Global Environmental Management

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1 Global Environmental Management Aiming at formulating a systematic environmental management system, and in order to maintain and improve the ongoing environmental, we are continuously working on improvement of the management systems in and outside, enhancement of the environmental education and promotion of the environmental accounting. Advance of Activity Level Promotion of CSR Activities: Implementation of Solar Power Generation System Hitachi Koki completed the construction of Hitachi Koki Solar Power Generation System at Sawa Plant (Hitachinaka, Ibaraki ) in October 2013 and started the full-scale operation to contribute to the society as a measure to increase the self-suffi ciency of domestic energy and prevent global warming, aiming to fulfi ll CSR (corporate social responsibility). A total of 2,088 solar panels were installed in the area of 7,700 m 2, and all the generated electricity is sold to an electric power company according to Feed-in Tariff Scheme for Renewable Energy. The annual electricity generation is approximately 465,000 kwh which is comparable to the electricity required by approximately 100 ordinary households, and the estimated CO2 reduction is 146 tonnes per year. The electricity generated from October 2013 to March 2014 is as follows: Average amount generated: 43,903 (kwh/month), average amount sold: 1,756 (k /month). We will promote the use of renewable energy by implementing a measure such as installation of solar panels within a plant for the future. Entire view of solar power generation facility Name Location Hitachi Koki Sawa Plant Solar Power Station 1450 Tarazaki, Hitachinaka, Ibaraki Area Approx. 7,700 (m 2 ) Solar panel Maximum electricity Annual generation amount Environmental effect Polycrystalline silicon panels: 2,088 pcs 500 (kw) 465,000 (kwh/year) (Comparable to electricity required by approx. 100 ordinary households) CO2 reduction 146 (t-co2/year) Equivalent area of forest 410,000 (m 2 ) Oil reduction 105,000 (L/year) [Equivalent number of drums 528] Payout time 11.8 (year) Start of generation October 2013 Electricity generation display panel Record of generation (Oct Mar 2014) Average amount generated 43,903 (kwh/month) Average amount sold 1,756 (k /month) (tax excluded) 12

2 GREEN Activities The Hitachi Group has been using GREEN to evaluate environmental collectively since Fiscal 2011 to improve and enhance the level of. This GREEN divides environmental into eight categories and evaluates achievement of the targets set in Environmental Action Plan and themselves with 53 evaluation items. Full points of each category are 100 GPs (Green Points), and fi ve-level rating is used for each item. The evaluation points achieved in Fiscal 2013 were 540 GPs while the target points were 512 GPs. We will continue to make efforts for further improvement in environmental, aiming the target 640 GPs in Fiscal Fiscal year Target Result Category Principal performance indicators Evaluation points (GPs) 1 Eco-management Environmental management, environmental accounting, compliance with regulations 2 Environmental Restraint of CO2 emissions of 0.1 billion tons, environmental Business business strategies 45 3 Supply Chain Collection and communication of environment information through the supply chain 90 4 Eco-minds Environmental education, cultivation of experts on environment 68 5 Eco-products Assessment of products, services, etc. 60 Prevention of Global Reduction of CO2 emissions, efforts for saving energy, energy 6 61 Warming saving in transportation 7 Resource Recycling Resource circulation, chemical substance management 63 8 Worldwide Stakeholder Collaboration Information disclosure, communication, global citizen and conservation of ecosystem 58 Total of GPs (green points) 540 Improvement of Environmental Management Structure Enhancement of Consolidated Environmental Management for Overseas Plants Following an increase in the overseas production ratio in the Hitachi Koki Group, we have been strengthening the consolidated environmental management for the overseas plants since fi scal As our goals, we set the following three targets: 1) information sharing and collection of environmental burden data, 2) development of unifi ed action plans and operation in management system, and 3) assessment of current situations and verifi cation of environmental. Target Activities FY2009 FY2010 FY2011 FY2012 FY2013 Obtaining established environmental policies, purposes and targets Obtained Obtained Obtained Obtained Obtained Survey of environmental burden (Review of environmental management classification) Investigated Investigated Investigated Investigated Investigated Survey of detailed environmental burden Investigated Investigated Investigated Investigated Investigated (China, Malaysia) Information sharing and collection of environmental burden data Promotion of compliance with EU environmental standards / REACH regulations (Hitachi Koki) Sharing information on action plans Development of unified action plans / Operation in management system Assessment of current situations / Verification of environmental As in Fiscal 2012, the of the unifi ed action plan of overseas plants in Fiscal 2013 resulted in achievement of goals of reduction in both electric power and waste disposal. Especially, Reduction in waste disposal showed a significant reduction by changing from cardboard boxes to dedicated reusable shipping cartons and changing the machining cutting oil which resulted in reduced frequency of replacement and increased output. Conducting preliminary survey Conducting secondly survey Conducting third to sixth survey Conducting seventh survey Executed information sharing Consideration of the aggregate calculation system Establishment of the aggregate calculation system Continuous information sharing Investigated Established Established Established Established Assessment of current situations China (Fujian), China (Guang Dong) Malaysia, Taiwan Unified action plan of overseas plants No. Action item Target 1 Reduction in electric power 2 Reduction in waste disposal 3 4 Enhancement of the system to secure non-existence of Hazardous Substances Promotion of environmental education China (Fujian), China (Guang Dong) China (Guangzhou) Reduction in electric power / production (per unit of production) [in comparison with fi scal 2009] Waste disposal / production including valuable resources [in comparison with fi scal 2009] Conducting continuously Hazardous Substances mass production check Promotion of participation in environmental e-learning Malaysia, Taiwan FY 2013 Target Performance 4 % 4 % Executed 29 % 17 % Executed Participated Participated 13

