliberate on mechanisms and policies to prevent human rights violations. The executive
officer in charge of human capital chairs this body, whose members include
representatives from sales, procurement, human capital, the CSR Division, and othercorporate units. Information from deliberations is shared with all employees throughcompany and business site committees, led by company and division executives.

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We improve Hitachi-wide human rights awareness based on the guidelines discussed andwritten by the Corporate Human Rights Promotion Committee. We develop humanrights leaders in each business unit, while they use their own regular group training,seminars, and videos to educate employees. To bring a global perspective to the humanrights initiatives of the Hitachi Group as a whole, we reflect the views of CSR teammembers from our six operating bases,*1 as well as regional issues, in developing
educational materials to raise human rights awareness and consider 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

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Achievements and Issues

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Business and Human Rights e-Learning
In June 2013, we began rolling out a business and human rights e-learning in Japanese,
Chinese and English, with around 160,000 employees participating, as of March 2014.
Educational materials grounded in the Hitachi Group Human Rights Policy, created in
May 2013, are used to help employees understand Hitachi's policy on respect for humanrights and to act accordingly. This is our first common global human rights e-learning
program.
The course covers the spectrum of human rights issues, including the definition of humanrights, the UN Guiding Principles on Business and Human Rights and other international
standards, corporate human rights issues and human rights risks in corporate activities,
examples of responses to these risks, and Hitachi's next steps. Through e-learning, we aim
to educate employees on why companies must respect human rights and how humanrights should be reflected in employees' daily activities.

Human Rights Training for Executive Officers
We regard understanding and leadership from senior
management as vital for building human rights
awareness among our employees and implementing
human rights due diligence. In July 2013, 29 executive
officers, including the president, Nakanishi
participated in a workshop on human rights in global
business. Representatives from the NPO Shift, the US
NPO made up of members of the team that wrote the
UN Guiding Principles on Business and Human Rights,
lead the session, in which participants used specificcases to examine human rights risks across the global
business value chain and ways to prevent, mitigate, orremedy these risks.

Human rights workshop for executive officers

Pilot Program for Human Rights Due Diligence
We conducted a pilot program for human rights due diligence within the Hitachi Group
from September 2013 to March 2014 to develop and implement ongoing human rights
due diligence within the Group based on the Hitachi Group Human Rights Policy.
We worked with the NPO Shift to identify human rights impacts of specific business inline with the four elements of human rights due diligence recommended in the UN
Guiding Principles on Business and Human Rights: assessing impacts, integrating andacting, tracking, and communicating.
Through workshops as well as interviews with stakeholders within and outside Hitachi,
we also identified human rights risks in the business' value chain. In addition, we worked
with BSR, a nonprofit business network dedicated to sustainability, to map Hitachi's
human rights risks in the particular region.
In fiscal 2014, we will draw on the results of those pilot programs to create written
guidance on how to embed human rights due diligence within the Hitachi Group.

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Chapter3 Social Report133

Supply Chain Management
Our supply chains around the globe are being extended in responseto the growing number of regions where we operate. We respect
basic human and work rights in global procurement activities, sharing
guidelines and communicating openly to encourage Hitachi
suppliers—the co-drivers of our operations—to share our CSR
philosophy.

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CSR Supply Chain Management Framework
Given the global reach of Hitachi's business, supply chain risks can create management
problems, so we are working hard to identify and mitigate these risks beforehand asmuch as possible. We established a CSR/Ecological Procurement Promotion Center within
the Hitachi headquarters in fiscal 2011. We have also established the Hitachi Group CSR
Green Procurement Committee, which includes committee members from in-housecompanies and key Group companies. This completes a framework that will enable our
CSR supply chain management and green procurement philosophy and initiatives to beshared throughout the Group.

Sharing Procurement Policies
Our procurement activities are based 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 andoccupation as well as all forms of child and forced labor.

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 purchasing necessary 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.
(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 improper act whichmight cause a loss to a supplier apart from normal and customary business transactions.
(3) HITACHI shall keep suppliers' trade secrets strictly confidential and prevent them from being
revealed or improperly used.
3. HITACHI develops suppliers to maintain competitiveness from a worldwide point of view.
(1) HITACHI responds to all suppliers' offers sincerely, and is always willing to offer the informationnecessary 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 other resources allows.
4. Through a designated selection process, suppliers shall be evaluated by product quality,
reliability, delivery, price, suppliers' business stability, technical development ability, fair andtransparent information release, compliance with societies' rules, regulation compliance, respect forhuman rights, elimination of discrimination in respect of employment and occupation, eliminationof all forms of forced and compulsory labor, environmental preservation activities, social
contributions, good working environment, and recognition of social responsibilities with business
partners.

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(1) HITACHI shall not request quotations from suppliers with whom there are no intention to enter
into a future business relationship.
(2) In accordance with specified internal procedures, the role and responsibility for specifications,terms and conditions, product acceptance and inspection belongs to each Requester, Procurement
Department and Inspection Department.
(3) Procurement Departments shall be a representative of HITACHI when contracting with suppliers.

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5. HITACHI members are prohibited from receiving any personal gifts or offers from suppliers.
Revised in 2009

CSR Deployment Guidebook
To help suppliers, as the co-drivers 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 from JEITA.*1 The guidebook is given out to around 23,000
suppliers of our in-house companies and Group companies.
*1 JEITA (Japan Electronics and Information Technology Industries Association): An industrial association forelectronics technologies, electronic machinery, and information technologies.

CSR・Green Procurement
http://www.hitachi.com/procurement/csr/index.html

CSR Procurement Initiatives
Global Partnerships
A key element of the Hitachi Group Vision is to improve the competitiveness of our value
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 the Americas.
By fiscal 2012, our 15 overseas procurement bases had grown to 25. To expand the poolof 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. We are also reinforcing our responsiveness to CSR risks, a growing concern as
the supply chain expands globally.

Green Procurement
We use green procurement,*1 sharing our commitment to environmentally conscious
monozukuri craftsmanship with everyone in our supply chain.
*1 Green procurement: Procuring parts and materials manufactured with reduced environmental impact, so that
suppliers help to protect the environment.

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Revised Green Procurement Guidelines (Responding to Chemical Substance
Regulations)
In fiscal 1998, we led the industry in developing Green Procurement Guidelines to define
our basic 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
for environmental conservation, including building an environmental management
system and acquiring certifications. There are also requirements for reducing theenvironmental impact of products supplied to Hitachi, such as conserving resources andenergy in production, recycling, managing chemical substances, and fully disclosing
related information.

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In fiscal 2013, we reviewed our categories for controlled chemical substances with aparticular focus on restricted substances, authorized substances, and SVHCs (substancesof very high concern) as stipulated in Europe's Registration, Evaluation, Authorization
and Restriction of Chemicals (REACH) regulations for managing chemical substances
within the EU. Specific changes include: (1) moving some chemicals to the prohibited
substances list, (2) further breaking down the controlled substances list, and (3) adopting
the industry association list. The previous guidelines were revised now version 7.0 and
distributed through in-house and Group companies to suppliers to make sure that
suppliers are fully informed. There is a global trend for strengthening regulations on
chemical substances. We have built the A Gree'Net, an Internet-based green
procurement system, to collect information about chemical substances contained in
products and other environment-related data from suppliers as soon as it becomes
available. The goal is to manage chemicals carefully. Under this system, we encourage
suppliers to use the MSDSPlus*1/AIS*2 reporting templates published by JAMP (Joint
Article Management Promotion Consortium).*3 We also encourage them 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 mid-stream companies (molded product manufacturers, etc.).
*2 AIS: A format for reporting chemical substances contained in products created by mid-stream companies(molded product manufacturers, etc.) for downstream companies (assembly manufacturers, etc.).
*3 JAMP (Joint Article Management Promotion Consortium): 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(parts and final products), and to establish and popularize a concrete mechanism for smooth disclosure andtransmission of such information in supply chains."

Joint Article Management Promotion Consortium
http://www.jamp-info.com/english

Promoting Green Procurement
We are improving our green procurement rate—the ratio of environmentally conscious
products purchased to total office supplies—by using a Group-wide online purchasingsystem: the e-sourcing Mall. This system has a range of environmentally conscious
products, and promotes purchasing by clearly labelling these products. In fiscal 2013, ourgreen purchasing rate reached 90 percent.
Hitachi Group Green Procurement Guidelines (PDF, 549 Kb)
http://www.hitachi.co.jp/environment/library/pdf/green_en.pdf

Response to the Conflict Minerals Issue
The Request to Our Suppliers, based on the Conflict Minerals Procurement Policy that wereleased in September 2013, has been put up on our website as a clear statement of ourposition.

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136
Hitachi Group Conflict Minerals Procurement Policy
The Hitachi Group is committed to responsible procurement practices to mitigate the risk ofsourcing conflict minerals (tantalum, tin, tungsten and gold) that can directly or indirectly financearmed groups abetting human rights violations in the Democratic Republic of the Congo (DRC) andadjoining countries. The Hitachi Group Procurement Division strives to establish a sustainablesupply chain that eliminates procurement of materials and/or parts using conflict minerals. Our
efforts are to continue procurement of minerals from responsible sources in the region and are notintended to implement a ban on procurement of minerals from the DRC and adjoining countries.

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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 to agree to our Conflict
Minerals Procurement Policy and to cooperate with us in our efforts to ensure procurement ofconflict-free minerals. In accordance with the Dodd-Frank Act*1 and the OECD Guidelines forMultinational 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 our supply chain through a collaborative industry-wide approach byutilizing 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 are developed, proven, and established(i.e., expansion of the Conflict-Free Smelter*4 list which is under implementation by EICC-GeSI). The
Hitachi Group will continue to engage in industry efforts to develop methods to build a stable,
conflict minerals-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 to adhere
to their guidelines.
*3 EICC-GeSI: Non-profit 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

Request to Our Suppliers
http://www.hitachi.co.jp/procurement/csr/__icsFiles/afieldfile/2013/09/03/CM_PP_RE_E.pdf

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137

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 make 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 2013, we asked 100 suppliers—55 in Japan and 45 outside
Japan—to make CSR Monitoring(self-checks).

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Self-Check Results
FY

Suppliers in Japan

Suppliers outside Japan

Total

2007

100

0

100

2009

132

0

132

2011

0

102

102

2012

57

41

98

2013

55

45

100

Total

344

188

532

CSR Audits
Since July 2012, we have been auditing suppliers from China and the rest of Asia fromamong the suppliers providing CSR Monitoring (self-check) results. In fiscal 2013, we
conducted CSR audits of 16 suppliers: 11 in China, two in Malaysia, and one each in
Philippines, Vietnam and Korea. For these audits, we engage JACO and DNV,*1
experienced CSR auditing companies. Our audits follow the international SA8000
certification standard developed by the Social Accountability International (SAI), an
American CSR evaluation institution. Theses audits investigate our workplace practices,
and an EICC-recognized auditor checks suppliers' performances on labor and humanrights, health and safety, the environment, and ethics. In fiscal 2013, audit results
revealed no major infringements at 16 companies, but some small areas need
improvement, and we are working with suppliers to address these. We will systematicallycontinue audits of suppliers, mainly in China and the rest of Asia.
*1 JACO and DNV: JACO (Japan Audit and Certification Organization) is a certification institution that provides arange of auditing services. For overseas audits, JACO develops and carries out joint audits with DNV (Det Norske
Veritas), a third-party certification institution that provides certification and other services. DNV, with 140 yearsof experience, is known as a risk management leader.

Creating of Procurement BCPs
We have a deep involvement in social infrastructures, where the suppliers who are ourbusiness partners are 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 awhole. To minimize this impact, the procurement divisions
in key Group and in-house companies in Japan have created BCPs that (1) standardize
and use generic products 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 to discuss in a group what should bedone during and after a disaster, making further improvements as a result. In fiscal 2014,
all Group companies worldwide will take the same steps to improve procurement BCPs
and contribute to the continuation of Hitachi's global operations.

