csr report digest - hitachi metals · consisting of hitachi metals, ltd. (the company) and its...

CSR Repor tD i g e s t

Hitachi Metals Corporate Philosophy

Code of Conduct for Hitachi Metals Group Companies

Enhancing Awareness of Social Responsibility and Corporate EthicsAdhering to the principle of "Obey the law and walk the path of virtue," we will develop our corporate activities in an ethical manner, with full grasp of our social responsibility and the potential effects of our corporate activities. As we conduct business on a global scale, we will comply with all relevant international conventions and the laws of each country, while striving to understand each country’s local religions, cultures and customs in order to contribute to regional economic development.

Pursuing Mutual Growth with our Business PartnersWith the aim of generating the highest possible customer satisfaction, we will engage in the development of unique basic technolo-gies and new technologies that empower us to continue providing high quality, reliable products. In achieving this aim, we will con-duct fair and appropriate business transactions with our suppliers.Based on an awareness of social responsibility shared jointly with our business partners, we will carry out corporate activities to real-ize mutual growth.

Promoting Truthful Communication with SocietyWe will disclose appropriate corporate information in a timely, fair and transparent manner to our shareholders and other stake-holders. At the same time, we will endeavor to establish a relationship of mutual trust with society through well-coordinated two-way communication.

Thinking about Our Next Generation - An Environmentally Friendly SolutionRecognizing the importance of protecting the environment, we will ensure effective and environmentally conscious utilization of limited natural resources in order to bestow a clean environment to the next generation.Through creation of new products and businesses that bring new value to society, we will base our sustainable growth on the provision of high quality products in harmony with the environment.

Fostering the Welfare of Employees and SocietyWe will create a safe and ideal workplace, embracing the great diversity of our individual employees and their capabilities, while promoting their personal development through work. As a good corporate citizen, we will continue efforts to contribute to society through sincere, nondiscriminatory corporate activities based on mutual trust with all members of society.

Formulated July 26, 2006

We aspire to contributing to society by creating "the best possible company"

based on harmony among people with affection for our company - a goal to be

pursued by drawing on its more than 100-year history, by ensuring that our

mainstay products lead their industries in both quality and quantity, and by

applying ourselves to the advancement of technology.

demonstrating environmental burden exceeding its standards for disclosure. This accounts for about 98% of the environmental burden created by the Hitachi Metals Group overall.Company names and related particulars are current as of March 31, 2011.

●PeriodThis report essentially covers fiscal 2010(April 1, 2010 through March 31, 2011).

●Underlying Guidelines"Environmental Reporting Guidelines" 2007 Edition, the Ministry of the Environment, Japan"Environmental Performance Indicators for Businesses" 2002 Edition, the Ministry of the Environment, Japan"Environmental Reporting Guidelines 2001-With Focus on Stakeholders," the Ministry of Economy, Trade and Industry, Japan"Sustainability Reporting Guidelines 2006," Global Reporting Initiative

●Purpose of PublicationThis report is published with the aim of acquainting readers with the Hitachi Metals Group’s view towards corporate social responsibility (CSR). Disclosing examples of its daily business activities in a reader-friendly manner, the Group hopes that this report will serve as a valuable tool for communicating with its stakeholders.This report introduces the scope of Hitachi Metals Group management activities to its broad spectrum of stakeholders.The contents include corporate governance and compliance structures, as well as its product development and monozukuri activities that significantly contribute to the creation of a recycling-oriented society. Through disclosure of such information, the Group aims to broaden and deepen conversations with the global community, while diversifying the scope of corporate activities.Detailed information can be found on the website.

●ScopeThis report covers 71 companies of the Hitachi Metals Group (the Group) consisting of Hitachi Metals, Ltd. (the Company) and its Group companies (62 consolidated subsidiaries and 9 equity-method affiliates). The scope of environmental data includes data for the 49 companies within the Group

Note on the Corporate Social Responsibility Report

Editorial Policy

For detailed information, please seehttp://www.hitachi-metals.co.jp/e/corp/corp14.html

or the PDF file.

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Top Message

The Effect of the Great East Japan Earthquake

Good Practice Guidance for Hitachi Metals Group Compaines

Hitachi Metals Group’s CSR

Social Report

Environmental Report

Third Party’s Opinion

Economic Report

Corporate Data

I would like to express my heartfelt sympathy for the many

people affected by the Great East Japan Earthquake that

struck on March 11, as well as my condolences for the lives

lost. I hope and pray that everyone who has suffered will be

able to return to a normal lifestyle as quickly as possible.

This disaster is truly a national crisis for Japan in terms of

both scale and impact, and considerable time and effort

will be required for rehabilitation and reconstruction. The

desire for a quick recovery is not limited to Japan, but is

shared by people worldwide. Several business locations of

the Hitachi Metals Group were damaged during the earth-

quake, but we are resolute in taking proactive action to

assist with the recovery and reconstruction of the stricken

areas. As part of this effort, the Hitachi Metals Group and

Thank you for taking the time to read the Hitachi Metals Group’s 2011 CSR Report.The Hitachi Metals Group formulated the Good Practice Guidance for Hitachi Metals Group Companies in September 2010 to serve as a common global standard for corporate conduct.This report presents the Hitachi Metals Group’s CSR initiatives in response to an age of greater globalization.

A Shared Sense of Value for the Corporate Group, and the Pursuit of Corporate Social Responsibility (CSR) with a Global Perspective

President, Chief Executive Officer and Director

To Everyone Affected by the Great East Japan Earthquake

its employees together donated approximately ¥50 million

through Central Community Chest of Japan and other organi-

zations to aid victims and disaster areas.

