Hitachi Construction Machinery

Global

Dialogue with Suppliers

Ideas and policies of supply chain CSR management

There is growing interest in the international community in corporate social responsibilities. Amid this rising trend, the Hitachi Construction Machinery Group is promoting CSR activities throughout the entire supply chain, including suppliers. In doing so, we believe it is important to share the same CSR awareness with our business partners to prevent supply chain risks.

In January, 2017, Hitachi Group revised its “Hitachi Group CSR Procurement Guideline the 3rd Edition”
In this revision, the “Hitachi Group Code of Conduct” (http://www.hitachi.com/about/corporate/conduct), which was established in August, 2010, based on “Code of Conduct Version 5.1” by the Electronic Industry Citizenship Coalition (EICC), has been incorporated into the Guideline. Distributed to our suppliers as a reference for CSR code of conduct and standards, this Guideline is expected to be fully implemented by all our suppliers.

HITACHI GROUP CSR PROCUREMENT GUIDELINE

Supply chain CSR management structure

Business operations are becoming increasingly more global, there is a growing possibility that procurement risks along the supply chain could very well trigger management issues. At Hitachi Construction Machinery, we take steps to catch and alleviate these risks as best as possible before they become significant.

In 1998, the Hitachi Group was the first in the industry to compile its fundamental policy regarding procurement of environmentally friendly parts and products and its requirements to suppliers in the publication “Green Procurement Guidelines” and to implement green procurement with its suppliers. The Green Procurement Guidelines stipulate for compliance items relating to supplier environmental preservation activities (establishment of environmental management systems, recommended certification standards, etc.) and items relating to reduction of the environmental of goods supplied to the Hitachi Group (resources saving, energy saving, recycling, proper management of chemical substances contained in products, dissemination of suitable information, etc.).

Green Procurement Guidelines
Annex

We note that since FY2015, the Hitachi Group has been directly conveying information to suppliers, face-to-face. In January 2016, 10 Hitachi Construction Machinery suppliers attended a CSR and green procurement presentation in Shanghai which was conducted for Hitachi Group partners in China.

Implementation of supplier CSR survey

Starting FY2010, the Hitachi Construction Machinery Group began conducting a Supplier CSR Survey, as the first step to implementing CSR procurement. The survey covers seven areas: human rights, labor, safety and health, the environment, fair business practices, and ethics, quality, safety, information security, and social contribution.

Starting in FY2014, we poured energies into the group implementation of the supply chain CSR survey. As a result, the survey was given to the suppliers of Hitachi Construction Machinery (China), one of our overseas group companies. In FY2015, the survey was conducted at 121 companies, of which six underwent a CSR audit. In FY2016, the survey was conducted at 143 companies. We address continuous improvement.

Going forward, HCMC plans to continue to implement CSR surveys, including CSR audits. We aim to work with our suppliers so they can push forward with improvement activities. In addition, we plan to promote initiatives to establish a supply chain business continuity plan.

Dialogue on the non-use of conflict minerals

In accordance with the Hitachi Group Conflict Minerals Procurement Policy, the Hitachi Construction Machinery Group conducts dialogue with suppliers on the non-use of conflict minerals.

Hitachi Group Conflict Minerals Procurement Policy

As a member of the Hitachi group, the Hitachi Construction Machinery Group is committed to responsible procurement practices to mitigate the risk of sourcing conflict minerals (tantalum, tin, tungsten, and gold) that can directly or indirectly finance armed groups abetting human rights violations in the Democratic Republic of the Congo (DRC) and adjoining countries. The Hitachi Construction Machinery Group Procurement Division strives to establish a sustainable supply chain that eliminates procurement of materials and/or parts using conflict minerals. Our efforts are to continue procurement of minerals from responsible sources in the region and are not intended to implement a ban on procurement of minerals from the DRC and adjoining countries.

Request to Our Suppliers
To do so, it is important to enhance supply chain transparency and to strengthen responsible procurement of materials and parts. Therefore, we expect our suppliers to agree to our Conflict Minerals Procurement Policy and to cooperate with us in our efforts to ensure procurement of conflict-free minerals. In accordance with the Dodd- Frank Act※1 and the OECD Guidelines for Multinational Enterprises,※2 companies are required to conduct a reasonable country of origin inquiry and to exercise due diligence covering the entire supply chain to determine whether final products include conflict minerals which benefit armed groups.

The Hitachi Group will examine its supply chain through a collaborative industrywide approach by utilizing the tool developed by EICC-GeSI.※3 We expect our suppliers to adhere to our Conflict Minerals Procurement Policy and to cooperate with our supply chain investigation.

As improved processes are introduced to eliminate conflict minerals from the supply chain, we will ask our suppliers to comply with such programs once they are developed, proven, and established (i.e., expansion of the Conflict-Free Smelter※4 list, which is under implementation by EICC-GeSI). The Hitachi Group will continue to engage in industry efforts to develop methods to build a stable, conflict-mineral-free supply chain.

※1 Dodd-Frank Act: The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into federal law by President Barack Obama on July 21, 2010.
※2 OECD Guidelines for Multinational Enterprises: Government recommendations for multinational corporations operating in or from the Organisation for Economic Co-operation and Development (OECD) countries to adhere to their guidelines.
※3 EICC-GeSI: Nonprofit organization of members in the information and communications technology (ICT) industry.
※4 Conflict-Free Smelter: A smelter or refinery that does not handle conflict minerals.

Hitachi Group Conflict Minerals Procurement Policy

Environmental initiatives: Green procurement and purchasing

Hitachi Construction Machinery Group works with its main suppliers to encourage implementation of an Environmental Management System (EMS), ISO 14001, EcoStage, and other practices to promote CSR activities throughout the entire supply chain along with suppliers.

In FY2016, we attained a Green Supplier Rate of 100%, the same as in FY2014. This rate reflects the percentage of suppliers that have acquired EMS certification. In addition, to comply with environmental regulations, we are still requesting suppliers fill in the JAMA* sheet and return them to us. To improve the survey collection rate, we held two briefings and invited suppliers that did not turn in JAMA sheets to attend. We instructed them on how to fill out the JAMA sheet.

Going forward, we plan to continue to ask suppliers to participate in the JAMA sheet survey and turn in their completed JAMA sheets.

*JAMA sheet: Industry standard data sheet to collect information on chemical substances included in products and parts as stipulated by the Japan Automobile Manufacturers Association.

Partnerships with suppliers―the Chikuhou-kai and Tokiwa-kai

Hitachi Construction Machinery aims to build and maintain partnerships with its suppliers. To this end, suppliers with which it has ongoing business transactions are invited to become members of either the Chikuhou-kai (61 corporate members) or the Tokiwa-kai (44 corporate members). (current as of April 2017).

These two organizations host a wide range of activities to promote understanding of Hitachi Construction Machinery  policies  and efforts concerned with safety, quality and environment.
This includes  joint lectures, presentations on examples of streamlining, skill competitions, and mutual  safety inspections.  In addition, monthly supplier presentations are held, in which Chikuhou-kai and Tokiwa-kai suppliers also participate, and each supplier is asked to promote CSR activities.


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