Hitachi Construction Machinery

Global

The HCM Group has established the HCM Standard of Corporate Conduct and the HCM Group Codes of Conduct and is carrying out compliance in accordance with the “Basics and Ethics.”

Compliance promotion systems

HCM has established the Compliance & Risk Management Division as an organization that will direct the HCM Group’s overall compliance activities. The Division meets regularly to examine, propose, and assess the outcomes of various compliance measures. The Division also discusses the effectiveness of measures to prevent the recurrence of misconducts and handles the prevention of corporate misconducts. Each HCM group company posts Compliance Promotion Officer and Manager who work closely with the Compliance Promotion Center in HCM Legal Department while implementing compliance activities.

In 2010, HCM established the HCM Group Codes of Conduct to serve as standard guidelines throughout the entire Group. Backed by the leadership of its top management, HCM is expanding business activities which are rooted in corporate ethics and legal compliance that is in accordance with the “Basics and Ethics”. These compliance activities are regularly audited during business audits conducted by the Internal Auditing Office of HCM.

Moving forward HCM plans to continue to raise awareness and instill full-fledged compliance practices throughout the Group.


Compliance Promotion System

HCM Group Codes of Conduct

Compliance Education and Training

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

In FY2016, HCM and its domestic group companies held 137 compliance training sessions for assistant managers and staff, for a total of 5,018 participants, with the goal of achieving “zero employee misconduct and compliance incidents.” This training program is just one in a series of compliance training programs, which includes a management training program started in October 2014 for HCM executives and a middle management of HCM domestic group training program, mainly for management positions that are section manager level or higher.

At HCM’s overseas group companies, HCM incorporated a wide range of workshop training programs that better reflect the challenges that are confronted during actual operations. HCM offered compliance training that emphasizes the nurturing of compliance concepts that can be immediately applied in operations. In FY2016, HCM implemented training and 196 employees at 13 of its overseas group companies underwent training.

HCM implemented compliance training at its domestic group companies for a period of roughly 30 months from October 2014 and at its overseas group companies for a period of 24 months from 2015.

In FY2017, HCM conducted a compliance awareness survey at HCM and its domestic group companies. The purpose of the survey was to grasp actual conditions throughout its domestic operations, including the level of compliance awareness among employees, actions, and degree of penetration. HCM plans to reflect the results of this survey in various measures and future training as we move forward. HCM aims to improve the level of compliance throughout the entire Group by regularly conducting compliance awareness surveys in combination with compliance training.

As a standard initiative for the HCM Group, we also implemented e-learning sessions for directors and management-level personnel covering the HCM Group Codes of Conduct, prevention of bribery, and legal compliance with competition laws, which are themes that are a part of the Hitachi Global Compliance Program (HGCP). In FY2016, 2,141 employees at the HCM Group overall took the e-learning training.

In addition, in tandem with Hitachi Group-wide initiatives, we declared the month of October as “Corporate Ethics Month” with the goal of reinforcing and re-evaluating compliance practices. In early October 2016, President Toshiaki Higashihara of Hitachi, Ltd. and President Yuichi Tsujimoto (currently Advisor) of HCM released their messages to encourage employees to achieve a new level of compliance awareness in their duties.

A global compliance reporting system

The HCM established a “compliance hotline” with the goal of quickly identifying and properly handling compliance issues. HCM also set up a “global alert line” as an external contact point that non-Japanese speaking employees and employees at its overseas group companies can use without worrying about time and language barriers.

HCM promotes the use of these two whistleblowing systems by continually raising awareness of the systems through training programs and briefings, other communications including the posting and distribution of posters, cards, and pamphlets.

Employees can use the whistleblowing systems to anonymously file complaints. The systems provide full protection to the reporters in various ways. Details of the information provided and information that can used to identify the reporter cannot be released outside of the Compliance Promotion Center in the Legal Department without the consent of the reporter. In addition, there are rules in place to prevent discrimination or retaliation against anyone using the systems.

Flow for global alert line

In FY2016, HCM received a combined total of 39 tips on its compliance hotline and global alert line. Breaking down the type of calls we received, 30% of them were related to harassment and 40 were associated with operational laws and regulations, and rule violations. 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. Reflecting these trends, the HCM Group believes there are three compliance issues—bribery, competition law violations, anti-social transactions—that directly impact our business activities and we believe actions for addressing with these issues are important. Under the guidance of Hitachi, Ltd., we have established regulations and guidelines related to these three issues under the guidance and are working to prevent the occurrence of compliance violations.

Hitachi Global Compliance Program

In addition, in February 2017, HCM established the Hitachi Global Compliance Framework Policy. This clarifies the framework for HCMs conventional compliance program, including institutions and organizations connected with compliance, their responsibilities, the system of rules for compliance, various systems and filings.

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 Standard of Corporate Conduct and 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 released in 2015 in order to increase knowledge about corrupt practices, including bribery.

In fiscal 2016, 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 in 2015 by Hitachi, Ltd.

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

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