Hitachi Rail Limited Modern Slavery Statement 2020

Hitachi Rail Limited Modern Slavery Statement 2020

Hitachi Rail Limited (“Hitachi Rail” or “HRUK”) recognises the importance of identifying and preventing modern slavery and its causes in our business and supply chain. This statement, our fourth made under Section 54 of the Modern Slavery Act 2015, sets out the steps we have taken to address modern slavery and human trafficking in our business and supply chain in the year to 31 March 2020.

Hitachi Rail’s Structure, Business and Supply Chain

HRUK is a wholly owned subsidiary of Hitachi, Ltd. and is headquartered in London, UK.  We are a total railway system supplier offering rolling stock, traction equipment, signalling, traffic management systems and train maintenance services. 

Our operations include a rolling stock manufacturing facility at Newton Aycliffe, County Durham and our fleets are maintained and serviced at a number of train maintenance centres located around the UK (including those based in Ashford, Doncaster, Bristol, London and Edinburgh).

Hitachi Rail employs 2507 direct employees of which 23 are part time.  This includes 2389 permanent roles, 30 apprentices, 2 interns and 86 fixed term altogether. Furthermore, Hitachi Rail employs an additional 158 contractors and 8 expats. We are currently working to have stronger visibility and breakdown across the business on our seasonal, outsourced and agency workforce composition.

HRUK’s supply chain comprises other Hitachi Group companies as well as external third party suppliers. In 2019, Hitachi Rail had a direct relationship with 24 Tier 1 companies within the Hitachi Group operating across four high income countries (Czech Republic, Japan, United Kingdom and Germany). The contribution of our Hitachi Group companies is significant in terms of the overall value of products supplied to HRUK.

In 2019, Hitachi Rail had a further direct relationship with 1189 Tier 1 external suppliers across 15 high income countries. Approximately 92% of these suppliers are based within the United Kingdom. However, Hitachi Rail also has a direct relationship with Tier 1 suppliers that either operate or have manufacturing operations within the following countries: Australia, Belgium, Czech Republic, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Spain, Sweden, Switzerland and the United States. In addition, Hitachi Rail has one Tier 1 direct relationship with a company operating in Turkey, an Upper Middle Income Country.

Hitachi Rail is committed to having more visibility of Tier 2 and Tier 3 suppliers. We are implementing analytical solutions and are homogenising our procurement processes, including due diligence and master data. We anticipate that these activities will ensure that we have more data visible and accessible to enable the classification of country sourcing on our main categories including the manufacturing and sourcing of products, services, parts and raw materials that we procure.

Hitachi’s Policies Relevant to Slavery and Human Trafficking

Modern slavery is part of our monthly compliance overview which is presented quarterly to the Hitachi Rail Board.  As part of the ongoing development of an effective implementation of human rights due diligence (which include modern slavery) Hitachi Rail is regularly engages and consults with expert stakeholders, Non-Governmental Organisations (NGOs) and international organisations. Examples of this include our participation in various national and international working groups and forums regarding Responsible Sourcing, Worst Forms of Child Labour (WFCL) and Business & Human Rights (BHR).

We recognise that slavery is not just an ethical and human rights issue, it is one of criminality and we understand that corruption is a key factor and driver of exploitation. As part of our corporate governance agenda, our objective is to continue to be committed to conducting business ethically and to minimising the risk of slavery or human trafficking in our own business or in our supply chain as much as possible.  To do this, we are aligning processes and policies that relate directly or indirectly to modern slavery.

Internally, we already have a number of policies addressing issues relevant to slavery or human trafficking.  These include:

  • the Hitachi Corporate Human Rights Policy;

  • the HRUK Dignity at Work Policy;

  • Hitachi Rail Whistle blower Policy;

  • Sustainable Procurement Policy;

  • Enterprise Risk Management Framework; and

  • Various written employment practices and procedures that ensure fair recruitment and treatment of employees.

Recognising the link to health and safety and workforce vulnerability as a factor for modern slavery, we are working to strengthen our Health Safety and Environment Policy.  We are also developing a Hitachi Rail Group Responsible Sourcing Policy and a Human Rights Policy. Our planned Modern Slavery Policy will now form part of our Human Rights Policy to support the wider alignment of our policies and procedures to the UN Guiding Principles (UNGP) on Business and Human Rights Framework.

Hitachi Rail discloses and makes available externally the following policies that have either a direct or indirect influence on matters that relate to modern slavery:

  • The Hitachi Group Codes of Conduct;

  • HRUK Supplier Code of Conduct;

  • HRUK Environmental Policy;

  • HRUK Quality Policy.

