Hitachi Construction Machinery


Key Initiative Theme 5 Governance

In order to improve corporate value in a sustainable manner, it is important to build a structure that allows for rapid decision-making based on prompt and correct understanding of changes taking place in the management environment. The HCM Group is working to reinforce its governance system in order to share values with stakeholders and to achieve management that is sound and transparent.

Key Initiatives

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

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) outside director on Hitachi Construction Machinery’s Board of Directors is from Hitachi Ltd., the parent company could exert influence on decisions on our management policy through the views expressed by this director at Board meetings. However, with the exception of the one (1) aforementioned director, Hitachi Construction Machinery’s Board of Directors consists of ten (10) members, three (3) of whom are outside directors designated as independent outside directors, and six (6) of whom are other directors with no concurrent relationships with Hitachi Ltd. or companies in the Hitachi Group. This ensures that we are able to make independent management decisions.

arw_r Corporate Governance Guidelines

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.
In fiscal 2016, we implemented an e-learning program on “business and human rights” that was given to a total of 4,890 employees at 21 HCM Group companies, including some outside of Japan.

Results of human rights training in fiscal 2016

Compliance with tax laws of each region

In January 2016, the Hitachi Group established regulations on tax related matters covering the entire Group. In accordance with these regulations, the HCM Group carries out tax risk management to address the globalization of its operations. Within our securities report, we disclosure corporate tax and other tax obligations for the HCM Group and also disclose information on factors behind variance with the effective statutory tax rate to ensure full tax transparency.
The HCM Group we continue to implement these measures to fulfill its tax obligations in all of the regions where we conduct business and comply with the spirit and tax laws applied in those countries and regions.

Hitachi Construction Machinery Group Rules for Global Tax Management

  1. Group companies strictly comply with all relevant laws and implement tax management when pursuing their business activities, bearing in mind such international tax-compliance standards as the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations of the Organisation for Economic Co-operation and Development (OECD*4), as well as that body’s Action Plan on Base Erosion and Profit Shifting (BEPS*5).
  2. Group companies effectively, continually, and proactively manage tax-related issues as socially responsible organizations, while maintaining Hitachi brand value and seeking to maximize shareholder value.
  3. Group companies build sincere and positive relations of trust with the tax authorities in the regions where the companies do business, and strive to maintain and develop those relations.

*4 OECD: Organization for Economic Co-operation and Development
*5 BEPS: Base Erosion and Profit Shifting

Strengthening risk management

The HCM Group is working to strengthen its risk management system.
The risks facing the business operations of the HCM Group are growing more diverse in nature. We work daily to identify risks and measures against the risks, and to reinforce our business continuity plan (BCP) and business continuity management (BCM), so that when faced with a risk, we are able to minimize the impacts on our business activities and restore operations as soon as practical.

The HCM Group’s definition of risk

Risk, as defined by the HCM Group, is the possibility of incidents, accidents, or other problems that may cause loss or damage directly or indirectly to the Hitachi Construction Machinery Group’s business, employees or stakeholders.

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