As many stakeholders have expressed their concern, and we

have received numerous inquiries, I would like to report on the

status of damage to the Hitachi Metals Group as a result of the

earthquake and tsunami, along with our post-disaster response.

None of our employees were injured, though two employee

family members lost their lives, and one person remains miss-

ing. In terms of facilities and equipment, several business offices

in the affected areas incurred damage to equipment, and there

was damage to the ceilings and walls of buildings. However,

everything was restored by end of March, and the impact on

production was minimal.

Nevertheless, the rolling blackouts in Tokyo Electric’s service area

that began soon after the disaster and lasted into April, imple-

mented as a result of the accident at the nuclear power station,

hindered production at certain facilities located in the region.

The blackouts later ceased as the supply? demand balance was

regained following restoration of thermal power plants and rising

temperatures, though the Hitachi Metals Group has since contin-

ued to cooperate in reducing power usage in its operations.

As I am sure everyone is aware, severe power shortages are

expected this summer as a result of the disaster, and the

Japanese government has issued an order limiting electricity

use in the service areas of Tokyo Electric and Tohoku Electric

from July through September. This order obliges large-lot

users with contracted capacity of 500kw or more to reduce

their power usage by 15% from peak periods during the

summer of 2010. The Hitachi Metals Group has already com-

pleted its response measures, including decentralization of

production, advanced production, provisions for on-site power

generation, and revision to work shift schedules. We expect to

be able to meet the 15% reductions without any inconve-

nience to our customers.

In September 2010, the Hitachi Metals Group formulated the

Good Practice Guidance for Hitachi Metals Group Companies to

complement its Code of Conduct for Hitachi Metals Group Com-

panies. The Hitachi Metals Group’s corporate philosophy is to

contribute to society by creating "the best possible company,"

and we conduct our business with the aim of realizing this phi-

losophy. The current code of conduct provides a basis for the

conduct of the corporate group. We believe that if all of our em-

ployees understand the essence of this code, we will be able to

achieve "the best possible company."

Corporate human resources have become increasingly diverse

with the globalization of business, and there are many employ-

ees of the Hitachi Metals Group around the world with varied

backgrounds. There are local rules that reflect the history and

social climate of each region, as well as differences in culture

and customs. However, we expect all employees, as long as

they members of the Hitachi Metals Group, to have mutual

respect for diversity, and to conduct themselves in accordance

with the shared values of the corporate group.

Looking at the Congo conflict minerals issue, for example, it was

not just the direct action of the companies that was called into

question, but their corporate responsibilities with regard to envi-

ronmental destruction and human rights violations across a

broad spectrum that affected the entire global supply chain. The

Good Practice Guidance was formulated in recognition that in

order to ensure consistency in decision-making and managerial

action regarding issues such as these, there was a need for

common global standards that are specific and easy-to-

understand.

N.B. This interview was based on information available as of the end of June 2011.

New Good Practice Guidance to Serve as a Global Standard

Damage to the Hitachi Metals Group and Our Post-Disaster Response

As expressed in our corporate philosophy, CSR and our corpo-

rate philosophy are essential to the Hitachi Metals Group, and

itis through the practice of CSR that we will realize our corporate

philosophy. Through the new Good Practice Guidance we aspire

to a common understanding of the spirit of our Code of Conduct,

and to be a company that contributes to society.

The significance of existence for the manufacturing industry

stems from its creation of new value to meet the needs of soci-

ety, and the returns it provides to society in the form of products

and services. A company becomes valued by meeting those

needs, which leads to its growth as a business. The Hitachi

Metals Group, as a manufacturer of materials, has the responsi-

bility to utilize distinctive technologies to provide unrivaled prod-

ucts that meet the needs of the market. As a company conduct-

ing business we must fulfill that responsibility, ensure sustain-

able growth, and enhance our corporate value.

The Hitachi Metals Group emphasizes two key phrases for meet-

ing the constantly changing needs of today’s society and market,

and for maintaining sustainable growth. These are "adapting to

globalization" and "new product development."

Among the unrivaled products of the Hitachi Metals Group,

there are some that are already considered mature products

in markets in Japan and the West. These same products

have considerable potent ial as growth products in the

expanding markets of emerging countries. Considering the

global marketplace, the latent demand for our products is

signif icant, and by uncovering these needs we hope to

achieve continued growth and to contribute to society. This is

one example of adapting to globalization.

For new product development, in the environmental field the

H i tach i Meta ls Group has cont inued to deve lop such

environment-responsive products as the HERCUNITE® series

of products for automobile exhaust systems and the soft mag-

netic material FINEMET®. Drawing on the energy conservation

technologies we have acquired through this research, we antici-

pate that Hitachi Metals Group products will make a significant

contribution in the field of solar power and other forms of renew-

able energy. We also consider the reform of manufacturing pro-

cesses to reduce their environmental load to be a priority matter,

and are taking steps to cut CO2 emissions and various types of

industrial waste.

Rising prices for scarce resources such as rare metals and rare

earths, which are essential to Hitachi Metals Group products, is

a serious issue with an impact on production costs. We are

pursing efforts to limit our use of mineral resources as much as

possible, and anticipate that this technology development will

become one of the strengths of the corporate group.

Safety is the foundation for corporate activity, and must be a

priority before anything else. Bearing in mind the major accident

at our Group company in September 2009, we are making a

concerted effort to prevent further workplace accidents, both in

Japan and on a global basis.

As managers we are continually working to improve equipment,

but in the end, enhancing safety awareness among each indi-

vidual worker is essential to prevent workplace accidents. Work-

ers need to anticipate the inherent risks of a major accident, and

remain alert as they carry out their duties. When upgrading

equipment we must also be keenly sensitive to safety in evaluat-

ing different systems.