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Chapter3 Social Report138

Diversity Management
Diversity is both the wellspring of our innovation and our growthengine. Hitachi's diversity management embraces and respects
people's external and internal differences. We see, among others,
gender, nationality, work history, age, character, and values as
making up someone's individuality. Combining our employees' many-sided strengths will enable us to meet the wide range of customer
needs in global markets.

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Developing Diversity Management
Since fiscal 1990, we have been at the social forefront, supporting women and othermembers of our multi-faceted workforce. This includes setting up systems to helpbalance work with child and nursing care. Entering the third stage of our diversity
management roadmap—"Diversity promoted as a management strategy"—we areembracing differences across Hitachi as a management strategy. This means creating anenvironment where women and other members of our varied workforce can use theirskills in leadership and business management.

Diversity Management Initiative
Our Diversity for Next 100 initiative develops diversity management as a key
management strategy to best use our wide range of personnel. Through diversity
management, we aim to boost our competitiveness in global markets and nurture
employees who can respond to the growing diversity of our stakeholders and customers.
The wide spectrum of our business arenas, technologies, geographic coverage, and typesof customers make us a treasure house of diversity. We are proud of our diversity, andwill use it to the full, getting the most from our talented employees to strengthen ourorganizational capacity, create synergies, boost company productivity, and expand ouroperations.

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139

Roadmap for Developing Diversity Management

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Deepening Diversity Management and Widening Human Capital Diversity

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Diversity Development Structure
Diversity Development 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.

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Hitachi and 22 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
the Diversity Development Council discusses specific activities and shares best practices.
Both meet every six months. Companies and plants have also set up their own projects tobecome organizations that develop the role of women in the workplace and that
improve those initiatives that are geared to the challenges faced by individual
workplaces.
We also hold regular meetings to exchange opinions on diversity with labor unions.
Hitachi Group Diversity Structure2

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141

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 to participate in management decision making. These KPIs signal our commitment
both internally and to the world to further advance women in the workplace and to
improve our diversity management.

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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 ineach business area and to set numerical targets for each area, strengthening ourmanagement 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 the general manager level and above. We intend to create anenvironment where as many women as possible are able to optimize their potential inmanagement positions.

Goals for Hitachi, Ltd. (KPIs)
Appoint female executives by fiscal 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

Trend in the Number and Ratio of Female Managers(Hitachi, Ltd)*

From FY2013, number and ratio is includes employees in global

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142Work-Life Management
Our diversity management initiatives are designed to enable all employees to reach theirfull potential, as well as to enhance our organizational capabilities and to createsynergies that will boost productivity and grow our business. This requires building awork environment that embraces human resource diversity and work style flexibility.

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Hitachi's Work-Life Management
Hitachi looks beyond work-life balance to work-life management: our employees takecharge 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, which in turn boosts
work performance.

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

Flextime and discretionary labor systems are also available. Cafeteria plan is a system which employees canselect the support that they need-when they need-according to their "Cafeteria Points."

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Improving In-House Child Care Centers
In April 2013, the Genki Club daycare center celebrated its 10th anniversary. This inhouse facility was set up to help Hitachi Group employees living and working around the
Totsuka area in Yokohama City to balance work and child care. The center opened with
14 children; today this has grown to over 70, with the center becoming one of the few
large in-house daycare facilities in Japan. The Hitachi Workers Union Soft Branch operates
the center, along with Hitachi Ltd., Hitachi Group companies, labor unions and othergroups who work together to provide support.

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Hitachi Chemical Co., Ltd. has a range of programs that ensure an employee-friendly
work environment, including a program launched in fiscal 2006 (change the name toDiversity Development Project from fiscal 2008) to encourage women in the workplaceand setting up a special section to develop diversity in fiscal 2007. Hitachi Chemical has
also created a nearby in-house nursery to help employees balance work and child rearing.
Featuring a large play area with playground equipment, the nursery's flexible childcare
options are designed to meet the full range of employee needs, including monthly careand drop-ins.

Work-Life Balance-up! MonthIn fiscal 2010, we began holding a Group-wide Work-Life Balance-up! (WLB-up!) Monthevery November to inform employee of our approach to managing the balance between
work and life. Our aims are to boost employees awareness of work-life management, todevelop a better review work styles, and promote understanding the programs and tools
needed for work-life management, in the end improving the quality of both work andhome life.
Group-wide activities include messages from top management, work style review
declarations in our workplaces from department general managers and above, WLB-up!
Month posters, and a weekly mail magazine sent to all employees. Individual workplacesalso operate their own programs, including holding WLB-up! meetings, surveys of work
styles, and holding a visualization campaign for annual leaves.

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Diversity Activities

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Human Capital Executive Visits Career-Stream Female Employees aroundJapan
Since fiscal 2013, our executive in charge of humancapital has been visiting career-stream female
employees around Japan to directly communicate
Hitachi's position on diversity and women's career
success. Issues such as developing better work-life
management and reviewing work styles have been
vigorously discussed. Having visited Hokkaido, Ibaraki,
Kanagawa, Tokyo, and Aichi Prefectures, our executive
will continue to work his way around the country formore direct exchanges of view with career-stream
female employees.

Workplace visit by our human capital
executive

Hitachi Group Women's Career Success Survey
In the first half of fiscal 2013, a survey of women's career success was conducted in 30 inhouse companies and Group companies. We used an external institution's survey
framework to quantify the status in these companies, especially: four indexes (1) female
management appointments; (2) work-life balance; (3) gender equality; and (4)advancement of women in the workplace. Because of the wide range of businesses
surveyed, their Group rankings were accompanied by comparisons with other companies
in the same industry. Survey results revealed both the progress to date and someoutstanding issues. The companies participating in the survey are now using the results
to take action, including creating key performance indexes (KPIs) to accelerate female
employees' advancement in the workplace.

Hitachi Group Women Leaders' Meeting
This meeting was held for female employees to—
drawing on their own experience and concerns—
make recommendations to senior management on
how to employ female staff more effectively. Held on
August 5 and September 27, 2013, this event was
attended by 113 women at the general manager level
and above from Hitachi Group companies in Japan.
On the first day, then-Hitachi President Hiroaki
Hitachi Group Women Leaders' Meeting
Nakanishi opened the meeting by making a speech
about diversity promotion awareness and the
expectations of women leaders, based on his own experience working in the UnitedStates and the United Kingdom. On the second day, presentations were given by thenChairman Takashi Kawamura and Ms. Yukari Tominaga, the Hitachi Group's first female
executive officer, followed by a lively Q&A session.
Participants engaged in group discussions on themes such as boosting female
employees' own awareness and changing the mindsets of people in the workplace, as
well as rethinking work styles and developing better work-life management. Every grouppresented recommendations to then-Vice President and Executive Officer, CHRO, Naoki
Mitarai. Vice-President Mitarai asked questions and made comments on each group's
presentation and promised to consider their recommendations with the goal of
implementing them, where possible.

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Prior to Maternity Leave / Return-to-Work Support Seminars
With more employees balancing work and child care,since fiscal 2012 we have been running Prior toMaternity Leave / Return-to-Work Support Seminars
to address issues such as putting careers on hold forchildbirth and child care, and concerns aboutbalancing work with child care. Employees attend
seminars with their managers so that both can shareattitudes and approaches when returning to work.
This will ensure a woman's smooth return to work as
well as understanding and support from her managers
and from colleagues. These seminars are held regularly
four to six times each year.

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Prior to Maternity Leave / Return-to-Work
Support Seminar

Diversity Workshops
Hitachi's unique diversity workshops use the World Café approach, bringing together
employees, including senior executives and young employees, to freely exchange
opinions on diversity and work-life management. It is important that the workplace as awhole develops a better understanding of diversity and puts work-life management into
practice. Changing the mindsets of managers is a particularly critical task. Our diversity
workshop approach is an effective way for managers to reflect on their management
styles and consider how to optimize the potential of their employees to achieve top
results for the organization as a whole. Around 570 managers took part in workshops
from the second half of fiscal 2010 up to fiscal 2012. More than 1,000 other HitachiGroup employees have also participated in these workshops, prompting many positive
comments. One person, for example, felt that the workshop had been invaluable forsharing issues and opinions with senior staff and other employees. A workshop
handbook has now been created, which in-house companies and Group companies havebeen using to hold their own workshops (as of fiscal 2013).

Time- and Location-Free Work
We have systems and processes in place that allow employees to choose flexible anddiverse work styles unrestricted by time or location. This allows our diverse staff toproduce results more efficiently. Initiatives—in addition to discretionary work, flextime,
and work from home—include establishing satellite offices, simplifying work-from-homeprocedures and applications, distributing mobile tools such as smartphones, and creating
a time-and location-free work page on our intranet to provide information on diverse
work styles.

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 andsenior high school students and their parents at a symposium at the University of Tokyo
entitled Bring the Family: On the Frontline of Science at Observing that women will be avital force for stimulating the Japanese economy, he explained the appeal to women ofworking in science. A female scientist from Hitachi also talked to the audience about theinteresting nature of her job. We also hold field days at the Hitachi Research Laboratory
and the Central Research Laboratory to convince as many high school girls as possible of
the advantages of working in science by giving them the opportunity to observe research
work firsthand and to take part in roundtable meetings with Hitachi employees who
majored in science.

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Building a More Diverse and Inclusive Workplace in Europe
Diversity and inclusion remains high on the agenda for Hitachi in Europe as the HitachiGroup works to become a truly global company. Gender diversity continues to be apriority issue.

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To address this challenge, two key initiatives were launched in 2013. Group companies in
Europe collaborated to launch the European Women's Interactive Network (WIN) which
was extended from a WIN run by Hitachi Consulting in the US. The network's objectives.
1. Make Hitachi a more attractive place for women to work;
2. Provide advocacy for women within the company at every level; and3. Become recognized as an employer of choice for women.
WIN engages its members through interactive quarterly "webinars" and annual summits.
The inaugural summit was held in November 2013. Entitled Hitachi in Europe: Advancing
Gender Diversity, this event was attended by over 50 participants from across the Group.
An engaging lineup speakers ran sessions on why diversity is important for Hitachi,
having confidence and thinking positively, and working in a multicultural organization.
Breakout workshops focused on topics such as achieving a satisfactory work life balance,
career development and building a personal brand. In 2014, WIN plans to establish a
mentoring program to further support its members.
A new e-learning program on building an inclusive workplace was developed and rolled
out to employees across Europe. In addition to covering compliance around diversity, thislearning resource focuses on making Hitachi's culture more inclusive of all people. The
version for managers includes a section on their specific responsibilities and inclusive
leadership. Going forward with these initiatives and others will further engage all levelsof the organization in making Hitachi in Europe a more diverse and inclusive place to
work.

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Employing People with Disabilities

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Hitachi, Ltd. and Group companies in Japan have worked hard to bring on board people
with disabilities, including holding special hiring fairs and study meetings for the Group
companies to share information. As a result, as of June 2013, the employment ratio ofpeople with disabilities was 2.02 percent at Hitachi, Ltd. and 2.03 percent for the entire
Group (compared with 1.95 percent last year). Both of these figures topped Japan's
legally mandated ratio of 2.0 percent. We will maintain our Group-wide drive to hire
more people with disabilities.
Key Indicators

Trend in Employment of People with Disabilities and Employment Ratio (Hitachi,
Ltd.)*1 Until fiscal 2012, the legally mandated ratio was 1.8 percent.
* Data is compiled in June every year.

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Hitachi Group Special Subsidiaries

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Five special subsidiaries*1 within the Hitachi Group
employ 229 people with disabilities, as of June 2013.
They work at the parent company and affiliatedcompanies performing tasks such as collecting anddelivering mail, cleaning, and clerical assistance, or
staffing cafeterias and tearooms.

Hitachi You and I Co., Ltd.
employees working in a Hitachi, Ltd.
Mailroom*1 Special subsidiary: If an enterprise forms a subsidiary that gives special consideration to employing people withdisabilities in order to promote 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 canbe included in calculations of the parent company's employment rate.

