2007 north american environmental report...honda north america, inc. 700 van ness avenue torrance,...

2007 North American Environmental Report

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2007 North American Environmental Report

About This Report

This report covers Honda’s activities in its North America region in fi scal

year 2007, from April 1, 2006, through March 31, 2007. In order to provide context, it also includes selected earlier accomplishments. Summarized below are highlights of Honda’s environmental performance in North America that are detailed in the full report.

Report Summary

Our Responsibility to the Environment

Honda 2 0 0 7 N O R T H A M E R I C A N E N V I R O N M E N T A L R E P O R T

Global Warming

Honda recognizes global climate change and energy sustainability as two of the most

serious environmental challenges of our day. As the world’s largest producer of gasoline-powered products, Honda is making a concerted effort to improve the effi ciency of its products and production operations on a global scale.

� In May 2006, Honda became the world’s only automaker to set voluntary global targets for further reductions in CO2 emissions from its automobile, power sports and power equipment products and production activities.

� On a global basis, the company is targeting a total 10 percent reduction in average CO2 emissions from its automobile, power equipment and power sports products from 2000 levels by 2010; along with a 10 percent reduction in average CO2 emissions per unit of automobile production; and a 20 percent reduction in per-unit CO2 emissions from production of power equipment and power sports products.

� Signifi cant progress already has been made in reducing global average product and production CO2 emissions from 2000 levels (see page 4 for further details):

• a 6 percent reduction in average CO2 emissions from automobiles

• a 9.5 percent reduction in average per-unit CO2 emissions from the manufacture of automobiles

• a 6.9 percent reduction in average CO2 emissions from power equipment products

• a 23.2 percent reduction in average per-unit CO2 emissions from the manufacture of power sports products

Product and Technology Innovation

Automobiles

� By introducing new technology and more fuel-effi cient products, such as the Honda Fit, the company maintained its industry-leading CAFE performance: 29.1 mpg for its combined car and light truck fl eet in model year 2006.

� Honda is targeting a further 5 percent improvement in its CAFE by model year 2010, along with a series of new technology initiatives:

• Next-generation Variable Cylinder Management (VCM) technology applied to the Accord V6 Sedan and Coupe and Odyssey in 2007.

• An all-new, more afford-able hybrid vehicle to be launched in 2009, with projected annual sales of 100,000 units in the U.S. and Canada combined.

• A next-generation 4-cylinder clean diesel engine, meeting EPA Tier 2 Bin 5 emissions, to be launched in 2009.

• An all-new more advanced, effi cient, and dynamically styled fuel cell vehicle, based on the Honda FCX Concept, to be launched in 2008.

Power Sports Products

� Honda has applied cleaner, more effi cient 4-stroke engine technology to the breadth of its North American product line and is expanding the use of programmed fuel injection (PGM-FI), which creates the potential for further improvements to emissions and fuel effi ciency.

Power Equipment Products

� Honda has applied 4-stroke OHV engine technology to all of its North American power equipment, general-purpose engines and marine engines, and is selling those cleaner engines in all 50 U.S. states.

IFC

LOOK FOR THIS ICON throughout the report

to review the company’s goals and commitments as they relate to specifi c areas of product and operational performance.

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We Value Your Opinion

We are interested in your response to this report and welcome your input to help us improve it. Please complete an interactive survey by visiting the following website:

http://corporate.honda.com

Waste Minimization

2 0 0 7 N O R T H A M E R I C A N E N V I R O N M E N T A L R E P O R T Honda


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Issued byHonda North America, Inc.700 Van Ness AvenueTorrance, California 90501-1490

Contact addressWe welcome your response to this report. Please send comments to:

American Honda Motor Co., Inc.Corporate Affairs & Communications1919 Torrance BoulevardTorrance, California 90501-1490

email: [email protected]

For more informationTo access an electronic copy of this report, please visit http://corporate.honda.com.

Table of Contents

Honda 2010 Vision 2

A Letter from Our North American Chief Operating Offi cer 3

Global Climate Change: Honda’s Perspective 4

Environmental Management 9

Environmental Goals, Status, Commitments 12

Environmental Impact of Honda Products 14

Environmental Impact of Honda Manufacturing 26

Waste Minimization and Recycling 38

Environmental Community Activities 50

Environmental Technology Milestones 54

North American Corporate Profi le 56

� Continued progress was sought in the reduction and elimination of substances of concern (SOC) in Honda products — including mercury, lead, hexavalent chromium, cadmium, PDBEs, and PVC.

� Efforts to reduce waste and increase recycling were further accelerated in FY2007. Honda also began the process of certifying two new facilities to the U.S. Green Building Council’s Gold-LEED (Leadership in Energy Effi ciency Design) standards.

� Honda maintained 90 percent or greater design recyclability (based on the Japan Automobile Manufacturers’ standard) for all U.S. developed and manufactured automobiles; and 95 percent for all Power Sport and Power Equipment products.

� Honda continues to work closely within its own product development and manufacturing operations, as well as with suppliers and automobile recyclers, to reduce the life-cycle impact of its products from design to disposal.

Honda is working to minimize the waste products resulting from its many business activities throughout

the life cycle of its products — from reduced use of virgin materials in product design to increased recycling of waste from product disposal, along with more earth-friendly means of packaging and distributing products and increased energy effi ciency in Honda plants and offi ces.

Green Manufacturing

In fi scal year 2006, Honda began tracking CO

2 emissions from all of its North American

production facilities while continuing efforts to reduce energy use, hazardous emissions and generation of waste material at its own factories and at the factories of its more than 600 North American OEM parts suppliers.

CO2 Emissions*

� Ongoing efforts to con-serve energy and to more effi ciently utilize production capacity resulted in a slight reduction in average per-auto CO2 emissions from electricity and natural gas consumed in the production process, from 715 kg in FY2006 to 711 kg in FY2007.

� Average CO2 emissions per automobile produced in the seven-year period from FY2001 to FY2007 increased slightly, from 709 to 711 kg.

Energy Use

� Energy use per unit of auto production fell about 1.5 percent in FY2007, from 6.7 to 6.6 gigajoules. Total energy use was up about 1 percent from the previous fi scal year, from 9.73 million to 9.83 million gigajoules, due to increased production activity.

ISO14001 Certifi cation

� 13 of the 14 Honda plants operating in FY2007 were third-party certifi ed to the ISO14001:2004 standard. The remaining new plant will be certifi ed by December 2009.

Landfi ll Waste

� Total waste to landfi lls was reduced from 9,202 metric tons in FY2006 to 8,968 metric tons in FY2007, and is down 66 percent from the FY2001 baseline. The company is targeting a 70 percent reduction by FY2010.

VOC Emissions

� VOC emissions from auto body painting were reduced 25 percent, from 20.8 g/m2 in FY2006 to 15.6 g/m2 in FY2007, and about 45 percent from an FY2001 baseline of 28.7 g/m2 .

* CO2 emissions and energy use are based on consumption of electricity and natural gas.

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We should pursue our daily business interests under the following principles:

Honda 2010 Vision

Viewed in total, the ultimate goal of Honda’s 2010 Vision is for Honda to be recognized as “a company that society wants to exist.”


2 Honda 2 0 0 7 N O R T H A M E R I C A N E N V I R O N M E N T A L R E P O R T

Honda’s 2010 Vision focuses the company’s global operations on the environmental challenge. Established in 1998, on the 50th anniversary of the Honda Motor Co., Ltd. (the parent company of Honda’s North American

operations), the 2010 Vision focuses on three key themes:

value creation

�Developing original technology that improves Honda product effi ciency, safety and functionality to create new value for customers and for society.

commitment for the future

� Developing products with advanced levels of safety and environmental performance, while limiting the environmental impact of Honda products though their entire life cycle, from the research and development stage all the way through to end-of-life disposal.

glocalization

�Meeting the growing and changing needs of Honda customers through the advancement of Honda’s local research and development, manufacturing, sales and service capabilities.

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2 0 0 7 N O R T H A M E R I C A N E N V I R O N M E N T A L R E P O R T Honda 3

“ While we continue to address these issues, our efforts now center on global climate change and energy sustainability — and the important contributions we believe our company can make to the reduction of greenhouse gas emissions and to the advancement of alternatives to gasoline as a fuel source for personal mobility.”

A Letter from Our North American Chief Operating Offi cer

We believe that our responsibility as a company extends beyond making products that people want to own. Based on the way we conduct our business activities,

it is our goal to be considered as “a company that society wants to exist.” Thus, we have worked over many decades to create new products, new technologies, and new processes that allow us to exceed the expectations of our customers while reducing the negative impacts of our products and operations on society. In no place is this more evident than in our commitment to the environment.

As one of the largest regions for the development, production and sales of Honda products, North America plays a critical part in our company’s drive to continually improve its environmental performance on a global scale. This is a broad-based effort involving all Honda associates, and addressing virtually every aspect of our business activity — from product design and production all the way to distribution and sales, as well as the in-use and end-of-life impacts of our products.

Over the past 30 years, we have made tremendous progress in reducing pollutants from our products and our factories. While we continue to address these issues, our efforts now center on global climate change and energy sustainability — and the important contributions we believe our company can make to the reduction of greenhouse gas emissions and to the advancement of alternatives to gasoline as a fuel for personal mobility.

To this end, over the next several years, we will introduce a series of new technologies to our customers in North America, including more fuel effi cient gasoline engines, a new gasoline-electric hybrid vehicle, and the fi rst-ever Honda clean-diesel vehicle sold in North America. At the same time, we will begin limited marketing in the United States of a next-generation Honda hydrogen-powered fuel cell vehicle, which could offer the ultimate promise for a clean and sustainable transportation future.

This report covers these and the many other steps we are taking daily, through the initiative of our own associates, to reduce our environmental footprint in all aspects of our operations. I hope you will fi nd it informative and helpful in increasing your understanding of Honda’s commitment to the environment and its drive to become a company that society truly does want to exist.


Sincerely,

Tetsuo IwamuraManaging Director, Honda Motor Co., Ltd.

Chief Operating Offi cer, North American Regional OperationPresident & CEO, American Honda Motor Co., Inc.

Honda’s Chief Operating Offi cer for North America Tetsuo Iwamura (far left) with Jon and Sandy Spallino and their hydrogen-powered Honda FCX. The Spallinos are celebrating two years as the world’s fi rst fuel cell family.


Global Climate Change: Honda’s Perspective

Honda recognizes climate change and energy sustainability as two of the most critical global issues facing society today. As the world’s largest producer

of gasoline-powered products, Honda believes it has a responsibility to reduce its greenhouse gas (GHG) output, primarily CO2 emissions. The greatest immediate opportunity to reduce the company’s CO2 emissions will come by improving the energy effi ciency of Honda products and the factories that build them. Together, these factors account for roughly 80 percent of a Honda product’s life-cycle CO2 emissions. Accordingly, in May 2006, Honda established voluntary targets to further reduce CO2 emissions from its products and manufacturing activities globally by 2010.

The company also has set specifi c targets for

its North American region — the largest

producer and consumer of Honda automobiles.

On a global average basis, CO2 emissions from

Honda automobiles were reduced by about 6 percent from FY2001 to FY2007. In the same

period, average CO2 emissions generated by the manufacture

of Honda automobiles were reduced by about

9.5 percent.



• Automobiles: By the end of FY2006 Honda had achieved a 6 percent reduction in the average CO2 emissions of its global automobile fl eet from FY2001 levels. The company is targeting a total 10 percent reduction from 2000 levels by 2010.

• Power Equipment and Power Sports Products: The company is also targeting a 10 percent reduction in CO2 emissions from its global Power Equipment and Power Sports product fl eets from FY2000 levels by 2010.

North American Targets• Automobiles: Honda will aim to increase the company’s

already industry-leading U.S. corporate average fuel economy (CAFE) for its combined passenger car and light truck fl eet by 5 percent from model year 2005 levels by model year 2010.

• Power Sports Products: Honda will replace 100 percent of its 2-stroke engines with cleaner and more effi cient 4-stroke engines in all of its North American power sports products by the 2008 model year.

* All manufacturing by Honda Motor Co., Inc., and 72 other Honda Group companies engaged in the assembly of vehicles and major components.

• Automobiles: By FY2007, Honda had achieved a 9.5 percent reduction in global average CO2 emissions per unit of automobile production from 2000 levels. The company is targeting a total 10 percent reduction by 2011.

• Power Sports Products: Average CO2 emissions per unit of production for Honda power sports products were reduced 23.2 percent in 2007 from 2000 levels. The company will strive to maintain at least a 20 percent reduction through 2010.

• Power Equipment: Average CO2 emissions per unit of production for Honda power equipment products increased4.4 percent in 2007 over 2000 levels, due in part to the increased product size and content. The company will strive to achieve its target of a 20 percent reduction over 2000 levels by 2010.

North American Targets• Honda will seek further reductions in manufacturing energy

intensity, as measured by gigajoules per auto (GJ/auto), where technically and economically feasible (see pages 28-29 for more details on Honda’s manufacturing energy reduction efforts in North America).

Global Target Global Target by 2010 vs. Progress (per unit produced) Progress 2000 baseline thru 2006 by 2010 vs. 2000 baseline thru 2006

Automobile -10% g/km -6.0% Automobile -10% kg/unit -9.5%Automobiles sold in Japan, North America, Europe/Middle East/Africa, Asia/Oceania, China, South America (more than 90% of worldwide sales)

Power Sports -10% g/km -13.2% Power Sports -20% kg/unit -29.3%Motorcycles sold in Japan, North America, Europe, Thailand, India, China, Indonesia, Vietnam, Brazil, the Philippines, Malaysia, Pakistan (more than 90% of worldwide sales)

Power Equipment -10% kg/hr -6.9% Power Equipment -20% kg/unit +4.4%All worldwide power equipment product sales, excluding outboard marine engines.

Honda’s Voluntary CO2 Reduction Targets

product domain

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manufacturing* domain

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Gasoline engine effi ciencyHonda will continue to improve the already industry-leading fuel effi ciency of its gasoline-powered vehicles, including:

•A more advanced version of Honda’s i-VTEC™ variable-valve timing technology introduced by 2010.

•Next-generation Variable Cylinder Management (VCMTM) technology introduced in the Accord Sedan and Coupe and Odyssey minivan in 2007.

•Power sports and power equipment: Advance the effi ciency and emissions performance of power sports and power equipment products, including application of programmed fuel injection (PGM-FI) technology to most of Honda’s worldwide motorcycle fl eet by 2010.

Hybrid technologyHonda will further advance its hybrid technology, including the introduction in 2009 of a new, more affordable family car with a gas-electric hybrid powertrain and a price below that of the current Civic Hybrid. The company is projecting annual sales of 100,000 units in the United States and Canada combined.

Clean dieselHonda will introduce in 2009 a new vehicle or vehicles equipped with high-effi ciency, 4-cylinder clean diesel engine technology that achieves U.S. EPA Tier 2 Bin 5 emissions levels. Honda’s next-generation die-sel engine has a unique NOx reduction catalyst that turns NOx into harmless nitrogen (N2) — all without the need for onboard urea storage.

