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Globally, there are still numerous social and environmental issues. This includes an increase in the severity of environmental problems worldwide and a growing inequality triggered by globalization. Consequently, each year corporations are being required to play a larger role in helping to create a sustainable society. In September 2015, the United Nations adopted the 2030 Agenda for Sustainable Development, in which both advanced and developing countries alike collectively focus on Sustainable Development Goals (SDGs) for the purpose of achieving three dimensions of sustainable development: environmental, social, and economic. In addition, at the 21st session of the Conference to the Parties (COP 21), a gathering for the United Nations Framework Convention of Climate Change, the Paris Agreement was adopted as a global framework to control climate change. Public interest in sustainability is growing and actions are being stepped up in this direction.
Furthermore, in the world of investing, ESG investment is gaining attention. This investment approach emphasizes environmental, social, and governance factors (hence the acronym), in addition to traditional financial data. It is becoming more prev-alently used by pension funds and other institutional investors in various countries. The idea that environmentally- and socially- conscious companies have the potential to enhance their corporate value in the long term is becoming more wide spread. Given this, there is a stronger need for management strategies that contribute to solving environmental and social issues and thereby improve corporate value.
Reflecting these global trends and changes in the business environment, the Hitachi Construction Machinery (HCM) Group views CSR as a method of sustainable development that companies can employ to enhance their corporate value in the medium/long-term, by helping to resolve social issues through their core operations. We have established medium/long-term CSR goals. We also identify the realization of a sustainable society a high-priority management theme. Moving forward, we plan to promote CSR activities by gaining an accurate understanding of and analyzing the environmental and social issues that companies face.
In FY2015, the HCM Group, along with outside experts and other external stakeholders, analyzed key CSR themes as a step toward achieving its goal for further growth. Taking into account recent trends in the global society at the time, we pinpointed 40 social issues, which we believed had a strong correlation with our business operations. We mapped out these issues and assessed them based using two parameters; their significance to HCM Group businesses and the expectations the public has of the HCM Group. From this we were able to define eight CSR initiative themes that factored in the opportunities and risks of each issue.
At the United Nations Sustainable Development Summit 2015, held in September, more than 150 UN member nations agreed on universal sustainable development goals. The SDGs serves as important guidelines for achieving a sustainable society. A total of 17 goals and 169 targets were set and are to be achieved by 2030. Companies are positioned as one of the main implementers of these actions.
Undertaking SDGs is not only a way to improve corporate value but a valid approach to strengthen stakeholder relations. Moreover, each SDG has an extremely close affinity to the HCM Group’s eight key initiative themes. In light of this, we examine how we can employ this as a sustainable growth strategy that leverages our strengths and expertise.
■ The Sustainable Development Goals
[Goal 1] End poverty in all its forms everywhere
[Goal 2] End hunger, achieve food security and improved nutrition and promote sustainable agriculture
[Goal 3] Ensure healthy lives and promote well-being for all at all ages
[Goal 4] Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
[Goal 5] Achieve gender equality and empower all women and girls
[Goal 6] Ensure availability and sustainable management of water and sanitation for all
[Goal 7] Ensure access to affordable, reliable, sustainable and modern energy for all
[Goal 8] Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
[Goal 9] Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
[Goal 10] Reduce inequality within and among countries
[Goal 11] Make cities and human settlements inclusive, safe, resilient and sustainable
[Goal 12] Ensure sustainable consumption and production patterns
[Goal 13] Take urgent action to combat climate change and its impacts
[Goal 14] Conserve and sustainably use the oceans, seas and marine resources for sustainable development
[Goal 15] Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
[Goal 16] Promote peaceful and inclusive societies for sustainable development provide access to justice for all and build effective, accountable and inclusive institutions at all levels
[Goal 17] Strengthens the means of implementation and revitalize the global partnership for sustainable development
Construction machinery manufactured by the HCM Group is used in a variety of situations in society. This includes resource development at mines, development of social infrastructures, and in the agriculture, forestry, and livestock industries. It is now important that we clarify the correlation with sustainability issues throughout the value chain from the production and transport of construction machinery to their disposal, and not simply during use.
We assess the impact of our business operations to the environment and society throughout the entire value chain by grasping an understanding of areas of impact, and analyzing the corresponding sustainable development goals and targets, and clarifying what initiatives are necessary for the group.
Going forward, we plan to disclose information on the progress we are making towards SDGs in our value chain. We also aim to implement activities to achieve these goals while cooperating with various stakeholders.
|CSV theme 1
Resolving global environmental issues
|Global greenhouse gas (GHG) emissions are trending upward. At present, the amounts of GHG emissions are increasing by more than 50% in comparison to levels in 1990. We aim to address global climate change by working with suppliers and customers to develop more sophisticated environmentally-conscious products and activities to reduce environmental impact.|
|CSV theme 2
Enhancing initiatives to increase social infrastructure workforce
|Technological advances are important for findings sustainable solutions to issues from both an economic and environmental standpoint. This includes providing new employment opportunities and improving energy efficiency. The construction machinery knowhow and technologies we have cultivated since the founding of our company are closely tied in with the creation of a foundation (base) for industry and technological innovations.|
|The sharp growth of cities in emerging economies presents a variety of issues, including the lack of engineers to support the social infrastructure. We aim to contribute to sustainable urban development in both emerging and advanced economies, mainly through energy-saving technologies and solutions for optimizing operations in the frontlines.|
|CSV theme 3
Contributing to community development
|The purpose of the SDGs is to attain decent work that is worthwhile and full and productive employment for all men and women by 2030. To this end, we aim to support local hiring and development through our construction machinery business by accurately grasping the needs of the local community.|
|We need to revitalize our global partnerships to achieve the UN’s sustainable development goals and targets. We aim to further strengthen collaborations with external organizations by leveraging the comprehensive capabilities of the Hitachi Group, to undertake initiatives for the realization of a sustainable society.|
In recent years, ESG investment has rapidly increased. This approach assesses a company based on environment, social, and governance factors, hence the acronym. ESG investing does not only take into account traditional financial data. Emphasis is on the incorporation of investment decisions and decision-making processes extrapolated from non-financial data, including corporate governance and a company’s actions dealing with environmental and social issues.
ESG investment is sprouted from the Principles for Responsible Investment (PRI), an initiative advocated by then secretary-general of the United Nations, Mr. Kofi Annan. Institutional investors around the world began to focus on environmental as social aspects as a yardstick for investment decisions. At present, more than 1,700 institutional investors, including pension funds, with assets of over US$60 trillion, and asset management institutions have already signed the PRI initiative and are promoting ESG investment.
A medium/long-term outlook is important when it comes to finding solutions for the environmental and social issues faced by the global community. The HCM Group believes that solidly addressing these issues will contribute to the creation of corporate value in the medium/long-term. We also aim to quickly and adequately provide information to investors on ESG issues.
With the spread of ESG investment, many foreign and domestic institutions have begun to implement Socially Responsible Investment (SRI) assessment. An SRI index is an index for selecting stocks that represent socially responsible investment based on ESG. The Hitachi Construction Machinery Group is included in multiple SRI indices.