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Hitachi Group Special Subsidiaries (as of June 2013)
Special subsidiary

Parent company

No. of people withdisabilities

Main tasks

Hitachi You and I Co., Ltd.

Hitachi, Ltd.

97

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

Hitachi Metals, Ltd.

43

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

Hitachi High-Technologies
Corporation

29

Mail collection and delivery, businesscard creation, travel expense
calculations, bookbinding.Builcare Staff Co.,Ltd

Hitachi Building Systems Co., Ltd.

55

Digitizing of documents, office work
assistance, cleaning, shredding

UJKC Social Enterprise Co.,Ltd

Hitachi Automotive Systems Steering,Ltd.

5

Auto parts assembly

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To create jobs in Ibaraki Prefecture, Hitachi's original
home, local plants and offices and Group companies
contribute to the community by together outsourcing
work to the Ibaraki Sheltered Workshop for around 80
people.*2

Employees hard at work at the Ibaraki
Sheltered Workshop*2 Ibaraki Sheltered Workshop: Established in 1978 under an agreement among Ibaraki Prefecture, 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
facilities or structures, or long commutes.

Understanding People with Mental Disabilities and Employment
We have created a special intranet page to share among Group companies in Japan theemployment and retention expertise developed through Hitachi's participation in
Promoting the Employment of People with Mental Disabilities, a model project of the
Ministry of Health, Labour and Welfare (MHLW). The wide range of information on thepage includes an explanation of mental illness, examples of mentally challenged people
at work, and a counseling section dealing with the concerns of people with mental
disabilities, their families, and workplaces.
In fiscal 2012, we created a handbook for personnel managers and workplaces on
employing and retaining people with mental disabilities, distributing it to all Group
companies in Japan. We also held the Hitachi Group Study Meeting on People with
Disabilities, encouraging Group-wide sharing of information that included examples ofGroup companies promoting work for the mentally challenged. Our initiatives have seen
the number of mentally challenged employees in the Hitachi Group shoot up from 25 infiscal 2008 to 225, as of June 2013. MHLW-hosted seminars and annual meetings of theJapan Psychiatric Medical Conference have brought widespread attention to Hitachi, Ltd.
and Group company work in this area. We will continue to develop model examples of
employing the mentally challenged and will work closely with medical, welfare, andgovernment institutions to communicate this information to society.
WEB Promoting the Employment of People with Mental Disabilities (Ministry of
Health, Labour and Welfare) (Japanese only)
http://www.mhlw.go.jp/houdou/2009/05/h0501-5.html

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150

Main Assessments and Awards

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Report 2014

Nadeshiko Brand Designation
Hitachi, Ltd. was one of the enterprises selected for the fiscal
2014 Nadeshiko Brand designations announced on March 3,
2014. Hitachi was recognized this year because we wereconsidered to have developed environments where women in
management positions are able to maximize their potential.
Since fiscal 2013, the Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock
Exchange (TSE) have jointly selected, on an industry basis, enterprises from among thoselisted on the first section of the TSE which are considered to encourage women to play
active roles in the workplace, including the development of environments where womenare able to further their careers. Companies are scored assessed on two factors: (1)providing career support for women; and (2) supporting women in balancing work andlife. Of the top scorers, those which also meet the requirement for return on equity
receive the Nadeshiko Brand designation. Hitachi, Ltd. was one of 26 enterprises chosen
in fiscal 2014, the second round of selections.

METI Diversity Management Selection 100
On March 22, 2013, Japan's Ministry of Economy, Trade andIndustry (METI) held a ceremony 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 areas such as improving
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 instead promoting diversity
management Group-wide as a corporate strategy backed by a strong management
commitment. We will continue to pursue diversity management as a Group, providing
opportunities for a wide range of employees, as well as reflecting their diverse
perspectives in our management during our ongoing drive for global competitiveness.

Kurumin Certification
Kurumin certification is granted under the Act on Advancement of
Measures to Support Raising Next-Generation Children, which cameinto force in April 2005, to companies that create action plans for childcare support in line with this legislation and that meet performancerequirements. In February 2011, we acquired this certification inrecognition of our achievements in developing and implementing
action plans supporting child care so that our employees can workwith the peace of mind that comes from a good work-life balance.
Act on Advancement of Measures to Support Raising Next-Generation Children
Japan's Ministry of Health, Labour and Welfare
http://www.mhlw.go.jp/seisakunitsuite/bunya/kodomo/shokuba_kosodate/jigyou_ryouritsu/ryouritu.html

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Chapter3 Social Report151

Employee Health and Safety
We take a Group-wide approach to preventing accidents, including
sharing the Hitachi Group Health and Safety Policy globally and usinga system that tracks information on health and safety managementfrom all Group companies in Japan. When an accident occurs, theGroup responds by investigating the cause and reviews the risk to
reduce the number of potential accidents. As well, we ask a third
party to assess safety.

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Addressing Occupational Health and Safety
The basic principle underlying the Hitachi Group Health and Safety Policy is to ensure the health and safety of all
employees. This policy is shared by Hitachi Group companies all over the world. Employees work together tocreate safe, secure work environments aiming to be accident free.

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,original technology and products", the Hitachi Group will endeavor to ensure safe and healthy
workplaces under the principle of "Health and Safety Always Comes First".
To accomplish this, we will:
1. Continually be involved in health and safety activities in order to prevent work-related injuries
and sickness through designating the health and safety of employees as management's top priority.
2. Comply with the local laws, and regulations in each company regarding health and safety.
3. Develop a safe and comfortable work environment by encouraging employees to maintain theirown health and taking a proactive stance on health and safety activities in the workplace.
4. Require an understanding of Hitachi's principle and the promotion of health and safety
awareness from all business partners of the Hitachi Group.
5. Contribute to the creation of a safe and pleasant society by emphasizing activities that makehealth and safety a top priority in all of Hitachi's business activities.
Revised November 2013

Health and Safety Promotion Framework
Hitachi, Ltd. and Group companies in Japan undertake a range of health and safety
activities. However, in some cases we are unable to prevent occupational accidents,
including worker injuries. After assessing these cases, we make improvements designed
to boost the level of health and safety management.

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For example, in fiscal 2011 we introduced the Hitachi Group Key Safety Management
Designation System which tracks key safety management improvements at Hitachi Group
companies and business sites in Japan that have experienced serious occupational
accidents. These companies and business sites take on both management-driven andbottom-up initiatives to formulate and promote specific improvement plans under theleadership of top executives. As well, we extensively investigate the cause of serious
accidents and review risk to reduce the potential for accidents, then ask third parties witha high level of health and safety expertise to diagnose safety. In these ways, we arereshaping the Group's safety management framework and introducing targeted safetymeasures.

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Key Indicators

Trends in Occupational Accident Rates***

Up until 2011, figures for 90 major Hitachi Group companies in Japan, including Hitachi, Ltd.
In 2012, 175 Hitachi Group companies in Japan, including Hitachi, Ltd.
In 2013, 195 Hitachi Group companies in Japan, including Hitachi, Ltd.

Information Sharing and the Hitachi Group Health and Safety
Portal System
We built the Hitachi Group Health and Safety Portal System in fiscal 2012 to ensure thatevery Hitachi Group company in Japan can track the progress of Hitachi health and safety
management programs.
Information on all occupational accidents is registered in the system so that all Group
companies can track the causes of and measures against accidents at Group companies.
Statistics are kept on the type of accident to prevent reoccurrences.
Once a year, we also hold the Hitachi Group Health and Safety Research Presentation
Meeting for Hitachi health and safety officers. The 57th gathering, in November 2013,attracted around 200 participants. They shared their newfound knowledge from casestudies and heard special lectures from outside experts on ideas that could benefit healthand safety activities at every business site. Around 100 industrial healthcare workers, suchas industrial physicians and nurses, participated in the 13th Hitachi Group Industrial
Health Conference in January 2014. The participants gave presentations on specialized
research and shared information on qualitative improvements in industrial healthprograms at business sites and training for industrial healthcare workers.

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Hitachi Group Health and Safety Award Program
The Hitachi Group Health and Safety Award Program awards Hitachi Group companies inJapan that either extend accident-free records or win external prizes for health andsafety. Based in Totsuka Ward, Yokohama City, the Telecommunications and Network
Systems Division of Hitachi, Ltd.'s Information & Telecommunication System Company
extended their industry record of work time accident-free hours to 150,506,325 as ofMarch 31, 2014. Recording not a single work-time accident for approximately 36 years,
this division remains the Group's top health and safety performer.

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Fatigue and Stress Checkup System
To support workers returning to work after a mental
illness, Hitachi Systems, Ltd., has begun using theFatigue and Stress Checkup System, a tool forcontrolling physical conditions through visualizationsof fatigue levels. This system was originally developed
through an industry-university partnership in fiscal
2012 to care for the mental health of local residents
affected by the Great East Japan Earthquake and for
local government employees. Using an instrumentthat measures autonomic nervous system responses
for the early detection of fatigue and stress, thiscloud-based system capitalizes on the results of research into fatigue technologies.

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" system was introduced so employees can select the benefits
they will receive. Choosing from a list of options, such as skills development, childcare,nursing care, health promotion and donations, allows employees to tailor a plan to theirindividual lifestyles and needs. Employees can select the support that they need—when
they need it—according to their "cafeteria points."
In response to the diversification of postretirement lifestyles, changes in the employment
system, and revisions to legal systems, the Hitachi Group has fundamentally revamped
the retirement and pension plans. Defined contribution pension and defined benefit
pension plans have been introduced within the systemic infrastructure—across theGroup—to provide support for employees' diversified life planning. For the defined
contribution pension plan, we encourage the participation of employees in theirpostretirement planning through, for example, education on asset management andinvestments. For the defined benefit pension plan, we have increased the number ofbenefit options in response to employees' varied needs.

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Chapter3 Social Report

Global Human Capital Development
Hitachi is creating a global human capital management strategy.
Based on this strategy, we are building a global human capital
database and developing employees who can succeed in the global
business arena. In addition to providing opportunities for young
employees to gain experience, we provide workplace-based careerdevelopment to boost individual performance.

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Managing Global Human Capital
Our Group-wide global human capital management strategy optimizes both humanresources and organizational performance toward achieving Hitachi's goal of becoming amajor global player.
For example, in fiscal 2013, we constructed the Global Human Capital Database to cover
all Hitachi Group employees, excluding factory workers outside Japan. This databaseenables us to fully understand our Group worldwide human capital, and to assess macro
management data, such as the allocation of human resources. We also built a global
grading system that applies to all managers in the Hitachi Group worldwide, using it as acommon platform for job evaluations throughout the entire Group, assessing the valueof management duties against a common standard.
Also in fiscal 2013, we introduced a performance management system at Hitachi, Ltd. aswell as Group companies worldwide to link the goals of both business operations andindividual skills, toward the goal of sustained improvement and growth of both. In fiscal
2014, this system will be expanded to include more companies. To support theadvancement of employees as our global operations expand, we are introducing
common global hiring systems to secure talented people, boost efficiency, and reducethe costs of hiring.

Global Recruiting and Globalizing Human Capital
To open up global markets, we have been accelerating the globalization of humancapital in Japan through three initiatives: (1) recruiting people in Japan who can promote
global operations, (2) providing more young Japanese employees with experience
outside Japan, and (3) comprehensively revising management development for Japaneseemployees.
To secure the right people for business globalization, we are opening up employment
opportunities and strengthening management diversity. We categorize all employees
graduating from universities and technical colleges in principle as global businesspersonnel who are able to drive our global operations. Our priority for employing global
business personnel is to attract people who are eager to build their foreign language
skills and who want the challenge of working in different cultures, social settings, andwork environments.
We also recruit new employees to ensure diversity in and outside Japan. In fiscal 2014, we
recruited around 70 non-Japanese from universities in Japan and worldwide, and around
10 Japanese graduates from universities outside Japan.