Alternatives to gasolineHonda is the only company that continues to offer a dedicated compressed natural gas-powered pas-senger car, Civic GX, to both the retail and fl eet markets. To advance alternative fuel vehicles with lower GHG emissions, Honda has ex-panded the availability of the Civic GX and the PhillTM home refueling appliance to additional markets in California and to 20 Honda dealers in New York state.

Fuel cell technologyHonda is accelerating the development of fuel-cell vehicle technology, and will introduce in 2008 a totally new fuel cell vehicle based on the FCX Concept. This vehicle is based on a Honda-developed V Flow fuel cell platform consisting of a compact, high-effi ciency fuel cell stack arranged in an innovative center-tunnel layout that allowed designers to create an elegant, low-riding, sedan form.

Alternative fuel infrastructureCompressed Natural Gas: The PhillTM home refueling appliance, manufactured by FuelMaker Corp., expands the CNG market beyond fl eets to retail customers. Its experience with gaseous home refueling has provided Honda with practical know-how that can help the development of distributed hydrogen infrastructure in the long term.

Hydrogen: Honda’s research on the experimental Home Energy Station (HES), with its partner Plug Power, Inc., is in its third generation. Using natural gas as its energy source, this station aims to provide a home-based refueling environment that produces suffi cient hydrogen to power a fuel cell vehicle while providing heat and electrical energy for an aver-age home.

Meeting the Energy and Climate Change Challenge


In Honda’s view, meeting the energy and environmental challenge involves three critical issues — air quality, climate change, and energy sustainability.

The company has undertaken a series of new technology developments aimed at further improving the in-use fuel effi ciency and emissions performance of Honda and Acura automobiles, and further advancing viable alternatives to gasoline.

Honda will also continue to advance and promote the compatibility of high fuel effi ciency and safety as epitomized by its leadership in both CAFE and in the application of standard safety features through its “Safety for Everyone” initiative.

timeframe

presentpast future

Strategy 1Reducing air pollution with

conventional engine technology. (Substantial progress has been

made as low emission technology has advanced.)

Strategy 2Further advancing fuel

effi ciency through conventional engine, hybrid,

clean diesel, and other technologies.

Strategy 3Developing alternative

fuel technologies (both for vehicles and

infrastructure) to address energy sustainability.

1

2

3societal

concerns

energysustainability

climatechange

airquality

three issues�

three strategies�

�

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Honda will continue to work constructively

with policymakers to help ensure that

appropriate policy actions are taken to encourage

continued progress toward greater fuel effi ciency

within the industry and the marketplace.

Honda believes there is a need to constructively pursue national policy initiatives that are technically feasible, and fair, and that encourage the auto industry to advance effi cient products, while helping to increase consumer interest in fuel economy.

Challenges for the FutureMany challenges remain in making the reduction of greenhouse gas emissions a top priority for consumers.

Although fuel prices in North America are high in absolute terms, as a percentage of household

income, fuel remains relatively inexpensive. As a result, many consumers do not consider fuel effi ciency a top priority. At the same time, the cost of pinnacle technologies such as gasoline-electric hybrids remains high relative to their value for the average consumer. Honda is working to encourage greater consumer acceptance by making its

technologies fuel effi cient and affordable. Further, the misperception that smaller cars cannot be safe is a persistent marketing challenge that leads some consumers to prefer larger cars, SUVs, and trucks. Through the introduction of new technologies and its “Safety for Everyone” initiative, Honda is demonstrating that it is possible to offer vehicles with both industry-leading levels of fuel effi ciency and standard safety equipment.

Honda’s Position on GHG/Fuel Economy Regulation in the United StatesHonda is playing a constructive role in urging the U.S. federal government to address greenhouse gas (GHG) emissions.

Honda encourages U.S. federal government policymakers to consider all levers at their

disposal to stimulate demand for more fuel effi cient vehicles. For more than two years, Honda has urged the U.S. government to increase and strengthen its fuel economy standards. Honda provided a statement to the U.S. Senate Energy and Natural Resources Committee and to the House Science Committee

supporting legislation to authorize the National Highway Traffi c Safety Administration (NHTSA) to set increased federal fuel economy standards and to consider attribute-based standards for passenger cars. Further, Honda is the only automaker to have submitted to the Senate Energy Committee a statement addressing the proper structure for a cap-and-trade system for motor vehicle greenhouse gas emissions.



United States In the United

States, Honda advocates national standards and a national industry policy for mobile sources. Honda has provided Congressional testimony in support of higher fuel economy standards, set and monitored by the appropriate regulatory bodies. Honda has also advocated selected use of incentives to promote new technologies that improve fuel effi ciency and reduce GHG emissions. (See below for additional information on Honda’s U.S. policy outlook.)

Mexico In Mexico,

Honda de Mexico (HDM) continues to work closely with government agencies to establish new policies that emphasize the importance of reducing emissions and increasing fuel effi ciency. HDM is part of Proyecto Gases Efecto Invernadero (GEI Project Mexico), which involves regular reporting of GHG emissions, such as C02 and CH4 , from the production process, in order to help the government assess activities for reducing emissions.

CanadaIn Canada, the automotive industry has already entered

into an agreement with the federal government to reduce greenhouse gases from on-road sources as part of a national commitment to address climate change. In October 2006, the government provided a Notice of Intent to regulate the industry when the voluntary agreement expires at the end of 2010.

The Canadian government’s 2007 budget introduced the Eco-Auto Incentive Program to encourage consumers to purchase fuel-effi cient vehicles with a combined highway and city fuel consumption of 6.5 L/100 km or less. Honda believes the program’s fuel consumption criteria are currently overly restrictive, and therefore too narrow in application to effect a

noticeable improvement in overall fl eet fuel consumption. Our considered view is that fee- and levy-type incentive programs should be structured only in a manner that scales both rewards and penalties for all vehicles on a continuous and proportionate basis. Actions to address climate change must also continue to be balanced with our efforts to enhance occupant safety.

National Approaches


Honda also has been a long-term supporter of federal and state incentives for alternative-fuel vehicles and the infrastructure to jump-start new technologies.

In the United States, Honda has called upon the federal government to approve further increases in fuel economy standards and to adopt a new combined standard for passenger cars, SUVs, and pickup trucks. Given the rapid technology changes that are taking place, performance-based requirements or incentives are the best way to reduce fuel consumption and GHG emissions. It is impossible to predict the pace of technology development or to know when break-throughs may occur. Accordingly, technology-specifi c mandates will not get us where we need to go.

• Previous attempts to mandate specifi c technologies have a poor track record, such as the attempts in the 1990s to promote methanol and the California electric vehicle mandate. The primary effect of technology-specifi c mandates is to divert limited resources from other development programs that may be more promising. If there must be mandates, they should be stated in terms of performance requirements, with incentives, and supported by research and development.

• Honda specifi cally supports CAFE increases for both light-duty trucks and passenger cars to be set by the NHTSA. The major problem with rigidly setting future CAFE standards in statute is that the rate of technology development cannot be accurately forecasted. There are times when

technology development progresses rapidly, and other times when promising technologies do not work out. Nor is it possible to predict accurately the future price of gasoline and other motor vehicle fuels. This is why it is important for an expert agency to monitor technology progress. When technology breakthroughs occur, NHTSA should increase the CAFE standards to compel more rapid implementation of the technology. Should technology development hit unexpected problems, NHTSA should adjust the CAFE standards to prevent unintended market and competitive problems. Congress should specify the criteria used by NHTSA to make CAFE adjustments, but a rational adjustment mechanism is needed in order to implement technology at the maximum feasible rate without market disruptions.

In addition to supporting the NHTSA’s recent increase in CAFE standards for light-duty trucks, Honda also sponsored critical research that demonstrated the capacity for vehicles to be made more fuel-effi cient without compromising safety, especially if a size-based attribute standard is used.

Honda also supports NHTSA’s recent determination that CAFE “backstop” provisions are counterproductive. Congress should further enhance the CAFE program by eliminating the artifi cial split between import and domestic passenger car fl eets and by combining passenger cars and light trucks under a single CAFE system.

Given the rapid technology changes that are taking place, performance-based requirements or incentives are the best way to reduce fuel consumption and GHG emissions.

Honda also supports an economywide effort to address global climate change. The transportation sector represents about 33 percent of all U.S. GHG emissions. The light-duty vehicle sector accounts for about 60 percent of that total. In addition to mandating reductions from the motor vehicle industry, Congress should develop appropriate regulatory programs to address emissions from the fuel sector. Such requirements would not only reduce GHG emissions, but would also help to ensure that

steps taken by the fuel and vehicle industries are complementary. Fuel sector activities might also send important market signals to consumers.

Honda strongly believes that mobile source initiatives must be undertaken at the national level.GHG emissions and their effect on climate change do not stop at the border of any one state.

The technology necessary to reduce GHG emissions is fundamental to the design of a vehicle and its powertrain. It is diffi cult and not economically practicable

to tailor fuel-effi cient technologies to meet different requirements for different states and to market different vehicle types for specifi c states.

For these reasons, and because fuel effi ciency is regulated exclusively at the federal level, the auto industry’s trade associations, including Honda’s, in 2009 challenged California’s attempts to regulate greenhouse gas emissions at the state level.

Honda believes that as a manufacturer of motor vehicles and power equipment, it has a

responsibility to do its share to address climate change.

But because climate change is a societal problem, Honda and fi ve other automakers rejected the assertion, made in a lawsuit fi led by the state of California, that vehicle manufacturers are responsible for damages caused by global warming. On September 17, 2007, the trial court agreed with the plaintiffs that the so-called “nuisance doctrine,” which formed the theory of this case, was misapplied in the context of global climate change.



7

Honda believes that as a manufacturer of motor vehicles and power equipment, it has a responsibility to do its share to address climate change.

Climate Change: A Societal Concern


Coordinated development of

advanced vehicle and powertrain

technologies with alternative fuels will be critical to

success in our energy future, and to the further reduction

of greenhouse gas emissions.



Fuels for the Future Honda believes that we need to reduce our consumption of conventional fuels while advancing the development of viable alternative fuels including renewable and lower carbon intensity fuels.

Global demand for transportation energy is so immense that no single technology holds

the key to the future. Coordinated development of advanced vehicle and powertrain technologies with alternative fuels will be critical to success in our energy future, and to the further reduction of greenhouse gas emissions. We need rapid

development and implementation of as many feasible technologies as possible to meet society’s future energy needs. Accordingly, Honda is exploring a variety of ways to achieve greater energy and environmental sustainability. We are advancing our technology across a broad front to meet the needs of our customers and society.

Biofuels are promising; they can replace some fossil fuel. But even cellulosic biofuel has the potential to replace, at most, 10 to 20 percent of the world’s oil demand. Honda believes an ideal biofuel has the following attributes:

• It has a true positive impact on reduction of GHG emissions and energy security, as determined by complete and objective life cycle analyses.

• It does not harm the environment through secondary effects, such as biodiversity loss.

• It does not adversely affect the price and availability of food supplies, directly or indirectly.

• It is compatible with all current and legacy vehicles and with small engines.

• It is transparent to the consumer in terms of price, performance, and availability.

• It has a pathway for sustained growth in the market.

• It can be transported using the existing pipeline infrastructure.

Ethanol and Flex Fuel Vehicles (FFVs)Honda supports biomass fuel development. It has introduced two models for the Brazil market capable of running on fuels containing 0 to 100 percent ethanol. It is also evaluating the market for FFVs in the United States. However, the optimal use of ethanol derived from corn is in an E10 (10% ethanol) formulation. E10 fuel, unlike E85 (85% ethanol), does not require a new fueling infrastructure or specially-engineered vehicles. In fact, all new gasoline-fueled Honda products are capable of operating with E10. In the near term, E10 can displace enough petroleum to meet the Renewable Fuels Program requirements. Honda opposes all government mandates that specify particular technologies as opposed to performance benchmarks, including mandates that manufacturers produce FFVs.

Biofuels for Diesel ApplicationsBiofuels for diesel vehicles, such as biodiesel, also have a role in reducing GHG emissions and in meeting our future energy needs. Unfortunately, there are currently no standards in place for biodiesel blends in the U.S. Honda is working within industry consortia to develop such standards and to promote the availability of high-quality biodiesel for U.S. consumers. Also, a new type of diesel biofuel, produced by hydrotreating

fats and oils, will soon enter the US market. This renewable diesel is of high interest, because it is chemically nearly equivalent to petroleum-based diesel and can be transported through existing pipelines.

Next-Generation BiofuelsThe key to wider use of renewable fuels is economically viable and environmentally sustainable methods of production. Research into cellulosic materials, such as switchgrass and agricultural waste, shows promise. Cellulosic materials have the potential to provide far more biofuel than corn, without impacting food supplies and with far less energy input and lower GHG emissions. One example is alcohol derived from cellulose. Another is the Biomass-to-Liquid (BTL) process, which can produce synthetic fuels that are chemically identical to petroleum-derived gasoline and diesel fuel.

Hydrogen and MethaneHydrogen fuel cells hold great promise as a technology able to address both climate change and energy sustainability concerns in the long term. Honda has made great advances in hydrogen fuel cells and in refueling solutions; however, the sustained challenges of hydrogen storage and infrastructure will require continued effort to overcome.

Honda Research into RenewablesHonda is performing cellulosic alcohol research in a partnership with the Research Institute of Innovative Technology for the Earth (RITE). This effort has already achieved a breakthrough in the process technology, resulting in an increased biofuel yield. We are also exploring the potential use of biogases, such as methane or hydrogen made from biomass. Methane can be captured and burned. Hydrogen can be produced from biomass, (or as a by-product in the biofuel production process). Since the hydrogen fuel cell vehicle has three times the fuel economy of a conventional gasoline-powered vehicle, the benefi t per mile is greater than using alcohol in a fl ex fuel vehicle. Honda is also doing research on hydrogen production from renewable solar energy and will begin solar module production for residential applications this year in Japan. We plan to maintain a comprehensive focus on alternative fuel vehicles and promising fuels in our ongoing research.

Honda’s View on Biofuels



Environmental Management

Based on our goal of being “a company that society wants to exist,” Honda has long viewed the preservation of our natural environment as a core management

responsibility and a critical component of our long-term viability as a mobility company.


Honda Environment Statement

A strong commitment to the environment is at the core of the business philosophy that guides Honda’s global and North American activities.

1.

We will make efforts to recycle materials and conserve resources and energy at every stage of our products’ life cycle, from research, design, production, and sales to service and disposal.

2. We will make every effort to minimize and fi nd appropriate methods to dispose of waste and contaminants that are produced through the use of our products, and in every stage of the life cycle of these products.

3. As both a member of the company and of society, each associate will focus on the importance of making efforts to preserve human health and the global environment, and will do his or her part to ensure that the company as a whole acts responsibly.

4. We will consider the infl uence that our corporate activities have on the regional environment and society, and endeavor to improve the social standing of the company.



ESTABLISHED AND ANNOUNCED IN JUNE 1992

“ As a responsible member of society whose task

lies in the preservation of the global environment,

the company will make every effort to contribute

to human health and the preservation of

the global environment in each phase of its

corporate activity. Only in this way will we be

able to promote a successful future not only for

our company, but for the entire world.”



