Hitachi Rail Limited Modern Slavery Statement 2021
Hitachi Rail Limited (“Hitachi Rail” or “HRUK”) recognises the importance of identifying and preventing the action and causes of modern slavery in our business and supply chain. This statement, our fifth 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 2021.
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 Doncaster, Bristol, London and Edinburgh).
Hitachi Rail employs 2543 direct employees of which 23 are part time. This includes 2464 permanent roles, 26 apprentices, 2 interns and 77 fixed term together. Furthermore, Hitachi Rail employs an additional 129 contractors and 4 expat staff. We are currently working to have stronger visibility and breakdown across the business on our seasonal, outsourced and agency workforce composition.
In terms of supply chain configuration, HRUK’s supply chain comprises other Hitachi Group companies as well as external third party suppliers.
In 2020, Hitachi Rail had a direct relationship with 22 Tier 1 companies within the Hitachi Group operating across eight high income countries, being Czech Republic, Japan, Italy, United Kingdom, Switzerland, France, Germany and one lower middle income country, Vietnam. The contribution of our Hitachi Group companies is significant in regards to the overall value of products supplied to HRUK.
In 2020, Hitachi Rail had a further direct relationship with 1017 tier 1 external suppliers across 20 high income countries. Approximately 88% 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, the United States, the United Arab Emirates, Hong Kong, Netherlands and Liechtenstein. In addition, Hitachi Rail has two Tier 1 direct relationships with external suppliers operating in Turkey and another in India, both classified as Upper Middle Income countries. The visibility of our supply chain composition and mapping is improving. We are aware that roughly 5.4% of our Tier 1 suppliers use subsidiaries, of which 1.4% of our Tier 1 suppliers’ subsidiaries are based in medium and high risk countries. Hitachi Rail is committed to having more visibility of Tier 2 and Tier 3 suppliers. We have implemented a Global Spend Analytics tool and are homogenising our procurement processes which include due diligence and master data. We anticipate that these activities will ensure that we have more visible and accessible data to enable the classification of sourcing by country on our main categories including the manufacturing and sourcing of products, services, parts and raw materials.
Hitachi’s Policies Relevant to Slavery and Human Trafficking
As part of the ongoing development of an effective implementation of human rights due diligence (which include modern slavery) Hitachi Rail engages with and consults expert stakeholders, Non-Governmental Organisations (NGOs) and international organisations. Examples of this would 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 to 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 mapping and connecting all our 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 Whistleblower Policy
- Sustainable Procurement Policy
- Enterprise Risk Management Framework and
- Other written employment practices and procedures which ensure fair recruitment and treatment of employees;
In addition, recognising the link to health and safety and workforce vulnerability as a factor for modern slavery, we are also working to strengthen our Health Safety and Environment Policy.
Furthermore, 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.
In terms of policy accessibility, Hitachi 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;
- the Hitachi Rail Supplier Code of Conduct
- Environmental Policy
- Quality Policy
Once we have finalised our Responsible Sourcing and Human Rights Policy, we plan to share this with suppliers for their buy-in.
Furthermore, we are also developing the below policies and statements and we plan to disclose these to suppliers and business partners once finalised:
- Security Policy
- Code of Ethics Statement
- Anti-Corruption Statement
- Gifts & Hospitality Statement
- Whistleblowing Statement
- Competition Law Statement
- Export & Trade Compliance Statement
Our Hitachi Rail Supplier Code of Conduct specifically includes principles relating to human rights and modern slavery prohibiting child and forced labour and promoting humane treatment. These 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 is:
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 is:
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 is:
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.”
Hitachi continues to recognise the importance of international human rights standards such as the 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 by the following polices:
- The Hitachi Group Human Rights Policy is aligned 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 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 completed, we will also strengthen our existing policies and mitigate any gaps by aligning to internationally recognised frameworks.
In addition, as part of the UK Procurement Standardisation work, 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 legalisation. As part of this, we are also aligning the framework to wider recognised indices including the Sustainable Development Goals to support the standardisation in sustainability and ESG reporting.
In terms of internal accessibility and the dissemination of policies associated with human rights and modern slavery, 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. Furthermore, we communicate them via our intranet where HRUK employees can easily find our policies using key word searches.
In terms of 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 high 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.
In terms of assessing forced labour and modern slavery risks before entering into contracts with suppliers, 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.
All Hitachi Rail contracts with suppliers 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 actively rolling this out to our suppliers. Once we have more visibility on modern slavery risk vulnerability, we intend to undertake an assessment of existing contracts where modern slavery offences may be of greater risk.
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. In addition, 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) will be mandated and required of all suppliers and is included by reference within our supplier contracts. To underpin this, we also intend to actively review supplier compliance of this code of conduct.
Our commitment and work to mitigate human rights violations is strongly supported by Hitachi, Ltd. having 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.
In addition, a member of the UK Hitachi Rail Procurement Team was a member of the British Standards Institute (BSI) working group established and tasked to design and implement a UK wide BSI Modern Slavery Standard. The intention is to incorporate this standard into the wider procurement governance framework once it is public.
