Hitachi Construction Machinery

Global

Key Initiative Theme 5 Governance

In order to enhance competitiveness as a company and enhance corporate value over the long term, it is crucial to accurately understand global trends and shifts in management environment as well as establish a structure for decision making. The HCM Group is strengthening its governance system in order to establish a structure to promptly and reliably execute management strategies as well as realize a fair and transparent management style.

Targets

  • Establish a fair and highly transparent organizational framework
  • Respect international principles on human rights
  • Respond to diversifying global risks
  • Instill and establish awareness of compliance

Key Initiatives

  • Strengthen global governance
  • Management transparency
  • Fair tax strategies
  • Risk management, including ESG

Progress of main activities in FY2017

Promote a safe and secure work environment by strengthening organizational capacity As businesses expand overseas, it has become even more important to build a secure work environment and exercise diligence towards human rights at overseas production sites.
The HCM Group encourages hiring locally as well as commits to creating a system of human rights education following the Hitachi Group Human Rights Policy.
GOAL8
Build a resilient infrastructure through risk management As the globalization of business advances, the risks surrounding companies are also becoming more diversified including natural as well as man-made disasters (terrorism and disturbances). The HCM Group is enhancing its global management system by anticipating various risks. GOAL9
Address risks of climate change To minimize the damage brought on by climate change, it is important to foresee, analyze, and promptly address such impacts. The HCM Group is making efforts to establish environmental compliance in order to reduce environmental risks and improve environmental values within its business activities. GOAL13

Future initiatives

In FY2017, we newly introduced a safety confirmation system for all HCM Group companies in Japan to prepare for a large-scale earthquake or other disaster. We have published a new guidebook to promote the instillment and thorough implementation of compliance. Governance is an area that must be continuously implemented and strengthened. Going forward, we will continue to strengthen our governance system.

Corporate governance system

As a member of the Hitachi Group, the HCM Group shares Hitachi, Ltd.’s Basic Philosophy and Conduct guidelines and stipulates its own codes of conduct in line with them. The HCM Group positions this code of conduct as the basic policies on corporate governance.

The HCM Group has adopted a corporate organizational system based on the structure for a company with a nominating committee, etc., as defined in the Companies Act. We have greatly strengthened our system of corporate governance through this separation of management oversight from business execution. The Board of Directors comprises ten (10) Directors, of which three (3) are Outside Directors (two [2] male and one [1] female). The Representative Executive Officer and other Executive Officers, who are authorized to do so by the Board of Directors, have the right to make operational decisions and execute work in accordance with the company’s basic management policies. The Board of Directors determines the responsibilities and duties of the Executive Officers, matters regarding supervision and authority, and the mutual relationships among the Executive Officers. An Executive Committee (convening twice a month, in principle), comprising all the Executive Officers has been established as a consultative organ for the Representative Executive Officer, President and Executive Officer in making business decisions. The Executive Committee exercises control regarding important matters related to the company’s operations.

Ensuring constant independence from the parent company

Since one (1) of Hitachi Construction Machinery’s ten (10) Directors also concurrently serves as advisor to Hitachi Ltd., the parent company is able to exert influence on decisions on our management policy through the views expressed by this director at Board meetings. Nevertheless, the other nine (9) directors do not serve concurrently in executive or other positions at Hitachi Ltd. and there are three (3) outside directors who have been reported to the Tokyo Stock Exchange as independent officers. Therefore, we are in a position to be able to make our own management decisions. Also, terms and conditions of transactions with Hitachi Ltd. and its group companies are determined reasonably based on mutual discussions referencing market prices and other factors.

arw_r Corporate Governance Guidelines

="Corporate governance system

Human rights initiatives

The HCM Group carries out human rights initiatives following its policies on human rights explicitly stated in the HCM Group Codes of Conduct and the HCM Group Human Rights Policy.

We continually implement education concerning human rights included in rank-specific training for new employees and new section managers, among others, for the purpose of improving each individual employee’s awareness of human rights. In addition, we conduct training concerning harassment during our compliance training in order to create workplaces that are sound and comfortable.