Environmental Management PhilosophyHonda’s commitment to the environment is based not only on meeting government regulations, but also on making positive contributions beyond regulatory requirements that lead to a healthy environment for its customers and for society as a whole.

This commitment is refl ected in all Honda products, technologies, and business operations.

To formalize this commitment, in 1995 Honda established a World Environmental Committee with the responsibility to implement the Honda Environment Statement throughout the company’s global operations. In keeping with Honda’s environmental philosophy and vision,

the committee sets the directions and goals for Honda’s companywide environmental efforts. With guidance from the Environmental Committee, regional environmental committees set their own goals in each of Honda’s six operational regions: North America, South America, Europe, Asia/Oceania, China, and Japan.


North American Environmental Organization

As our single largest region for automobile sales and production, Honda’s North America region plays a critical role in the company’s global environmental effort. The North American Environmental Committee is charged with fi nding ways to minimize the environmental impact of Honda’s operations in the region, which includes the United States, Canada, and Mexico.


Product Development From the earliest stages of a new product’s development, targets are established for such critical factors as vehicle weight, fuel economy, and emissions performance. In virtually every area, Honda targets best-in-class levels of performance. Each product development team is also responsible for meeting certain corporate environmental targets, including vehicle recyclability and reduced use of toxic substances. These goals are vigorously pursued throughout product development, in balance with other key criteria, to ensure that the company is meeting its commitment both to the customer and to society.

Green BuildingsHonda is fi nding ways throughout its North American sales, manufacturing and R&D operations to reduce its energy use and to increase the reuse and recycling of spent or waste materials. Honda is also working to meet U.S. Green Building Council certifi cation standards for a number of its new and existing facilities.

ManufacturingHonda’s “Green Factory” and “Green Purchasing” programs in North America encompass a broad range of initiatives across all of its manufacturing operations and its family of more than 600 North American OEM parts suppliers. These efforts include continuous improvement in eliminating substances of concern (SOCs) and in reducing factory emissions, material waste, and energy use. Each plant is responsible for pursuing its own strategies within the framework of Honda’s regional environmental initiatives.

CommunicationsHonda is committed to transparency in reporting its progress on environmental issues in all areas of its North American operations. In 2005, the company began publishing an annual report on its environmental performance in the region, which encompasses the United States, Canada, and Mexico. This report is distributed in print form to policymakers, stakeholders, and environmental organizations in North America. It is also made

available to all interested individuals through the company’s consumer Web site: www.honda.com. Additionally, Honda Motor Co., Inc., publishes an annual environmental report that focuses on Japan, which also includes key regional activities and a summary of global product and manufacturing emissions.

Risk ManagementHonda considers risk management an integral part of environmental management. Honda’s approach to risk management is refl ected in various activities. These include systems for preventing spills and releases, reducing volatile organic compounds (VOCs) and other air emissions, and recycling products and components in order to minimize landfi ll waste. From long-term planning to daily operations, Honda makes efforts to understand the risk of environmental damage and to make prudent decisions to minimize damage wherever possible.

Product Recall PolicyHonda’s policy on product recalls, including emissions-related recalls, is in accordance with the procedures of its Quality Committee, which is composed of senior executives from various divisions of the company. The Japan-based Quality Committee makes decisions about Honda products manufactured and sold throughout the world, relying upon recommendations from Honda experts in each region. In making decisions, Honda targets best-in-class procedures, with only a few exceptions.

During the fi scal year ended March 31, 2007, Honda fi led one combined product update/warranty extension report, and two voluntary emission recall reports under the U.S. EPA’s Voluntary Emission Recall reporting requirements.

Compliance with Environmental Laws and RegulationsRegulatory compliance is fundamental to the production and in-use performance of Honda products and operations in North America. All Honda companies have systems in place to ensure that their activities comply with all applicable legal requirements.



11

In virtually every area of environmental performance, Honda targets best-in-class levels, including fuel effi ciency, emissions, recyclability, and reduction of toxic substances.

North American Environmental-Related FinesCOMPANY BACKGROUND DATE/FINE

Honda was not assessed any material environmental-related fi nes in the fi scal year ended March 31, 2007. (Material fi nes are defi ned as $100,000 or more by regulatory disclosure guidelines.)


Honda is guided by the following goals and commitments to ensure ongoing progress in the advancement of its environmental performance in North America.

CATEGORY GOAL CURRENT STATUS COMMITMENT

PRODUCTS

Automobile Maintain top level car and truck fl eet fuel economy among the top six automakers, as measured by U.S. CAFE and Canada CAFC

Honda has the industry’s best Corporate Average Fuel Economy (CAFE) for the model year 2006 vehicle fl eet (29.1 mpg for MY2006)

Honda has established a voluntary goal to improve its U.S. CAFE by 5% over 2005 levels by model year 2010

By 2005, 100% of Honda and Acura vehicles employed VTEC engine technology for improved fuel effi ciency, while Honda’s Variable Cylinder Management (VCM) cylinder idling technology has been applied to the Honda Odyssey, Pilot, and Accord Hybrid

Introduce by 2010 a vehicle or vehicles equipped with a more advanced and effi cient version of Honda i-VTEC engine technology for 4-cylinder engines

Introduce in 2007 the next-generation of VCM technology with 3-, 4-, and 6-cylinder operation, on the Accord V6 Sedan and Coupe, and Odyssey

Hybrid: In 2005, Honda introduced the fourth generation of its hybrid technology in the 2006 Civic, with 50 mpg combined city/highway fuel economy and increased performance and effi ciency compared with the previous-generation Civic Hybrid (2002-2005)

Continue to advance our hybrid technology and introduce in 2009 an all-new model sold only as a dedicated hybrid, priced and positioned below the current Civic Hybrid, with projected annual sales of 100,000 units in the U.S. and Canada

Clean diesel: No diesel engines currently offered in North America

Introduce in 2009 the next generation of Honda 4-cylinder clean diesel engine technology that will achieve U.S. EPA Tier 2 Bin 5 emissions levels without the need for on-board urea storage

Fuel cell: The Honda FCX hydrogen-powered fuel cell vehicle has over 50% effi ciency on the EPA city driving cycle, nearly three times that of a conventional gasoline-powered car and almost twice the effi ciency of a gas-electric hybrid car

Introduce in 2008 an all-new fuel cell vehicle, based on the Honda FCX Concept, that uses a smaller, lighter fuel cell stack with higher output, for even greater fuel effi ciency and driving range, in a new low-fl oor sedan layout


Ongoing incremental improvement in fuel effi ciency worldwide of motorcycle, ATV, and personal watercraft products

A 27.6% improvement in global motorcycle fl eet average fuel effi ciency in FY2007 compared with FY1996 levels (total average in Japan, U.S., EU, and Thailand)

Expand application of programmed fuel injection (PGM-FI) on motorcycles by 2010

Power Equipment

Continuous improvement in fuel effi ciency worldwide of Power Equipment, General Purpose engines, and Marine engines

A 31.7% improvement in the global fl eet average fuel economy was achieved in FY2007 versus FY1996, exceeding the original target of a 30% improvement

Improve Power Equipment, General Purpose engine, and Marine engine fuel economy through the development and application of new technology

Automobile Continuous reduction in emissions from automobiles

100% of 2007 model year Honda and Acura automobiles meet or exceed the U.S. EPA and Transport Canada Tier 2 Bin 5 emissions standards

Strive to meet or exceed all regulatory requirements pertaining to vehicle emissions ahead of established deadlines

Honda has three vehicles that are also certifi ed as Advanced Technology Partial Zero Emissions (AT-PZEV) vehicles under California’s emissions regulations: the 2007 Accord Hybrid, Civic Hybrid and CNG-powered Civic GX

Broaden availability and appeal of advanced technology vehicles with near-zero emissions

The Honda FCX hydrogen-powered fuel cell vehicle is the only vehicle certifi ed by the U.S. EPA as a Zero Emissions Vehicle (ZEV)

Introduce in 2008 an all-new zero-emissions fuel cell vehicle based on the FCX Concept


Continuous reduction in emissions worldwide from Honda Power Sports products

Cleaner, more effi cient 4-stroke engine technology has been integrated into all of Honda’s Power Sports products, with the exception of a few off-road competition models

Expand application of 4-stroke engine technology to all Power Sports products, including off-road competition models, by model year 2008

Power Equipment

Continuous reduction in emissions worldwide from Power Equipment, General Purpose engines, and Marine engines

A 39% reduction in global fl eet average HC+ NOx emissions in FY2007 compared with FY1996 levels, exceeding the original target of a 30% reduction, achieved in FY2001

Continue to reduce emissions from Power Equipment, General Purpose engines, and Marine engines through development and application of new technology

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Honda has established key goals with regard to its products and operations. �

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Environmental Goals, Status, Commitments

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CATEGORY GOAL CURRENT STATUS COMMITMENT

MANUFACTURING

ISO Certifi cation Achieve and maintain ISO14001 certifi cation at each major manufactur ing operation in North America

13 of 14 major North American plants operating in FY2007 were certifi ed to the ISO14001 standard

Honda Precision Parts Georgia (HPPG) will be certifi ed to ISO14001:2004 standards by December 2009

Air Emissions Reduce releases of air pollutants VOC emissions from auto body painting operations were reduced 25% to 15.6 g/m2 in FY2007, from 20.8 g/m2 in FY2006

Maintain average VOC emissions from auto body painting operations at less than 20 g/m2

Landfi ll Waste Achieve zero waste to landfi ll (excluding mineral waste and certain construction debris)

Landfi ll waste in North American was reduced 56% from FY2001 levels to 8,968 metric tons in FY2007

Reduce total landfi ll waste by 70% from a FY2001 baseline by FY2010

Energy Improve manufacturing energy effi ciency

Total energy use increased about 1% in FY2007 compared to the previous fi scal year, while energy use per automobile decreased roughly 1.5% in the same period, from 6.7 to 6.6 GJ/auto

Further reduce energy use in all North American manufacturing facilities

CO2 emissions per automobile produced fell about 1%, from 715 kg/auto in FY2006 to 711 kg/auto in FY2007, up slightly from the FY2001 baseline of 709 kg/auto

Continue to track greenhouse gas emissions for all North American assembly plants

ISO Certifi cation Promote certifi cation by OEM suppliers to ISO14001 standards

93% of key suppliers and 80% of all OEM suppliers in North American achieved third-party certifi cation to the ISO14001 standard

Promote certifi cation of key suppliers to the new ISO14001:2004 standard

Supply Chain Management

Expand the use of returnable containers for Honda manufacturing operations

All automobile models exceeded 90% returnable container use

Continue to increase use of returnable containers

Enhance parts delivery logistics Reduced planned network miles by implementing optimal shared routing for North American manufacturing locations

Reduce vehicle miles traveled (VMT) for shipment of parts to North American manufacturing facilities

WASTE MINIMIZATION

Products Increase the design recyclability of automobiles in North America

Every model year 2006 and newer Honda and Acura vehicle has achieved 90% or greater design recyclability (Honda calculation based on JAMA standard)

Maintain 90% or greater design recyclability of future automobiles (Honda calculation based on JAMA standard), and 95% for Power Sports and Power Equipment products

Substances of Concern (SOCs)

Reduce and, if possible, eliminate substances of concern, including mercury, lead, hexavalent chromium, cadmium, brominated substances and polyvinyl chlorides (PVCs)

Mercury: Used only in HID headlights and for navigation and entertainment systems. Honda maintains a closed-loop recycling process for damaged or replaced video screens

Phase out mercury in components (such as HID headlights and LCD screens) where technically feasible and economically practical

Lead: Eliminated lead from wheel weights in automobile and motorcycle products and from machined steel, with the exception of contaminants, and electrode deposition coatings for automobiles

Eliminate lead in steel used to produce ATV wheel hubs and in solder used for welding electronic circuit substrates, when technically feasible

Hexavalent Chromium: Eliminated from paint pretreatment process; phased out for 90% of North American-made OEM parts

Phase out the hexavalent chromium used in automobiles for anti-corrosion purposes by the end of CY2007, with the exception of replacement parts

Cadmium: Eliminated all but a very small amount of cadmium used in electronic components such as IC chips

Work with suppliers to eliminate cadmium from components

PVC: Applying PVC-free technologies for interior and exterior parts, trim, sealants and adhesives

Expand PVC-free technologies for remaining applications wherever feasible, including elimination from underbody and weld sealer applications

Brominated Substances: Phased out all applications of penta- and octa-brominidephenylethers (BDE) for all products

Assess all applications of brominated substances and continue to study opportunities to eliminate deca-BDEs

Green Building Improve energy effi ciency and reduce the generation of waste at Honda facilities in North America

Honda now has two facilities in North America with LEED Gold certifi cation from the U.S. Green Building Council

Certify at least two new buildings to LEED-NC in FY2009, and recertify the Gresham, Oregon, facility from LEED-NC to LEED-EB (Existing Building)

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Through three major product segments Automobiles Pages 14 - 20

Power Sports Pages 22 - 23

Power Equipment Pages 24 - 25

Honda produces, sells and services a broad array of products in North America.

Environmental Impact of Honda Products

Environmental Goals and Commitments (SEE PAGES 12-13 FOR COMPLETE SUMMARY)

CATEGORY GOAL COMMITMENT

PRODUCTS

AutomobileFuel Effi ciency

Maintain top level car and truck fl eet fuel economy among the top six automakers, as measured by U.S. CAFE and Canada CAFC

Honda has established a voluntary goal to improve its U.S. CAFE by 5% over 2005 levels by 2010

Advancing Internal Combustion Engine Effi ciencyContinued improvements to the effi ciency of the internal combustion gasoline engine are critically important.

The gasoline internal combustion engine will remain the primary powerplant for personal mobility for some time to come. It has broad customer acceptance, and it is supported by a vast fueling infrastructure. Moreover, advanced technologies such as gas-electric hybrid powerplants still rely on gasoline. Thus, Honda believes that further advancements in gasoline engine effi ciency are critically important for the immediate future and that many opportunities still exist to improve the effi ciency of the internal combustion engine.

Accordingly, the company in 2006 set for itself a voluntary goal to increase its already industry-leading U.S. corporate average fuel economy by 5 percent over 2005 levels by model year 2010. Achieving this goal will require the introduction of even more effi cient engines. Specifi c actions being taken for the future include:

• Introduction in 2007 — on the 2008 Accord V6 Sedan and Coupe and Odyssey minivan — of next-generation, Variable Cylinder Management (VCM) technology, with 3-, 4-, and 6-cylinder modes.

• Introduction by 2010 of a more advanced version of Honda’s 4-cylinder i-VTEC technology, with up to a 13 percent effi ciency increase over 2005 levels.

• Further advancements in Honda hybrid technology, including the introduction in 2009 of a new, more affordable family vehicle sold as a dedicated hybrid vehicle, with projected annual sales of 100,000 units in the U.S. and Canada combined.

• Introduction in 2009 in the United States and Canada of a vehicle or vehicles powered by the next generation of Honda’s 4-cylinder clean diesel engine technology, which will achieve U.S. EPA Tier 2 Bin 5 emissions levels without the need for on-board urea storage.



