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Hitachi

Toward a Sustainable Society: Hitachi's Materiality

Hitachi practices sustainable management, which positions sustainability as the core of its business strategy, and is working toward realizing a sustainable society through the Social Innovation Business.
In the Mid-term Management Plan 2024, we declared our aspiration of "supporting people's quality of life with data and technology that fosters a sustainable society." While some of the nine planetary boundaries have already been exceeded, Hitachi is aware of each one and works to protect the planet and maintain society. Hitachi aims to solve social challenges to realize a future that balances protection of the planet and people's individual wellbeing.

The materiality analysis process

With a comprehensive understanding of social issues, Hitachi has identified six material topics and 15 sub-material topics based on an analysis of risks and opportunities from a sustainability perspectives as well as feedback from stakeholders.
Based on these material topics, Hitachi is monitoring measures as well as discussing the progress, and new initiatives for each materiality at the Senior Executive Committee and the Board of Directors.

The materiality analysis process
Materiality Our aspirations
Environment
Contributing to decarbonization and resource circulation
  • 6 Clean water and sanitation
  • 7 Affordable and clean energy
  • 9 Industry, innovation, infrastructure
  • 11 Sustainable cities and communities
  • 12 Responsible consumption, production
  • 13 Climate action
  • 17 Partnerships for the goals
 As a climate change innovator, Hitachi will contribute to the realization of a carbon neutral society with Hitachi's superior green technologies, by providing value to customers in all business segments. We will also promote resource efficiency toward the transition to a circular economy.
Resilience
Contributing to the maintenance and rapid recovery of social infrastructure
  • 9 Industry, innovation, infrastructure
  • 11 Sustainable cities and communities
  • 17 Partnerships for the goals
 Hitachi helps people live safely by contributing to the rapid recovery of supply chains and the maintenance of social infrastructure by providing system solutions that can respond immediately to risks, such as natural disasters, pandemics, and cyberattacks.
Safety & Security
Contributing to safe and secure society-building
  • 3 Good health and well-being
  • 6 Clean water and sanitation
  • 9 Industry, innovation, infrastructure
  • 11 Sustainable cities and communities
  • 17 Partnerships for the goals
 Hitachi contributes to the realization of comfortable and active lifestyles for people by providing solutions in the building, mobility, and security fields that support urban development for safe and secure living.
Quality of Life
Contributing to physical and mental wellness and a prosperous life
  • 3 Good health and well-being
  • 4 Quality education
  • 5 Gender equality
  • 8 Decent work and economic growth
  • 10 Reduced inequalities
  • 17 Partnerships for the goals
 Hitachi is harnessing our healthcare and digital technologies to help more people develop bonds and enjoy healthier, more prosperous lives. We will also continue to pursue the happiness and wellbeing of our employees, as we believe that their happiness and wellbeing is the ground on which Hitachi's future will flourish even more fully.
Business with Integrity
Adhering to ethical standards as well as respect human rights
  • 3 Good health and well-being
  • 4 Quality education
  • 5 Gender equality
  • 8 Decent work and economic growth
  • 10 Reduced inequalities
  • 16 Peace, justice and strong institutions
  • 17 Partnerships for the goals
 As a Group responsible for social infrastructure around the world, Hitachi will manage its business with honesty and integrity, trusted by society, respect human rights and provide a safe workplace. We will reflect a system of ethical and responsible business conduct, including respect for human rights, in our business activities and decision-making standards, working together with our employees, collaborative partners and communities throughout the supply chain.
Diversity, Equity and Inclusion (DEI)
Contributing to a society where everyone can shine
  • 4 Quality education
  • 5 Gender equality
  • 8 Decent work and economic growth
  • 10 Reduced inequalities
  • 17 Partnerships for the goals
 Hitachi has a place for everyone, welcoming differences in colleagues' background, age, gender, sexuality, family status, disability, race, nationality, ethnicity, and religion. At Hitachi, we treat everyone fairly, recognizing differences to allow everyone to perform at their full potential. We respect and value these and other differences because only through them we can understand our markets, create better ideas and drive innovation.

