LAYING THE GROUNDWORK FOR GLOBAL CORPORATE CITIZENSHIP

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1 CSR, Corporate Social Responsibility, is a core part of our [Social Innovation] business. We have to recognize our business is based on a mutually trusting relationship among society, community, customers and the Hitachi group companies. - Hiroaki Nakanishi, Chief Executive Officer, and Chairman, Hitachi, Ltd. LAYING THE GROUNDWORK FOR GLOBAL CORPORATE CITIZENSHIP Hitachi has a long history of corporate citizenship and community engagement, since it was established in Hitachi s founder Namihei Odaira abided by a slogan that remains posted at the first Hitachi Factory site: The most important value is to live and work in harmony. This motto has guided Hitachi s development as it has strived to meet the needs of society. It underlies the company s philanthropic efforts and shaped The Hitachi Foundation, created in 1985 to help Hitachi companies understand, develop, and practice corporate social responsibility in a Western context. Since our founding, The Hitachi Foundation and Hitachi, Ltd. have worked together to realize a vision of corporate citizenship that starts with global commitment yet is locally rooted. The creation of The Hitachi Community Action Partnership (HCAP), in 1987 was designed to set deep roots and contribute to the well-being of communities in North America where Hitachi employees live and work. Throughout the years, the Foundation and company have built this program into a respected, recognized model that is highly valued by employees and all who are touched by the program. In 2013, Hitachi, Ltd. announced its strategy to unify the Hitachi group under a shared global approach for community engagement. As a result, beginning in 2014, the program is administered by the office of Corporate Social Responsibility at Hitachi America, Ltd. While The Hitachi Foundation will no longer play a direct management role, we are eager for HCAP s continued success and are proud of the contribution we ve made in helping to shape this effort for more than 25 years. In the following pages we trace some of the history of the program s development and highlight key innovations that distinguish HCAP; we also share updates from 2013 activities. FOSTERING HITACHI S APPROACH TO COMMUNITY ENGAGEMENT The Hitachi Community Action Partnership concept is simple and its approach is distinctive: provide employees with the training and tools needed to direct part of their company s community engagement efforts. Employees form Community Action Committees (CACs) and these become the vehicles to organize the talent, funds, and additional resources to make a difference in the community. The Hitachi Foundation developed the structure, provided training, matched the company s support to community organizations, and connected the effort with the larger field of corporate citizenship. The program helps unify Hitachi s group companies in North America around shared values of service and good corporate citizenship lending credence to Hitachi s motto of One Hitachi. What began with the first CAC in Tarrytown, NY has grown to nearly 50 Hitachi companies and thousands of employees throughout North America serving as community ambassadors for Hitachi. HCAP provides Hitachi Group employees with the tools to address critical needs in their communities while developing essential leadership skills.

2 The Hitachi Community Action Partnership balances external community relations with internal employee professional development. CAC action benefits the community, the company and employees. The community benefits by receiving financial and volunteer support; the company receives brand recognition and knowledge that these authentic actions build trust within the surrounding areas; and employees benefit by developing leadership, management, and business skills. The opportunity to lend one s voice to this company-supported program improves morale, reinforces teamwork, and strengthens relationships. HCAP A COMMITMENT TO EXCELLENCE The program grew steadily during its history, engaging more Hitachi group companies and more employees. By 2013, the partnership contributed nearly $16 million to communities in North America while employees volunteered almost 68,000 hours. Yet, while numbers are valuable, they don t paint the full picture. Everything Hitachi does, it does with quality, and community engagement is not an exception. In 2006 The Hitachi Foundation undertook an ambitious initiative to adapt the principles and practices of continuous improvement to Hitachi s corporate community engagement. The result the Mastering Community Action approach is a signature innovation in the field, a turning point for the program, and a source of great pride. This Mastering Community Action (MCA) tool provides CACs with an opportunity to assess their community action efforts and offers a set of milestones and activities. The framework is designed for self-improvement and is motivated by aspiration. It also serves as a road map and strategic planning tool. The process is similar to a merchant craftsmen guild with predetermined achievement levels. CACs start as Basic CACs -- meeting threshold levels of quality in order to formally participate in the program. These include well-organized and effective team work on the part of the CACs, priorities for community action, budget among other things. In order to reach the next level of quality -- CAC Professional -- a CAC has to demonstrate additional strengths. The final level -- CAC Master -- is designated for CACs that