In this sense, I feel it is necessary to ensure full training in work-

place safety, and to undertake steady and consistent efforts in

such areas as daily maintenance and repair of machinery.

Adapting to Globalization and New Product Development are the Keys to Growth

Prevention of Workplace Accidents Results from Raising Individual Safety Awareness

N.B. This interview was based on information available as of the end of June 2011.

The business locations of the Hitachi Metals Group have regular

programs of community activities that aim to ensure coexistence

with local society. Examples include promoting sports by spon-

soring sports competitions and supporting culture and technol-

ogy through the restoration of a tatara, an ancient Japanese

furnace for manufacturing iron. Our efforts even extend beyond

the immediate area around our business locations, such as how

employees from the Tottori Works pull weeds and clean the area

around the Tottori Sand Dunes. Through these ongoing activities

we are working to deepen our communication with communities.

Many Hitachi Metals Group employees participated in volunteer

efforts in response to the Great East Japan Earthquake. With the

growing momentum for social action on an individual basis, we

are considering measures to establish a foundation to support

the volunteer spirit of employees, such as a program of volun-

teer activities with pay.

A string of major events has occurred in the year since I assumed

the position of president in April 2010. In May last year there was

the rapid rise in the yen precipitated by the Greek financial crisis,

and in the fall the global shortage of rare earths and rising prices.

At the start of the year there was the spread of pro-democracy

demonstrations in the Middle East and North Africa, and then in

March the Great East Japan Earthquake. The world had become

smaller with the spread of the Internet and other developments,

and events in far-off countries propagate instantly and a have

major impact on Japan, while events in Japan also affect the

world. The many uncertainties in the world today is a reminder

that unexpected events test a company’s ability to respond

quickly, and its flexibility. For this reason all Group employees

must be conscious of risk, and enhance their awareness.

Japan is now facing unprecedented difficulties. The Hitachi

Metals Group, however, will pull together and overcome these

difficulties as a corporate group, and strive for further growth.

I would like to thank all stakeholders for their continued support

and cooperation.

Steady Efforts to Deepen Communication with Communities

Overcoming Difficulties as a Group

The following is a report of the effect on the Hitachi Metals Group as a result of the Great East Japan Earthquake that struck on March 11, 2011.

The Effect of the Great East Japan Earthquake

■Hitachi Metals Group’ s CSRSince its inception, the corporate philosophy of the Hitachi Metals Group has been to "contribute to society by creating 'the best pos-sible company.'" This philosophy has been properly reflected in the Hitachi Metals Group policies toward CSR.

■Implementation of the Hitachi Metals Group Corporate Ethics Month

We established the month of October 2010 as the Hitachi Metals Group Corporate Ethics Month and carried out a variety of mea-sures and activities.

■Conveyance of a Compliance MessageJanuary 2011: To improve the compliance awareness of the group on a global scale, a compliance message from the president was prepared in Japanese, English, Thai, Korean, Chinese and Indone-sian language and distributed to employees of the Hitachi Metals Group all over the world.

■Corporate GovernanceThe underlying basis for corporate governance at Hitachi Metals is to ensure management transparency and efficiency, meeting the needs of our stakeholders, and increasing corporate value. We

Damage to Structures and EquipmentA certain degree of damage was sustained to structures and equipment at the following manufacturing facilities: Hitachi Metals’ Moka Works (Moka-shi); Kumagaya Works (Automotive Components Company) (Kumagaya-shi); and Kumagaya Works (NEOMAX Company) (Kumagaya-shi); as well as Auto-tech, Ltd. (Iwaki-shi); Moka Technos, Ltd. (Moka-shi); and Alcast, Ltd. (Kumagaya-shi and Moka-shi).There was also damage to buildings where the following sales offices are located: Hitachi Metals’ Kitanihon Sales Office (Sendai-shi) and Hitachi Sales Office (Hitachi-shi); Hitachi Tool Engineering, Ltd.’ s Kitakanto Sales Office (Hitachi-shi) and Tohoku Sales Office (Sendai-shi); Hitachi Metals Techno, Ltd.’ s Tohoku Sales Office (Sendai-shi); Hitachi Metals Admet, Ltd.’ s Kitanihon Sales Office (Sendai-shi) and Ibaraki Sales Office (Hitachi-shi); and Hitachi Metals Tool Steel, Ltd.’s Tohoku Sales Office (Date-shi) and Iwate Sales Office (Kitakami-shi).There was no significant impact on production or other functions, and business operations were restored by April.

Impact from Rolling BlackoutsTokyo Electric implemented rolling blackouts in its service area immediately following the disaster through April. Certain manufacturing operations were hindered at locations within the service area, but we managed to minimize the impact on production with in-house power generation and measures.

Response to Government Order to Limit Electricity UseThe Japanese government issued an order for the reduction of power usage in the service areas of Tokyo Electric and Tohoku Electric from July through September, by 15% from peak periods during the summer of 2010. The Hitachi Metals Group has completed imple-mentation of measures at affected business locations, including decentralization of production, advanced production, and provision for on-site power generation, and is able to meet the power reduction requirements without compromising production.

Assistance for Disaster AreasHitachi Metals Group companies and their employees sent donations totaling approximately ¥50 million through Central Community Chest of Japan and other organizations.Group company Hitachi Metals Techno, Ltd. also loaned property it owns in Higashi-Matsushima in Miyagi Prefecture to the local city govern-ment free of charge for use as a site to build temporary housing for disaster victims. The company concluded a two-year land use contract with the city on April 25. Construction of approximately 500 units is planned, and residents have already begun moving into the facility.

believe this to be one of the most important management issues within our firm.Accordingly, it is imperative that we create an organizational struc-ture in which management oversight and business operations func-tion effectively and in balance. We also believe that timely, high-quality information disclosure contributes to the improvement of corporate governance. In pursuit of this philosophy, we have chosen to go beyond levels of simple financial disclosure, regularly publ ishing the detai ls of indiv idual business segments and medium-term management plans.