Honda is reducing the environmental impact of its products through continued improvements to fuel

effi ciency and emissions, and through real-world advancement of energy alternatives, such as natural gas and hydrogen, as well as reductions in the use of virgin materials and potentially toxic substances.

Automobile: Fuel Effi ciency

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Honda Leads the Industry in Fuel Economy

Honda has invested consistently in the development and broad application of technologies aimed at improving the fuel effi ciency of all its automobiles. This includes overhead cam, all-aluminum engines; 5-speed electronically controlled transmissions; sophisticated engine management systems; and VTEC™ variable valve control.



15

In September 2006, Honda announced the development of a new 4-cylinder clean diesel engine that reduces exhaust gas emissions to the same level as a clean gasoline engine (EPA Tier 2 Bin 5). The new diesel engine employs an innovative new lean-burn catalytic converter that makes its own ammonia to convert NOx gas into harmless nitrogen, without the need for on-board storage of urea. A vehicle equipped with Honda’s next-generation clean diesel engine technology will be launched in the United States and Canada in 2009.

Honda’s 4-cylinder clean diesel engine and NOx catalyst.

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Leading Environmental Groups Rate Honda ProductsIndependent studies play an important role in measuring automakers’ environmental performance.

THE GREENEST VEHICLES OF 2007

Honda places 4 vehicles in American Council for Energy Effi cient Economy (ACEEE) top 12 vehicle rankingsRANKING MAKE AND MODEL SPECIFICATIONS EMISSION STANDARD FUEL ECONOMY CITY FUEL ECONOMY HIGHWAY GREEN SCORE

1 Honda Civic GX 1.8L 4, auto (CNG) Tier 2 Bin 2/PZEV 28 39 57

3 Honda Civic Hybrid 1.3L 3, auto CVT Tier 2 Bin 2/PZEV 49 51 53

8 Honda Fit 1.5L 4, manual Tier 2 Bin 5/LEVII 33 38 45

12 Honda Civic 1.8L 4, auto Tier 2 Bin 5/ULEVII 30 40 44

Green score is based on well-to-wheel greenhouse gas and pollution. A higher score is better.


Natural Resources CanadaIn 2007, Honda earned two awards from Natural Resources Canada (NRCan) for the environmental performance of its products. The Honda Civic was recognized as the most fuel-effi cient car in the compact class, and the Fit won an award in the station wagon class. These awards are further examples of the “Honda Benefi t,” which allows customers to enjoy a good balance of green, safe and fun.

UCS Ranks Honda as “Greenest Automaker” for Fourth Consecutive TimeThe Union of Concerned Scientists (UCS) issued its biennial report of automakers’ environmental performance, with Honda topping the rankings for the fourth consecutive time. Honda retained the title of “Greenest Automaker” with the lowest emissions overall in both the global warming and smog categories. Honda was one of only two companies that had better-than-average performance on greenhouse gases (GHG) in every vehicle class. Honda also had the best smog performance in four out of the fi ve vehicle classes in which it competes (small car, midsize car, small utility, midsize utility, and minivan). This report analyzes sales volume to determine real contribution to emission reduction. The report looks at sales of individual models that demonstrated best-in-class performance in one or more environmental category. It found that 25 percent of Honda’s sales were of models that met this description.

The UCS analysis uses sales and emissions data from the U.S. Environmental Protection Agency and the Department of Transportation for model year 2005. Overall scores are based on a 50/50 weighting of average per-mile emissions of smog-forming and global-warming pollutants. The average across all eight automakers is defi ned as a score of 100. Lower scores indicate less pollution.

ACEEE Study The American Council for an Energy-Effi cient Economy (ACEEE) released its environmental scorings of model year 2007 cars and trucks, an annual rating based on a single “green score” that incorporates tailpipe emissions and GHG emissions over the full product life cycle.

The natural gas-powered Civic GX earned the highest score in the 2007 study. It was joined by the three other Honda models in the ACEEE’s top-12 list of “greenest vehicles” for 2007. They are the gasoline and hybrid versions of Civic and the Fit small car.

Honda retained the title of “Greenest Automaker” with

the lowest emissions overall in both the

global warming and smog categories.




17

Leading in Automobile Emissions PerformanceFor model year 2007, every Honda and Acura vehicle sold in the United States and Canada has been certifi ed to Tier 2 Bin 5 or better U.S. EPA emissions standards.

Honda has consistently led the automobile industry in meeting and exceeding vehicle exhaust emissions standards.

Every U.S. Honda and Acura vehicle sold in the United States and in Canada meets or exceeds the U.S. EPA’s stringent Tier 2 Bin 5 emissions standard, and each model is certifi ed in all 50 U.S. states.

Due to the diffi cult nature of this standard, automakers are permitted to meet the standards using fl eet-wide average. All Honda and Acura automobiles meet this standard individually, without taking advantage of fl eet averaging.

Automobile: Emissions



PRODUCTS

AutomobileEmissions

Continuous reduction in emissions from automobiles

Strive to meet or exceed all regulatory requirements pertaining to vehicle emissions ahead of established deadlinesBroaden availability and appeal of advanced technology vehicles with near-zero emissions

Introduce in 2008 an all-new zero-emissions fuel cell vehicle based on the FCX Concept

Honda has also led in Near-zero Emissions Advanced Vehicle TechnologyHonda introduced the fi rst car to earn California’s Air Resources Board (CARB) Advanced Technology Partial Zero-Emission Vehicle (AT-PZEV) certifi cation — the 2002 natural gas-powered Civic GX. For the 2007 model year, Honda has three vehicles — more than any other automaker — that have earned the AT-PZEV rating: the Civic Hybrid, the Civic GX, and the Honda Accord Hybrid.

The 2007 Civic Hybrid (shown here) and the 2007 Accord Hybrid carry both AT-PZEV and Tier 2 Bin 2 emissions certifi cations. They are also both sold in all 50 states with the same specifi cations.

The chart at left applies to vehicles of less than 6,000 pounds gross vehicle weight (GVW). Light trucks greater than 6,000 pounds GVW have a later phase-in period. The Honda Ridgeline pickup truck met the requirement in 2006, three years ahead of schedule.

Honda Low-emission Classifi cation in Mexico

All new Honda and Acura cars sold in Mexico have been classifi ed as Double

Zero (00) in Mexico City’s Hoy No Circula emissions control program. The Double Zero classifi cation is given to vehicles certifi ed as having low NOx emissions and high city fuel effi ciency. Vehicles meeting this standard may be driven in Mexico City and its suburbs without restriction.

Five Honda models and one Acura model — Accord, Civic IMA, Civic Si, Civic, CR-V and Acura TL — were classifi ed Double Zero (00) for up to six years with only three required recertifi cations. Three additional Hondas and two Acuras — Fit, Ridgeline, Pilot, Acura RL and Acura RDX — were classifi ed in the next highest category,

certifi ed as Double Zero (00) for up to four years, with recertifi cations every two years. The Honda Odyssey and Acura MDX were certifi ed for a single period of two years. Many new models from other automakers received a Single Zero (0) classifi cation, and so must be retested every six months.




In 2005, Honda began marketing the Civic GX and the Phill home refueling appliance to retail customers in California. Sales of the Civic GX to retail customers, by 34 specially trained Honda dealers in California, now exceed sales to fl eet customers. Early customer reports indicate very high satisfaction levels, although the number of early adopters remains relatively small given the scarcity of public CNG fueling stations. Although CNG fueling opportunities

are more prevalent in California than in most regions of the U.S., almost half of Civic GX retail customers have purchased or leased the Phill™ home refueling appliance, available from FuelMaker Corporation, adding convenience to their vehicle ownership experience and realizing additional fuel cost savings. In 2006, Honda further expanded its Civic GX and Phill marketing efforts with the addition of 20 Honda dealers in New York state.

Automobile: Alternative Fuels

Continued Advancement of the CNG-Powered Honda Civic GXIncreasing the performance and effi ciency of the near-zero emissions Civic GX.

The Honda Civic GX, now in its third generation, illustrates the potential for compressed natural gas (CNG) to be a viable near-term alternative to gasoline as a mainstream transportation fuel. CNG offers multiple benefi ts, including:• A 25 percent reduction in CO2 emissions (on a gallon

equivalent basis).• Near-zero emissions — the Civic GX qualifi es as an

AT-PZEV and is powered by the cleanest internal combustion engine and fuel system ever certifi ed by the U.S. EPA.

• Widespread distribution — more than 50 percent of American households are supplied with natural gas.

• Home refueling cost savings and convenience — using PhillTM, the home refueling appliance developed by Honda and Fuelmaker Corp., consumers realize the benefi t of home refueling at a signifi cantly reduced cost — as little as one-half to one-third that of gasoline (on a gallon-equivalent basis).

• Multiple economic benefi ts for the user — including local, state and federal tax incentives and, in California, single-occupant access to HOV lanes.

Moreover, Honda believes that the application of CNG in the market can play a critical role in bridging the gap between gasoline and alternatives such as hydrogen, providing a mechanism for industry and government to gain a greater understanding of the challenges and opportunities associated with gaseous fuels, and introducing consumers to the potential benefi ts of alternative fuels. In fact, Honda’s fi rst retail

customer for the FCX fuel cell vehicle was selected from its existing base of Civic GX customers, whose experience as early adopters of CNG made them good candidates for the early deployment of hydrogen power.

Three generations of Civic GXHonda has advanced its CNG technology through three generations of the Civic GX. • For the fi rst generation Civic GX, introduced in

1998, Honda developed a natural gas vehicle with durable components and suffi cient range for CNG fl eet applications.

• In the redesigned 2001 model, the powertrain was further improved, making the Civic GX the fi rst passenger car in the world to meet California’s ZEV regulation as an AT-PZEV vehicle.

• Both the power and the fuel effi ciency of the third-generation Civic GX, introduced in 2006, are increased by new powertrain technologies. Through increased engine displacement, Honda VTEC valvetrain technology, and a variable-length air intake, the 2006 Civic delivers a 13 percent increase in power and a 5 percent increase in engine effi ciency. Despite the increased weight of the larger vehicle and its added standard safety features, the 2007 Civic GX also delivers a 15 percent increase in fuel economy on the Federal Test Procedure (FTP) highway mode, extending the vehicle’s commuting range.

With its demonstrated near-zero emissions performance, the 2006 Civic GX is also certifi ed as an AT-PZEV by CARB, and as a Bin 2 ILEV (Inherently Low Emission Vehicle) by the U.S. EPA.




19

Automobile: Alternative Fuels

New Honda fuel cell technology signifi cantly advances the performance and appeal of hydrogen power.

Hydrogen Fuel Cell Vehicle TechnologyPossibly the ultimate solution to the world’s energy and environmental challenges.

Believing that hydrogen power potentially represents the ultimate solution to energy and environmental challenges, Honda has advanced its hydrogen fuel cell vehicle (FCV) technology though four generations of prototype vehicles and several generations of production models. Honda focuses on overcoming barriers to market acceptance by doing original technology research and development, and through early deployment of its technology with real customers in the real world. Through these efforts, Honda has made considerable progress in the total performance and market appeal of its fuel cell technology.

With respect to effi ciency, Honda’s existing FCV technology delivers almost twice the tank-to-wheel fuel effi ciency of its current gasoline-electric hybrid

technology, with no harmful exhaust emissions. In addition to its effi ciency and emissions benefi ts, hydrogen power has the advantage of greatly increased energy diversity — with natural gas, biofuels and renewables such as solar and wind as potential energy sources.

Despite these potential benefi ts, several signifi cant barriers remain to hydrogen’s viability as a mainstream alternative to gasoline. These include the cost of the technology and the absence of a broad-based hydrogen refueling solution. With these remaining barriers squarely in its sights, Honda continues to invest in the advancement of both the vehicle and the refueling technology as we seek to broaden the fuel cell vehicle’s market potential.

The next generation of Honda fuel cell vehicle

represents a signifi cant step forward, delivering performance on par with a gasoline-powered vehicle (in the 2.0- to 2.4-liter engine class). Compared to the current FCX, it has greater range, power, effi ciency, interior space, and improved cold-weather operation, along with new more appealing packaging and style.

In October 2005, Honda unveiled a concept version of its new fuel cell vehicle, slated for limited market introduction to fl eet and retail customers in the United States and Japan beginning in 2008. Its core development concepts are distinctive styling, advanced structure, and smooth driving with superior torque. The FCX Concept is a spacious sedan on a distinctive low fl oor design, made possible by an innovative and compact new Honda-developed V Flow fuel cell stack.

The Honda V Flow stack is a signifi cant improvement over the Honda FC Stack. Power/volume density is improved by 50 percent and power/weight density is improved by 67 percent. The new V Flow structure takes advantage of gravity to effi ciently discharge water formed during electricity generation, improving performance in subzero temperatures with increased system reliability. When starting at -4°F (-20 C), its time to reach 50 percent of

maximum power is reduced by 75 percent. The system is designed to start-up at temperatures below -20°F (compared to -4°F on the existing model). At the same time, output was improved by 16 percent, and size and weight reduced by 21 percent and by 30 percent, respectively, compared with the 2003 Honda FC stack.

The FCX Concept’s fuel cell powertrain generates more power than the current FCX and features a coaxial motor-gearbox that nearly

matches a gas-electric hybrid power plant in weight and size. It offers a signifi cant improvement in mid- to high-speed acceleration and a 30 percent improvement in range, to about 270 miles.

The FCX Concept has a maximum speed of 100 mph. Fuel cell stack output is 100 kW and maximum motor output is 95 kW (127 hp). Energy storage is achieved using a lithium-ion battery, and hydrogen is stored in a 171-liter tank at 5,000 psi.

Next-Generation Honda Fuel Cell Vehicle Technology

V Flow fuel cell stack (center tunnel layout)

Lithium-ion battery

High-pressure hydrogen tank

Coaxial motor-gearbox drive train


Automobile: Hydrogen Fueling Infrastructure

Working To Solve the Challenge of Hydrogen RefuelingHonda’s commitment to advancing alternatives such as the fuel cell is comprehensive, focusing not only on vehicle development, but also on a small-scale hydrogen infrastructure solution.

One approach to hydrogen refueling is the Home Energy Station concept, which uses natural gas to provide electricity and heat for a home while producing hydrogen fuel for a vehicle. The result is a total effi ciency improvement. A second approach is renewable hydrogen production through Honda’s own solar panel technology.

Home Energy StationThe third generation of Honda’s experimental Home Energy Station is about 30 percent smaller than its predecessor, yet it provides a 25 percent increase in electrical power output and a faster start-up time.

Additionally, hydrogen storage and production capacity are improved by about 50 percent with the new high-performance natural gas reformer. Natural gas is reformed to generate hydrogen for vehicle use. At the same time, some of hydrogen is sent to a fuel cell inside the unit to generate electricity for the home. Heat, which is a byproduct of the electricity production process, is also captured and used. These energy devices, taking advantage of an integrated energy management system, connect to the public utility grid, the home, and the vehicle, producing an environmental and energy effi ciency benefi t for all three.