15 Sub-Material Topics and Targets

Materiality Sub-material topics Targets/KPIs FY2022 Progress
Environment
Contributing to decarbonization and resource circulation 		Decarbonization Carbon neutrality through the value chain Targets/KPIs
  • FY2030: Achieve carbon neutrality in business sites (factories and offices)
  • FY2050: Achieve carbon neutrality through the value chain
Contributing to CO2 reduction through business Target/KPI
  • FY2024: 100 million metric tons of CO2 avoided emissions per year
Resource circulation Transition to a circular economy Targets/KPIs
  • FY2024: Full application Eco-Design for all newly developed products
  • FY2030: Zero*2 waste to landfill*3 from manufacturing sites
Effective use of water Target/KPI
  • Reduction rate in water use per unit (compared to FY2010) FY2024: 24%, FY2050: 50%
Harmonize with nature Minimize impact on natural capital
Resilience
Contributing to the maintenance and rapid recovery of social infrastructure		 Strengthening supply chains Build flexible supply chains capable of responding to disasters and risks
Maintaining social infrastructure Resilience and sophistication of maintenance through DX of social infrastructure
Business Case Contribute to stable energy supply through substation management to approx. 1.9 billion people*4
Safety & Security
Contributing to safe and secure society-building		 Safe and secure urban environments Safe and comfortable transportation
Business Case Contributed to a total of 15 billion people annually through railway services*4
Ensuring cyber security Secure cybersecurity for social infrastructure and business systems
Quality of Life
Contributing to physical and mental wellness and a prosperous life 		Connected and prosperous society Increase healthy life expectancy and wellbeing
Business Case Blood tests and other physical exams: 20 billion tests/year*4
Build a trustful relationship with others Target/KPI
  • Users of happiness service: 90 thousand in FY2024
Employee happiness More flexible working styles to increase engagement Target/KPI
  • Employee engagement (positive response rate): FY2024 71.0%*5
Business with Integrity
Adhering to ethical standards as well as respect human rights 		Business ethics and compliance Encourage employees to apply ethical standards in day-to-day work. Target/KPI
  • Achieve a score of at least 60 (out of 100) in FY2023*6, the first year of results from Ethical Culture & Perceptions Assessment, improving it every year
Respect for human rights Promote human rights due diligence and strengthen monitoring of procurement partners for responsible procurement, including human rights Targets/KPIs
  • FY2023: Conduct human rights risk assessments for all BUs (10 BUs) and major Group companies
  • FY2024: Respond to human rights risks
Occupational safety Creating a safe working environment without accidents Target/KPI
  • Zero fatal accidents
Safe and secure products and services Ensure products and services safety while putting customers first
Diversity, Equity and Inclusion (DEI)
Contributing to a society where everyone can shine 		Diverse organization that fosters innovation Strengthen diversity in management Target/KPI
  • Ratio of female and non-Japanese executive and corporate officers: FY2030 30% respectively
Acquiring and developing digital talent Target/KPI
  • FY2024: 97,000 persons*8
Contribution to a diverse and equitable society Empower DEI of society through community relationship programs Target/KPI
  • Nurture and empower next-generation talent
*1
Mid-term Management Plan 2024 three-year average
*2
Less than 0.5%
*3
Wherever this is compatible with local conditions and regulations
*4
FY2022 results
*5
Target has been raised since we achieved the initial target/KPI
*6
Base year has been changed from FY2022 to FY2023
*7
Included assignment as of April 1, 2023
*8
Hitachi Astemo is excluded
*9
Cumulative total since 1996
*10
  Cumulative total since 1990

Hitachi has mapped the 15 sub-material topics in terms of importance for Hitachi and stakeholders. The level of importance to Hitachi is defined as the gap between our goals and our current initiatives.

mapped the 15 sub-material topics

Stakeholder dialogue about the materiality

We held a stakeholder dialogue on the theme of materiality in Japan and Europe in fiscal 2021. We received feedback on Hitachi's proposed materiality and measures for each materiality from disclosure experts, leading sustainability companies, European Commission, NGOs, international organizations, and institutional investors. In Europe, we divided it into a planet session and a people session, with Hitachi explaining its measures for the environment, human capital, and respecting human rights, while participants gave suggestions for new perspectives and improvements.

Principal comments from stakeholders

  • Hitachi should indicate the direction society wants Hitachi to move along or the goals that Hitachi itself has.
  • When it comes to diversity and inclusion, it would be better to include "equity" and make it "diversity, equity, and inclusion."
  • For the circular economy, the approach shouldn't just be to reduce materials and waste but also to think about new business models.
  • With human rights and decent work, Hitachi should go beyond conventional monitoring, audit, and other compliance approaches to engage with all aspects of supply chains through partnerships with external stakeholders.

We will continuously engage with diverse stakeholders and strive to enhance sustainable management.

Reflecting Sustainability Targets in Executive Compensation Evaluation

In fiscal 2023, Hitachi amended the executive compensation system to further accelerate growth as a global company, and to further strengthen links between increases in corporate value and compensation. The revised executive compensation system is more closely linked to the Mid-term Management Plan 2024 and incorporates sustainability targets.
Specifically, sustainability evaluations that had been used as an index for individual short-term incentive compensation (STI) are now treated separately and account for a ratio of 20%.
In addition, an additional grant of shares equivalent to 10% of the standard amount of medium- to long-term incentive compensation (LTI) will be granted if the sustainability targets are achieved.

Reflecting Sustainability Targets in Executive Compensation Evaluation: Before amendment / After amendment Reflecting Sustainability Targets in Executive Compensation Evaluation: Before amendment / After amendment

Sustainability evaluation in STI will be aligned to materiality topics including Environment, Business with Integrity and Quality of Life, each linked to sub-materiality topics targets listed below.
Going forward, Hitachi will enhance link of compensation and the growth of the company, cultivating a growth mindset and strive to achieve global growth as One Hitachi.

Materiality targets linked to executive compensation

Materiality Sub-material topics target
Environment [Decarbonization]
  • Carbon neutrality through the value chain
  • Contributing to CO2 reduction through business
[Resource circulation]
  • Effective use of water
Business with Integrity [Occupational safety]
  • Creating a safe working environment without accidents
Quality of Life [Employee happiness]
  • More flexible working styles to increase engagement