■Internal Control SystemHitachi Metals, in accordance with the requirements of the U.S. Sarbanes-Oxley Act, is expanding its internal control system based on a standard framework (COSO Framework). Through this system the internal controls for financial reporting are documented, and their effectiveness is evaluated. In fiscal 2008, this system was brought in line with the internal control reporting structure intro-duced based on the requirements of Japan’s Financial Instruments and Exchange Law. Hitachi Metals will continue to work to enhance the effectiveness of its internal controls.

Position of the Good Practice Guidance for Hitachi Metals Group Companies

Specific practices for the Good Practice Guidance for Hitachi Metals Group Companies to be uniformly applied throughout the Hitachi Metals Group have been compiled in the following categories. We will implement these practices under the leadership of top man-agement, and conduct business activities in accordance with our principle of "Obey the law and walk the path of virtue," and rooted in our corporate philosophy and in compliance with laws and regulations.

Chapter 1: Sincere and Fair Business Activities1.1 Provision of Safe High-Quality Products and Services 1.2 Sales Activities 1.3 Procurement Activities 1.4 Respect of the Hitachi Brand1.5 Observance of Engineering Ethics

Chapter 2: Environmental Protection2.1 Promoting Environmental Management 2.2 Environmentally Conscious Business Activities and Environmental Management2.3 Communication with Stakeholders

Chapter 3: Relations with Society3.1 Disclosure of Company Information 3.2 Contribution to Local Communities 3.3 Relations with Politics and Government Administration3.4 Prevention of Anti-social Transactions 3.5 Regarding Gifts, Business Entertainment, Etc.3.6 Observance of Laws and Regulations and Respect of the Culture and Customs of Each Nation and Region

Chapter 4: Respect of Human Rights4.1 Promoting Respect of Human Rights 4.2 Eliminating Discrimination 4.3 Respect of Human Rights in Information Management4.4 Respect of Basic Rights at Work

Chapter 5: Management Foundations5.1 Management and Use of Information 5.2 Use of Inside Information and Related Considerations 5.3 Management and Preservation of Company Assets 5.4 Arranging a Work Environment That Draws Out Employee Strengths 5.5 Observance of Laws and Regulations Governing Imports and Exports

Chapter 6: Complete Observance of Codes of Conduct6.1 Complete Observance of Rules 6.2 Implementation of Self-Audits 6.3 Internal Reporting System

Chapter 7: Responsibilities of Top ManagementSupplementary Provision Hitachi Group Implementation of Codes of Conduct

Overview of the Good Practice Guidance for Hitachi Metals Group Companies

Management Principles

Good Practice Guidance for Hitachi Metals Group Companies

CSR Guidebook regulations and Company rules

Social norms for behavior that society expects of a company(formulated July 2006)

Common guidelines for Hitachi Metals Group companies worldwide (formulated September 2010)

Easy-to-understand explanations of the Code of Conduct and Good Practice Guidance

For more detailed information, please refer to the following URL: http ://www.hitachi -metals.co. jp/corp /corp14.html

The Good Practice Guidance for Hitachi Metals Group Companies was formulated in September 2010 as a complement to the Code of Conduct for Hitachi Metals Group Companies. We plan to implement this Good Practice Guidance throughout the Hitachi Metals Group, both in Japan and overseas, by September 2011.The Good Practice Guidance provides specific, easy-to-understand common standards of conduct for managers and employees, and will reaffirm awareness of compliance across the Hitachi Metals Group worldwide.

Code of Conduct for Hitachi Metals Group

Companies

Pursuing Mutual Growth with Our Business Partners

■Seeking to Create Products That Offer the Greatest Customer Satisfaction

Driven by twin philosophies of priority on quality and placing the customer first, the Hitachi Metals Group continues to improve our quality assurance technologies, offering products that delight both our customers and the ultimate product consumers.This is yet another way in which we contribute to the betterment of society.

■With Our SuppliersCSR in procurement is achieved through a combination of our own CSR

practices, and business relationships with other companies that follow CSR principles. When the trading relationship begins Hitachi Metals declares its basic policies, and confirms the CSR compliance status of its partners.

●Comply with laws, regulations and social requirements●Fair, clean trading●Open, global procurement●Maintain partnerships●Keep confidentiality●Conserve the environment

Hitachi Metals Group’s Procurement Policy

Hitachi Metals Group’s CSR activities consist of corporate activities that create "the best possible company," and this corporate philosophy neatly portrays the attitudes Hitachi Metals Group holds toward CSR.

Hitachi Metals formulated its Code of Conduct for Hitachi Metals Group Companies in July 2006. In September 2010, the Good Practice Guidance for Hitachi Metals Group Companies was established as a group-internal rule to complement the code of conduct. We have also been promoting CSR initiatives with "Obey the law and walk the path of virtue" at the foundation of our corporate activities. However, violations of the Antimonopoly Act were uncovered in 2006 and 2007, and we implemented measures including extraordinary audits and internal training to respond. Measures of the same kind were taken also in fiscal 2010 to prevent violations from occurring again. We will continue to do so without sidestepping the cases of the past.In addition, same as in fiscal 2009, we established the month of October as the Hitachi Metals Group Corporate Ethics Month also in 2010, and conveyed a message from the CEO to all employees of the Hitachi Metals Group.