Honda fi rst established its own solar-powered hydrogen refueling

station in 2001, at its Torrance, California, campus. The station uses photovoltaic solar panels to produce electricity, which is fed to a Honda-developed polymer electrolyte membrane (PEM) electrolyzer that generates hydrogen that can be compressed, stored, and dispensed to the fuel cell vehicle.

Data from this station have shown that system effi ciency is more than 50 percent and GHG output is zero.

In this case, “system effi ciency” refers to total effi ciency, from the power output of the photovoltaic modules to the production and storage of hydrogen, including compression. This system can also utilize grid electricity when solar radiation is not available. On grid power, system effi ciency increases to more than 65 percent — comparable to an existing large-scale and centralized hydrogen production site. This suggests the future possibility of a small-scale hydrogen refueling system.

The solar panels on this station are made of CIGS (copper, indium, gallium and selenide) — a thin fi lm compound, developed by Honda, that reduces by half the energy and CO2 emissions required for their manufacture — compared to conventional silicon type solar panels. Honda is building a new plant in Japan to begin mass production of the CIGS solar cells in the fall of 2007. It will have a projected annual production capacity of 27.5 megawatts.

Renewable Hydrogen Station Using Honda CIGS Solar Panel Technology




HondaJet: Taking Honda Mobility and Effi ciency to the Skies

Two of the world’s largest and most respected

names in propulsion joined together in 2004 to design and manufacture advanced engines for the next generation of very light jets. Their fi rst product, the GE Honda HF120 turbofan, is a higher-thrust successor to Honda’s original HF118 prototype engine. The HF120 has been selected to power two of the most advanced new light jets — the HondaJet and Spectrum Aviation’s Freedom business jet.

Honda research on jet engine technology, which started in 1986, culminated in the development of the

HF118 engine, which has powered the prototype HondaJet since its fi rst fl ight in December 2003. GE and Honda’s collaboration on the HF120, which began in early 2005, combined Honda’s original small turbofan engine technology and GE’s 60 years of experience in the development and

manufacture of jet engines. True to Honda’s legacy of innovative and effi cient engine technology, the GE Honda HF120 comes to market with higher fuel effi ciency and lower emissions than its rivals, and the quietest operation in its thrust class.

Engine EmissionsAt present, the International Civil Aviation Organization (ICAO) emissions standards cover carbon monoxide (CO), oxides of nitrogen (NOx) and hydrocarbons (HC), for engines of 6,000 or more pounds of thrust. There are currently no emission regulations for small aircraft. As small engine aircraft become more popular in the future, the range of aircraft covered by the standards will be expanded. GE Honda Aero expects that the HF120 will surpass anticipated future ICAO standards by as much as 20 percent.

Honda Brings Higher Effi ciency to Light Jet Market

Honda and GE Join Forces on Development of Advanced and Effi cient Jet Engines

HondaJet’s operating effi ciency is further enhanced by its twin GE-Honda HF120 turbofan engines, which are designed to reduce fuel consumption, minimize emissions and lower noise.

Honda’s new advanced light jet, HondaJet, achieves 30 to 35 percent higher fuel effi ciency than jets of comparable performance.



21

Honda began selling the $3.65 million HondaJet in October, 2006, a little more than three years after its public debut

in July 2003. Honda’s fi rst ever commercialized aircraft brings with it a series of innovative new concepts in aircraft design that not only deliver a more spacious cabin and class-topping cruise speed, but also allow HondaJet to achieve substantially higher cruising fuel effi ciency — as much as 30-35 percent higher than other light jets of comparable performance. Although environmental standards have not been fully

defi ned for the business jet class, Honda’s goal is to meet or exceed all anticipated future standards.

Employing a carbon composite fuselage, natural laminar fl ow wing and nose, and a patented over-the-wing engine-mount (OTWEM) confi guration, HondaJet exhibits less aerodynamic drag at high speeds than conventional “clean wing” aircraft, resulting in improved performance and cruising fuel effi ciency. Deliveries of HondaJet to customers are scheduled to begin in 2010.

HondaJet, our fi rst entry into the growing light business jet market, represents a signifi cant new era for Honda mobility. It carries with it the hallmark of Honda’s leadership in advancing technology for improved effi ciency and performance.

True to Honda’s legacy of innovative and effi cient engine technology, the GE Honda HF120 comes to market with higher fuel effi ciency and lower emissions than its rivals, and the quietest operation in its thrust class.

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Honda strives to balance the demands of its motorcycle, ATV and personal watercraft customers, who typically seek greater performance, with society’s

need for higher fuel effi ciency, further emissions reductions, and reduced use of toxic materials.

Improving EmissionsCleaner, quieter and more effi cient 4-stroke engine technology has been applied to virtually all Honda power sports products.

All Honda motorcycles, motor scooters, and off-road recreational vehicles sold in North America, with the exception of a few competition off-road motorcycles, are powered by 4-stroke engines. Honda’s 4-stroke expertise results in products that conform to noise and emission standards without compromising the customer’s expectations for performance. Honda’s excellent and sustainable out-of-the-box performance typically gives owners little incentive

to circumvent emissions and exhaust sound control systems in an attempt to realize higher performance.

Honda certifi ed a total of 48 motorcycle and ATV engine families for the 2007 model year. Eight of these engine families were certifi ed at or below California Class III Tier 2 emissions standards. They had emissions levels ranging from 0.3 to 1.2 grams per kilometer HC+NOx.

Improving Fuel Effi ciencyGlobal fl eet average fuel economy of Honda motorcycles has increased signifi cantly since FY1996.

Through improved design and the advancement of engine technology, Honda achieved a 27.6 percent increase in the fl eet average fuel effi ciency of its global motorcycle fl eet in FY2007 compared with FY1996 levels. Fleet average fuel effi ciency decreased 5.5 percent from the previous year’s result, due mainly to the increased sales of motorcycles equipped with automatic transmissions in Thailand.

The increased use of electronic fuel injection in Honda power sports products, particularly in on-highway motorcycles, provides the potential for further increases in real-world fuel effi ciency as well as reduced fuel vapor emissions.



PRODUCTS

Power Sports ProductsFuel Effi ciency

Ongoing incremental improvement in fuel effi ciency worldwide of motorcycle, ATV, and personal watercraft products

Expand application of programmed fuel injection (PGM-FI) on motorcycles by 2010

Power Sports ProductsEmissions

Continuous reduction in emissions worldwide from Power Sports products

Expand application of 4-stroke engine technology to all Power Sports products, including off-road competition models, by model year 2008




23

In addition to its own direct educational programs, Honda has partnered with numerous industry groups, government agencies, and leaders from the recreation and environmental communities to fi nd solutions that permit responsible use of motorized recreation while protecting America’s treasured natural resources.


• For the 2006 model year, 15 of the 19 Honda models sold in California (79 percent versus 51 percent for the industry overall) were certifi ed to emissions levels at or less than the on-highway Class III Tier 2 standards.

• Average emissions for Tier 2-certifi ed models were 0.52 g/km, among the best in the industry.

• Honda’s corporate fl eet average for California-certifi ed Class III motorcycles was slightly below the Tier 2 standard of 0.80 g/km at 0.79 g/km HC+NOx.

I N F A C T Honda has consistently reduced hydrocarbon (HC) emissions from its motorcycle fl eet. Using FY1996 as a baseline, the company has reduced HC emissions 77.4 percent.

In addition to 4-stroke engine use, Honda will be applying programmed fuel-injection technology (PGM-FI) to most of its worldwide power sports fl eet between now and 2010.

Encouraging Responsible Use of Public Lands

Recognizing that the access most riders have to designated off-road riding areas is a privilege, Honda works to educate its customers on responsible use of its products for human safety and environmental protection.

Honda contributes to organizations such as the National Off-Highway Vehicle Conservation Council and Tread

Lightly, which seek to educate riders about designated trail use and responsible riding.

Honda Environmental Learning Centers (ELCs)Honda Environmental Learning Centers, the only centers of their kind in the industry, are an expansion of the four Honda Rider Education Centers (RECs) established more than 15 years ago in Dallas, Atlanta, Los Angeles, and Troy, Ohio. In addition to safety training, Honda’s learning centers teach responsible land use and respect for the ecosystems that surround many off-highway vehicle trails. A nature walk and trail walk have become part of the curriculum taught by dirt-bike and ATV instructors as part of Honda’s efforts to educate students about the importance of responsible riding.

At the Atlanta facility, Honda has partnered with the Audubon Society to draw attention to local bird species and their habitats. The Los Angeles center has a partnership with the San Bernardino National Forest to reach out to local schoolchildren who live far from the forest. Students there take a nature walk and follow a curriculum developed by SBNF’s Children’s Forest Program.

In May 2007, Honda offi cially opened its third ELC as an extension to its Irving, Texas, facility.

The centers are made available to local schools and youth groups, such as the Girl Scouts, with the hope that surrounding communities can use them as a resource to help educate future generations about the environment. Our plans call for a fourth ELC in Troy, Ohio.




Power Equipment

Honda has long been committed to improving the fuel economy and emissions performance of its power equipment products, which includes lawn and garden

equipment, generators, general purpose engines and outboard marine engines. The company has led the industry in the application of overhead valve (OHV) 4-stroke engine technology, which has been applied to all of Honda’s power equipment, outboard marine, and general purpose engines for a long time. In addition, the company has exceeded its internal goals for improvements in fuel economy and emissions performance and is committed to further advancements in its environmental performance.

Fuel Effi ciency and Emissions ImprovementsHonda has worked to improve the fuel effi ciency and emissions of its comprehensive global power equipment product lineup.

In 1999, the company established a voluntary goal to improve the average fuel effi ciency and the exhaust emissions (HC + NOx) of its global power equipment fl eet by 30 percent over FY1996 levels by FY2006.

The company exceeded its target for fuel effi ciency with a 31 percent improvement by FY2006. The average fuel effi ciency of its global power equipment fl eet was further

improved in FY2007 to 31.7 percent over the FY1996 baseline.

The company also achieved its goal of a 30 percent reduction in the average emissions of its global power equipment fl eet in FY2002, four years ahead of schedule. In FY2007, emissions were maintained at the FY2006 levels, 39 percent below the FY1996 baseline.



PRODUCTS

Power Equipment Fuel Effi ciency

Continuous improvement in fuel effi ciency worldwide of Power Equipment, General Purpose engines, and Marine engines

Improve Power Equipment, General Purpose engine, and Marine engine fuel economy through the development and application of new technology

Power Equipment Emissions

Continuous reduction in emissions worldwide from Power Equipment , General Purpose engines, and Marine engines

Continue to reduce emissions from Power Equipment, General Purpose engines, and Marine engines through development and application of new technology

FPO



25

The freewatt micro heat and power cogenerator produces electric power as a byproduct of its heating function. The electric power it produces displaces electricity that consumers would otherwise have to purchase from their local electric utility, reducing CO2 emissions and saving homeowners $500 to $1,000 per year on their electric bills.

Power Equipment


Honda’s iGX general purpose engine performs to stringent California emissions standards. It employs an intelligent engine control system that can vary engine speeds according to load requirements, reducing fuel consumption and noise.

Going Beyond Emissions RegulationsHonda has adopted California emissions standards for most general purpose engines sold in the 50 U.S. States and Canada.

General purpose engines and the equipment they power are regulated by both the U.S. EPA and California’s Air Resources Board (CARB). Currently, California regulations are more stringent and include evaporative emissions control of small engine-powered products.

I N F A C T Based on Honda’s commitment to protecting the environment, the vast majority of the 2.3 million

general purpose engines (1.5 million produced in North Carolina) sold throughout the United States and Canada in 2006 conformed to the more stringent California standards.

Honda is also working constructively with the EPA in an effort to help determine the next regulatory level of emission reduction for the United States.

Reducing CO2 Emissions from Home HeatingHonda begins sales of freewatt™ micro co-generation combined heat and power (MCHP) system.

In 2005, American Honda Motor Co., Inc. and Climate Energy LLC announced their collaboration on the development of an innovative new residential home heating system — an appliance that lets U.S. homeowners create electricity from the energy they already use to heat their homes. In April 2007, the two companies began retail sales of the system, called freewatt, in the northeastern United States. The ultra-quiet MCHP unit produces 3.26 kilowatts of heat and 1.2 kilowatts of electric power, which allows homeowners to reduce their utility bills and

curb carbon dioxide emissions while improving overall energy effi ciency and comfort. Test data from Climate Energy have shown that when the freewatt system replaces a typical 80 percent effi ciency home heating system, homeowners can realize an average of 30 percent energy cost savings and a corresponding 30 percent reduction in CO2 emissions. In certain states, net metering allows homeowners to sell unused electric power to their community’s power grid, which yields additional savings.


26



MANUFACTURING

EnergyGreen Factory

Improve manufacturing energy effi ciency

Continue to track greenhouse gas emissions for all North American assembly plants

Environmental Impact of Honda Manufacturing



Recent increases in total CO2 emissions

from electricity and natural gas have

occurred as a result of increased production volumes, and further

insourcing of powertrain components

and other processes.

CO2 Emissions from ManufacturingEfforts to reduce CO2 emissions from manufacturing focus on cutting CO2 emissions intensity (emissions per unit of production), primarily through reduced consumption of purchased electricity and natural gas.

More than 96 percent of the CO2 emissions from manufacturing operations result from electricity use and natural gas combustion. Electricity is used for automation, plant lighting, motors and compressors, and cooling. Natural gas is used for heating and conditioning fresh air, for manufacturing processes such as melt furnaces, and paint bake ovens, and for air emissions control equipment.

Less than 4 percent of CO2 emissions from North American manufacturing activities result from the combustion of fuels other than natural gas.

CO2 emissions from electricity and natural gas use at Honda’s North American manufacturing operations increased about 37 percent in FY2007 from the FY2001 baseline. This increase was attributable in large part to increased production volume and the insourcing of powertrain parts production and other processes. Average CO2 emissions per unit of automobile production increased slightly from 709 to 711 kg in the same time period. However, average per-auto CO2 emissions have fallen signifi cantly from a seven-year high of 761 kg in FY2005. This decrease is attributable to ongoing energy-reduction efforts and more effi cient utilization of available production capacity.

Through its “Green Factory” initiative, Honda is working to reduce the environmental impact of its manufacturing activities, including ongoing efforts to reduce energy

use, water use, generation of waste materials, and CO2 and air emissions. Through its “Green Purchasing” program, the company is also encouraging its more than 600 North American original-equipment suppliers to adopt similar practices.

Honda’s North American manufacturing operations track its CO2 emissions from fuel combustion and process uses in accordance with guidelines published in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition. In Canada, emissions are tracked in accordance with the Canadian GHG Challenge Registry Guide to Entity and Facility-based Reporting, Version 5.0, April 2007. In the United States, CO2 emissions are calculated in accordance with the 1605(b) voluntary guidelines. In Mexico, Honda participates in the Proyecto Gases Efecto Invernado (GEI Project Mexico) to track CO2 emissions.

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27

Even as Honda expands the number and variety of the products it produces in North America, it is working to reduce the environmental impact of these activities.

Automobile, Power Sports, and Power Equipment Production in North America

Power Equipment Production Totals

Honda encourages its associates to seek out ways to improve the effi ciency and environmental performance of its manufacturing operations.