In the next 12 months, we will continue to strengthen our approach to managing the risk of antislavery nationally and globally.
We are currently undergoing a transformation to our Supplier Management capabilities as a key aspect of a broader Procurement improvement agenda. As part of this, we will embark on a programme to enhance and improve our overall Supplier On-Boarding and Due Diligence processes with a particular focus on areas such as Human Rights and Sustainability.
Following the publication of our previous Modern Slavery Statement, we continue to develop and deliver a plan to meet the established deliverables created.
Going forward, the statement will be the 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.
Hitachi Rail 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 those 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 potential or indirect risk for modern slavery.
As part of this mapping 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 pilot, it is our plan to develop additional robust processes to identify risk, including workforce vulnerability of risk which 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 a direct or indirect control and/or influence.
In terms of current risk assessment, principally there are five stages to this:
Hitachi Universal Assessment & Screening:
This is an initial 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.
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. This forms part of our supplier selection and is aligned to customer requirements, regulatory requirements and best practices. As part of this screening, all suppliers are also required to sign up and adhere to the Supplier Coe of Conduct.
As part of the supplier selection procedure, our Quality team will organise in initial supplier visits and audits.
Our screening is run periodically throughout the year and, as a minimum, once a year. We are working with Hitachi Corporate to establish more governance and procedures on periodic due diligence and process auditing.
Processes & Procedures – Procurement Governance, Risk & Compliance:
We have a framework in place for all current procurement processes. These are all tested internally and externally through rigorous audits that look at compliance and the application and adherence to processes. Where there is a NCR or recommendation, we build them into the process development. 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 planned 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.
Over the past twelve months, we have identified the following materials/sectors as having a labour and human rights related risk:
- Manufacture of batteries and accumulators
- Other specialised construction activities
- Manufacture of glass and glass products
- Manufacture of rubber products
- Manufacture of non-metallic mineral products n.e.c.
- Manufacture of plastics products
- Manufacture of paints, varnishes and similar coatings, printing ink and mastics
- Construction of buildings
Furthermore, during the past twelve months, we took responsibility in protecting vulnerable workers impacted by the global pandemic. Covid-19 related supply chain disruptions that originate in one place can have a ripple effect across our entire supply chain. Therefore, as part of this, we worked closely with (and regularly monitored the impact that the pandemic had on) our Tier 1 suppliers and supply chain. For all suppliers monitored, we can confirm that only three suppliers were forced to close, whilst all other businesses monitored remained open and operational. This ensured that those suppliers (and, in effect, the workers within the supply chain where our suppliers use subsidiaries based in medium and high risk countries) did not exacerbate existing challenges in social inequality and deprivation.
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 shift to cleaner energy sources. We are also aware that human rights violations including the use of forced labour and that of child labour are associated with the mineral extraction industry. This includes the use of cobalt and conflict minerals (tin, tantalum, tungsten and gold) all of which are increasingly used throughout the global battery industry.
Furthermore, addressing forced labour is complex and, in many cases, this systemic abuse can be prevalent within industry and regions in 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 changing the conditions that we may be directly creating or indirectly causing.
Over the next twelve months, our focus is to continue to take responsibility in protecting 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 or increasing violations of human rights; and
- Identify areas within our supply chain that have been impacted by the Covid-19 global pandemic and/or are at risk in of any future pandemics.
Following the report by the Australian Strategic Policy Institute that implicated several Chinese companies as having allegedly directly or indirectly 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 a business that we have a non-supplier affiliation with.
We have since conducted an independent onsite third party audit based on SA8000 and await the report findings.
Our intention is to ensure and promote full transparency of potential harms within our supply chain related to modern slavery or labour rights.
We continue 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 discoveries, we will support collaboration and dialogue with the relevant consumers, civil society groups, including NGOs, labour unions and wider consumer advocacy groups. Our focus will be to take appropriate remedial action and to introduce corrective action plans before choosing to cease engagement with any suppliers.
In terms of provision of training on company policies and standards related to modern slavery risks, all Hitachi Rail employees are expected to complete the annual Code of Conduct training as part of our compliance programme, which references human rights.
HRUK actively encourages all our procurement team members to undertake the annual Ethical Procurement and Supply e-learning and online test which also covers anti-bribery and modern slavery.
Furthermore, we are actively working 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 building 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 to be published and trialled internally before the end of 2021.
To support and sponsor any remedial actions, we aim to design a training plan that aligns to the UNGPs. This will be designed to 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. We anticipate any training format will be proportionate to the targeted audiences to ensure successful landing and impact.
This statement is made pursuant to Section 54(1) of the Modern Slavery Act 2015 and constitutes HRUK’s anti-slavery and human trafficking statement for the financial year ended 31 March 2021. It has been approved by the board of directors of Hitachi Rail Limited.
Signed by James Brewin
HRL board director
30 September 2021