■Compliance Efforts

[Internal On-site Training]1. On-site training seminars conducted by the sales director and the Compliance Department

regarding compliance with the Antimonopoly Act and the Code of Conduct

Target offices for training: Hitachi Metals head office, branch offices, sales offices, manufacturing sites and research centers; Group companies’ head offices and sales sitesTarget persons: all holders of e-mail addressesTerm: August to December 2010Number of sessions: 73 seminars for 136 business offices (including joint and multiple sessions)

* Training on global compliance for the prevention of acts of bribery and on information security was conducted at the same time.

2. On-site compliance training seminars at overseas locations conducted by the ComplianceDepartment

Target offices for training: Overseas business offices (19 business offices)Target persons: manager jobs and aboveTerm: January to March 2011Number of sessions: 18 seminars at 17 locations (including joint sessions)

* Training on global compliance for the prevention of acts of bribery and on information security was conducted at the same time.

3. Compliance training for specific levels and positions

2010 Apr. Training for new hiresJun. Training for newly appointed assistant managersJul. Training for newly appointed junior executiveNov. Sales accounting trainingDec. Training for newly managers

2011 Jan. Group company manager training

Hitachi Metals Group Corporate Ethics Month/Message from CEO

Compliance training at the head office

Compliance training at overseas office

Promoting Truthful Communication with Society

■Personal Information Protection/ Information Security Initiatives

The Hitachi Metals Group established a "Basic Policy of Information Security" in April 2004, followed by a "Personal Information Protec-tion Policy" in January 2005, establishing a system of personal information protection/information security based on these policies. The Company continues to update information security measures on an ongoing basis.

■With Society, Including Our Shareholders and Investors Timely Publication of Information

To earn trust as a highly transparent "open firm," the Hitachi Meta ls Group is work ing to enhance in-house sys tems to appropriately implement prompt, accurate and fair disclosure of company information and publish information in a timely manner.


[Compliance Extraordinary Audits]Hitachi Metals conducted extraordinary audits of all its business offices, and the consolidated subsidiaries that operate commercial businesses or independent businesses. Auditors reviewed documents related to these businesses (such as invoices, and papers on industrial organizations to which they belong) and took statements from all sales managers to ensure there were no violations of the Antimonopoly Act.

The safety records of our group in FY2010 show two accidents involving lost work time at Hitachi Metals, and six accidents in the Hitachi Metals Group in Japan. This indicates that we were unable to significantly improve from the two accidents at Hitachi Metals and eight accidents in the Hitachi Metals Group in Japan in the previous year.For this reason, we rolled out a safety and health program in the entire group in fiscal 2011 under the slogan "Strive to create a workplace where 'Safety always comes first'." On the basis of our occupational safety and health management system and risk assessment system, special emphasis in this year was placed on safety and health education focusing on the observation of rules in order to eliminate occupational injuries at the root, and on the reduction of risks at the workplace by reviewing and updating rules such as work standards.

■Effort to Eliminate Occupational Injuries

FY2006 FY2007 FY2008 FY2009

Frequency of Occupational Injuries

FY2010 (Year)

All Industries Manufacturing Steel Hitachi Metals Group

*Frequency of Occupational Injuries = No. of occupational deaths or injuries ÷ total labor hours × 1,000,000

Fostering the Welfare of Employees and Society

■Human Resources TrainingThe basic stance of the Hitachi Metals Group toward its personnel is summed up in the phrase "strength through harmony," the fundamental spirit we have followed since our founding. Based on this philosophy, we continue to conduct activities aimed at creating a corporate culture that facilitates individuality and independence.

■Labor and Management RelationsHitachi Metals sincerely addresses common management-labor issues, respecting the basic rights and responsibilities of each, built on a "foundation of mutual trust."

■Respecting Human RightsHitachi Metals has established channels for reporting harassment issues, along with other corporate systems to guarantee basic rights. We have also focused on systematically raising awareness of human rights by providing a range of educational opportunities, including e-learning courses on human rights and level-appropriate training sessions.

■Employment of the Physically Disabled and Support for Nurturing the Next Generation

Hitachi Metals has been an early adopter in building a system providing

The corporate philosophy of the Hitachi Metals Group is to "contribute to society by creating 'the best possible company,'" and the Code of Conduct for Hitachi Metals Group Companies includes the aspiration to continue to contribute to society as a good corporate citizen. Pursuant to these policies, the Company is engaged in a variety of social contribution activities.

■In Cooperation with Society and the Local Community

1. Harmonious coexistence with local communities2. Support through charitable foundations3. Preservation of historical sites and traditional culture4. Support for regions that have suffered from disasters5. Social Welfare

HMW, Ltd.Wakamatsu Ward Junior High School Baseball Tournament

Yasugi WorksJunior High School Friendly Sports Tournament


Weeding Volunteer Work at the Tottori Sand Dunes

The Tottori Sand Dunes are a symbol landmark of the Tottori Prefecture. After the end of world war II, forests were planted to acquire agricultural land and protect the villages. For this reason, the movement of the sand dunes was largely restricted, and the sand dunes started to become immobile. Plants began to cover the surface, and the spread of grassland in the dunes is now a serious problem. Moreover, exotic plants that originally do not grow in the sand dunes started to thrive, and 42% of the sand dune surface turned into grassland.Since 2004, the Tottori Sand Dunes Landscape Preservation Council including members from Tottori Prefecture and Tottori City started volunteer weeding activities, which were firmly established as citizen activities in 2007. The Hitachi Metals Group has been participating in the activities as part of our regional contributions from the first year.Since the topography of the sand dunes would change if weeding was performed by heavy machines, the weeding must be done by hand as much as possible. In addition, the roots of the plants growing on the sand dunes reach deep below the sur-face; therefore the weeding is largely different from what one would generally imagine. It is very hard work where holes have to be dug with shovels to pull out the weeds. Furthermore, the sunlight on days with fine weather is very strong and heats up the sand dunes. Therefore it is important to pay attention to health management, including hydration and breaks. The work is exhausting, but thanks to volunteer weeding, the grassland on the sand dunes has shrunk to 19% of the total area in recent years.The communities at the San-in coast, which includes the Tottori Sand Dunes, are currently striving to have the coast certi-fied as a global geopark. We are convinced that our activities contribute to a part of these efforts, and we will continue to take part in these activities in the future.