Green Expansion

In keeping with its glocalization initiative, and to meet growing demand for its automobiles in the region, Honda is expanding its North American manufacturing capabilities, while continuing to seek ways of reducing its total environmental impact.

In FY2007, the company undertook numerous

expansion initiatives. These included a 150,000-sq.-ft. expansion of its Lincoln, Alabama, auto and engine plant for increased production of certain engine components, and the addition of automatic transmission gear production at its Russells Point, Ohio, transmission plant. The company also added production of two new light truck models — the Honda CR-V and the Acura RDX — to its U.S. factories in fi scal 2007.

Energy-saving initiatives used in the expansion of the Russels Point transmission plant included:

• Use of variable-speed drives on chilled and cooling water pumps

• Air conditioning units designed to use chilled water, instead of compressor style rooftop units

• Rooftop air conditioning units with economizer dampers to allow use of cooler outside air when possible

• Water-cooled chillers instead of air- cooled chillers

• Use of modulating air compressors

Some machining operations are using more environmentally friendly hydraulic units with smaller tanks, which lessens the need for hydraulic oil. The units are inverter driven, which allows for variations in pump speed according to requirements. Since oil is not being constantly circulated, there is no need for additional chilling to keep oil temperatures cool. These improvements allow the units to use less energy and to run more quietly.

The expansion of Honda’s Lincoln, Alabama, plant involved a ground-up effort to reduce energy use, including the following initiatives:

• The use of more effi cient space heaters, where possible

• Restroom lights controlled by motion sensors

• Zoned lighting and waterless urinals

• Infrared sensors for wash sinks

• Insulation and siding containing recycled materials

• Use of paints with low VOC levels




Energy ConservationIncreased energy effi ciency is the central component of Honda’s drive to reduce the CO2 emissions intensity of its product manufacturing.

Electricity is used in automation, plant lighting, motors and compressors, and cooling. Natural gas is also used for manufacturing processes, such as melt furnaces, the paint bake ovens, and the air emissions control equipment.

I N F A C T Total energy use at Honda production facilities in North America increased by about 1 percent in FY 2007 from the previous fi scal year, due to increases in production volumes and added production of powertrain components. Energy use per unit of automobile production decreased roughly 1.5 percent in the same time period, from 6.7 to 6.6 gigajoules. This reduction in energy intensity is attributable primarily to energy effi ciency gains and better utilization of production capacity.

\



MANUFACTURING

EnergyGreen Factory

Improve manufacturing energy effi ciency

Further reduce energy use in all North American manufacturing facilities

Energy Star Awards

Honda Plants are Recognized for Industry-leading Effi ciency

Honda’s three existing U.S.

automobile assembly plants — in Marysville and East Liberty, Ohio, and in Lincoln, Alabama — were awarded the 2006 Energy Star Label by the U.S. EPA and the

Department of Energy. Because of their performance in the EPA’s National Energy Performance Rating System, the plants were recognized as being among the most energy-effi cient in America.

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29

Lighting Enhancements

All Honda plants in North America

continue to implement lighting effi ciency upgrades and lighting control system improvements. At the Timmonsville, South Carolina, power sports products plant,

dimming controls were added to container yard parking areas to more effi ciently meet lighting requirements, resulting in a savings of more than 80,000 kilowatt hours of electricity per year. The plant’s Plastics Blow Mold Department also

installed translucent panels with photosensors to take advantage of available daylight. The plant also installed a solar-powered traffi c light at a pedestrian crossing zone in front of the plant.

Energy Reduction Projects

Paint Booth Airfl ow System Improvements

The East Liberty, Ohio, auto

plant implemented a comprehensive program to improve airfl ow systems in the paint department. An engineering study identifi ed opportunities

to recycle conditioned air exhausted from some operations and blend it with general space air to satisfy air intake requirements. The improvements, made in 2006, reduced the amount of outside

air intake and improved the energy effi ciency of maintaining proper booth temperatures. In addition, the re-circulated air is cleaner, which results in fewer fi lter changes and less waste. Paint departments

at other Honda plants are using this project as a basis for studying their own airfl ow systems to identify effi ciency improvement opportunities.

“Intelligent” Paint Booths

In collaboration with the Department of

Mechanical Engineering at Ohio State University, Honda developed and implemented an industry-fi rst “intelligent” paint booth

air conditioning system at the Marysville, Ohio, motorcycle plant. Paint booth air conditioning systems are intended to achieve and maintain a desired air temperature and relative humidity

to ensure a high-quality paint fi nish. The “intelligent” paint booth accomplishes this by switching from a reactive control mechanism to predictive control, which reduces

booth air conditioning energy consumption. This system is now being studied for implementation in paint booths at other Honda plants in North America.

Every Honda plant in North America is empowered to fi nd, assess and invest in ways to reduce the plant’s environmental footprint.

Air Compressor Heat Recovery

Air compressors generate signifi cant

heat as a result of the compression process. At the Alliston, Ontario, auto plants, a heat exchanger was installed to capture the waste heat generated by the

air compressors. The captured heat is used to heat make-up air in the plant ventilation systems during the winter months, which reduces natural gas use.



NORTH AMERICAN MANUFACTURING OPERATIONS

LOCATION FACILITY ISO14001:1996 ISO14001:2004 CAPACITY

United States Marysville, Ohio Automobile Plant 1998 2006 440,000 automobiles

Motorcycle Plant 1998 2006 75,000 motorcycles50,000 engines

Anna, Ohio Engine Plant 1998 2005 1.15 million engines

East Liberty, Ohio Automobile Plant 1998 2006 240,000 automobiles

Russells Point, Ohio Transmission Plant 1998 2005 1 million transmissions

Swepsonville, North Carolina Power Equipment Plant 2002 2005 2 million engines380,000 lawnmowers

Timmonsville, South Carolina

All-Terrain Vehicle (ATV) Personal Watercraft (PWC)

2003 2006 280,000 ATVs28,000 engines11,500 PWCs

Lincoln, Alabama Automobile and Engine Plant

N/A 2006 300,000 automobiles300,000 engines

Tallapoosa, Georgia Transmission Plant N/A CY2009 300,000 transmissions

Canada Alliston, Ontario Automobile Plant 1 1999 2006 195,000

Automobile Plant 2 1999 2006 195,000

Mexico El Salto, Estada de Jalisco Automobile Plant 1999 2006 30,000 automobiles

Motorcycle Plant 1999 2006 30,000 motorcycles



MANUFACTURING

ISO Certifi cationGreen Factory

Achieve and maintain ISO14001 certifi cation at each major manufactur ing operation in North America

Honda Precision Parts Georgia (HPPG) will be certifi ed to ISO14001:2004 standards by December 2009


ISO14001 Certifi cationHonda is committed to maintaining an effective structure to oversee and manage the company’s environmental performance in the manufacturing arena.

The central element of Honda’s environmental oversight and management structure was implemented in 1998 with a commitment to achieve and maintain third-party ISO14001 certifi cation for environmental management at Honda manufacturing facilities throughout the

North American region. Thirteen of 14 Honda plants operating in fi scal 2007 were certifi ed to the ISO14001:2004 standard. The new Tallapoosa, Georgia, transmission plant is working toward certifi cation before the end of calendar year 2009.



Associate Training and InvolvementHonda believes that effective environmental performance begins with a high level of awareness among all Honda production associates and their active participation in achieving it.

All Honda manufacturing associates in North America are provided with environmental training consistent with their job requirements. In addition, associates are continually encouraged to discover ways to improve the effi ciency of processes in their own areas and throughout the manufacturing plant. Through their own initiative and passion for innovation, Honda associates are having a real impact on the reduction of their company’s environmental footprint.

Attacking Energy Use (Lincoln, Alabama, Line 2 Paint Department)Associates in the Lincoln, Alabama, Line 2 Paint Department conducted a structured analysis of the department’s operations in an effort to reduce energy use. Members of the department’s “Energy Attack Team” conducted an extensive review of the previous year’s energy budget to identify opportunities for conservation and cost savings without negatively affecting production operations. Included in their recommendations were such simple but effective measures as unplugging unneeded task lighting, reducing oven temperatures, and shutting down equipment during nonproduction times. Additionally, the group recommended improvements in paint booth air management and more specifi c control of certain paint processes. By implementing these ideas, the Line 2 Paint Department reduced costs almost $750,000 from the previous year, despite a 10 percent increase in production volume.

How Low Can You Go?(Marysville, Ohio, Auto Plant)The Marysville Auto Plant implemented a “How Low Can You Go?” program, challenging all associates to fi nds ways to reduce energy use. Key initiatives resulting from the program included:

• a systematic program for scheduling lighting shutdowns during nonproduction periods

• ongoing evaluation and elimination of lighting fi xtures that may no longer be needed because of building or equipment changes

“De-Energizer” Buddies (Alliston, Ontario, Auto Plant)A team of associates at Honda’s Alliston, Ontario, auto plant — calling themselves the “De-Energizers” — were determined to reduce energy use in the Plant 2 Paint Department. The team noticed that lighting and equipment were often left running during nonproduction times. With a focus on reducing wasted energy, the team implemented systems to ensure that lighting and equipment were turned off when not needed. They also developed procedures to optimize start-up and shutdown schedules to reduce energy use even further. Overall, the efforts of the De-Energizers resulted in one million kilowatt hours in energy savings and a 325,000 cubic meters reduction in natural gas consumption.

Honda Canada’s De-Energizers took the initiative to dramatically reduce electricity and natural gas use at Honda’s Alliston, Ontario, Plant 2 paint booth operations.





Turning in Toner (Timmonsville, South Carolina, Power Sports Plant)Associates at the Timmonsville, South Carolina, power sports products plant, seeking ways to improve their plant’s environmental performance, developed a process for collecting used printer toner cartridges for recycling. Collected cartridges donated to the local school district were redeemed for school supplies. The efforts kept about 356 cubic feet of waste out of landfi lls.

Supporting Local Recycling (Marysville and East Liberty, Ohio, Auto Plants) In 1991, associates at the Marysville plant began collecting scrap aluminum foil from painting operations and donating it to the Union County Shriners for recycling. In 2006, associates in the East Liberty plant’s paint department saw an opportunity to implement a similar program and installed a compactor as well.

HPE Recycles Aluminum (Swepsonville, North Carolina, Power Equipment Plant)Associates at Honda’s Swepsonville, North Carolina, Power Equipment plant began testing a new system for on-site recycling of aluminum scrap from its machine trimming process.

The plant, with a capacity of up to 2 million general-purpose engines per year, had been sending its trim scrap by truck to a recycling center in Alabama. The new system melts scrap aluminum into ingots that are immediately recycled into the die-casting operation. The scrap never leaves the site. Honda saves money by not having to buy as much aluminum and saves fuel by eliminating the trucking of scrap. HPE has also installed two small natural gas-powered melting furnaces to replace one big furnace that was less effi cient.

Turning Off the Tap (Tallapoosa, Georgia, Transmission Plant)Even though Honda Precision Parts of Georgia, LLC, is a new operation, associates are already busy identifying ways of improving its environmental performance. One recent initiative involved the process for testing the plant’s fi re pump system, which results in 30,000 to 60,000 gallons of water being purged from the system. In a combined effort, two plant groups — Facilities and Environmental Health and Safety Systems — began research last year to determine how the water could be reused. Possibilities being considered include transfer of discharged water to a storage tank or small reservoir for maintaining the grounds and use in nonpotable water systems such as toilets or machinery cooling systems.




33

Minimizing Landfi ll WasteHonda plants in North America are committed to achieving zero waste to landfi lls.

Honda works continually to minimize the generation of landfi ll waste, beginning with the design of more effi cient manufacturing systems that produce less waste, and through maximization of recycling and reuse activity when generation of waste is unavoidable.

I N F A C T These techniques have enabled Honda plant operations in North America to reduce total landfi ll waste in FY2007 by about 66 percent from FY2001 levels. Much of this decrease is attributable to increased recycling at all North American plants and increased waste-to-energy conversion for certain wastestreams, particularly those that are currently nonrecyclable. The company is targeting a 70 percent reduction from FY2001 levels by FY2010.



MANUFACTURING

Landfi ll WasteGreen Factory

Achieve zero waste to landfi ll (excluding mineral waste and certain construction debris)

Reduce total landfi ll waste by 70% from a FY2001 baseline by FY2010

Waste Minimization Initiatives in Manufacturing

� Recycling of paint-sludge overspray particles as an additive for cement and for waste-to-energy conversion

� Recycling of used oil, batteries, fl uorescent bulbs

� Reuse of waste concrete and asphalt in roadbed construction

� Recycling of metal contaminants removed from wastewater as an additive for cement and for waste-to-energy conversion

� Recycling or reuse of offi ce waste, including paper, newspapers, magazines, and transparencies

� Reclamation of zinc from iron cupola dust collected in bag houses for use in fertilizer

� Recycling of scrap painted bumpers to make splash guards

� Recycling of wood � Implementation of cafeteria waste management, including bulk containers, reusable plates and utensils, and the recycling of organic matter, packaging, plastics, and metals

� Recycling of scrap steel � Washing and reuse of rags, gloves, and fl oor mats

� Recycling of scrap aluminum chips and turnings

� Recycling of spent sands from foundry and casting processes as cement additives and roadbed construction material

� Recycling of scrap copper, used wiring, and used welding tips

To minimize landfi ll waste generated by its manufacturing facilities, Honda has successfully implemented several key initiatives to reduce, reuse, and recycle.




Water ConservationEfforts to minimize water use and the production of wastewater are continually undertaken at all of Honda’s North American plants.

Total water used at Honda’s North American auto plants in FY2007 was down 4 percent, or 46 million gallons, from the previous fi scal year, while average water consumed for each unit of automobile production fell about 7.6 percent to 730 gallons from 790 gallons the previous fi scal year. Average water use per auto in FY2007 rose 4.3 percent over the FY2001 baseline of 700 gallons/auto.

Waste Reduction Efforts

WheelabratorTM Cleaning

The East Liberty and Marysville, Ohio,

auto plants discovered a greener way of cleaning paint fi xtures that hold parts during the

automobile painting process. In the past, the fi xtures were sent off-site, where the dried paint was removed by a chemical or burning

method. Based on the input of associates, each plant installed a Wheelabrator, which mechanically cleans the fi xtures by tumbling and

simultaneously blasting the fi xtures with zinc wire shot. The used shot and dried paint particles are recycled off-site.

Plastic Packaging Recycling

The Timmonsville, South Carolina,

power sports plant implemented full recycling of hard plastic foam, sheet

plastic foam, and other recyclable plastics that protect incoming parts during shipment. Collection systems separate the plastics

from other landfi ll waste, and a baler compacts the plastics so they can be shipped off for recycling. More than 130 tons of plastic waste was

diverted from landfi lls in FY2007 because of this initiative.

Phosphate Tank Cleaning Improvements

Large quantities of nitric acid and

sodium hydroxide were once used to clean the phosphate

coating tank, a part of the body painting process at the Alliston, Ontario, plant. To reduce waste, associates in the

department devised a new method for cleaning that included the modifi cation of existing equipment to

reduce chemical use by 43 percent while also reducing water use, wastewater, and electricity consumption.