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Key Indicators

Trend in the Number of Non-Japanese Employees(Hitachi, Ltd)

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Providing Young Employees with Overseas 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
to live outside Japan. We have sent around 3,000 young Group employees over the three
years since fiscal 2011, allowing them to take part in more than 80 programs, including
understanding other cultures, language studies, local field studies, and internships, aswell as opportunities to work with local people to resolve social issues. We plan tocontinue these programs in fiscal 2014.

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) in 2012
to develop leaders for our Asian operations. In fiscal 2013, 23 participants from aroundthe 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.
We will run the GAP-L program twice in 2014, and the GAP-K program will be held in
Brazil as well as India. We also plan to hold standard training courses for generalmanagers and new managers across our global Group operations in 2014. As global
human capital management evolves to realize Hitachi's management strategies, we will
work to globalize participation in our management development programs and makesure these are followed up in our business strategies.

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156

Global Employee Survey
In September 2013, we conducted our first global employee survey. Created in 12
languages, Hitachi Insights was designed to measure employee engagement. The survey
was sent to around 180,000 employees worldwide, and we received around 150,000
responses.
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 scorefor "resources and support" indicates that we can do better on the level of staffing as wellas information and resource tools.
In fiscal 2014, Hitachi's organizations will review their own results and compare themwith those of other business units and with major global players to identify andimplement steps that will lead to more incentives for jobs, workplaces, andorganizational structures.

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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: employees and their supervisors discussand agree on short-term work goals. We also use career consultations for gaining mutual
understanding of medium to long-term career plans, training and skills development toboost individual employees' engagement and motivation and to advance 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 improvesorganizational results.

Career Development Workshops
Together with workplace career development, we provide direct support for individualcareer development through education and workshops that encourage self-awareness of
employees' "internal careers"—in other words, their reasons for working and living. These
programs are geared to every employee's career development and life stage, from young
employees to those more senior. The Hitachi Career Development Workshop (H-CDW),
which was launched in fiscal 2002 as a Group-wide initiative, is a key program thattargets middle-aged employees who have some work experience and who play a central
role in the workplace. Participants use self-analysis to deepen their self-understanding
with an emphasis on their "internal careers," affirming their career direction, goals, andpaths so that they can direct their own career development and skills development.
Trend in the Number of Participants in Career Development Workshops (Hitachi Groupin Japan)2chapter

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157

Next Steps
To become a major global player, we are prioritizing individual and organizational
performance. We will create value built on employees' individuality and their aspirations
by implementing GPM grounded in diversity and the individual. To support careerdevelopment, we will work to deepen mutual understanding by fosteringcommunication between employees and their organizations through careerdevelopment programs that encourage every employee to take greater control of his or
her career development. In these ways, we are creating the resources and tools thatenable a wide range of people to work together enthusiastically.

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Chapter3 Social Report

Quality Assurance Activities
The entire Hitachi Group contributes to quality assurance, part of our
tradition of monozukuri craftsmanship from the customer's
perspective. These contributions cover all processes from researchand development through to after-sales service. In addition toproviding training for engineers in Japan, we are developing humancapital outside Japan.

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Quality Assurance Activities
To preserve our tradition of monozukuri craftsmanship from the customer's perspective
and to advance product reliability, our quality assurance activities cover all processes fromproduct planning and development through to design, manufacturing, delivery, andafter-sales service. Our 2015 Mid-term Management Plan calls for Hitachi to begin a newphase to secure a leading market position as a major global player. For quality assurance,
there is a growing and increasingly clear call for taking the customer's perspective andstrengthening both products and processes. In response, we have extended, until fiscal
2015, the three-year Hitachi Group QF (Quality First) Innovation Movement that was
launched in fiscal 2010. This will ensure product safety, compliance with laws andregulations, human resource development, and quality improvements. We have also
been concentrating on quality improvements in China and the rest of Asia, as well asother countries and regions, since fiscal 2007.

OCHIBO HIROI
Meaning "gleaning" in English, OCHIBO HIROI identifies the fundamental causes of
product accidents and recurrence prevention measures. The quality assurance executive
officer works with related divisions to identify fundamental causes and develop
recurrence prevention measures. They delve deeply into the technical causes as well as
the procedures and the organizational and psychological factors that led to the accident.

Intensive Product Safety Programs
To deliver safe products and services, we combine expertise and technologies from suchvaried areas as planning, research, design, manufacturing, quality assurance, andmaintenance. Safety of life, health, and property are the top priorities in productdevelopment. Therefore, we verify design safety and conduct risk assessments from awide perspective in collaboration with related manufacturing plants and researchlaboratories.

Complying with Technical Laws
To supply our customers with products they can use with confidence, we comply with all
product safety and technical laws, including those covering environmental consciousness
and safety labels. We distribute information within Hitachi Group companies on productregulations worldwide with amendment trends and enforcement dates. We have also
created compliance guidelines to share within the whole Group that include clarifying
product-specific laws (product-specific laws map), continuous improvement processes—
based on our compliance management system, designed to satisfy the 2008 ISO 9001
standards—and providing education on compliance, as well as raising complianceawareness.

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159

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
more than 120,000 Hitachi engineers around the world, reaffirming the monozukuri
spirit based on our engineering ethics. During fiscal 2012 and 2013, we operated anothere-learning program that drew on the results of analyses of past product accidents to
identify weaknesses that our engineers must see and understand, as well as overcome intheir daily works, including respecting, understanding, and practicing monozukuri
craftsmanship.

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Quality assurance training centers at our manufacturing sites help to increase production,
quality assurance, and maintenance skills through their own specialized technicalcourses.

Strengthening Quality Assurance (QA) Systems in China andthroughout 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 annual conferences for QA managers in China and Thailand to improve
quality awareness and to share information and best practices.
We provide reliability training programs in Beijing, Shanghai, and Guangzhou in China
and Bangkok, Thailand, to develop employees' QA skills and to improve their quality
awareness and inspection techniques. In addition to the Basic Reliability Course*1 andIntermediate Reliability Course,*2 we launched an Advanced Reliability Course in China infiscal 2011 and in Thailand in fiscal 2012. In this Advanced Reliability course, managers
hold group discussions on past accidents to identify the fundamental causes, including
the process-related, organizational, and psychological factors. The goals are to boost
problem identification and problem-solving skills as well as to develop accident
prevention procedures. We also plan to provide these courses in India and Malaysia.
*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.

Handling Product Accidents
If there is a product accident, the division responsible acts swiftly to resolve the problem
from the customers' perspective, coordinating with other Hitachi business units asneeded. For an especially serious accident, we report to government agencies, as we arelegally required to do, and publish the incident information through our website andother channels. At the same time, we quickly submit a status report to top management,
ensuring fast and appropriate remedial action not just at one company but all companies
Group-wide.
When we decide that a product recall is necessary, we notify the public through our
website and/or in newspaper notices, then repair or replace these products.

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Response Flow in the Event of Product Accident

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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 have avoiding all accidents as
the baseline. For example, since fiscal 1987 we have been testing worst-case scenarios,
such as deliberately setting a fire inside a product to confirm that the fire will not spreadoutside it. Since fiscal 2006, we have also been conducting product safety risk
assessments at the development stage, creating "accidents" that might be caused bymisuse.
Of the serious product accidents occurring in Japan, there were 3,411 fires in electrical
products between May 14, 2007 and March 31, 2013.*1 By product, room air conditioner
accidents (including outside units) were the most common. No Hitachi air conditioners
were involved in the serious product accidents listed on the Consumer Affairs Agency
website for the January to December 2013 period, reflecting the strength of the HitachiGroup QF Innovation Movement. We will continue to make all our consumer applianceseven safer using our own voluntary action plan for product safety so that customers canuse our products with confidence.
*1 Report on Status of Product Safety Policy Initiatives

Customer Satisfaction Management Guidelines
http://www.hitachi.com/csr/society/satisfaction/index.html#cs02

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Chapter3 Social Report

161

Customer Satisfaction
We are committed to improving customer satisfaction (CS) based on
the Customer Satisfaction Management Guidelines that we created in
1994. To bring customers' voices into our product and businessstrategies, we prioritize direct dialogue and share these opinions
across the whole Group. We also incorporate the views of productusers and experts into our Universal Design (UD).

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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. Listen to our customers determine the value of products and services
2. Review information from our customers is another source ofimprovement
3. Offer prices and quality that are competitive
4. Respond rapidly to keep our promises to our customers
5. Adopt systems that prevent accidents and minimize their impact
Formulated in 1994

Reflecting Customers' Voices
Our sales and marketing division uses customers' voices for 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 Hitachi's"portals," and the whole Group works with them to build closer relations with customers
and to boost customer satisfaction.
Our Hokkaido, Tohoku, Shikoku, and Kyushu area operations hold executive seminars for
local customers. Through direct dialogues with customers participating in our seminars
and lectures, we incorporate their expectations for Hitachi and their opinions into
product strategies.
We also hold the Hitachi Innovation Forum that has 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'sbusiness. We use feedback from this forum to improve our operations.
Our R&D Technology Community program gives us opportunities for creation throughcollaboration with customers. Project leaders invite customers to their research labs tosee exhibits of products and systems currently being developed.

Website Customer Support
Our website provides comprehensive customer support. It 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 products and services. We also conduct training courses to provide
better handling of these inquiries.

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As one of our initiatives, we have been holding the Web Inquiry ResponsivenessImprovement Course since fiscal 2009. In fiscal 2013, 122 Hitachi Group company
employees took this course (bringing the total to 564 participants since the coursebegan), which features case studies based on response to inquiries. Going forward, we
will strengthen coordination among Group companies to respond more quickly andeffectively to customer inquiries, using the website as an important contact tool.

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Electric Home Appliances
The Electric Home Appliances Customer Satisfaction Division has enabled the expansionof Hitachi business from electronic and electric equipment to the environment businessby drawing up a vision for environment value creation, actively promoting various service
areas.
Our call center and website handle about 2.4 million customer inquiries, repair requests,
and complaints about washing machines, LCD TVs and other appliances.*1 We haveundertaken a number of initiatives to better respond to inquiries and to reflect customer
feedback in our monozukuri craftsmanship, including improving the rate of customer
contact by using outsourcing; creating a database of customer feedback, including
consultations, inquiries and complaints; and enhancing our website FAQs.
We also conduct semiannual customer service evaluation surveys at 90 service centers inJapan. Based on the answers, we improve services through CS training courses and otherprograms.
With the expansion of Hitachi's markets outside Japan, sales offices have been opened inseven countries in Asia and the Middle and Near East. We are also working on unifying
management of the operations outside Japan.
*1 For fiscal 2013, technical inquiries from suppliers and parts orders have been excluded from these statistics.

Rates/Number of Cases of Customer Contact (twelve-month average)2

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Results of Evaluation Survey for Customer Repair Services (Degree of Customer
Satisfaction)*

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Figures for fiscal 2013 are totals for April 2013 to January 2014.

Flow Chart of Customer Service

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164

Universal Design
We promote Universal Design (UD) by improving the quality and ease of use, accessibility,
and life cycles of our products. Quality of use means focusing on the traits that makepeople feel that the product is easy and enjoyable to use. Accessibility refers to the rangeof people who can use a product or service. Life cycle covers all the stages of the value
chain from product purchase through to disposal.

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Our Universal Design Activities
In keeping with these three elements of our UD philosophy, we conduct basic researchon behavior and cognitive characteristics of various users to formulate UD guidelines andreflect these in product development, incorporating the voices of users and experts atevery stage. The information obtained during product development is entered into a
database shared by our businesses in Japan. We also distribute some of this information
externally to promote open source standardization and education.
Digital and Home Appliances
We define people as customers as soon as a product interests them, so we make a pointof considering Universal Design in everything from pre-sales to disposal. Key attributes
are usability, features, harmony with the environment, safety, and maintenance. Our
intention is to provide products that suit the physical ability or lifestyle of every customer
and are appreciated for a long time.
Our UD focus extends beyond products to include product manuals. For example, we areworking 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 a text
file that can be played aloud using text-to-speech software (a screen reader for thevisually impaired). These reconstructed text files are available online and allow thevisually impaired to use our products safely and easily. The text files are created based on
feedback from visually impaired people who have operated and verified product use
while listening to the instructions on the text files.
We have also launched a range of measures to improve the accessibility of increasingly
complex electronic consumer appliances for the elderly and disabled. DVDs providing
clear explanations on product use are included with products, while some products have
Braille labeling on their buttons.