Once we have finalised our Responsible Sourcing and Human Rights Policy, we plan to share this with suppliers for their adoption. We are also developing the following Group policies and statements which we plan to disclose to suppliers and business partners once finalised:

  • Security Policy;

  • Code of Ethics Statement;

  • Anti-Corruption Statement;

  • Gifts & Hospitality Statement;

  • Whistle blowing Statement;

  • Competition Law Statement;

  • Export & Trade Compliance Statement.

In addition, our Supplier Code of Conduct specifically includes principles relating to human rights and modern slavery prohibiting child and forced labour and promoting humane treatment.  These principles are as follows:

  • Child Labour Principle: We do not accept child labour in any stage of manufacturing or any practice that inhibits the development of children.

What this means for our suppliers: Suppliers must not employ children under the age of 15 years old, or where higher, the mandatory school leaving age in the relevant country.

  • Forced Labour Principle: We believe that all employment should be voluntary and workers must be free to leave work at any time or terminate their employment.

What this means for our suppliers: Suppliers must not use forced or bonded labour, involuntary prison labour, slave labour or trafficked persons. Suppliers may not confiscate or deny access to passports or work permits.

  • Humane Treatment Principle: We treat every human being with respect as a base line expectation for human rights.

What this means for our suppliers: Suppliers must ensure that there is no harsh and inhumane treatment including sexual harassment, sexual abuse, corporal punishment, or physical or mental coercion of workers in their organisation.

This policy can be found on our public website.

Hitachi continues to recognise the importance of international human rights standards such as the International Labour Organisation (ILO) labour rights and the UN Guiding Principles on Business and Human Rights. Where possible, we align these standards to our internal and external policies and procedures. This is demonstrated in the following polices:

  • The Hitachi Group Human Rights Policy is aligned to, and references, the International Bill of Human Rights, International Labour Organisation's Declaration on Fundamental Principles and Rights at Work and the UN Guiding Principles on Business and Human Rights;

  • Hitachi Rail's Supplier Code of Conduct was developed with the UN Global Compact (UNGC) Framework (10 Principles) structure as guidance.

HRUK continues to review existing policies to identify whether there is sufficient coverage (or gaps) of risks related to modern slavery. Once this review has been completed, we will strengthen our existing policies and mitigate any gaps by aligning to internationally recognised frameworks.

We have designed a framework to align internal and external requirements to our processes. This includes the ongoing development of our procurement due diligence procedures which are designed around the UN Guiding Principles on Business and Human Rights Framework in preparation for the forthcoming Mandatory Due Diligence EU legislation. As part of this, we are also aligning the framework to wider recognised indices including the Sustainable Development Goals (SDG) to support standardisation in sustainability and environmental and social governance reporting.

Hitachi Rail continues to makes its policies available to all workers and internal parties by publishing and managing them via our internal document management system. This ensures that they are reviewed regularly and updated. As for mechanisms to monitor compliance with our policies and standards, we include key policies (e.g. code of conduct) within our new employee starter packs and reference certain policies within the contract of employment. This includes, but is not limited to, our anti-bribery and corruption policy and related procedures.

We are committed to conducting our business with honesty and integrity, and we expect all employees to maintain these standards. Our policies aim to encourage employees to report suspected wrongdoing as soon as possible and their concerns are required to be taken seriously and investigated appropriately.

Due Diligence

Hitachi Rail continues to review its existing contracts and category risks to identify whether there is sufficient coverage (or gaps) of risks related to modern slavery vulnerabilities.

All Hitachi Rail contracts require suppliers to comply with all applicable laws. Furthermore, our supply contract templates all take account of modern slavery risk factors and contain provisions relating to offences under the Modern Slavery Act 2015. We continue to roll this out to our suppliers.

In terms of cascading our policies, we require first tier suppliers to flow down our human rights and modern slavery standards into their own supply chains.  To support this, we continue to actively engage with a number of suppliers to gain an understanding of the measures taken by them to prevent and mitigate modern slavery in their business. This activity is in collaboration with wider Hitachi businesses through the Hitachi Responsible Sourcing Working Group. We intend to continue to conduct further analysis of our supply chain to identify where the likelihood of risks related to modern slavery can occur. We intend to understand the adoption and engagement appetite of suppliers in mitigating human rights offences.

Compliance with HRUK’s Supplier Code of Conduct (including supply chain accreditation) is mandated and required of all suppliers and is included by reference within our supplier contracts. To underpin this, we also intend to review supplier compliance of this code of conduct.

Our commitment and work to mitigate human rights violations is strongly supported by Hitachi, Ltd. whose President and CEO, Toshiaki Higashihara, signed the World Business Council for Sustainable Development’s CEO Guide to Human Rights in 2019.  This recommended that CEOs drive transformative change for human rights on a corporate basis (over and above compliance requirements).

