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Hitachi

Corporate InformationSustainability

Governance

Striving to Increase Corporate Value

Not only is Hitachi strengthening its corporate governance in areas like the role and composition of the Board of Directors and standards for determining the suitability and independence of its independent directors, it is also taking self-directed action to enhance corporate value by sharing its Codes of Conduct across the Group, ensuring compliance with laws and regulations, and advancing risk management. In this way, we contribute both to the company's own sustainable growth and the development of the economy as a whole.

Corporate Governance

WhyWhy it matters

Hitachi views the expansion of long-term and overall shareholder returns as an important management objective. Hitachi, Ltd. and Hitachi Group companies maintain good relationships with a wide range of stakeholders, and we recognize that these relationships make up an important part of our overall corporate value.

Accordingly, we are striving to establish a system that will facilitate the maintenance of these relationships and improve our corporate value primarily through the implementation of measures focused on promoting constructive dialogue.

Corporate Governance

WhatWhat we are doing

  • Implementing all of the principles of the Corporate Governance Code
  • Conducting board meetings in a way that sustainably enhances corporate value and shareholders’ common interests
  • Approving and dismissing the CEO and formulating a succession plan
  • Determining appropriate compensation for directors and executive officers
  • Implementing internal controls over financial reporting
  • Enhancing collaboration through tripartite audits
  • Building a more effective and efficient auditing system

HowHow we are doing it

Policy and promotion structure

Hitachi, Ltd. adopted its current committee system in 2003 and has established an Audit Committee, Compensation Committee, and Nominating Committee. Independent directors chair these committees and comprise the majority of the members. The company has also created a system that enables sufficient exercise of supervisory functions by separating the execution and supervision of business management.

Achievements in Fiscal 2020

Ensuring legality, soundness, and transparency of Hitachi’s business Analyzed and evaluated the effectiveness of the Board of Directors
Reviewing executive compensation systems To achieve carbon neutrality at Hitachi business sites (factories and offices) by fiscal 2030, Hitachi, Ltd. reviewed a system of evaluation taking environmental performance into consideration in executive officers’ short-term incentive compensation and decided to introduce it in fiscal 2021.
A restricted stock compensation unit system was introduced as compensation for non-Japanese executive officers and corporate officers in fiscal 2020, and the scope of was expanded to executives at some Group companies In fiscal 2021.

Compliance

WhyWhy it matters

With the globalization of the economy, borderless corporate activities—spanning countries and regions with different governmental and economic frameworks, trade practices, and sets of values—are increasingly vital. Spreading understanding of and respect for norms among all Hitachi Group employees is a fundamental management issue as we seek to rigorously implement fair business practices and avoid risks around the globe.

Additionally, with stricter regulations in countries and regions around the world regarding important business practices such as bribery prevention and adherence to competition laws, Hitachi has formulated in-house regulations in line with international standards and is sharing these regulations and enforcing thorough compliance with them throughout the Group.

Promoting Work Practices in Line with International Ethics Codes

WhatWhat we are doing

  • Comply with the Hitachi Group Codes of Conduct
  • Establishing and strengthening a compliance framework
  • Instituting and integrating a compliance reporting system
  • Preventing antisocial transactions and money laundering
  • Preventing bribery and corrupt practices
  • Complying with competition laws
  • Carrying out strict export controls
  • Implementing thorough tax compliance

HowHow we are doing it

Policy and promotion structure

The Hitachi Group Codes of Conduct and the Hitachi Group Code of Ethics and Compliance spell out decision-making procedures and actions for all Hitachi Group executives and employees. To promote compliance, Hitachi has implemented the Hitachi Group Compliance Program (HGCP) based on these standards. In addition, information is shared with business units, key Group companies, etc., under the supervision of personnel responsible for Group-wide risk management and compliance.

Achievements in Fiscal 2020

Complying with the Hitachi Group Codes of Conduct Formulated the Hitachi Group Code of Ethics and Compliance
Had more than 300,000 executives and employees complete an e-learning program on the Hitachi Group Code of Ethics and Compliance (provided in 15 languages)
Strengthen compliance Hitachi Group Compliance Conference for working-level employees twice, each was divided among four regions
Held interviews and provided improvement guidance for Group companies deemed “high-risk” in the compliance risk survey
Institute and integrate a compliance reporting system Launched a Group-wide internal reporting system called the Hitachi Global Compliance Hotline and worked to integrate internal reporting systems within the Group with it (Total number of Group-wide compliance reports: 639)
Implement prevention of bribery and corrupt practices and compliance with competition law Established the Hitachi Group Anti-Bribery and Anti-Corruption Policy as well as associated rules and clarified the standards and procedures concerning entertainment, gifts, and other arrangements provided to or received from public officials and non-public officials alike
Established the Hitachi Group Fair Competition Policy and clarified the participation of departments responsible for compliance in types of conduct other than with cartels (vertical relationships with customers, channel partners, suppliers, and so on)

Risk Management

WhyWhy it matters

Social issues, including rapid advancements in digitalization and complex changes in political and economic situations occurring worldwide, along with environmental issues, including climate change, resource depletion, and major disasters, are bringing changes to the business environment that are difficult to predict. In this era, the maintenance of our business model will be greatly affected by how we respond to these changes as well. Hitachi understands that, in this context, it will be necessary to identify and analyze opportunities to attain sustainable growth and the risks that it must prepare for and appropriately address them.