Results of human rights training in fiscal 2017

Strengthening our risk management system

The HCM Group is working to reinforce our business continuity plan (BCP) and business continuity management (BCM), so that when faced with a risk, such as natural disaster or accident, we are able to minimize the impacts on our business activities and restore operations as soon as practical.

In FY2017, we newly introduced a safety confirmation system for all HCM Group companies in Japan to prepare for a large-scale earthquake or other disaster. With employee safety in mind, this system can check the whereabouts and condition of employees at any time during a disaster. We also conducted a training drill using this system based on the scenario of an actual disaster. In FY2018, we will increase the frequency of training in an effort to facilitate the confirmation of employee safety using the system.

Also, the HCM Group is working to strengthen its risk management system across the entire Group in order for it to grow as a truly global corporation. We are now working to prevent various types of risk and implementing measures against the risk after assigning priority based on the impact and frequency of each risk. As a way to avoid risk overseas, we continuously monitor for incidents and disasters and issue appropriate instructions to employees traveling on business and expatriate workers.

Going forward, we will continue to heighten awareness of crisis management across the entire Group and take steps to strengthen our risk management system.

Measures against risks

  1. When a risk arises, we will implement initial measures immediately. We will promptly ascertain the risk level and decide the range of the people to be informed, according to the severity of the risk.
  2. We will make constant efforts to raise the awareness of employees and other relevant persons to ensure that they recognize risks as risks, thoroughly understand the importance of compliance, proactively work to prevent the occurrence of risks and scandals, and take proper measures to cope with risks when they occur.
  3. When a risk arises, or there is the possibility of such, no matter how minor the risk is, we will immediately report the matter to a superior or to the Compliance Promotion Department manager.
  4. We will regularly check risk potentialities and take measures to prevent the occurrence of each risk.
  5. We will always endeavor to maintain good relations with the local community (including police stations, labor standards inspection offices, fire stations, public employment security offices, local residents, etc.).

Compliance promotion structure and training

The HCM Group’s compliance promotion structure is headed by the Compliance and Risk Management Division, which is in charge of compliance activities for the entire HCM Group. Meetings of the Compliance and Risk Management Division are convened regularly to review, plan, and evaluate the results of various compliance measures. It also works on prevention of misconduct by deliberating on the effectiveness of measures for preventing the recurrence of misconduct. We establish a Compliance Promotion Officer and Compliance Manager at each Group company and promote compliance activities in coordination with the Compliance Promotion Center of HCM’s Legal Department.

Also, we provide a variety of training programs to raise awareness about compliance across the entire HCM Group. We provide e-learning on the topics of codes of conduct as well as anti-corruption and compliance with competition laws to executive officers, employees, temporary employees in Japan and overseas managers. In FY2017, a total of 5,411 employees from across the HCM Group took the course of e-learning.

Also in FY2017, we published the new Hitachi Construction Machinery Group Compliance Guidebook, which we distributed to executive officers, employees and temporary employees including at HCM Group companies in Japan. The purpose of this publication is to systematically explain compliance from the basics to awareness and organizational functions, as well as to make the HCM Group’s unwavering commitment in its Compliance Policy known to all. In FY2018, we plan to publish English and Chinese language versions of this guidebook for use at overseas Group companies.

arw_r Hitachi Construction Machinery Group Codes of Conduct

Hitachi Construction Machinery Group Compliance Guidebook

Hitachi Construction Machinery Group Compliance Guidebook

Response to environmental compliance

The HCM Group is strongly committed to environmental management. We have set our own voluntary environmental management standards that are stricter than laws and regulations in consideration of the environmental impacts caused by our business activities. Each of our business sites regularly measures water quality, noise and other indicators in an effort to reduce environmental risks. Also, whenever new facilities are introduced, we check relevant laws and regulations on the environment in advance and have a system in place to ensure compliance with laws and ordinances.

Mutual understanding among employees concerned established through communication is important to promoting environmental compliance. The HCM Group regularly provides onsite guidance at Group companies and organizes environmental exchanges. In FY2017, environmental managers from Hitachi Construction Machinery (China) visited the Tsuchiura Works where they discussed environmental management.

Discussion among environmental managers

Discussion among environmental managers


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