Hitachi Construction Machinery

Global

Hitachi Construction Machinery Group Codes of Conduct

The HCM Group strongly adheres to Hitachi’s founding spirit symbolized by the values of Wa – Harmony, Trust, Respect, Makoto – Sincerity, Fairness, Honesty, Integrity, and Kaitakusha-Seishin – Pioneering Spirit, Challenge.

In 2010 we established the HCM Group Codes of Conduct which acts as the specific code of conduct applied throughout the HCM Group. Our Codes of Conduct is thoroughly implemented by our leadership team, and we are expanding our business activities rooted in corporate ethics and legal compliance in accordance with the “basics and ethics”. Additionally, in June 2018, we made changes to the HCM Group Codes of Conduct because of the need to constantly incorporate the changing times, including the SDGs, with regards to realizing a sustainable society, human rights, work styles, and various risk management in our business activities.

Understanding and abiding by this, the HCM Group promotes compliance with strong ethical values alongside fair and honest actions.

Hitachi Construction Machinery Group Codes of Conduct

Compliance promotion systems

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 appoint 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.

The HCM Group’s compliance activities are regularly checked by the HCM Internal Auditing Office.

HCM continually makes efforts to make employees known of compliance measures and to thoroughly prevent misconduct so that the entire HCM Group collectively promotes compliance.


Compliance Promotion System

Compliance Education and Training

In order to increase awareness of compliance throughout the Group, the HCM Group conducts various educational and training programs.

We provide e-learning on the HCM Group Codes of Conduct, bribery prevention, and compliance with competition laws to the officers, employees and temporary employees of HCM and HCM Group companies in Japan along with managers at HCM Group companies overseas. In fiscal 2017, a total of 5,411 employees from across the HCM Group took part in compliance training.

In addition, we also hold harassment training to promote a sound and comfortable workplace for employees. In fiscal 2017, a total of 867 employees across the entire HCM Group participated in this training.

In fiscal 2017, we conducted a compliance awareness survey at HCM and HCM Group companies in Japan. In addition, we reported the results of the compliance awareness survey to our executive team and held compliance training based on the results of the survey.

In addition, in tandem with Hitachi Group-wide initiatives, we declared the month of October as “Corporate Ethics Month” with the goal of reinforcing compliance practices. In early October 2017, President Toshiaki Higashihara of Hitachi, Ltd. and President Kotaro Hirano of HCM released their messages to encourage employees to achieve a new level of compliance awareness in their duties.

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.

A global compliance reporting system

The HCM Group has established two types of whistleblower reporting systems comprising the Compliance Hotline and Global Alertline. The purpose of these lines is to ensure thorough compliance with laws, regulations, corporate ethics, manners and morals, heighten self-improvement by quickly detecting and addressing possible frauds including compliance violations, and raise awareness about compliance.

The Global Alertline is a global reporting system set up outside the company that allows people who do not speak Japanese and employees of HCM Group companies overseas to report matters regardless of time of day or language.

These whistleblower reporting systems are continually made known to all employees not only through briefings during compliance training, but also mention in the HCM Group Compliance Guidebook and wall posters, among other ways.

Rules dictate that all information that can identify the whistleblower and the nature of their report be managed strictly with the utmost care. Sufficient consideration is given so that whistleblowers and cooperating parties are not subjected to mistreatment and measures are in place to promptly address any situation when facts are brought to light of whistleblowers and cooperating parties experiencing mistreatment. Furthermore, whistleblowers and cooperating parties are also protected because severe punishment is levied on any persons who mistreat them as a result of their reporting.

Flow for Global Alertline

In FY2017, HCM received a combined total of 44 tips on its compliance hotline and Global Alertline. Breaking down the type of calls we received, 40% of them were related to harassment and 20 were associated with operational laws and regulations, and rule violations. This is believed to be attributed to growing perception of risk among HCM Group employees given the spate of corporate misconducts occurring recently. That said, none of the tips we received posed a major risk to the HCM Group.


Hitachi Global Compliance Program (HGCP)

In recent years, companies are being required to gradually improve their compliance standards. This has made it necessary to further strengthen governance. Amidst this, the HCM Group recognizes the importance taking action in the three areas of “bribery,” “competition law violations,” and “anti-social transactions,” because they pose a particularly high compliance risk in our business activities. Under the guidance of Hitachi, Ltd., we have established rules and guidelines on each of these areas and are working to prevent compliance violations using the Hitachi Global Compliance Program (HGCP), a systemized form of the HCM Group Codes of Conduct.

Hitachi Global Compliance Program

Furthermore, in February 2017 HCM established the Hitachi Global Compliance Framework Policy. This clarifies the framework for HCM’s conventional compliance program, including institutions and organizations connected with compliance, their responsibilities, the system of rules for compliance, along with various systems and procedures.

Prevention of bribery

Initiatives to prevent bribery

Following in the footsteps of Hitachi, Ltd., HCM revised its regulations related to the prevention of bribery in 2017 to address global risk. The revisions clarify issues including the prevention of facilitation payments*, compliance due diligence of business partners, and procedures for compliance screening when hiring of currently active or former public officers.

These regulations are in accordance with the HCM Group Codes of Conduct. The goal is to execute business operations in a lawful and proper manner in relation to laws and regulations in Japan and abroad to prevent bribery, and conduct ourselves in accordance with the law and correct corporate ethics. Moreover, overseas group companies that have newly become members of the HCM Group are also adopting the revised set of regulations so that they employ the same standards as the HCM Group.

Also, the HCM Group will obey laws and regulations in each country and region that prohibit fraudulent business transactions, involvement in such, and money laundering (laundering of money obtained through criminal or other illegal means), pursuant to the HCM Group Codes of Conduct. Furthermore, suppliers are given the HITACHI GROUP CSR PROCUREMENT GUIDELINE and required to prevent improper benefits as part of the business ethics clearly stipulated therein.

The HCM Group is working to prevent all forms of bribery by utilizing Hitachi’s e-learning program (global edition) on the basics of bribery prevention in order to increase knowledge about corrupt practices, including bribery.

In fiscal 2017, there were no incidents involving bribery-related violations or sanctions.

*Facilitation payment: Funds paid to public servants to ensure that operations, including approvals, immigration control, and customs, are carried out smoothly.

HITACHI GROUP CSR PROCUREMENT GUIDELINE

Addressing Anti-competitive Behavior

Initiatives to prevent violations of competition laws

The HCM Group is adopting the basic principles of conduct according to the rule of law and ethical corporate integrity and fair and orderly competition. We are implementing training and education for employees, including conveying messages from top management, establishing rules, conducting regular audits, and preparing manuals, to fully raise compliance awareness as it pertains to violations of the competition laws. In addition, to improve knowhow on this issue, the HCM Group is conducting e-learning (global version) related to the basics on compliance with competition laws, which were released by Hitachi, Ltd.

The HCM Group plans to take action to further expand and strengthen its compliance system going forward.

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