Given the close relationship of our business with social infrastructure, we are enhancing our business continuity plans (BCPs) to ensure that the impact of risks does not disrupt our business and thereby significantly affect society.

Meanwhile, we remain actively engaged in promoting our own sustainable growth while contributing to the realization of a sustainable society by seeking out business opportunities that contribute to the resolution of global issues including those relevant to the UN Sustainable Development Goals (SDGs) and Society 5.0. Also regarding climate change, which is an urgent issue worldwide, Hitachi discloses key information and strives to promote responses to climate change based on the proposals of the Task Force on Climate-related Financial Disclosure (TCFD).

Risks and Opportunity Management

WhatWhat we are doing

  • Understanding and responding to risks and opportunities related to investment, sustainability, etc.
  • Implementing risk management to strengthen the business and ensure continuity

HowHow we are doing it

Policy and promotion structure

Hitachi launched an Investment Strategy Committee to strengthen the quantitative risk management of its investments. The Executive Sustainability Committee deliberates on the social and environmental impact of our business activities to clarify any negative impact our business has on society and the environment and to identify issues. The company also established the new position of chief risk management officer (CRMO) in April, 2020 and has worked to better understand the risks and opportunities that may affect its business and to strengthen risk management activities.

Achievements in Fiscal 2020

Strengthen risk management systems Established the new position of CRMO
Understand risks and oppotunities and take appropriate action Continued to strive systematically to identify and address risks hindering the achievement of business objectives, and for climate change, disclosed information based on the TCFD’s recommendations

Business Continuation Initiatives

WhatWhat we are doing

  • Strengthen procurement BCPs
  • Improve the safety of employees sent to dangerous regions

HowHow we are doing it

Policy and promotion structure

To increase preparedness for major disasters and other risks across the entire Group worldwide, we have issued the Hitachi Group Guidelines for Developing Business Continuity Plans. Also, to minimize the impact of disasters that may occur, the procurement divisions in business units and key Group companies in Japan have created procurement BCPs.

Achievements in Fiscal 2020

Earthquake drills simulating a major seismic event Conducted drills to set up an earthquake task force on a remote-work basis
Further strengthening procurement BCPs Hitachi Group CSR/BCP Procurement Committee provided supplier diagnostic tools to procurement divisions
Continuously improving the safety of employees sent to dangerous regions Posted information from risk consultants internally through our intranet
Provided medical assistance for Hitachi Group employees outside Japan

Information Management

WhyWhy it matters

Even as the development of IoT creates new value, cyberattacks are growing increasingly sophisticated and widening in focus from traditional IT to encompass the IoT/OT field as well. The risks for corporations include leaks of information, operational stoppages, and even direct disruption to business making information security one of the most critical issues companies face. Hitachi, in developing its Social Innovation Business, has highlighted the vital importance of information security governance as a key management issue and is working to address it.

With the arrival of the digital age due to advances in IT and the globalization of socioeconomic activity, privacy risks have also increased. Data associated with individuals, including location information and purchase history, has come to be known collectively as “personal data.” The use of personal data can be expected to create value going forward, but protecting this data and showing due consideration for privacy is essential.

Information Security

WhatWhat we are doing

  • Disseminating information security policies
  • Strengthening information management
  • Preventing information leaks
  • Providing education programs on information security
  • Conducting thorough information security audits and inspections
  • Personal information protection
  • Managing customer information

HowHow we are doing it

Policy and promotion structure

Hitachi has established Information Security Policies that foster cybersecurity risk management.
The Information Security Committee is chaired by the chief information security officer (CISO), who has the responsibility and authority for the implementation and operation of Hitachi’s information security and personal information protection systems. The committee determines relevant policies and measures, while the information security heads at each Hitachi business unit (BU) and Group company promote workplace awareness and oversee measure implementation.

Achievements in Fiscal 2020

Strengthen information management In addition to ISO/IEC27001, which is an international standard, we are promoting compliance with the U.S. government standard SP800-171 in our Global Information Security Management Regulations to strengthen information security governance globally.
Built a cyber monitoring environment that continually adopts the latest technology to defend against increasingly sophisticated cyberattacks.
Provide education programs on information security Held e-learning programs on information security and personal information protection (participating employees: around 40,000)
Conduct thorough information security audits and inspections Conducted Information security and personal information protection audits at all Group companies and business units (annual)
Conducted audits of 153 Hitachi Group companies in Japan including Hitachi, Ltd. in the same manner as at Hitachi, Ltd. and Hitachi, Ltd. confirmed all results
Personal information leaks Personal information leaks: 0
Privacy protection initiatives by Hitachi’s IT Sector · Published opinion surveys on use of consumer data in big data businesses
· Hitachi initiatives were included in the Guidebook on Corporate Governance for Privacy in Digital Transformation (DX) ver.1.1 released by Japan’s Ministry of Internal Affairs and Communications and Ministry of Economy, Trade, and Industry.
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