Hitachi Construction Machinery

Global

Dialogue with Suppliers

Ideas and policies of supply chain CSR management

There is a growing interest in the international community of 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) 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.

Through a designated selection process, suppliers shall be evaluated by product quality, reliability, delivery, price, suppliers’ business stability, technical development ability, fair employment ,  elimination of all forms of forced and compulsory labor, environmental preservation activities, social contributions, good working environment, and recognition of social responsibilities with partners. (These policies are specified in “Guidelines for Procurement Activities”.)

In November 2017, in order to reinforce compliance efforts,  we revised procedures for internal audits.These rigorous audits are carried out on new suppliers and include provisions in consideration of environmental and social criteria, such as anti-bribery measures.

HITACHI GROUP CSR PROCUREMENT GUIDELINE

Guidelines for Procurement Activities

Supply chain CSR management structure

Because business operations are becoming more global, there is a growing possibility that procurement risks along the supply chain could trigger management issues. At Hitachi Construction Machinery, we take steps to identify and mitigate 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 policies 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 specifies compliance items related to supplier environmental preservation activities (establishment of environmental management systems, recommended certification standards, etc.) and items related to reduction of the environmental impact 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

Implementation of supplier CSR survey

Starting FY2010, as the first step of implementing CSR procurement, Hitachi Construction Machinery Group began conducting a Supplier CSR Survey. 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 FY2014, we put efforts 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 FY 2018, based on our new guidelines, we conducted a CSR survey targeting suppliers who account for approx. 90% of Hitachi Construction Machinery’s independent purchases of products. The response rate was 83.5%. We have requested improvements from suppliers whose evaluation results were not favorable and are carrying out continual improvement activities.

Going forward, HCMC plans to continue to implement CSR surveys, including CSR audits. We aim to work with our suppliers so they can move 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

In all Hitachi Construction Machinery Group companies, as members of the Hitachi group, the policy for procurement departments has always been and will continue to ensure  responsible procurement activities  of minerals that not result or aid in the conflicts in the region based on local laws and that armed groups do not benefit from those activities. Additionally, we will continue to support the practice of due diligence based on the “OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” among companies. With these in mind, Hitachi Group would like to request all our suppliers to utilize the Conflict Minerals Reporting Template developed by EICC/GeSI※1 to continue checking the country of origin and supply chain of minerals, and also to procure from the CFS (Conflict Free Smelter)※2 listed within.

※1 EICC-GeSI: Nonprofit organization of members in the information and communications technology (ICT) industry.
※2 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.

In FY 2018 our partner companies continued to achieve a 100% “Green Supplier Rate”, which shows the certification acquisition rate of suppliers. In FY 2019 we plan to maintain our response rate by conducting our 19th survey and carrying out periodic follow ups.

Going forward, we plan to continue to ask suppliers to participate in the JAMA sheet survey provide us with 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 (60 corporate members) or the Tokiwa-kai (48 corporate members). (current as of April 2019).

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, joint presentations, 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.


Joint presentation in progress


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