Hitachi Construction Machinery

Global

Compliance

 

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.

Codes of Conduct

 

Hitachi Group Codes of Ethics and Compliance

This Hitachi Group Code of Ethics and Compliance (“the Code”) consists of rules and principles intended to help Hitachi’s workforce (meaning its officers, employees – whether full-time, part-time or temporary – and contractors) conduct business with integrity and act in accordance with Hitachi’s Values. The Code supplements the Hitachi Group Codes of Conduct. All members of Hitachi’s workforce are required to comply with the Code and act with sincerity and fairness, in order to earn and maintain the trust and confidence of our coworkers, business partners, shareholders and communities.

The Code consists of the following six objectives:

  1. Personal Conduct
  2. Lawful and Ethical Behavior
  3. Company Assets
  4. Data Protection
  5. Conflicts of Interest
  6. Reporting Violation

Hitachi Group Codes of Ethics and Compliance

 

Compliance Promotion Systems

The Hitachi Construction Machinery Group’s compliance promotion structure is headed by the Compliance and Risk Management Group, which is in charge of compliance activities for the entire HCM Group. Meetings of the Compliance and Risk Management Group 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 Department of HCM’s Legal Division.

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 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 education program for Hitachi Construction Machinery and Hitachi Construction Machinery domestic and overseas group managers and above. The content is about the “ Hitachi Group Codes of Ethics and Compliance”, which mentions “anti-bribery” and “compliance with competition laws”. In fiscal 2020, the number of participants for the entire group was 26,080 for the tasks.

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 2020, 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.

Furthermore, in FY 2017, we newly issued the Hitachi Construction Machinery Group Compliance Guidebook and distributed it to executives, employees, and temporary employees, including domestic group companies. We systematically explain the basic knowledge of compliance, its significance, and organizational functions, with the aim of disseminating the unwavering “Compliance Policy” to the entire Hitachi Construction Machinery Group.

Besides the conventional English and Chinese editions, in fiscal 2019 we completed the issuance of Spanish, Portuguese, French and Malay editions and distributed them to domestic and overseas group companies and We have published Indonesian and Thai versions in FY2020.

 

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.

Our Compliance Hotline is the point of contact for the Compliance Promotion Department of HCM’s Legal Division. It is part of a system for handling reports related to compliance. After receiving a report through the Hotline, the center will consider report details and form an investigation team to investigate and examine methods to deal with the issue.

Flow for Compliance Hotline

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. The Global Alertline is available 24 hours a day 365 days a year by many language.

Flow for Global Alertline

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.

The Hitachi Construction Machinery Group respects human rights. We take advance action to ascertain the likelihood of rights violations and work to maintain a system for preventing such violations beforehand. In accordance with regulations we rigorously manage all information that could identify users or report contents.

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.

In FY2020, HCM received a combined total of 33 tips on its Compliance Hotline and Global Alertline. Breaking down the type of reports we received, 30% of them were related to harassment and another 30% were associated with operational laws and regulations, and rule violations. Furthermore, reports are conveyed to the Audit Committee regularly to make the reporting system more effective.

 

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. The Hitachi Global Compliance Framework Policy was approved by the Executive Committee and the HCM Group Code of Conduct, which contains guidelines on bribery prevention, was approved by the Board of Directors. Any legal violations are reported to the Board of Directors.

 

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. In FY 2019, we introduced a new supplier examination tool by an external company, and strengthened the examination for preventing bribery and anti-social transactions before transactions at Hitachi Construction Machinery and domestic group companies. At the same time, we reviewed the procedure so that the examination record remains.

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 Sustainable Procurement Guidelines 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 FY2020, there were no incidents involving bribery-related violations or sanctions. As a result, there were no instances of related disciplinary action, fines, or penalties levied against employees.

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

Hitachi Group Sustainable Procurement Guidelines

 

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.

In FY2019, there were no incidents involving competition laws-related violations or sanctions.

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

 

Engaging with Environmental Compliance

The HCM Group gives consideration to the impact of business activities on the environment, and endeavors to ensure environmental management by establishing voluntary management standards that are more stringent than laws, regulations and local ordinances. We periodically and continually measure metrics such as water quality and noise at each business location, and conduct management to reduce environmental risk. Furthermore, we are engaged in prevention of recurrences and strengthening of management by sharing information on environmental laws and regulations along with examples of violations within the group.
In addition, we identify environmental risks in the supply chain, and are strengthening management of environmental compliance on overall CSR efforts to eliminate and minimize such risks.

Although at the entire Hitachi Construction Machinery group companies, there were violations of regulations, contracts and notifications in the FY2020, all incidents were dealt with quickly and all applications were completed. Also we had external complaints concerning noise, and the atmosphere, but we have completed countermeasures for them.
Going forward, we will continue to strengthen our environmental management, and we will strive to prevent any re-occurrences of these types of issues.
No environmental penalties and fines have resulted.

2018 2019 2020
Breaches of law or regulation 4 3 6
Administrative Guidance 0 0 0
Complaints 3 3 2

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