Instruction DVD

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Public Equipment and Systems

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Public equipment and systems are used bya large number of people, includingchildren, either individually or collectively,in public spaces such as public buildings,
stations, railways, and hospitals. Because of
the public nature of the spaces where they
are used, 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 machinethat a range of people can operate in thesame way with ease and without any
particular concern. The arched guide frame
leads hands naturally toward the card,
bankbook, and cash slots. The open space
below the user panel has been substantiallydeepened 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).

AKe-S next-generation ATM*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 (Color Universal Design Organization) standards for color
Universal Design, the concept of designing products and facilities for universal ease of use, regardless ofpeoples' differences in color perception. The aim of the CUDO certification system is to contribute to the public
good by creating a society that accommodates personal differences.

An arched guide frame leads hands naturally toward the slots

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166

Web and Information Systems
Web and information systems are essential forgathering information and communicating. For people
with disabilities who have difficulty accessing
information, it is particularly important that systems areaccessible, usable, and secure. We are promoting UDthat ensures accessibility in our Web and information
systems by using the international Web Content
Screenshot of the Assistance for Color
Accessibility Guidelines (WCAG) 2.0.*1 Examples of this
Generation tool
include screens and layouts that are easy to read,compatibility with screen readers that read content out
loud, and a feature that allows people to alter font size and color.

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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 andother effects that allow more people to create web pages efficiently without factoring incolors and using images. This tool makes it easy to choose colors that can bedifferentiated regardless of color vision. We have made this tool available for free from
July 19, 2012, so that it can be used by screen designers and systems developers.
*1 Web Content Accessibility Guidelines (WCAG) 2.0: Guidelines created by the World Wide Web Consortium (W3C)
that form the basis of the JIS standard on information communications and Web content. The International
Organization for Standardization (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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To ensure that shareholders and investors can make soundinvestment decisions, we provide information that is fair,transparent, and appropriate, including information on ourmanagement strategies. We are improving communication throughinvestor relations (IR) events and general shareholders' meetings.

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 and businessactivities.

Disclosure Policy
1. Basic Policy
Hitachi's Mission is to contribute to society through the development of superior, originaltechnology 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 compliancewith the law and/or regulations of the stock exchanges on which the Company is listed. Hitachi
discloses not only information required by law and/or regulation, but also management andfinancial 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 other disclosure 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 fromanswering inquiries about business performance and related matters.
5. Forward-Looking Statements
In its disclosures, Hitachi may make statements that constitute forward-looking statements thatreflect management's views with respect to certain future events and financial performance at thetime 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 uponassumptions 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.

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Proactive IR Approach
Our range of Investor Relations (IR) activities include business strategy meetings for
institutional investors and analysts, tours of plants and R&D facilities, participation in
brokerage-sponsored investor meetings, and one-on-one meetings with investors andanalysts.

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In fiscal 2013, we held quarterly financial results briefings and corporate strategy
meetings on the 2015 Mid-term Management Plan created in May 2013. Following on
from fiscal 2012, we hosted a Hitachi IR Day 2013, where senior management explained
their business strategies and management policies under the Mid-term Management
Plan. Feedback from institutional investors and analysts was positive. Their comments
included, "Hearing explanations of each business strategy enabled us to better
understand these, which I found useful for analysis" and "It was a significant event for
dialogue between the capital market and management."
We held a corporate strategy meeting on our information and telecommunications
systems and power systems businesses to deepen understanding of these operations.
Furthermore, we conducted around 800 one-on-one meetings with institutional
investors and analysts worldwide. Senior managers visit institutional investors in North
America, Europe, and Asia twice a year to explain management policies and businessdirections. We are doing our best to share IR feedback in-house and reflect this in
management and operations.
We are committed to timely disclosure, and we post briefing materials and businessperformance as well as stock price trend charts on our IR website. Concise explanations ofHitachi's history and business are also provided on pages for individual investors. We
intend to expand that content and make it more user friendly.

Disclosure Tools
Financial results
Annual and quarterly reports in accord with the Financial Instruments and Exchange Law of Japan
Annual reports
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General Meeting of Shareholders
At the Ordinary General Meeting of Shareholders, we provide audio-visual reports
designed to give shareholders a thorough understanding of our situation. After thegeneral meeting of shareholders, Hitachi discloses management policy explanations fromour president for shareholders and investors via our website. We post notices of general
meetings of shareholders earlier than legally required to give stakeholders additionaltime to consider our proposals.

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Trends in Shareholder Composition*

Data of Source : Report on the 145th Business Term

Report on the 145th Business Term
http://www.hitachi.co.jp/smeet-e/145/report/140526a.pdf

Hitachi as an SRI*1 Investment
The Hitachi Group welcomes external assessments as a socially responsible andsustainability investment. For five years in a row (since fiscal 2009), DJSI World,*2 a leading
global sustainability investment index, has listed Hitachi, Ltd. as a component stock. FourGroup companies, including Hitachi Chemical Co., Ltd. and Hitachi Capital Corp., wereselected for the FTSE4Good Index Series.*3 Four 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 well overall in these external
assessments.
*1 SRI: Socially responsible investment, where investment 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 within a certain composition. DJSI World, for example, selects on a global
basis, while the DJSI Asia Pacific Index covers Japan, Asia, and Australia.
*3 FTSE4 Good Index Series: One of the indexes calculated by the London Stock Exchange-owned FTSE Group that
selects component stocks based on their ESG performance, specifically environmental management, climatechange mitigation, human rights and workers' rights, supply chain labor standards, bribery and corruption
prevention, and corporate governance.
*4 Morningstar SRI Index: SRI Indexes for Japanese stocks. Morningstar Japan K.K. developed these indexes withCenter for Public Resources Development.

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170

Results of SRI Assessments in Fiscal 2013
Institution
RobecoSAM

Index

Companies selected

Dow Jones Sustainability World Index

Hitachi, Ltd.

Dow Jones Sustainability Asia Pacific Index

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 Group
Sustainability
Report 2014

Fundamental Policy against Takeovers
The Group invests a great deal of business resources in fundamental research and in thedevelopment of market-leading products and businesses that will bear fruit in the future,and realizing the benefits from these management policies requires that they becontinued for a period of time. For this purpose, the Company keeps its shareholders andinvestors well informed of not just the business results for each period but also of theCompany's business policies for creating value in the future.
The Company does not deny the significance of the vitalization of business activities andperformance that can be brought about through a change in management control, but
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
the business description, future business plans, past investment activities, and othernecessary aspects of such a party.
There is no party that is currently attempting to acquire a large share of the Company'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 of such a party,
but the Company does understand that it is one of the natural duties expected byshareholders and investors to continuously monitor the state of trading of the Company's
stock and then to immediately take what the Company deems to be the best action in
the event of the appearance of a party attempting to purchase a large share of theCompany'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 theCompany deems that said buyout will not maintain the Company's value and is not in thebest interest of the shareholders, then the Company will quickly determine the necessity,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 ofthe shares of a Group company.

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Chapter3 Social ReportSocial Contribution Activities
Hitachi believes that contributing to society is the company's mostimportant role, not only through our businesses but also by engaging
with and contributing to local communities as a part of thecommunity. Through our employees, while we pass on technologies
and knowhow to local communities. We also work with local
authorities and NPOs to nurture the next generation and to resolve
local issues.

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Philosophy and Policy
We approach social contribution based on our Group-wide Social Contribution Activities
Philosophy and Policy under the Hitachi Group Identity. Group companies, theiremployees, and our six foundations work together to resolve issues in the communities
where we have business operations.
We also believe that our social contribution activities help us build trust with
communities as a good corporate citizen, while volunteer work inspires greater social
awareness and more flexible thinking in those employees who volunteer. These initiatives
will become a source of strength for driving our Social Innovation Business, enabling us tocontribute to the development of both a sustainable society and business. Given that
December 5 is the International Volunteer Day, we set every November and December as
Hitachi Volunteer Days during which Hitachi further encourages employees to take partin a broad range of volunteer activities to contribute to their communities.
In fiscal 2013, funding for the social contribution activities implemented by Group
companies and the five foundations in Japan totaled approximately 3,1 billion yen.

Social Contribution Activities Philosophy and Policy
Philosophy
The Hitachi Group strives to demonstrate good corporate citizenship in response to social needs
and expectations, while endeavoring to enrich the quality of life and realize a better society.
PolicyThe Hitachi Group promotes various social contribution activities to build a vibrant society based on
fostering leadership to implement reformation for the next era. This is achieved by making optimaluse of our knowledge and information technology in three specific areas: education, theenvironment, and social welfare.

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Key Indicators

Hitachi Group
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Breakdown of Funding for Social Contribution Activities

Approach to Social Contribution Activities

Hitachi's Foundations
The Odaira Memorial Hitachi Education Foundation
The Hitachi Environment Foundation
The Kurata Memorial Hitachi Science and Technology Foundation
The Hitachi Scholarship Foundation
The Hitachi Mirai Foundation
The Hitachi Foundation (US)*

Hitachi's six foundations worldwide operate in a wide range of areas, including supporting family education,
promoting science and technology research, inviting Southeast Asian university faculty members andresearchers to Japan, helping with environmental conservation, supporting the development of young people,
and promoting good corporate citizenship in the United States.

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Social Contribution Activities in Japan and Asia

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Fostering Future Scientists
Hitachi Science Seminar
Since fiscal 2011, the Hitachi Science Seminar program
has been encouraging children's interest in science. In
hands-on programs, Hitachi Group companies involve
children in science experiments and projects in an
enjoyable way, sharing the skills and knowhow
developed through our long monozukuri tradition
with the next generation.
In fiscal 2013, Hitachi Group companies held eight
Hitachi Science Seminars at the Science Museum inChildren conducting a science experimentTokyo. The seminars drew 229 elementary and juniordirected by a teacher
high school students, creating paperclip motors using
magnets and dry cell batteries (Hitachi Metals, Ltd.,
Hitachi Maxell, Ltd., and Hitachi, Ltd.); observing the micro world through electron
microscopes (Hitachi High-Technologies Corporation); purifying water with coagulationand magnetic separation as well as voice synthesis by computers (Hitachi, Ltd.); and, in a
new chemical experiment program launched in fiscal 2013, experiencing the weight ofcarbon dioxide (Hitachi Chemical Co., Ltd.). A special biology seminar was held incooperation with then Prof. Tatsuo Motokawa, affiliated with the Tokyo Institute ofTechnology Graduate School of Bioscience and Biotechnology. The seminar provided an
enjoyable introduction to biological behavior and mechanisms. Hitachi will continue to
use the technologies and strengths of Group companies for these educational support
programs by addressing diverse themes that foster children's curiosity.
Hands-on Science Education Support Programs by Group Companies
As part of our support for nurturing of young
scientists, we take advantage of our companies' wideranging resources to offer hands-on scienceeducational support programs to students frompreschool to junior high school.

Water purification corner at a we lovethe earth class2

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Main Science Education Support Programs
Company name

TargetActivity description

Fureai Kagaku Kyoshitsu Science
Experiment Classes for Children

Preschool
childrenSince fiscal 2012, these classes have been taught
by Hitachi Chemical employees at kindergartensand day-care centers in the neighborhood of theirbusiness sites in Japan, introducing 2,870
children to the wonders and pleasures of science.

Fushigi Hakken! How miraculous is theabundance of sea life!