As part of their regional contribution activities, Tottori Works of Hitachi Metals, Ltd. and Hitachi Ferrite Electronics, Ltd. have been engaged in volunteer weeding of the Tottori Sand Dunes in the San-in Kaigan National Park since fiscal 2004. Every year from July through September, employees and their families volunteer to weed the sand dunes three times a week, on Fridays, Saturdays and Sundays.

employment opportunities for physically disabled individuals. In 1998, Hitachi Metals established the Hallow, Ltd. Special subsidiary, followed by Kuwana Create Co., Ltd. In 2006, which received special government certification as a company offering employment opportunities for the physically disabled. These two companies have been recognized by their local communities for their policies, including the active hiring of mentally disabled individuals.Beginning fiscal 2008, the Company has established a child allowance benefit for employees as a policy for supporting the development of the next generation, strengthening our support of employees who are raising children. In 1992, Hitachi Metals was also one of the first firms to adopt a system to

re-employ individuals who have retired from the Company due to childbirth or home care, demonstrating once again our forward-thinking policies.Our child care and nursing care leave programs are now well-established. During fiscal 2007, we expanded the special cumulative leave program in combination with family nursing care leave to allow up to 20 days off during the leave year for the care of a spouse or child, or the parents of the employee or the employee’ s spouse. Even with the fiscal 2010 revisions to the basic law on child care and nursing care leave, our systems exceed the legal requirements. We will continue to focus on developing the operational aspects of these systems.

Quantitative Items

Reduction rate in CO2 emissions per unit (vs. FY2006, in Japan)

Eco-Management & Eco-Mind Green PointsCompletion rate of Eco-Mind training through e-learning

Registration rate of Eco-Products

Green supplier ratio (non-consolidated)

Resource recycling rate (in Japan)Net sales energy rate (in Japan)＊2

Reduction rate in VOC atmospheric emissions (vs. FY2000)

GREEN 21＊1

Reduction rate in CO2 emissions (vs. FY1990, in Japan) ＊2

Reduction rate in water usage (vs. FY2005, per unit sales)

Eco-Products

Eco-Factories

Environmental Education

Expand Eco-Products

Reducing the Product Transportation Burden

Waste Reduction

Global Warming Prevention

Reducing VOC＊3

Conserving Water Resources

Category Environmental Objectives Indicators

Qualitative Items

Eco-Management & Eco-Mind

Held Hitachi Metals Group Environmental Committee meetingParticipation in planning for the information exchange meeting in China for Hitachi

Completion of the company-integrated EMSEnvironmental cost: 9.58 billion yen

Environmental effects (economic effects): 3.82 billion yen

Environmental Management Promotion

Eco-Products

Eco-Factories

Promote environmental meetings

Implementation of Environmental Accounting

Implementation of Environmental Training

Our Response to Regulations on Hazardous Chemicals in Products

Compliance

Promote "zero emission"＊6 at works

Environmental Information Disclosure

Category Environmental Objectives Fiscal 2010 Results

Environmental Management System (EMS)

Perfect legal compliance; no accidents

Cooperation with Stakeholders

Social Contribution

Environmental effects (physical effects): Energy reduction 6,618kℓ (crude oil equivalent)

: Waste reduction 2,213 tonsEnvironmental Internal Auditor training: 50 people attendedEnvironmental Internal Auditor follow-up training: 12 people attended

"Zero emission" achieved at 23 sites (added six more sites compared to the prior year)

Hitachi Metals Group CSR Report 2010 issuedExhibited at Eco-Products 2010

Held environmental discussions with various associations

Welcoming plant tours

Participation in local environmental preservation activitiesImplemented local area cleanup activities

Implement the Environmental CSR-Compliant Monozukuri structureImplement the SVHC＊4 survey concerning REACH regulation＊5

PR activities for Eco-Products

＊1 :Hitachi Group’s mechanism for evaluating the achievement level for environmental activity targets ＊2 :The site subject to the target is a Type1 energy management designated plant in Japan ＊3:VOC:Volatile Organic Compounds ＊4 :SVHC:Substances of Very High Concern ＊5 :Registration, Evaluation, Authorisasion and Restriction of Chemicals. An EU regulation that mandates registration and evaluation of chemicals manufactured and imported in the EU, and where the substance is a cause for concern mandates authorisasion and for particularly high-risk substances, applies restrictions. ＊6 :Final disposal volume is less than 1% of total generated volume

Exhibited at the Eco-Products International Fair 2011 (India)

Implemented PRTR Risk Communications

●Medium-to-Long-Term Environmental Strategy

Towards Global Environmental ManagementThe Hitachi Metals Group continues to reduce our environmental burden, with a focus on the environmental risk management. We promote a shared understanding of the Hitachi Metals Group Basic Environmental Protection Policies and action plans among Group companies, understanding the different characteristics of the areas around the world in which we operate.

Global Warming PreventionTaking society’s need to reduce CO2 emissions as an oppor-tunity, we aim to innovate our manufacturing processes, and strengthen our manufacturing technologies while simultane-ously aiming to reduce CO2 emissions.

