Case study: How Hitachi promotes sustainability across its supply chain
Hitachi’s mission is to contribute to society through the development of superior, original technology and products, a mission that has been carefully passed on to generations of employees and stakeholders throughout its 110-year history. In order to share its CSR procurement policies, Hitachi not only distributes the Hitachi Group CSR Procurement Guidelines to approximately 30,000 suppliers around the world and ensures their awareness, but also conducts CSR Monitoring (self-checks) and CSR audits to minimise procurement risks.
This case study is based on the 2020 Sustainability Report by Hitachi, prepared in accordance with the GRI Standards, that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
Hitachi strongly emphasises sustainability in its value chain, and its suppliers are selected strictly in accordance with the Hitachi Group Global Procurement Code. Tweet This! In order to promote sustainability across its supply chain Hitachi took action to:
- promote responsible procurement
- ask key suppliers to conduct CSR Monitoring
- implement CSR audits
Subscribe for free and read the rest of this case study
Please subscribe to the SustainCase Newsletter to keep up to date with the latest sustainability news and gain access to over 2000 case studies. These case studies demonstrate how companies are dealing responsibly with their most important impacts, building trust with their stakeholders (Identify > Measure > Manage > Change).
With this case study you will see:
- Which are the most important impacts (material issues) Hitachi has identified;
- How Hitachi proceeded with stakeholder engagement, and
- What actions were taken by Hitachi to promote sustainability across its supply chain
Already Subscribed? Type your email below and click submit
What are the material issues the company has identified?
In its 2020 Sustainability Report Hitachi identified a range of material issues, such as responding to climate change, diversity and inclusion, human rights, circular economy/resource efficiency. Among these, promoting sustainability across its supply chain stands out as a key material issue for Hitachi.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Hitachi engages with:
To identify and prioritise material topics Hitachi engaged with its stakeholders through the following channels:
| Stakeholder Group | Method of engagement |
| Customers
| · Customer satisfaction activities · Marketing · Website · Advertising activities · “Global Brand Campaign” (14 locations) · Holding Hitachi Social Innovation Forum (4 locations) |
| Shareholders and Investors | · Financial results briefings (quarterly) · General shareholders’ meetings (annual) · Hitachi IR Day event (annual), one-on-one meetings with institutional investors and analysts (about 790 meetings/year) · IR tools: Integrated Report, business reports, etc. · Information disclosure on website for stakeholders and investors |
| Suppliers
| · Procurement activities · CSR procurement seminars (59 companies/year) · CSR monitoring (201 companies/year) · CSR audits (19 companies/year) |
| Employees
| · Intranet, in-house newsletters · Training · Town hall meetings between senior management and employees (president and CEO: 18 meetings/year, executive vice presidents: 28 meetings/year) · Employee survey (annual) · “Make a Difference!” idea contest (annual) |
| National and Local Governments, Industrial Associations | · Academic research for policy recommendations to international organisations and national governments, lobbying activities · Policy council participation (Japan) · Participation in business and industry associations (Japan) |
| Local Communities | · Contribution to local communities through business · Participation in volunteer activities |
| Academic Associations and Research Institutions | · Open innovation (joint research) |
| NGOs and NPOs | · Stakeholder dialogues (3 times/year) · Dialogue through collaboration |
| Global Environment | · Stakeholder dialogues (annual) |
What actions were taken by Hitachi to promote sustainability across its supply chain?
In its 2020 Sustainability Report Hitachi reports that it took the following actions for promoting sustainability across its supply chain:
- Promoting responsible procurement
- In April 2019, Hitachi instituted the Hitachi Group Global Procurement Code. Based on the framework of its CSR and green procurement guidelines, this is Hitachi’s highest code for procurement activities. It calls on Group companies and suppliers to give due consideration to human rights, labour practices, safety, ethics, quality, and security in the supply chain. All suppliers are selected strictly in accordance with the code’s provisions. Procurement activities are also carried out according to the Hitachi Group CSR Procurement Guidelines, which were revised based on the results of human rights due diligence performed by procurement divisions and version 5.1 of the Responsible Business Alliance (RBA, formerly called EICC) Code of Conduct. To ensure that the guidelines are strictly followed, Hitachi makes them available in Japanese, English, Chinese, and Thai and distributes them to approximately 30,000 suppliers around the globe. Hitachi also requests acknowledgment of suppliers’ understanding in writing and plans to revise these guidelines regularly in the future, to make sure that they always reflect global demands regarding corporate supply chain management.
- Asking key suppliers to conduct CSR Monitoring
- Hitachi asks key suppliers to conduct CSR Monitoring (self-checks) using checklists based on the Hitachi Group CSR Procurement Guidelines. After collecting and analysing the results, Hitachi provides feedback for related business operations to suppliers, and then works with those involved in the operations to resolve issues related to the suppliers. Hitachi is also reinforcing its onboarding procedures for new suppliers in Japan, including providing them with the guidelines and asking them to complete a checklist.
- Implementing CSR audits
- Hitachi, Ltd. has been auditing the manufacturing bases of its and Group companies’ suppliers in China and the rest of Asia. For these audits, Hitachi engaged external evaluators such as the experienced CSR auditing company Intertek Certification. Hitachi’s audits are based on the international SA8000 certification standard developed by Social Accountability International (SAI), an American CSR evaluation institution. These audits investigate Hitachi’s workplace practices, and an RBA-recognised auditor checks suppliers’ CSR initiatives from the perspectives of labour and human rights, health and safety, the environment, and ethics. Suppliers needing improvement are requested to submit improvement action plans, and Hitachi, Ltd., together with Group companies, works with and advises the suppliers until they complete the planned improvements.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 308-1 New suppliers that were screened using environmental criteria
2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken
3) Disclosure 414-1 New suppliers that were screened using social criteria
4) Disclosure 414-2 Negative social impacts in the supply chain and actions taken
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
Disclosure 414-2 Negative social impacts in the supply chain and actions taken corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
78% of the world’s 250 largest companies report in accordance with the GRI Standards
SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.
Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.
7 GRI sustainability disclosures get you started
Any size business can start taking sustainability action
GRI, IEMA, CPD Certified Sustainability courses (2-5 days): Live Online or Classroom (venue: London School of Economics)
- Exclusive FBRH template to begin reporting from day one
- Identify your most important impacts on the Environment, Economy and People
- Formulate in group exercises your plan for action. Begin taking solid, focused, all-round sustainability action ASAP.
- Benchmarking methodology to set you on a path of continuous improvement
See upcoming training dates.
References:
This case study is based on published information by Hitachi, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:
https://www.hitachi.com/sustainability/download/pdf/en_sustainability2020.pdf
Note to Hitachi: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.