Associates throughout the organization are

encouraged to seek ways of improving individual

and plantwide reduction of emissions,

energy use, and waste products.

FY07FY06FY05FY04FY03FY02FY01

* Total water use includes all North American operations.

** Water used per auto produced includes all auto-related manufacturing operations; it excludes power equipment and power sports products.




35

Minimizing Air EmissionsEfforts to minimize air emissions include reductions in the emissions of volatile organic compounds (VOCs).

Honda’s plants release various air contaminants, primarily volatile organic compounds (VOCs), particulate matter (PM), oxides of nitrogen (NOx), and carbon monoxide (CO). VOC emissions typically come from painting operations. PM emissions usually result from metal casting and fi nishing processes and from painting operations. NOx and CO emissions typically result from the combustion of natural gas for heating and from the use of engine and full-vehicle testing dynamometers. Air emissions are released in accordance with applicable laws and regulations.

Emissions are routinely monitored, tracked and reported to regulatory agencies in accordance with federal, provincial, and state requirements. Factories are also periodically inspected for compliance with legal requirements.

Reducing VOC EmissionsVolatile organic compounds (VOCs) are the primary air emissions from Honda’s North American manufacturing plants, with 60 percent coming from painting operations. It has always been Honda’s policy to minimize the release of VOCs by adopting less-polluting processes wherever possible.

In FY2007, Honda’s North American auto body painting operations (excluding those in Mexico)

reduced VOC emissions by 25 percent from the previous fi scal year and 45.6 percent lower than the FY2001 baseline. At 15.6 g/m2, VOC emissions in FY2007 were 22 percent below the company’s target of 20 g/m2. Reductions from the previous fi scal year were due to the full start-up of a new state-of-the-art paint shop at the Marysville, Ohio, auto plant, which reduced body painting emissions almost 47 percent from the previous fi scal year.

Honda’s automobile paint process typically consists of four coating steps — an electro-deposition coating, primer, basecoat for color, and a fi nal clearcoat.

The start-up of the new Marysville Auto Plant Line 2 paint shop brought the number of production lines using waterborne basecoat in the painting process to six: Marysville Line 2, Lincoln (2 lines), Alliston (Ontario) Plant 2, East Liberty (Ohio), and El Salto (Mexico), which together account for roughly 70 percent of North American automobile production capacity. In addition, these production lines, Marysville Line 2 and Lincoln (2 lines), apply waterborne primer/surfaces.

Welding Solvent ReductionA team leader in the East Liberty plant’s Welding Department, concerned about diffi culties in removing excess weld sealer from the welding body prior to painting, sought a more environmentally-responsible solution. Traditionally, excess sealer was removed by wiping the area with a solvent-moistened cloth. The associate noticed that dry wipes could be used to remove most of the excess sealer and the wet wipe employed for only the fi nal process step. The new process was more effective and effi cient, and it reduced solvent use by 50 percent, lessening overall plant VOC emissions by about 3 tons a year.



MANUFACTURING

Air EmissionsGreen Factory

Reduce releases of air pollutants Maintain average VOC emissions from auto body painting operations at less than 20 g/m2

It has always been Honda’s policy to minimize the release of VOCs by adopting less-polluting processes wherever possible.




Reducing Chemical Releases — TRI/NPRI ReportingHonda operations in the United States and Canada report total chemical releases annually in accordance with regulatory requirements.

In the United States, Toxic Release Inventory (TRI) data are submitted to both state and federal environmental protection agencies; they are available for public review at www.epa.gov. In Canada, National Pollutant Release Inventory (NPRI) data are submitted to Environment Canada and to the Ontario Ministry of the Environment; they are available for public review at www.ec.gc.ca/pdb/npri. Honda has reduced its total TRI/NPRI releases by more than 27 percent despite signifi cant expansions in production capacity since calendar year 2000. Auto-specifi c TRI/NPRI emissions per automobile produced have been reduced by about 45 percent in the United States and Canada, in the same period.

Accidental Spill and Release Prevention, Tracking and Reporting Prevention of environmental spills and releases is a key design consideration for all Honda manufacturing facilities. Exterior chemical and wastewater storage tanks and transfer systems are constructed with materials and designs that minimize the risks of leaks and spills. Most exterior

tanks and piping systems have backup containment capabilities to facilitate recovery of any leaked or spilled material. Additionally, storage tanks are equipped with alarms that give advance warning of overfi lling. Virtually all materials with the potential for release are handled within enclosed buildings. Learning from accidental releases is critical to preventing future occurrences; therefore Honda tracks all signifi cant incidents. Major incidents undergo root-cause analysis, and the information gained is used to improve operations.

Emergency Response All of Honda’s manufacturing facilities have response plans that defi ne the policy and procedures to be followed in emergencies. Honda’s major manufacturing operations have well-trained, experienced on-site emergency responders and emergency equipment. The emergency response plans are tested through tabletop exercises and periodic in-plant drills involving both on-site and local community responders.

Honda’s U.S. and Canadian manufacturing operations report TRI (Section 8.1) and NPRI (Schedule 1, Part 1) releases and transfers for disposal.

Honda’s U.S. and Canadian manufacturing operations report TRI (Section 8.1) and NPRI (Schedule 1, Part 1) releases and transfers for automobiles and automobile parts (engines and transmissions) per automobile produced.

Prevention of potential environmental spills and

releases is a key design consideration for all Honda

manufacturing facilities.




37



MANUFACTURING

ISO Certifi cationGreen Purchasing

Promote certifi cation by OEM suppliers to ISO14001 standards

Promote certifi cation of key suppliers to the new ISO14001:2004 standard

Supply Chain ManagementGreen Purchasing

Expand the use of returnable containers for Honda manufacturing operations

Continue to increase use of returnable containers

Enhance parts delivery logistics Reduce vehicle miles traveled (VMT) for shipment of parts to North American manufacturing facilities

Honda promotes supplier recognition by offering training sessions on its Corporate Citizenship Award at various conferences throughout the year, encouraging the suppliers to integrate green practices into their daily management practices.

Green PurchasingHonda encourages its suppliers to take a “green factory” approach by reducing their packaging waste, adopting more energy-effi cient processes, and adhering to ISO14001 management standards.

Honda’s “green purchasing” effort began in 1998, when the company asked suppliers to its Ohio and Ontario, Canada, plants to implement environmental management systems and to obtain third-party ISO certifi cation. At fi rst, Honda focused on its top 42 key OEM equipment suppliers. In 2005, this request was extended to additional key suppliers of Honda’s Lincoln, Alabama, plant.

I N F A C T By 2006, almost 93 percent 0f these key suppliers, including all original 42 suppliers, had earned ISO14001 certifi cation. Overall, 80 percent of Honda’s total North American OEM supply chain, comprising more than 600 suppliers, is ISO14001 third-party certifi ed.

Lean, Green and SafeHonda continues to educate and encourage suppliers through its “Lean, Green and Safe” program, which includes on-site evaluations, benchmarking, and an annual environmental conference where suppliers can share best practices. In 2006, Honda introduced a new program to recognize excellence in OEM suppliers’ corporate citizenship. In 2007, two Honda OEM suppliers were recognized in six areas: ethics and compliance, environment, diversity, community involvement, health and safety, and government relations.

These suppliers qualifi ed in each of the six areas by using self-assessment tools created by Honda. The environmental self-assessment tools show suppliers how they can improve their lean and green processes and overall environmental performance.

Returnable Parts PackagingOne signifi cant area of waste generation in manufacturing is nonreusable packaging used to ship parts from suppliers to Honda factories. A formal program aimed at reducing nonreusable packaging was initiated in 2001. In fi scal 2006, Honda implemented a new program at its Anna, East Liberty, and Marysville, Ohio, plants to recycle as scrap plastic any returnable containers that can no longer be repaired or used. The program was expanded to the Lincoln, Alabama, plant in 2007. The Ohio plants recycled more than 650,000 pounds of scrap plastic through this program in 2007, an increase of 115 percent over the previous calendar year.

Winner: TK Holdings, Inc. — SWS Apodaca, Mexico

Recognition: Bridgewater Interiors, LLC — Eastaboga, Alabama

This chart indicates the percentages of parts supplied in returnable containers, excluding certain parts supplied from Japan and other Asian countries.



Waste Minimization and Recycling


38

T he minimization of waste is a common theme of Honda’s efforts to reduce its environmental footprint. By reducing its use of energy and raw materials,

reusing materials where possible, and recycling waste where necessary, Honda is conserving energy, producing less waste at its facilities, and increasing the recyclability of its products.

Honda is working to reduce waste, to conserve energy, and to eliminate substances of concern

(SOCs) in its products. The company also works with stakeholders in the recycling industry to improve dismantling effi ciency, to facilitate material reuse, and to minimize shredder residue — the leftover waste from products at the end of their life cycle.

Government regulations covering end-of-life products, recycling, and substances of concern differ somewhat by region, but Honda is seeking to harmonize the company’s guidelines for product design and materials selection and to apply them globally.

Beyond efforts to improve the fuel effi ciency and reduce the emissions of its products, Honda is working to lessen the total environmental impact of its products throughout their life cycle, from initial design and production to end-of-life recycling and materials disposal.

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39



WASTE MINIMIZATION

Products Increase the design recyclability of automobiles in North America

Maintain 90% or greater design recyclability of future automobiles (Honda calculation based on JAMA standard), and 95% for Power Sports and Power Equipment products

DesignMinimizing the use of virgin, nonrecyclable and hazardous materials in product design to reduce life cycle impact.

Designing for the EnvironmentEnvironmental factors are considered early in the design phase of every Honda product. This allows greater potential for environmental benefi t and waste minimization.

In selecting materials and design for new products, Honda engineers look for opportunities to reduce the end-of-life impact by keeping in mind environmental aspects such as dismantling, component remanufacturing, minimizing or eliminating substances of concern (SOCs), and reducing the potential for shredder residue.

Product RecyclabilityHonda has achieved 90 percent or greater design recyclability for all Honda and Acura automobiles developed and produced in North America (based on the Japan Automobile Manufacturers Association standard). Honda continues to look for ways to improve the design recyclability of new models. It is committed to maintaining 90 percent or greater design recyclability for all automobiles developed and produced in North America. Additionally, the company is committed to achieving 95 percent or greater recyclability for its power sports and power equipment products.

Naturally Sourced MaterialsHonda is looking at new materials in the construction of its products. This includes naturally sourced materials that reduce the environmental impacts associated with product production and disposal, including reduced VOC emissions, improved sustainability, and greater recycling potential. Two recent outcomes of this approach are the basalt headliner in the 2007 Acura MDX and the bio-fabric interior of the Honda FCX Concept.

Basalt headliner in 2007 Acura MDXIn 2006, a Society of Plastics Engineers (SPE) Automotive Innovation Award in the Environment category recognized an innovative fi berglass-free headliner supplied by M-Tek (of Sandusky, Ohio) for the redesigned 2007 Acura MDX.

Honda R&D’s materials group worked with M-Tek to specify the new headliner, which was created in response to an end-of-life challenge: to develop an alternative to the conventional polymer material headliners whose glass fi bers melt and accumulate on the walls of incinerators instead of being consumed with the rest of the composite material. By replacing polymer material with naturally occurring volcanic rock, the new headliner not only resolved the incinerator problem, but also improved sound insulation and completely eliminated the volatile organic compounds (VOCs) that are emitted from both the manufacture and incineration of fi berglass-based composites.

The headliner on the Acura MDX is made of basalt from volcanic rock, eliminating VOCs emitted during the production and disposal of conventional headliners made of polymer materials.



Armrests(Honda bio-fabric)

Pillar inner liner, roof lining (PET)

Door lining(Honda bio-fabric)

Rear shelf,trunk lining (PET)

Floor carpetsand mats (PET)

Seat fabric(Honda bio-fabric)

Honda bio-fabric and bio-derived surface materialsIn designing the FCX Concept, Honda engineers looked beyond the fuel cell powertrain to other

vehicle components, including the interior. As a result, the company created Honda bio-fabric, a highly durable and fade-resistant alternative to

conventional polyethylene terephthalate (PET) material made from plant-derived cellulose. The bio-fabric was applied to “high touch” interior components, including the seats and armrests. Following the introduction of Honda bio-fabric on its next-generation fuel cell car in 2008, Honda plans to expand its use to other models.


40

Parts Procurement Honda is requiring that suppliers eliminate or reduce hazardous materials in parts.

Reducing Substances of Concern (SOCs) in ProductsHonda’s global policy is to set standards for the voluntary reduction and control of substances considered harmful to people and our environment.

In 2002, Honda created the North American Chemical Substances Guideline to minimize SOCs in Honda products assembled in North America. In 2007, Honda updated the guideline, which is now called the Honda North America Chemical Substance Standard. The standard states the North American requirement for parts suppliers to reduce or eliminate lead and lead compounds, hexavalent chromium, mercury and mercury compounds,

cadmium and cadmium compounds, bromine compounds (specifi ed BDEs), and azoic compounds. Honda continues to work closely with its North American suppliers to fi nd new ways of reducing SOCs in all of its products.

Honda Motor Co. established a Global Hazmat Compliance Team within the company, which has the goal of complying with the strictest regional hazardous material regulations and enacting a proactive approach to meet or exceed these regulations globally. The team consists of representatives from the Automobile, Power Equipment, and Power Sports divisions, and



WASTE MINIMIZATION

Substances of Concern (SOCs)

Reduce and, if possible, eliminate substances of concern, including mercury, lead, hexavalent chromium, cadmium, brominated substances and polyvinyl chlorides (PVCs)

Phase out mercury in components (such as HID headlights and LCD screens) where technically feasible and economically practicalEliminate lead in steel used to produce ATV wheel hubs and in solder used for welding electronic circuit substrates, when technically feasible

Phase out the hexavalent chromium used in automobiles for anti-corrosion purposes by the end of CY2007, with the exception of replacement parts

Work with suppliers to eliminate cadmium from componentsExpand PVC-free technologies for remaining applications wherever feasible, including elimination from underbody and weld sealer applicationsAssess all applications of brominated substances and continue to study opportunities to eliminate deca-BDEs

The FCX Concept uses Honda-developed bio-fabric,

designed for enhanced durability, along with other

bio-derived materials.




41

representatives from the Purchasing, R&D, Manufacturing, and Certifi cation departments from all six regions, including North America.

LeadOver the past several years, Honda has found new ways to reduce the lead used in electronics, light bulbs, and corrosion-resistant paints. In addition, the company has replaced lead in steel bars with nonhazardous materials, and it has eliminated lead in its automobile and on-highway motorcycle wheels. Honda is currently working to eliminate the lead in steel used to produce ATV wheel hubs, and it has begun to eliminate lead in circuit boards.

Hexavalent ChromiumHexavalent chromium has been used extensively in the past to protect exterior parts from corrosion. Honda and its suppliers have begun using trivalent chromium and other nonhazardous alternatives. Starting in 2005, Honda began to work actively with suppliers to reduce dramatically the levels of hexavalent chromium. The company plans to eliminate all hexavalent chromium used for corrosion-resistant purposes from its North American-made OEM parts and products by the end of calendar year 2007. Currently, this goal is 90 percent complete. The company’s original target — to complete the conversion by the end of 2006 — was not achieved because of technical diffi culties and unavailability of materials.