Expansion of Eco-ProductsWe dedicate management resources to creating and expanding Eco-Product lines that reflect environmental concerns for reducing energy and saving resources, preventing global warming, and reducing the use of hazardous substances.

Recycling of ResourcesWe are pushing forward multiple initiatives such as the reduction of the amount of waste by innovating the manufacturing processes, development of uses for recycled waste, and recovery of used products.

●Environmental Objectives, Targets, and ResultsWe largely achieved our goals during fiscal 2010. We did not achieve our goal for recycling wastes, mainly due to a drop in demand for road and construction materials. This drop in demand resulted in a lower recycling ratio of slag on our part. We continue to look for other applications that allow us to recycling slag.

Achievement levelFiscal 2010 Targets

Environmental officers

Achievement level

Environment Education ClassIn response to a request from a local high school, the Moka Works presented an on-site lecture about corporate responsibility for global environmental preservation and our activit ies for environmental and workplace safety. Through the class, the participating student recognized a renewed view of environmental issues and came away with a strong commitment to be vigilant about environmental issues, and to do what they can to contribute to a more eco-friendly society.

Exhibition in "Eco-Products 2010"Hitachi Metals exhibited at Eco-Products 2010 held at the Tokyo Big Sight from December 9 through December 11. We exhibited rare-earth magnets, amorphous ribbons, and other Eco-Products. We also designed a demonstration area to allow people of all ages to learn about rare-earth magnets, experimenting with strong magnetism and electricity generation.

1280 pt.90%

70%

90%

10%

99%

1.126

10%

30%

10%

200

400

600

800

1000

1200

1400

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

0CO

2 em

issi

ons

(kt-

CO2/y

ear)

Net s

ales

ene

rgy

rate

(Kℓ

cru

de o

il equ

ivale

nt/m

illion

yen

)

1990 2005 2006 2007 2008 2009 2010 2011 2012

Global Warming PreventionExpand Eco-Products

Fiscal 2010 Results1122 pt.99.8%

76.0%

87.0%

34.9%

81.6%

1.139

25%

35.0%

25.1%

2015

CO2 emissions targets900 thousand tons or less (2008–2012)


600,000

400,000

200,000

0

100

90

80

70

60

50

40

30

20

10

0

Net s

ales

(￥m

illion

)

Ratio

of E

co-P

rodu

cts

sale

s to

net

sal

es (%

)

2008 2009 2010 2011 2012 2015

500,000

300,000

100,000

Ratio of Eco-Product Sales

: Target Achieved : Target 90% or More Achieved : Target Not Achieved

Net sales of Eco-Products (results)Net sales of Eco-Products (projected)Ratio of Eco-Products sales to net sales (results)Ratio of Eco-Products sales to net sales (projected)

CO2 emissions (results)CO2 emissions (projected)Net sales energy rate (results)

Solar Cells

Smart

Fuel Cells

Smart Meter

Target Materials for CIGS Solar Cells

Interconnector Materialsfor Solar Cells

Interconnector Materials forSolid Oxide Fuel Cell (SOFC)

Amorphous Ribbon for Distribution TransformersMetglas®

Amorphous Cut Core

Fuel-Efficient Vehicles

Factories/Plant

Advanced Die Steel for Die Casting DAC-MAGIC®

High-Efficiency End Mills"Epoch Mirus"

Mask Flow Controllers for Semiconductors, Liquid Crystal, and Solar Cell Production

Type R

Type N

●Hitachi Metals Group Eco-Friendly, Energy-Related Products

The Hitachi Metals Group supplys materials and products that contribute to the environment and energy conservation in the fields of our lives, such as energy generation / transformation and power usage in factories, homes and automobile.

Substation

Grids

Thermal Power Generation, and Others

Wind and Solar Power Plants

Distribution Grid

Electrical Grid

Magnetic components for power line communication

Clad Metals for Secondary Battery Electrodes

Rare-Earth MagnetFor HEV/EV NEOMAX®

Precision-Cast Blades for Gas Turbines

Rare-Earth Magnets for Wind Power GenerationNEOMAX®

Amorphous RibbonMetglas®

Amorphous Cut Cores

Turbine Blades

Hybrid/Electric Vehicles

Heat-Resistant Cast Steel for Vehicle Exhaust Systems HERCUNITE-S®

Fashionable Aluminum Road Wheels SCUBA®


Fuel-Efficient Vehicles

who actually participated in social and local community activities. The

report should cover CSR management in overseas activities, which is

included in the Good Practice Guidance.

The Environmental Report describes the progress in developing new

environmental products and the increase in R&D expenditures, clearly

expressing Hitachi Metals’ characteristics as a leading technology

company. The Company’s environmental performance is improving,

with domestic CO2 emissions on a declining trend compared with

fiscal 1990 and growth in the number of business establishments

that have already achieved zero emissions. As the Hitachi Metals

Group advances overseas, however, the goal will be improved

environmental performance worldwide.

In addition to global warming, the maintenance of biodiversity is also

becoming a major issue. The Hitachi Metals Group Basic Environmental

Protection Policies clearly specify consideration of the conservation of

biodiversity, but overall Hitachi Metals does not write much about this

issue. In addition to preventing global warming through energy

conservation, metal recycling contributes to the conservation of

biodiversity from reduced resource consumption. Furthermore, along

with reductions in CO2 emissions, reduced emissions of hazardous

substances and waste products also support the maintenance of

biodiversity. The mining and procurement of raw materials is closely

related to the conservation of biodiversity for metal manufacturers.

Environmental issues are interrelated, so in planning responses it is

important to integrate the individual issues and make the overall

supply chain greener across the globe.