3 Promotion of ISO Certification Regarding the ISO Environmental Management System, the Hitachi Koki Group manages it as single system within, and separately at the respective sites outside. Since we acquired ISO in 16 in, we have promoted expanding the application and integration of the certifi cation among the domestic group companies, while our overseas plants successfully acquired the certification one after another. In Fiscal 2013, Yokohama KDC (Hitachi Koki Power Tool Center) was newly included in the certification scope. ISO acquiring situation (as of March 31, 2014) Outside Certifi ed sites Hitachi Koki Co., Ltd. : Headquarters, Katsuta plant, Sawa plant, Shirako plant, Distribution division (Yamazaki), Hokkaido / Tohoku / Kanto / Chubu /Hokuriku / Kansai / Chugoku / Shikoku / Kyushu branches, Hitachi Koki Power Tool Centers (62 sites) Hitachi Koki Sales Co., Ltd., Hitachi Koki Europe Ltd., Hitachi Koki (Malaysia) Sdn. Bhd., Guang Dong Hitachi Koki Co., Ltd., Hitachi Koki Taiwan Co., Ltd., Fujian Hitachi Koki Co., Ltd. Guangzhou Hitachi Koki Co., Ltd. Certified sites in Across the country, 72 sites have acquired certifi cations, each actively in operation. Nabari Plant Headquarters Hitachi Koki Co., Ltd. Headquarters Hitachi Koki Sales Co., Ltd. Hitachi Koki Manufacturing & Service Co., Ltd. Haramachi Manufacturing Center Hitachi Koki Co., Ltd.Katsuta / Sawa Plants Headquarters Hitachi Koki Co., Ltd.Shirako plant Hitachi Koki Group registration certificate Companies Date of acquisition Certifi cation organization Hitachi Koki Co., Ltd. Hitachi Koki Sales Co., Ltd. September 24, 16 JACO: Audit and Certifi cation Organization Hitachi Koki Europe Ltd. January 15, 18 NSAI: National Standards Authority of Ireland Hitachi Koki (Malaysia) Sdn.Bhd. July 20, 2001 BVC: Bureau Veritas Certifi cation Outside Guang Dong Hitachi Koki Co.,Ltd. April 19, 2006 Hitachi Koki Taiwan Co.,Ltd. November 2, 2006 Fujian Hitachi Koki Co.,Ltd. September 25, 2007 BSI: British Standards Institution Guangzhou Hitachi Koki Co., Ltd. October 8,