Elementary
schoolstudents

Special workshops held jointly with the Sumida
Aquarium in Sumida Ward, Tokyo, since fiscal
2013. In 2013, 66 elementary school children
learned about the ocean as the wellspring for all
living things, the abundance of sea life, and thevalue of all life.

Summer Vacation Family Science
Experiments

Elementaryand juniorhigh school
students

Since fiscal 2009, Hitachi Chemical has worked
with the Chemical Society of Japan's I Love
Chemistry (Kagaku Daisuki) Club to provide funscience experiments to 1,421 children and theirparents at four business sites in Japan.

Hitachi High-Technologies
Corporation

Science outreach using electron
microscopes

Elementary
schoolstudents

In this program, children use tabletop scanningelectron microscopes to experience the surprise
and wonder of the unknown worlds of everyday
objects. Since fiscal 2012, 384 children haveparticipated in the Let's Look at Bugs! program at
the Sayo-cho Konchukan (insect museum) in
Hyogo Prefecture, Japan. In fiscal 2013,
biomimetics was introduced at a 20-day
exhibition that attracted 1,200 elementary school
students at the Science Museum in Tokyo,
entitled 400 Million Years—Letters with Insects.

Hitachi Maxell, Ltd.

Kyo Edison Program (Battery Class)Elementary
schoolstudents

A program for elementary and junior highstudents is run by the Kyoto Otokuni Regional
Education Office, bringing together company
employees, Board of Education members, andschool personnel to promote science, technology
and monozukuri (skilled manufacturing). Hitachi
Maxell joined in fiscal 2006, carried out a class on
batteries where, so far, 1,236 elementary school
students have participated. In fiscal 2013, theseclasses were held in five schools, with 321
children creating their own unique dry batteries.

Central Research Laboratory
Hitachi, Ltd.

Waku Waku Kids' Science Seminar

Elementary
schoolstudents

Since fiscal 2012, around 200 elementary school
children in the fifth and sixth grades participatedin this program, including seminars, projects, andresearch laboratory visits. The seminars andprojects are managed by researchers. In fiscal
2013, about 100 students came to the CRL for aseminar on the theme of light.

Hitachi Research Laboratory
Hitachi, Ltd.

Science Seminar

Junior highschoolstudents

Launched in fiscal 2005, this hands-on program
taught by young researchers to junior high school
students (295 to date) in experiments that
stimulate their interest in science and engineeringin an enjoyable way. In fiscal 2013, 40 students
used electron microscopes, built a prototype
cyclone vacuum cleaner, and conductedsupercooling experiments, supported by 30
employees.

Infrastructure Systems
Company
Hitachi, Ltd.

Partnership in Elementary School Club
Activities

Elementary
schoolstudents

A science education partnership with Toshima
Ward, Tokyo, began in fiscal 2007. To date,around 950 students have participated in thesescience classes. In fiscal 2013, science classes
were launched as club activities at another six
elementary schools in Toshima Ward, and around
150 students have deepened their understandingof science through handicrafts and experimentson the nature of compressed air and water
purification.

We Love the Earth Class

Elementary
schoolstudents

Since fiscal 1998, students from elementary
schools around the Matsudo Works have been
invited to taken part in water-related scienceclasses. The program has been held 32 times,
with more than 3,000 students participating so
far.

Hitachi Chemical Co., Ltd.

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Supporting Science and Mathematics Education in Hitachi City
Hitachi City's educational objectives are to foster aninterest in science and to cultivate creativity andoriginality in children on an international stage.
Hitachi, Ltd. supports these objectives, and in fiscal
2009 concluded a basic agreement to work with
Hitachi City on programs that enrich science andmathematics education. Assisted by the Hitachi
Science Club,*1 established by an NPO in May 2009, wework with the Hitachi City Board of Education andClass support
local schools—in line with school curricula—todevelop science experiments that deepen students'
understanding and to provide a wide range of programs that stimulate their curiosity.

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The six programs include assistance for elementary school science classes, an experienceclass on making water rockets, and the Super Science and Math Academy for junior highschool students with a strong interest in science and mathematics. In fiscal 2013, 17,755
students took part in 423 classes. In another program called Rika-Shitsu no Ojisan (Mr.
Science), volunteers of the Hitachi Science Club went to 25 local elementary schools twicea week to help set up science experiments and answer students' questions. These
activities deepen children's interest in science. As of March 2013, the Hitachi Science
Club's activities have become regular club events at all 25 schools.
Hitachi, Ltd. will continue to support these programs, providing opportunities for our
engineers to convey their experience and skills to children so that children can experience
the joy of science and the satisfaction that comes from creating something.
*1 Hitachi Science Club: An NPO of around 100 volunteer retirees from Group companies' plants and research
institutes, including engineers with PhDs, professional monozukuri engineers, and senior engineers with special
skills.

Cosponsoring Kagaku-no-Koshien
Hitachi, Ltd. has been co-sponsoring the Kagaku-noKoshien (the Japan High School Science
Championships) event since fiscal 2011. Organized by
the Japan Science and Technology Agency with theaim of getting more high school students interested inscience and extending their abilities. The tournamentis held every year in Nishinomiya City in Hyogo
Prefecture with the cooperation of the government,
industry, and academia. Teams of six to eight students
Japan High School Science Championships
from high schools that won preliminary rounds inJapan's 47 prefectures compete for the highest total
score in written exams and practical competitions. The Hitachi Award is given to the teamthat demonstrates the most creative answers with the most innovative potential,
regardless of the score, to help nurture outstanding future scientists. In fiscal 2013,
Hitachi, Ltd. also participated as a cosponsor in a new competition for junior high school
students held in Tokyo. We look forward to continuing to support this program andfostering creative and inventive scientists for the future.

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Sponsorship of Kanagawa Science Fair for Junior High School High SchoolStudents"
The Hitachi, Ltd.'s Yokohama Research Laboratory
supports this science fair sponsored by Kanagawa
Prefecture to deepen the understanding of scienceand technology and highlight their appeal. The faircounters the drift of high school students away fromscience. Universities and companies specializing inscience and technology in Kanagawa Prefecture
collaborate in the event. In fiscal 2013, the Yokohama
Research Laboratory ran a booth on the theme ofhighly reliable IT platform technologies for the social
Demonstration by Hitachi staff
infrastructure. Nine employees took part indemonstrations and introduced Hitachi's cutting-edge
technologies to 402 students. The Yokohama Research Laboratory will continue to show
Hitachi's leading-edge technologies to students through this outstanding example ofgovernment-industry-academia collaboration.

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Great East Japan Earthquake Recovery Support
IT-based Pro Bono Work
Hitachi Solutions, Ltd. is running a pro bono*1 project in Kamaishi City, Iwate Prefecture.
Employees provide IT-based recovery assistance for local revitalization. In fiscal 2013,seven employees helped to improve the website of Kamaishi's Toni Town Fishery
Cooperative to Strengthen the information on their website. They also helped to develop
a business system to boost productivity for a seafood processor. The processing company
was delighted to find that improvements to in their business system have doubled
business productivity. The Fishery Cooperative too has welcomed the new look of its
website, which provides not only fisheries information but also a new, multi-faceted
introduction to Toni Town's history, natural environment, culture, and way of life. The
number of people accessing the website is expected to increase. Hitachi Solutions will
work with fishery cooperatives, local residents, local authorities, NPOs, and otherstakeholders on sixth sector industrialization to revitalize the region. Disaster recovery is
one of Japan's major social challenges, requiring a long-term approach. Hitachi Solutions
looks forward to continuing to bring IT expertise to support the recovery in this region.
*1 Pro bono: Voluntary work where people use their professional skills for the public good

Cleaning the Seabed to Restore the Fishing Industry
To restore the Ogatsu Bay coastal area and the fishingindustry in Ishinomaki City, Miyagi Prefecture, Hitachi
Systems, Ltd. has been working with the Miyagi
Prefecture Fisheries Cooperative, Kanagawa
Prefecture's civil volunteer group, "The Sea
Beautification Society", and a local volunteer group,"Ogatsu Bay Fisheries Cooperative Association Support
Society". Since fiscal 2012, these groups have beencleaning up the seabed in Ogatsu Bay. Local
Bringing up debris from the seafloor
authorities tackled this problem after the earthquake,but a huge amount of waste and debris remained andcontinues to harm the marine environment. In fiscal 2013, 13 Hitachi employees helped
to remove waste and debris to restore the fishing grounds. Over two days, they recovered
10 tonnes of waste, including wood, steel pipes, and home appliances.

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Before the Great East Japan Earthquake, the fishing industry in Ogatsu Town, Ishinomaki
City, supplied a rich variety of marine products, including the best scallops in Miyagi
Prefecture, caught in the calm waters of the Ogatsu Bay, as well as oysters, sea squirts,
and seaweed from the coastal waters. Hitachi Systems will continue to provide long-term
support for the recovery of the aquaculture industry and the revitalization of fishingvillages.

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Hitachi Hospitals Support Their Communities
In 1938, Hitachi, Ltd. founded the Hitachi Hospital (now the Hitachi General Hospital),
Japan's first corporate-affiliated hospital, with the fundamental philosophy ofcontributing to personal health in our plants as well as public medicine. Since then, we
have established other company hospitals, centered on regions where our production
plants and other businesses are located.
All of our hospitals are open to local residents, in addition to providing social welfare andhealth management services for Hitachi Group employees and their families. These
hospitals provide high-quality, safe healthcare services using the latest medical
technologies and experience. They also work with local medical institutions to boost thelevel of local medical care, and cooperate with the healthcare industry by sharing
knowhow from the Hitachi Hospitals' medical practices, helping to improve the quality ofservices. We currently operate three company hospitals.
Hospital

Location

Year established

Hitachi General Hospital

Hitachi City, Ibaraki Prefecture

1938

Taga General Hospital

Hitachi City, Ibaraki Prefecture

1942

Hitachinaka General Hospital

Hitachinaka City, Ibaraki Prefecture

1945

Participating in Charity Events
Hitachi Australia Pty Ltd. participates in charity events
that support local communities. In September 2013,
over 50 Hitachi Group employees and their family
members ran, jogged, and walked in the annual
City2Surf run in Sydney, Australia. This is the world's
largest charity run, with 85,000 registered participants,
and Hitachi Group companies participate every year.
Runners can choose an organization to raise funds for.
Hitachi's employees in 2013 chose the charity
Barnardos Australia, a well-known child welfare
City2Surf charity runners
organization that works to stop child abuse byproviding mentoring, accommodation, and foster care.
Team Hitachi raised over AU$3,400 (around 320,000 yen) for this charity.
On November 3, 2013, employees from several Hitachi Group companies based inAustralia rode together in the MS Gong Ride, a one-day community bicycle ride to raisemoney for MS (Multiple Sclerosis) Australia. A special part of Sydney's cycling heritage,
the ride from Sydney Park to Wollongong is 90 kilometers long. For Hitachi's first time atthis event, Team Hitachi was ranked the 24th fundraiser in the Information andCommunications Technology category. Together, the team raised AU$2,105 (around
200,000 yen) for MS Australia. The participants enjoyed riding with other colleagues fortheir communities under the globally know Hitachi name, and are looking forward to
having a bigger team next year.

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Preserving Mangrove Wetlands

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Since 2010, Hitachi Elevator (China) Co., Ltd. has been
participating in the World Wildlife Fund-organized
Earth Hour, the world's biggest combined
environmental event. In 2010, the company joined theevent by turning off lights for an hour together withparticipants in more than 150 countries worldwide,and has since been promoting green mobility byencouraging bicycle commuting and planting trees.
Mangrove conservation

In March 2013, the company held a mangrove
conservation event near a village in the Nansha Districtof Guangzhou together with the Shenzhen Mangrove Wetlands Conservation
Foundation (MCF). After MCF's explanation about mangroves and their role in theecosystem, 30 employees joined the MCF staff to remove trash from the mangrove
wetlands. In 2014, the company will continue to work with the foundation on mangrove
conservation and wild bird studies.