These are the points I would like to call to attention. I expect that

Hitachi Metals will continue to play a leading role as an innovative

corporate group for the 21st century.

The way in which Japanese enterprises respond to environmental

issues is undergoing a great change. Corporate management is

shifting from the passive response of simply observing government

regulations to grasping environmental problems as a business

opportunity and positively incorporating this into management

strategies. This CSR report clearly demonstrates the Hitachi Metals

Group’s leading strategic stance.

The Hitachi Metals Group established the Good Practice Guidance for

Hitachi Metals Group Companies in September 2010. This code of

conduct was prepared with reference to the United Nations (U.N.)

Global Compact. It presents specific environmental, social, and

economic standards, with a clear flow from corporate philosophy and

action guidelines to the on-site conduct of business. In particular, the

Good Practice Guidance includes the observance of "engineering

ethics." The balance between engineering and profit-making is a

basic management principle, and the observance of engineering

ethics will likely become more and more important for businesses as

ongoing concerns.

Moreover, the "observance of the laws and regulations and respect of

the cultures and customs of each country and region" and the

"respect of human rights" specified in the Good Practice Guidance

have become important issues for the CSR management of

globalizing companies.

While this CSR report is a well-balanced presentation of the Hitachi

Metals Group’s CSR activities, I would like to make a few comments

as follows.

The Social Report discusses compliance in detail, but I would like to

see more complete coverage of women’s activities and regarding

work–life balance. I would also like to hear the voices of employees

Following the March 11, 2011 earthquake disaster, the conditions in

Japan will demand major shifts in management strategies. To work for

continuous growth in this turbulent world, I think it is important for every

employee of the Hitachi Metals Group to earnestly address the

"observance of engineering ethics," "observance of laws and respect of

the cultures and customs of each country and region," "respect of human

rights," and "consideration of the conservation of biodiversity" specified

and advocated in the Good Practice Guidance from a global perspective

as noted by Professor Horiuchi. The Hitachi Metals Group will continue

responding to the expectations of society by advancing CSR activities.

Thank you very much for your valuable advice. The Hitachi Metals

Group has conducted business activities in response to changes in

the global external environment following the Code of Conduct for

Hitachi Metals Group Companies, based on our corporate philosophy

of contributing to society by creating "the best possible company."

Now that the Good Practice Guidance for Hitachi Metals Group

Companies provides global standards that can be applied to specific

daily activities, I expect the Hitachi Metals Group will develop future

CSR activities that are visible in the daily actions of individual

employees.

ProfessorFaculty of Humanity and Environment, Hosei University Kozo Horiuchi

Hitachi Metals’ Answer Vice President, Representative Executive Officer and DirectorHitachi Metals, Ltd. Nobuhiko Shima

Corporate Data

Hitachi Metals Group Major Manufacturing Facilities (As of the end of March 2011)

Corporate Profile

High-Grade Metal Products and Materials High-Grade Functional Components and Equipment

Electronics and IT Devices

Consolidated Financial Highlights (Years ended March 31, 2011)


Establishment:

Capital:

Chief Executive Officer:

Number of Employees:

Yasugi Works2107-2 Yasugi-cho, Yasugi-shi, Shimane 692-8601, Japan

HMW, Ltd.1-9-1 Kitahama, Wakamatsu-ku,Kitakyushu-shi, Fukuoka 808-8558, Japan

Tottori Works70-2 Nan-ei-cho, Tottori-shi, Tottori689-1121, Japan

Kumagaya Works(NEOMAX Company)

5200 Mikajiri, Kumagaya-shi, Saitama360-8577, Japan

Yamazaki Manufacturing Center2-15-17 Egawa, Shimamoto-cho,Mishima-gun, Osaka 618-0013, Japan

Kyushu Works35 Nagahama-cho, Kanda-machi,Miyako-gun, Fukuoka 800-0393, Japan

Moka Works13 Kinugaoka, Moka-shi, Tochigi 321-4367,Japan

Kumagaya Works(Automotive Components Company)

5200 Mikajiri, Kumagaya-shi, Saitama360-8577, Japan

Kuwana Works2 Daifuku, Kuwana-shi, Mie 511-8511,Japan

Products and Businesses:

Group Companies:

Headquarters:

April 10, 1956

￥26.3 billion (As of the end of March 2011)

Hiroyuki FujiiPresident, Chief Executive Officer and Director

Hitachi Metals Group: 18,008(As of the end of March 2011)

Manufacture, sales, and service of high-grade metal products and materials; electronics and IT devices; high-grade functional components and equipment; and services and other activities

62 subsidiaries, 9 affiliates

SEAVANS North Building, 2-1 Shibaura 1-chome, Minato-ku, Tokyo 105-8614, JapanTel: +81-3-5765-4000 Fax: +81-3-5765-8311

Net sales Operating income Net income Capital expenditures Research and development

Return on equity

200920082007 2010 2011

Millions of yen

200920082007 2010 2011 200920082007 2010 2011 200920082007 2010 2011 200920082007 2010 2011 200920082007 2010 2011

%Millions of yen Millions of yen Millions of yen Millions of yen

Wakayama Works1850 Minato, Wakayama-shi, Wakayama 640-8404, Japan

Metglas Yasugi Works1240-2 Hashima-cho, Yasugi-shi,Shimane 692-8601, Japan

Printed with 100% vegetable oi l ink conta in ing no VOC (vo lat i le organic compounds).

Printed on paper made with wood from forest thinning. “Morino Chonai-Kai” (Forest Neighbor-hood Association) — Supporting sound forest management.

A-（2）-060002

Please recycle when you are finished withthis report.

Printed in Japan

Catalog No. HM-45(E)-2011Printed in Sep. 2011(H) HT3

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