We continue to contribute to the discussion in industry initiatives related to the mitigation and protection of human rights including modern slavery. This is demonstrated by our participation in UN Global Compact Peer Meetings organised by the UNGC, BSR Human Rights Working Group meetings and Worst Forms of Child Labour Forums. Hitachi Group is also a member of the following multi-stakeholder initiatives related to human rights and modern slavery: Tech UK, UNGC, GRI, Global Compact UK, CSR Europe, London Benchmarking Group, BSR Human Rights and the World Business Council Sustainable Development.

Our due diligence framework is founded on the Human Rights, International labour standards and corporate social responsibility training completed at the International Labour Organisation (ILO) Centre in Italy.

In addition, one of our Procurement Process Design Team is a member of the British Standards Institute (BSI) working group that was established and tasked to design and implement a UK wide BSI Modern Slavery Standard. The plan is to incorporate this standard into our due diligence processes.

In the next 12 months, we will continue to strengthen our approach to managing the risk of modern day slavery.  Following the publication of our previous year’s Modern Slavery Statement, a three year plan with established deliverables was produced. This is set out in a recognised external framework to enable future benchmarking and is based on collective activities from several Hitachi Rail functions.  Going forward, Hitachi Rail’s Modern Slavery Statement will be a summary of these activities. The deliverables will feed into the programmes underpinning each of the policies mentioned above and align to external frameworks i.e. UNGPs and SDGs.

 During this financial year, through the Modern Slavery Working Group, Hitachi Rail will continue to develop on the following commitments and aims:

  • to establish relevant KPIs to increase the profile of Modern Slavery within our business;

  • promote the adoption and endorsement of existing and new human rights (MSA) standards;

  • to improve MSA data sharing, exchange and usability;

  • to strengthen management, preservation and stewardship of MSA-related data;

  • to increase MSA awareness and training;

  • to enhance MSA global risk visibility and align to international frameworks and objectives;

  • to create a MSA plan, road map and reporting framework; and

  • to align to the Human Rights Policy and wider UN Guiding Principles Framework.

Risk Assessment

Hitachi continues to undertake risk assessments on its supply base. We are working to identify the geographical risks attached to the individuals and partners we work with, including the countries that we operate in or supply from. This exercise involves the process of mapping out our Tier 1 supply chain and business relationships to measure and identify areas where there is a potential or indirect risk for modern slavery.

As part of this exercise, we regularly review published data from sources including, but not limited to: Transparency International’s Corruption Index, The Global Slavery Index, ITUC Global Rights Index, International Labour Organisation (ILO), and Trafficking in Persons Report, Freedom House and various World Bank World Governance Indicators that specifically focus on Corruption, Government Effectiveness and Rule of Law Indicators.

Building on this activity, it is our plan to develop additional robust processes to identify risk, including workforce vulnerability; this involves looking in more detail at category and country profiling. We also intend to develop a reporting framework, plan and roadmap to support action, manage and mitigate any findings.

As part of this wider understanding to identify modern slavery, we are also focusing on our business, our supply chain and customers. We anticipate that with greater understanding and the sharing of workforce composition, we should be in a better position to start identifying this.  We plan to identify other areas within Hitachi in which we have direct or indirect control and/or influence.

In terms of current risk assessment, we have five stages to this:

  1. Hitachi Universal Assessment & Screening:

This is a desk based assessment that is managed by the Hitachi Corporate Compliance and Risk Management teams. This involves the screening of the supplier through internal design processes and the collection of information from third party data sources.

  1. Hitachi Rail Assessment & Screening:

When a supplier is invited to tender, the supplier will be required to complete our localised Hitachi Rail assessment and screening process. This forms part of our supplier selection and aligns to customer requirements, regulatory requirements and best practice. As part of this screening, all suppliers are also required to sign up to and adhere to the Supplier Code of Conduct.

  1. Site Visits:

As part of the supplier selection procedure, our Quality team will organise initial supplier visits and audits.

  1. Periodic Reviews/Triggers:

Our screening runs periodically throughout the year and, as a minimum, once a year. We are working with Hitachi Corporate to understand this in more detail and it is our plan to establish more governance and procedures on periodic due diligence and process auditing.

  1. Processes & Procedures:

We have a framework in place for all of our current procurement processes. These are tested internally and externally through rigorous audits that look at compliance and the application and adherence to processes. Where there is a Non-Conformance Report (NCR) or Recommendation, we build them into the process going forward.  A procurement process working group has also been established to support the standardisation, development, application and educational activities.

We work closely with stakeholders around the business to manage the business’ current requirements within procurement processes. We are also building a governance framework within procurement to meet current and plan for future process requirements. This will map all the criteria (including regulations, international and industry standards, customer requirements etc.) against all current and future procurement processes.