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Social Contribution Activities in India and ASEAN

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Singapore-Industry Scholarship
Hitachi Asia Ltd. was invited by the Singapore
Economic Development Board (EDB) in 2012 to workin partnership with the Singapore government to cosponsor the inaugural Singapore-Industry Scholarship(SgIS). The aim is to jointly develop a strong core of
local talent to anchor the strategic sectors that are
critical for Singapore's development. The selection
process included some research on Hitachi, ability andskills assessments, a panel interview, and a networking
session with the scholarship's management. The
Networking session with management
interview panel had a strong makeup of senior
management representatives from Hitachi Group
companies in Singapore and Hitachi, Ltd. The Singapore government agencies were very
happy with our approach and have complimented us for our engagement with thescholars. The partnership also resulted in good media exposure for our scholars: two out
of five scholars from 2012 were featured in local newspapers. As of fiscal 2013, we have
had 10 outstanding scholars who are now part of Hitachi's talent pipeline and that may
become future leaders that will contribute to the Hitachi family after their graduation.

Hitachi Library Project
Since the launch of the Hitachi Library Project in 1993,
employees of Hitachi Asia (Thailand) Co., Ltd. havebeen volunteering to donate school books and othermaterials to rural schools in need of educational tools.
With funds from Hitachi Asia Ltd. and groupcompanies, books and materials have been donatedevery year to elementary and junior high schools incentral, northeast, and northern Thailand. In 2013,
more than 2,000 books were donated. To date, 219
schools have benefited from this project. Hitachi Asia
Kazuo Karasawa, then-Managing
Ltd. also donated 100,000 baht (about 310,000 yen) to
Director of Hitachi Asia (Thailand) Ltd,the areas where libraries and renovations were
donating books
needed. This community-based project aims not only
to cultivate students' interest in reading but also to
improve their knowledge and reading skills as a way to increase their learning skills.

Health Care Training Center Opens in Laos
In October 2013, held was an opening ceremony washeld for the Health Care Training Center, established in
Xepon District, Savannakhet Province, in the Lao
People's Democratic Republic (PDR). The center was
built as a government-private sector project under the
Grant Assistance for Grassroots Human Security
Projects, a Japanese government ODA program. The
project proposal was submitted in fiscal 2012 by the
Savannakhet Province Health Department withsupport from Nagasaki University, the ResearchInstitute for Humanity and Nature (RIHN), and Hitachi,
Ltd.

Hitachi staff scanning finger veins

Basic public health education and health surveys using finger vein authentication are
conducted at the center. Established in the Xepon District Hospital, the center trains
volunteers selected from the province's villages. Hitachi has also been working with
Nagasaki University and the RIHN on a finger vein authentication system to support

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health surveys in Xepon District, and they will continue these surveys.
The opening ceremony was attended by the Lao PDR's Vice Minister of Health, theDirector of the Savannakhet Province Health Department, the Second Secretary of the
Embassy of Japan in the Lao PDR, and representatives from Nagasaki University, the RIHN,
and Hitachi. Hitachi marked the opening by donating eight finger vein authentication
systems.

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The Hindu-Hitachi Scholarship Program
Together with the influential Indian English-language
newspaper The Hindu, Hitachi, Ltd. has been running
The Hindu-Hitachi Scholarship Program since 1960 tonurture young Indian engineers. Every year, engineersfrom the Indian public and private sectors are invited
to Japan for technical training at the plants and officesof Hitachi Group companies. As of 2013, 134
engineers have completed the training.
Three 2013 engineers received training:
Presentations by scholars

1. Host site: Power Systems Company, Hitachi, Ltd.
Training areas: Turbine generator design, gas-insulated switching device design,assembly processes, and quality control
2. Host site: Infrastructure Systems Company Power Systems headquarters and Power
Systems Company, Hitachi, Ltd.
Training areas: Power transformation and distribution (protection and control, andprotection relays)
3. Host site: IT Platform Business Division, Information and Telecommunications Systems
Company, Hitachi, Ltd.
Training areas: Server and storage management as well as maintenance and related
network technologies
At the final presentations at Hitachi, Ltd. headquarters in January 2014, the engineers
described how their training helped them improve their skills in their specialized areas.
They commented that they looked forward to taking back what they had learned
through their training about Japanese culture and the Japanese approach to work andputting that to use in their professional careers at home.

Partnering with IITH in Technology
Hitachi India Pvt. Ltd. has been strengthening theirtechnological partnership with the Indian Institute ofTechnology Hyderabad (IITH) since 2009. A series oflectures and knowledge-sharing forums by Hitachi
employees have further reinforced the relationshipwith IITH. Hitachi India has also been supporting someof IITH's annual events. In January 2014, Hitachi India
sponsored Robo Epic. The two-day Robo Epic, where
30 participants pitted their robots against each otherin robo fights, along with some interesting robot
Students participating in Robo Epicchasing games, drew more than 100 visitors from IITH
and other Hyderabad engineering institutes. Hitachi
India will continue to support this event to further encourage students' competitivenessand creativity, leading to an improvement in their monozukuri skills.

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Social Contribution Activities in the U.S. and Europe

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Introduction of Volunteering Policy
To encourage employees to get involved withvolunteering, Hitachi Europe launched the first
Employee Volunteering Policy covering its operationsin the UK in June 2013. This new policy allows
employees up to two days leave, in addition to annual
leave, to volunteer for local charities, schools, andNPOs. For fiscal 2013, 17 employees volunteered, orover 7 percent of Hitachi Europe employees in the UK.
For example, seven employees helped a with charity
Employees enjoying the new policy
event to support an organization that assists cancer
patients, raising over 760 pounds (around 130,000yen). Another 10 volunteers introduced Universal Design (UD) to about 150 students.
When running the program, the volunteers made presentations, ran experiments, andhelped the students design a TV remote control as part of a group competition. All thevolunteers enjoyed their experience and would recommend volunteering to theircolleagues.
Hitachi's European CSR team also established an online toolkit in 2013 to enable groupcompanies in Europe to more easily contribute to their local communities. The toolkit,
developed by the team, contains their CSR vision, goals, and suggested activities for otherGroup companies to implement for education, the environment and community support.
The webpage also includes a starter kit for those who plan to start a UD program in theirlocal community and schools. Hitachi Europe believes that this toolkit is a valuable
resource for fulfilling their commitment to work with local European communities
through outreach. A similar toolkit has been introduced in North America, and it will be
used to help local communities there.

Supporting a Poster Contest
The Hitachi, Ltd. Los Angeles Office has beensponsoring the Times in Education program with theLos Angeles Times for more than 16 years. This
program provides thousands of students and teachers
in the Southern California area with copies of the LA
Times to use as learning materials in the classroom. As
part of this program, Hitachi also created a poster
contest in 2001 where students are asked to design
posters specific to causes relevant to society today
and to show solutions or prevention.
In 2013, more than 150 posters were submitted fromboth middle and high school students, and one grandprize—winning student was chosen from both age
groups. The theme for this year was climate change.
Grand prize—winning poster in the 2013
The grand prize winners drew posters showing thesenior high school category
importance of recycling and keeping the environment
healthy and safe. The winners received a $100 giftcard and a Hitachi 46-inch LED TV to be used by their schools.

2chapter

Governance
ReportEnvironmental
Report

059

073

130
133
138
151
154

chapter

1chapter

3 Social Report

Respect for Human Rights
158
Supply Chain Management
161
Diversity Management
167
Employee Health and Safety
171
Global Human Capital Development

Quality Assurance Activities
Customer Satisfaction
Communication with Shareholders and Investors
Social Contribution Activities

http://www.hitachi.com/csr/

182

Helping Earn General Education Degrees
In April 2013, the Hitachi Foundation joined with theHarrodsburg Community Action Committee (CAC) in
Kentucky that consists of employees from Hitachi
Automotive Systems Americas, Inc, donating US$1,900(around JPY 190,000) to the Mercer County Adult
Education (MCAE) program operated by the Mercer
County Adult Learning Center. The MCAE programassists adults who weren't able to graduate from highschool to prepare for an exam from their General
Education Degree (GED), the equivalent of a highPresenting a donation
school diploma. Earning a GED gives prospective job
hunters a better chance to get a higher paying job andto better their lives. The center used the funds to purchase an interactive smart board,which has improved classroom instruction for those who have limited time to attend
classes due to work or family obligations. Between July and December 2013, 65 students
passed their GED. Many graduates are reporting big changes in their lives, including
finding jobs at companies offering better pay or finding a full-time job and then buying ahome. The Harrodsburg CAC will continue their support of the local community.

Hitachi Group
Sustainability
Report 2014

Delivering Meals to Seniors
In 2013, 17 employees from Hitachi Metals
Automotive Components USA, LLC (HMAC) joined a
local program called Meals on Wheels, which delivers
meals to seniors. This nationwide program helps
seniors maintain their mental and physical health aswell as remain independent and in their homes
instead of being institutionalized. Through thisnutrition program, seniors above the age over 60 canreceive a meal once a day that provides one-third of
HMAC employees with Meals on
their daily recommended nutrition. After 2010, when
Wheels staff
HMAC employees started volunteering for mealdelivery once a month in their local community ofEffingham, Illinois, they increased this to twice a month in 2012. In 2013, volunteers in
the Effingham area, including HMAC volunteers, delivered 23,825 meals to house boundseniors, as well as 15,889 meals to seniors in group settings. With growing life
expectancy, the need for support has been increasing. The result of an employee survey,
conducted earlier by HMAC's Community Action Committee, showed meal assistance,
youth development education, and the aging of society as their employee's top fourconcerns for their local community HMAC will continue with volunteer activities focusing
on these issues.

2chapter

Governance
ReportEnvironmental
Report

059

073

130
133
138
151
154

chapter

1chapter

3 Social Report

Respect for Human Rights
158
Supply Chain Management
161
Diversity Management
167
Employee Health and Safety
171
Global Human Capital Development

Quality Assurance Activities
Customer Satisfaction
Communication with Shareholders and Investors
Social Contribution Activities

http://www.hitachi.com/csr/183

Social Contribution Activities in Africa

Hitachi Group
Sustainability
Report 2014

Hitachi-DST Scholarship Programme for South African Engineers
Since 2009, Hitachi and the DST (Department of
Science and Technology, South Africa) havecollaborated on a program that trains engineers fromSouth Africa, where the lack of electricity as well as
engineers are two of the country's social issues. Every
year, three engineers visit Japan for three months oftraining. They learn about Hitachi's latest technologies
in power generation and distribution, as well as
initiatives for the environment at Hitachi's sites. At theengineers' final presentations before their return, theyreported that they found it valuable to learn about Japan's power technologies andJapanese culture, including kaizen (continuous improvement). The engineers will help toimprove power systems in South Africa after they return home.