3 have well-honed approaches and significant achievement both in rallying team spirit within their companies and in achieving results in their communities. Movement along the Mastery continuum occurs through individual CAC planning, target-setting and self-assessment. The Foundation and Hitachi America, Ltd. worked together to provide coaching, training and validation of these selfassessments. The MCA provides clarity about success, shapes the conversation within a CAC, and ensures rigor and focus. In 2006, 60 percent of the CACs self-identified as a Basic CAC while 40 percent felt they had achieved CAC Professional status. By 2013, when the program transitioned from the Foundation to Hitachi America s Corporate Social Responsibility office, 15 percent of CACs self-identified as Basic CACs; nearly half were CAC Professional, and 23 percent self-identified as CAC Master. The following chart shows the growth in the number of Master and Professional CACs between 2006 and Mastering Community Action fosters an engaged employee base; upgrades employee skills; and creates a more cohesive, companywide community engagement approach. While Hitachi certainly benefits from the implementation of the MCA, it is communities that realize the greatest gain. The introduction of the MCA helped spearhead additional resources for CAC application, including the Community Engagement Tool, a Grant Application Form, a Proposal Review Template, and a comprehensive Volunteer Policy. The number of volunteers and the number of hours served have tripled since With the addition of a new volunteer category Targeted Partnership a number of non-profit organizations received more than 1,000 hours of pro-bono work valued at nearly $100,000. HCAP RESPONSE TO CRISES The HCAP network also serves to mobilize Hitachi s response in times of crisis. Beginning in 1999 with tornadoes in Oklahoma, Hitachi companies in North America are demonstrating the value of collective action and the role that companies can play in bringing their assets to bear in times of need. Having immediate access to this network allows for quick response. Examples include: Hitachi and its employees donated more than $4 million in cash in response to a number of tragedies, including the California wildfires; the September 11 disaster; the Haiti earthquake; and the earthquake and the 2011 Japan Tsunami. Since 2000, Hitachi employees have collected more than 500,000 pounds of food and $600,000 in cash donations in support of food insecurity issues through annual drives.

4 HCAP TRANSITIONS LOOKING FORWARD The experiences of employees involved with CACs over the past 27 years help Hitachi better understand societal challenges. While the program design reflects the diversity of Hitachi companies in many locations, it also serves as a unifying force among North American group companies. The CACs learn from one another, work together when disaster hits, and address shared concerns through initiatives such as the North America-wide annual food drives. The program strengthens employee pride, enhances employee skills, and solidifies Hitachi s reputation as a good corporate citizen. The Hitachi Community Action Partnership demonstrates how a global company can remain rooted in local society and when that happens, the firm, its employees, and communities benefit. The Foundation is proud to have played a role in the evolution of the Hitachi Community Action Partnership. We are confident the program will continue to build on its solid history as Hitachi moves forward as a global company with roots that run deep in North America.

5 2013 Program Statistics Since 1987 The Hitachi Community Action Partnership has provided a means for Hitachi group companies in North America and their employees to engage in community activities, ensuring that community service remains a core element of Hitachi s corporate culture. Coordinated through employee Community Action Committees (CACs), the program is intended to improve the quality of life in communities where employees live and work, while unifying group companies around shared values of service and good corporate citizenship. With the decision to unify the Hitachi group under a shared global approach for community engagement and the Foundation s transition from managing the program, 2013 activities centered on introducing CACs to additional community engagement resources to support this transition. For example, participants at the 2013 annual HCAP conference joined the Points of Light Conference on Volunteering and Service the world s largest community service conference. HCAP leaders were among more than 5,000 individuals focused on improving communities where employees live and work. We are inspired by our CAC members and thrilled to see Hitachi employees connect with a large network of service volunteers to network, share strategies from one another HITACHI COMMUNITY ACTION PROGRAM PROFILE (April 1, 2012 March 31, 2013) NUMBER OF GRANTS CAC grants in FY CAC grants since ,789 AMOUNT OF CASH GRANTS CAC/Foundation Funding in FY 2013 $800,758 Foundation Funding $330,774 CAC Funding $469,984 Total Funding since 1987 $15,895, Funds Serving Low-Income Individuals 76% 2013 HITACHI NORTH AMERICA FOOD DRIVE 53 Hitachi locations collected 39,940 pounds of food and $119,047 for donation to local community-based organizations.