In the wake of exploitation revelations and increasing visibility of human rights abuse in global supply chains due to the global pandemic, we understand that all forms of human rights abuse (including that of child and forced labour) is not just a legal or ethical concern but a business risk.  We recognise that we have a responsibility to ensure our products do not contribute to or prolong human rights abuse as we move across to cleaner energy sources. We are also aware that human rights violations, including the use of forced labour and that of child labour associated within the mineral extraction industry (including the use of cobalt and conflict minerals (tin, tantalum, tungsten and gold))  are increasingly used throughout the global battery industry.

Addressing forced labour is complex. In many cases, this systemic abuse can be prevalent within industries and/or regions themselves. However, we have recognised the need for responsible supply chain management, for multi-stakeholder engagement and we understand that we can be a powerful force for change. Over the next twelve months, our focus is to protect vulnerable workers and to be an agent for positive change. To do this, we need to have more visibility of our supply chain and the associated risks that are (directly or indirectly) linked to slavery and labour abuse.  Areas of priority and immediate concern are:

  • Child labour in battery technology;

  • The use of forced labour in countries with existing and/or an increasing violations with respecting and protecting human rights; and

  • To identify areas within our supply chain that have been impacted by the Covid-19 global pandemic and/or are at risk in any future pandemics.

Effectiveness

In March 2020, we received notice of a report by the Australian Strategic Policy Institute implicating several Chinese companies as having allegedly benefited from the use of Uyghur workers forcibly moved outside the Xinjiang region through an abusive labour transfer program.  One of these Chinese companies was one of the bidders in a competition for new business with us.

We received further notice that in 2020 this company had benefited from the same government-led forced labour program as 41 Uyghur workers were forcibly transferred to their Chinese factories in Changzhou.

In July 2020, a ruling by the US Department of Commerce’s Bureau of Industry and Security implicated several Chinese businesses in human rights violations and abuses against Uyghur Muslims in the Xinjiang region of China. Subsequently, this decision resulted in these same Chinese businesses, including the same potential supplier in question to be added to the United States Prohibited Entity List.

We are aware that the Chinese Government condemns this decision and we have also received  correspondence from the supplier in question strenuously refuting the allegations. Given the lack of transparency and any remedial evidence, we would not risk breaching both domestic and international laws and did not enter into any business arrangement with this supplier.

Due to the forced labour allegations, our intention is to ensure and promote full transparency of potential harm within our supply chain related to modern slavery or labour rights.  We plan to conduct a review of all labour operations to understand the current and ongoing labour and human rights related risks. This will include not only robust initial desk-based analysis, independent third-party social audits and inspections but also multi-stakeholder social compliance initiatives. Depending on the outcome of this review, we will support much needed collaboration and dialogue with relevant consumers, civil society groups (including NGOs), labour unions and wider consumer advocacy groups.  Where possible, our focus is to not exacerbate or cause further harm.  Before  ceasing engagement with any existing supplier who may be accused of alleged modern slavery practices, our focus would be to take appropriate remedial action and introduce corrective action plans with them.

Training

All Hitachi Rail employees are expected to complete the annual Code of Conduct training as part of our compliance programme. This includes reference to human rights. The completion data for our code of conduct programme for FY19 is 86%.

All of our procurement team members are required to undertake the annual Ethical Procurement and Supply e-learning and online test which also covers anti-bribery and modern slavery.  We actively work with our procurement teams to identify gaps in individual and role training as part of the wider due diligence activities and responsible sourcing programme.

HRUK continues to develop a training programme to improve awareness of modern slavery issues.  The intention is to implement mandatory online modern slavery and human trafficking awareness training into our e-learning programme. This will include internal training and capacity.  It will build on risks, policies, and standards related to modern slavery and human trafficking along with bespoke training for target audiences relating to modern slavery risks they are likely to encounter in their work. Our internal modern slavery training is in draft format and is under review. We anticipate this will be published and trialled internally before the end of 2020.

To support and sponsor any remedial actions, we aim to design a training plan that aligns to the UNGPs. This will be designed in collaboration with relevant right holders that specifically target areas of our business where risks related to modern slavery or labour rights is prevalent. Where the cause is systemic to the industry and/or country, it is our intention to participate in multi-stakeholder dialogue with the relevant consumers, civil society groups, including NGOs, labour unions and wider consumer advocacy groups.  Our mandatory Code of Conduct training is an e-learning module that employees complete annually using HRUK’s Learning Management System. We anticipate any training format will be proportionate to the targeted audiences to ensure successful landing and impact.  The Code of Conduct training content is created with the support of Hitachi Rail’s legal team and subject matter experts.  It is required to be taken annually and all new employees must complete it within the first three months of starting employment with Hitachi Rail.

This statement is made pursuant to Section 54(1) of the Modern Slavery Act 2015 and constitutes Hitachi Rail’s anti-slavery and human trafficking statement for the financial year ended 31 March 2020.  It has been approved by the board of directors of Hitachi Rail Limited.

Jim Brewin

Head of UK & Ireland, Hitachi Rail. 

30 September 2020