2chapter

Governance
ReportEnvironmental
Report

059

073

130
133
138
151
154

chapter

1chapter

3 Social Report

Respect for Human Rights
158
Supply Chain Management
161
Diversity Management
167
Employee Health and Safety
171
Global Human Capital Development

Quality Assurance Activities
Customer Satisfaction
Communication with Shareholders and Investors
Social Contribution Activities

http://www.hitachi.com/csr/

184

List of Key Indicators

Hitachi Group
Sustainability
Report 2014

The Key Indicators reported in the Hitachi Group Sustainability Report 2014 are listed
below. Comparative tables with GRI Guidelines and ISO26000 Core Subjects, as well as
our Policy, Vision, and Guidelines, are only available on our website.
Comparative Table with GRI Guidelines
http://www.hitachi.com/csr/list/gri.html

Comparative Table with ISO26000 Core Subjects
http://www.hitachi.com/csr/list/iso.html

Comparative Table with the UN Global Compact
http://www.hitachi.com/csr/list/gc.html

Policy, Vision, and Guidelines
http://www.hitachi.com/csr/list/policy.html

Governance
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Innovation Management
Ratio of R&D Efficiency (ROI)

0.54

1.13

1.00

1.24

1.52

Ratio of R&D Expenditures to Revenues

4.2

4.2

4.3

3.8

3.7

150

150

51

55

Number of R&D Staff outside Japan

-

-

290

Intellectual Property
Patent Application Ratios outside Japan

47

57

59

[Scope of Data]
Hitachi, Ltd. and consolidated subsidiaries (including modified entities to which the equity method of
consolidated reporting applies.)
Number of companies: FY 2009: 901; FY 2010: 914; FY 2011: 940; FY 2012: 964; FY 2013: 948

The Environment
FY 2009

FY 2010

Eco-Product Sales Ratio--

Eco-Product Sales Ratio
Contributions to CO2 Emission Reduction(millions of tonnes)-

FY 2011

FY 2012FY 2013

Environmentally Conscious Products and Services
80

84

89

1,551

1,904

2,274

2,747

3,751

4,154

3,447

3,453

3,355

Waste and Valuables Generation (kt)

608

738

701

655

677

Water Use (outside Japan) (millions of m3)

1,290

1,640

891

988

737

VOC Atmospheric Emissions (t)

3,737

3,653

4,285

4,127

4,216

Environmentally Conscious Production
CO2 Emissions (kt CO2)

［Scope of Data］
For environmental load data generated from products；Hitachi, Ltd. and consolidated subsidiaries(including modified entities to which the equity method of consolidated reporting applies.)
Number of companies: FY 2009: 901; FY 2010: 914; FY 2011: 940; FY 2012: 964; FY 2013: 948
For environmental load data generated through business operations； companies that cover 90 percent of theload(based on Hitachi calculations.) Data for each fiscal year indicates performance within the given scope for the
fiscal year.

185

Social
FY 2009

FY 2010

FY 2011

FY 2012--

Hitachi Group
Sustainability
Report 2014

FY 2013

Corporate Citizenship Activities
Funding for Corporate Citizenship Activities *1(billions of yen)
Funding for Corporate Citizenship Activities *2(billions of yen)

1,347
-

1,607

1,806

-

3,471

3,284

3,076

-

102

98

100

12

16

84:16

83:17

Supply Chain Management
Number of CSR Monitoring (Self-Checks)
Number of Audits by External Auditing
Organizations

132
-

-

-

Diversity Management
Ratio of Male and Female Employees*3
Number and Global Ratio of Female Managers

85:14
-

Disabled Employment Ratio*3

84:16
-

84:16
-

-

3,415（5.6）

2.01

2.05

2.00

2.02

2.02

218

230

239

257

244

1,064

1,202

747

Global Human Capital Development*3
Number of Non-Japanese Employees
Number of Young Employees Participating inTraining outside Japan*4--

Employee Health and Safety*5
Occupational Accident Rate*6

0.06

0.07

0.10

0.14

0.10

Occupational Accident Rate*7

0.21

0.20

0.15

0.19

0.14

［Scope of Data］
*1
*2
*3
*4
*5
*6
*7

Hitachi, Ltd. and five foundations in JapanThe Hitachi Group and five foundations in Japan
Hitachi, Ltd.
Hitachi Group
January to December 2012
Hitachi, Ltd.
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

Overview of Financial Results, Board Member 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)(Billion yen)
FY 2009

FY 2010

FY 2011

FY 2012FY 2013

Revenues

8,968.5

9,315.8

9,665.8

9,041.0

9,616.2

Operating Income

202.1

444.5

412.2

422.0

532.8

EBIT*1

77.8

443.8

573.2

358.0

580.1

Income before Income Taxes

63.5

432.2

557.7

344.5

568.1

Capital Investment (completion basis)

546.3

556.8

649.2

742.5

849.8

R&D Spending

372.4

395.1

412.5

341.3

351.4

Net Income Attributable to Hitachi, Ltd. Stockholders-106.9

238.8

347.1

175.3

264.9

*1 EBIT: Defined income before income tax less interest income changes.

Board Members
Total

GenderMale

Directors*1

12

Executive Officers*2

31*1 As of June 2014
*2 As of April 2014
*3 External directors (one from outside Japan)

Nationality

FemaleJapan

Outside Japan

11

1*3

9

3

31

0

31

0

186
Hitachi Group
Sustainability
Report 2014

187

Composition of Employees
FY 2009
Number of Employees*1
Male

FY 2010

FY 2012FY 201331,06531,24332,90833,66533,55026,36026,39927,80528,43728,323

Female4,705

Ratio of Female Employees

FY 2011

-

4,844

5,103

5,228

5,227

16.00

15.90

16.00

16.60

Average Age (years)

39.7

39.9

40.0

40.2

40.7

Male

40.4

40.6

40.6

40.8

41.3

Female

35.9

36.3

36.8

37.1

37.6

Average Service (years)

17.7

17.9

17.9

18.0

18.3

Male

18.5

18.6

18.6

18.7

19.0

Female

13.7

14.0

14.2

14.5

15.0

377 (3.4)

401 (3.5)

418 (3.8)

Number and Ratio of Female Managers*2-

386 (3.3)

General Manager or Above--

54 (1.9)68 (2.3)

77 (2.7)

Section Chief--

323 (4.0)

333 (4.0)

341 (4.3)

2.00

2.02

2.02

Employment of Ratio of People with Disabilities

2.01

2.05

*1 Number of full-time employees*2 See List of Key Indicators for Group global figures

Hiring Ratios
April 2010
Ratio of New Female Graduate Hired*1

April 2011

April 2012

April 2013

20.3

April 2014

19.9

18.3

18.0

19.4

Technical

16.7

13.5

14.7

11.6

14.7

Administrative

37.7

39.3

43.9

43.4

43.4

*1 Graduates from universities or colleges (including postgraduate schools and technical colleges)

Number of Employees Using Work-Life Balance Support Systems
FY 2009
Number of Employees Taking Childcare Leave /Spouse Childcare Leave
Number of Employees Using Shorter Working
Hours for Child Care
Number of Employees Taking Nursing Care
Leave
Number of Employees Using Reduced Working
Hours for Nursing Care

FemaleFY 2010480

FY 2011525

FY 2012518

FY 2013

525

539

Male

139

173

224

245

238

Female

472

528

608

617

683

Male

1

3

6

8

5

Female

4

7

6

10

8

Male

4

3

6

7

12

Female

7

7

6

7

4

Male

0

1

2

3

2

Hitachi Group
Sustainability
Report 2014

188

Working Conditions
FY 2009
Paid Leave

FY 2010

FY 2011

FY 2012FY 2013

Average Number of Days

14.3

16.1

15.9

15.3

15.5

Ratio

66.4

66.4

66.8

64.0

64.7

Average Overtime Hours / Month

12.9

12.3

12.8

14.1

13.5

5

1

1

3

1

Employee Health and
SafetyNumber of Fatal Accidents

Social Contribution Activities
FY 2009
Social Contribution
Activities

FY 2010

FY 2011

FY 2012FY 2013

Number of Voluntary Social
Contribution Programs

24

32

32

34

43

Participants in Voluntary Social
Contribution Programs

1,591

2,567

2,087

2,479

2,744

Hitachi Group
Sustainability
Report 2014

189

Independent Assurance
To enhance the reliability of the data disclosed in the Hitachi Group Sustainability
Report 2014, we have received third-party audits and reviews.

Governance Report / Social Report
Regarding “2015 Mid-term Management Plan Highlights” which has been publishedin “Management Strategies and CSR (pp. 013-016)”, Hitachi R&D and Intellectual
Property Rights (pp. 021-028), the Governance Report (pp. 059–072) and the Social
Report (pp. 129–183), focusing mainly on activities in fiscal 2013, we have received areview by Ernst & Young Sustainability Co., Ltd.
Third-Party Certification Report on Governance Report and Social Report

Translation

The following is an English translation of an independent assurance statement prepared in Japanese and is for
information and reference purposes only. In the event of a discrepancy between the Japanese and English
versions, the Japanese version will prevail.

Independent Assurance ReportTo
Mr. Toshiaki Higashihara
President
Hitachi, Ltd.

Date: September 10, 2014

Kenji Sawami
Representative Director
Ernst & Young Sustainability Co., Ltd.
Tokyo

We, Ernst & Young Sustainability Co., Ltd. have been commissioned by Hitachi, Ltd. (hereafter the “Company”) to
provide limited assurance on the Key Sustainability Performance Indicators (hereafter the “Indicators”) of theCompany and its major subsidiaries for the year ended March 31, 2014 included in the following contents of the
Hitachi Group Sustainability Report 2014 posted on the Company’s Web site (hereafter the “Report”).
･Sustainability Report Editorial Policy･VISION: Management Strategies and CSR･Governance Report･Hitachi Group Profile･INNOVATION Hitachi R&D and Intellectual Property Rights･Social Report

1． The Company's Responsibilities
The Company is responsible for the preparation of the Report in accordance with the Company's policies and*1standards as criteria.

*1 The Reporting Standards refer to the Sustainability Reporting Guidelines Version 3.1 (Revised in March 2011 by Global
Reporting Initiative） , and the important information subject to disclosure are identified in accordance with the
Sustainability Reporting Assurance and Registration Criteria (Revised in January 2014 by the Japanese Association of
Assurance Organizations for Sustainability Information).

2． Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics forProfessional Accountants issued by the International Ethics Standards Board for Accountants, which isfounded on fundamental principles of integrity, objectivity, professional competence and due care,confidentiality and professional behavior.
We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of
quality control including documented policies and procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.

3． Our responsibilities
Our responsibility is to express a limited assurance conclusion on the Key Sustainability Performance
Indicators of the Company and its major subsidiaries for the year ended March 31,2014 included in the Reportbased on the procedures we have performed and the evidence we have obtained.
We conducted our limited assurance engagement in accordance with the International Standard on Assurance
Engagements - Assurance Engagements Other than Audits or Reviews of Historical Financial Information(ISAE 3000), issued by the International Auditing and Assurance Standards Board, Practical Guidelines for the
Assurance of Sustainability Information, revised in December 2012 by the Japanese Association of Assurance
Organizations for Sustainability Information.
The summary of the procedures we performed for our assurance engagement is as follows:• Reading relevant documents with regard to the Company’s Reporting Standards and the Company’s policies
and standards and inquiring of personal responsible thereof;• Reading relevant documents with regard to the design of the Company’s internal control of the Indicators andinquiring of personal responsible thereof at the headquarters and the site visited;• Performing analytical procedures of the Indicators at the headquarters and the site visited (1 site);and• Agreeing to supporting documents and recalculating with part of the Indicators at the headquarters and thesite visited on a test basis.
The procedures performed in a limited assurance engagement are more limited in nature, timing, or extent
than a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance
engagement is not as that obtained had we performed a reasonable assurance engagement.

4． Conclusion
Based on the assurance procedures performed, nothing has come to our attention that caused us to believethat the Indicators of the Company and its major subsidiaries for the year ended March 31, 2014 included in
the Report were not measured and reported in accordance with the Company’s policies and standards in allmaterial respects.

Hitachi Group
Sustainability
Report 2014

Environmental Report
Regarding the fiscal 2013 results in the Environmental Report (pp. 073–128), we havereceived a review by Bureau Veritas Japan Co., Ltd.*1
For energy use in Japan, a more detailed verification was conducted to confirm thedata. Environmental load data, Eco-Product registration data, and the contribution
to CO2 emission reduction through the use of Hitachi products and services were also
subject to review.
The standards, guidelines, and calculation methods used in collecting data are posted
on our website.
*1 A certification agency providing inspection, auditing, and certification services in areas such as marine and building compliance; health, safety, and the environment; systems; and consumer products.

WEB

Calculation methods for environmental load data:
http://www.hitachi.com/environment/activities/third/method.html

Third-Party Verification Report on Environmental Report

190
Hitachi Group
Sustainability
Report 2014

191
Hitachi Group
Sustainability
Report 2014

Greenhouse Gas Emissions Verification Statement

Inquiries:

Hitachi, Ltd.
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/