4 Audit Internal environmental audit Specially trained and certifi ed internal environmental auditors conduct audit of all departments once a year. Any noncompliance found during the audit must be corrected within a specifi c time frame to improve the reliability of environmental management. Annual education and training programs are provided to increase the number of internal environmental auditors. In Fiscal 2013, three new internal environmental auditors were additionally registered through training conducted by external organizations. Furthermore, we hold annual workshops for internal environmental auditors to improve their abilities. Number of internal environmental auditors Internal audit system Fiscal year Number of auditors The number of auditors increased by three but reduced by two due to transfer in FY Implementation of workshop for internal environmental auditors in FY 2013 External Audit In addition to the Internal environmental audit, accredited auditors from outside the company conduct external audit every year. In external audit, comprehensive assessment is made covering respective nonconformance fi ndings and the overall quality of the system as well, to contribute to continuous improvement of the environmental management. Enhancement of Environmental Education Boost voluntary education To avoid an insuffi ciency in the number of legally qualifi ed personnel required for environmental in the Hitachi Koki Group, we have established an education plan to increase the number of legally qualifi ed personnel with a goal of doubling the number. In Fiscal 2013, one person from Hitachi Koki was newly qualifi ed as Qualifi ed Manager of the specially controlled industrial wastes, and the number of legally qualifi ed personnel reached 1.9 times larger than the required number. We will make efforts to double this number by In order to effectively address environmental issues, it is important that all employees acquire a high level of environmental awareness. For the sake of this awareness acquisition, we are continually providing all staff members with general and department-specifi c education as well as environmental education dealing with more specialized topics. As another environmental initiative, we hold regular meetings to explain our Environmental Action Plan to suppliers and seek their cooperation in our environmental. Promote participation in the Hitachi Group s common education courses We promote participation in our eco-mind education program environmental e-learning over the Internet common to Hitachi Group to nurture eco-minds among our employees. In Fiscal 2013, environmental e-learning courses were taken by 1,550 employees in and overseas, % of all the staff who should take these courses. Environmental education system Classifi cation Course name General education Special education Department specifi c education Others Environmental e-learning Education, Environmental Policy and Environmental Management System Education Special Course on Environmental Matters, Education on Specifi c Tasks, Training in Anticipation of Emergencies, Internal Auditor Education Technical Education on Environmental Design, Education on Industrial Waste Control New Personnel Education, Supplier Education 15

5 Persons who completed education 1, Participation rate Performance Target (fiscal year) Eco-mind education via the internet Economic Aspect (Environmental Accounting) The Hitachi Koki Group calculates the environmental conservation costs and effects based on Environmental Accounting Guidelines of the Ministry of the Environment. Cost effectiveness is understood quantitatively to make effective environmental investment and reduce environmental burden continuously. Environmental Conservation Cost Cost (unit: million yen) Category Business area Overview Costs of maintenance of equipment with low environmental burden, depreciation Upstream/downstream Recycling of products and packaging, recycling expenses Cost Management Research and development Social activity Labor costs of environmental management, implementation and maintenance of environmental management system R&D for the reduction of environmental burden caused, product design expenses Planting, beautifi cation, and other environmental improvement expenses, PR and publicity expenses Environmental damage Environmental mitigation costs, assessments, etc. Total Total investment Installation of solar power generation system, and investment in energysaving equipment and equipment for reduced environmental burden Economic Effects with Environmental Conservation Measures Contents of effects Net income effect (Profi t on sales and electric power selling, resulting from separation and recycling of wastes) Cost reduction effect (Reduction of energy cost resulting from energy saving, reduction of disposal cost resulting from waste reduction) Cost (unit: million yen) Total Power-saving Effects with Environmental Conservation Measures Item Reduction of electric power consumption when manufacturing products (thousand kwh) Reduction of electric power consumption when using products (thousand kwh) The table above shows typical power-saving effects. Reduced amount 1,209 1, , , ,488 Overview Energy-saving by air leakage prevention measure, and use of LEDs for illumination, etc. Reduction of electric power consumption when using products by employing power tools with energy-saving motors 16

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