MercuryThe electrical properties of mercury make it useful in a wide variety of applications, including switches, radios, and ride-leveling devices. Honda has never specifi ed mercury for any of these applications. Honda currently uses very small quantities of mercury in high-intensity discharge (HID) headlights and in illuminated screens for entertainment and navigation systems only. For damaged or broken LCD screens, the company employs a closed-loop recycling system. Honda is working to increase the durability of mercury-free HID bulbs and will introduce the technology when technically feasible.

Polybrominated Diphenyl Ethers (PDBEs)PDBEs are used as fl ame retardants in seats, carpets, engine control units, and plastic substrates. Honda has stopped using octa- and penta- PDBEs because of their potentially harmful environmental impact. The company has worked with suppliers to ensure that these substances are no longer present in fabrics or parts.

Perfl uorooctane Sulfonate (PFOS)Honda is also working to reduce the use of perfl uorooctane sulfonate (PFOS), a water repellent agent. PFOS will be banned in the EU market after June 27, 2008. Honda is working with its suppliers and aims to reduce or fi nd alternatives to PFOS in all parts delivered to North American manufacturing facilities by the end of 2007.

Polyvinyl Chloride (PVC)Although diffi cult to recycle, PVC plastics help reduce vehicle weight and are able to meet high standards for durability, fade resistance, and other critical quality criteria. Honda has worked with suppliers to implement PVC-free technologies for components such as interior and exterior trim pieces, door sealants, adhesives, window moldings, fl oor mats, and seat coverings. PVC used in instrument panels, inner-door weather stripping, and shift knobs is being replaced with a variety of materials. The new Acura MDX, manufactured at the Alliston, Ontario, Canada, Plant 2, has an aluminum hood that uses a PVC-free weld sealer. Honda is also working to eliminate PVC used for underbody coating and weld sealer applications from all North American manufacturing plants within two years. In many cases, the applications have already been changed. Honda is investigating effective alternatives to PVC for all paint department applications and will begin to apply the technology once it has been proven.

Reduction of In-vehicle Volatile Organic Compounds (VOC)

Honda has long been working to reduce

in-vehicle VOC emissions. Starting with the all-new 2008 Honda Accord, we adjusted processing methods, adhesives, and

materials used in making interior parts with the goal of further reducing VOC emissions. We will apply low-VOC materials for all future new model developments.



Green Building InitiativesHonda continued to expand its green building activity with the certifi cation of new facilities and ongoing efforts to reduce waste and energy use at existing buildings.

Leadership in Energy-Effi cient Building DesignHonda is in the process of certifying two new facilities to LEED (Leadership in Energy Environmental Design) standards set by the U.S. Green Building Council (USGBC): the Acura Design Studio in Torrance, California, and the Midwestern Consolidation Center (MCC) in Troy, Ohio. Honda has two existing LEED-Gold buildings: the Honda R&D Americas central plant facility in Raymond, Ohio, and American Honda’s Northwest Regional Center in Gresham, Oregon.

Both new buildings, although very different in design and use, share some common sustainable features, such as:

• An Energy Star highly refl ective roof and dual-paned low-emissive glass to reduce solar heat gain

• Extensive use of recycled and recyclable products in the building envelope and interiors

• Use of energy-effi cient light fi xtures with motion sensors

• Use of U.S. steel, guaranteed to contain at minimum 25 percent, and often as much as 90 percent, recycled content

• Diversion of construction waste (concrete, glass, drywall, steel) from landfi lls to recycling centers

• Selection of suppliers and products based not only on their use of recycled content, but also on their proximity to the jobsite, to reduce truck emissions

• Replacement of cement used in concrete production with fl y ash, a byproduct of coal-fi red power stations, which results in energy savings and reduction of greenhouse gas emissions

The Acura Design Studio, despite several challenging features, including the need for abundant natural and artifi cial lighting and high security requirements, incorporates sustainable design concepts:

• Water reclaimed from the Hyperion Sewage Treatment Plant, in nearby El Segundo, is used to fl ush toilets and irrigate the grounds.

• A highly effi cient displacement ventilation system moves cool air from the rooftop air conditioning units down the walls and columns to large grilles at fl oor level, where it displaces heat from the human body to maintain a steady and comfortable working environment.

The Midwestern Consolidation Center is built on a much larger scale. The warehouse, mezzanine and offi ce building total 547,000 square feet. In addition to the features mentioned at left, the facility’s mezzanine uses wood certifi ed by the Forest Stewardship Council, which means it came from a sustainably managed forest, and has documentation showing its chain of custody all the way from the forest to its fi nal destination in the building.



WASTE MINIMIZATION

Green Building Improve energy effi ciency and reduce the generation of waste at Honda facilities in North America

Certify at least two new buildings to LEED-NC in FY2009, and recertify the Gresham, Oregon, facility from LEED-NC to LEED-EB (Existing Building)


Honda’s policy to reduce the

environmental impact of its North American operations extends to

its facilities throughout the region.



Other Green Building ActivityAmerican Honda’s Gresham, Oregon, LEED Gold building is being recertifi ed under the USGBC’s LEED-EB (Existing Building) program to ensure that the building continues to operate in a very energy effi cient manner.

Honda Canada also is in the process of certifying buildings on its new Headquarters Campus under the Canadian Green Building Council’s certifi cation program.

Honda R&D Americas Ohio Center Recycling EffortIn 2006, the Honda R&D Americas Ohio (HRA-O) Center in Raymond, Ohio, reduced its waste to landfi ll by 32 percent and increased its recycling by 29 percent over calendar year 2005. Since 2004, the facility has instituted several successful waste reduction activities, including the recycling of aluminum cans, glass and plastic bottles, paper, cardboard, magazines, newsprint, toner cartridges, wood pallets, metal, glass, aluminum and plastic parts, and cafeteria food waste for compost and tires.

I N F A C T These efforts resulted in a 41 percent reduction in waste to landfi ll and a 56 percent increase in recycling poundage over the past three years. The increase in recycling activity was due in a large part to the addition of a compactor for cardboard, placement of offi ce waste recycling bins at all desks, and the composting of cafeteria food waste. In addition, the facility donates used cell phones, offi ce supplies, and equipment for use by nonprofi t organizations.

Despite an increase in personnel and square footage, Honda R&D Americas has more than doubled its recycling over the past three years while reducing trash produced.

Energy Conservation and Waste Minimization at American Honda Headquarters American Honda actively reduces the use of purchased electricity and generation of landfi ll waste. The 101-acre Torrance, California, campus uses environmentally friendly cogeneration-supplied electric power, and it actively supports its associates’ recycling activities.

Electricity cogenerationAmerican Honda continues to rely on an effi cient natural gas-powered cogeneration unit to produce 10 percent of the energy needed for its offi ce operations. Cogeneration produces heat and power in a single thermodynamic process. It uses the valuable heat produced in electricity generation that would otherwise be wasted.

I N F A C T In 2006, the Torrance campus of American Honda purchased 13.1 percent fewer kilowatt-hours of electricity from the public utility than it did in the previous year.

In addition to cogeneration energy, the company uses other energy-conserving techniques, including an energy management system (EMS) that automates the building’s heating, ventilation, lighting, and air-conditioning equipment to run at their highest effi ciency. In addition, Honda makes use of motion-sensor lighting and off-peak forklift battery charging. Honda has also set up a program to alert associates on its Torrance campus when energy shortages are threatened in the area and to remind them to save energy wherever possible.

Recycling Offi ce recycling and waste reduction at American Honda’s headquarters have earned the company recognition from the state’s Waste Reduction Award Program for eight consecutive years, from 1999 through 2006. Additionally, Los Angeles County and the city of Torrance have recognized the company for its outstanding waste prevention efforts.





I N F A C T Honda’s Torrance facilities kept more than 4 million pounds of materials out of landfi lls in calendar 2006. Recycling poundage was down almost 9 percent from the previous year, due in part to efforts by associates to reduce and reuse materials along with the increased use of reusable containers by the campus parts warehouse.

One example of Honda’s waste reduction programs is its deskside recycling program. The program makes it convenient for associates to recycle paper, magazines, DVDs, CDs, tapes, brochures, and newspapers right at their desks. In 2006, the program was expanded to include dry cell batteries as well.

The sorting of materials is handled by disabled workers in a partnership between Honda and Social Vocational Services (SVS).

Additional on-site waste reduction programs include the recycling of aluminum cans, batteries, glass and plastic bottles, toner cartridges, metal, stretch plastic wrap, wood pallets, and cardboard. In addition, items such as offi ce supplies, equipment, and cell phones are donated to nonprofi t organizations and reused.

The implementation of a reusable container program in American Honda’s Torrance, California, parts warehouse helped the company reduce recycling poundage by 9 percent in CY2006.

Server Virtualization Project Saves EnergyIn 2004, American Honda’s Information Systems Division (ISD) began implementing Virtual Server technology. With this new approach, the division was able to reduce the number of physical servers it needs from 134 to 13 by 2007. The initiative allowed American Honda to reduce its power and cooling requirements by a factor of 11 to 1. ISD also plans to migrate an additional 161 production servers to 18 physical servers by the end of 2007, which will further reduce power and cooling requirements.

Finding Ways to Reuse Electronic WasteRecognizing that electronic waste disposed of through conventional means was ending up in landfi lls, both here and abroad, associates of Honda’s Information Systems Division (ISD) rethought their electronic waste disposal process.

With this effort, the ISD group has begun to dispose of electronic waste such as unusable computers, printers and monitors, through a certifi ed process that employs mechanical size reduction and separation equipment to separate electronic waste into a dozen different material streams, including copper, aluminum, polymers, ferrous and fi berglass. These materials can then be recovered and resold on the commodities market. The ISD group has eliminated 9 tons of waste using this method.

More than 9 tons of unusable computer equipment was recycled in a new certifi ed disposal process.

E-waste is broken into aluminum and copper “chops.”

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45

Distribution, PackagingReducing packaging materials and the use of expendable containers.

Honda Returnable Crate System What started as a pilot program with Honda personal watercraft, Honda’s Returnable Crate System (HRCS), has rapidly expanded to large segments of the company’s North American product and parts shipping operations. Since 2002, Honda’s U.S. Motorcycle Division has been using returnable crates for its U.S.-made power sports products. In the fi scal year ended March 31, 2007, Honda’s U.S. Motorcycle Division further expanded the initiative and achieved 100 percent use of returnable containers for domestic motorcycle, all-terrain vehicle (ATV) and personal watercraft (PWC) production. The reverse logistics process includes power sports dealers in all states, including Alaska and Hawaii, who are linked via a interactive computer network to the supply chain and return process. Locally, both Honda dealers and consumers benefi t from reducing debris.

I N F A C T By including the Gold Wing motorcycle and Fourtrax ATV line, Honda eliminated over 17.6 million pounds of packaging waste from domestic production in FY2007.

Pallet Recycling Program Honda is also engaged in the recycling of wood pallets. With the help of our part centers, packagers, and our pallet supplier, American Honda was able to recycle 62,308 pallets in calendar year 2006, which resulted in 3,426,940 pounds of materials being kept out of landfi lls.

Reducing Parts PackagingHonda’s North American Parts Division has also worked to reduce waste to landfi ll, cutting deposits by 1.5 million pounds for the fi scal year ending March 31, 2007. Some of this was achieved by removing packaging from parts that are robust enough to withstand the rigors of the distribution system. This decontenting process was fi rst applied to stronger parts, such as bulkheads, bumper beams, and muffl ers. In fi scal year 2007, this project eliminated almost 1.32 million pounds of packaging material.

Backless packagingIn late 2006, American Honda introduced its new Daily Stock Order (DSO) program for shipments of parts to dealers. The new shipping process resulted in a redesign of the sheet metal packaging and reduced the amount of packaging materials and space taken up by the packaging.

Harmony projectHonda’s North American Parts Packaging group has initiated a program between American Honda and Honda de Mexico to change their shipping method for parts from single-use wooden pallets to reusable crates. This program, called the Harmony Project, was rolled out in phases. It fi rst eliminated pallets, then reduced packaging materials, and fi nally eliminated packaging entirely. In the fi scal year ended March 31, 2007, this project eliminated 109,173 pallets and 1,310,076 pounds of landfi ll waste.

Electronic Warehouse Management SystemWith the implementation of an electronic warehouse management system (WMS) at American Honda’s nine parts centers and two central distribution hubs, 124 million sheets of paper were eliminated in calendar year 2006. The system eliminated:

• One piece of paper for every piece shipped• Three pieces of paper for every shipment made• One piece of paper for every pallet of parts received

by the parts division

A new backless design for shipping crates enables the reduction of material due to simplifi ed packaging. The packaging was designed for four main sheet metal parts: hoods, trunks, fenders, and tailgates. It is now also used for doors and side outer panels.




Material ReductionReducing the environmental impact of product operation and maintenance.

Use of Recycled Plastics in Honda Product ContainersHonda offers a wide variety of accessories and products that customers use to service and maintain their automobiles, motorcycles, and other Honda products. Many of these containers are made almost

entirely of plastic (except for lids, caps or labels) and have capacities between 8 ounces and 5 gallons. Honda requires suppliers of these containers to manufacture them with a minimum of 25 percent recycled postconsumer plastics. This reduces landfi ll waste material, reduces use of virgin plastic (a petroleum product), and conserves energy. Also, many special tools and parts are required at Honda dealers for service, repair and maintenance of Honda vehicles. Wherever possible, Honda supplies these products to dealers in reusable containers and tool holders that reduce packaging and serve as permanent storage devices.

Transportation and LogisticsWorking to reduce the environmental impacts of product distribution in North America.

Honda Original Parts fl uid containers use

at least 25 percent postconsumer plastic.

AutoMax train in the process of

loading vehicles.

Honda and Acura Automobiles Distributed by Effi cient U.S. and Canadian Railway SystemsOf all the available product distribution channels, including rail, truck, air transport, and water, rail is the best option for the environment. The average train can move one ton of material 408 miles on a gallon of diesel fuel. That is roughly three times the effi ciency of a truck.

I N F A C T Approximately 80 percent of all American Honda and Honda Canada automotive products are transported via rail. Honda also takes advantage of America’s effi cient freight rail industry by making use of AutoMax railcars, which can transport more

autos per railcar using less fuel than traditional auto transport railcars.

Nighttime Truck Transport Means Fewer EmissionsAbout 30 percent of Honda’s truck transport of automobiles in the United States and Canada occurs at night. Nighttime transport generates fewer emissions than transport during peak daylight hours, because there is less traffi c on the road. During nighttime shipments, trucks spend less time idling on congested roadways, and their internal combustion engines run more effi ciently at road speed.

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Reuse, RemanufactureReducing waste in the disposal of manufacturing and service parts.

Remanufacturing and Reuse of Honda Parts Honda has established a remanufacturing system for many components in its vehicles.

Remanufacturing of parts recovered from vehicles in service helps to divert materials from landfi lls, while reusing still valuable processed material from castings and other components helps minimize inputs to the wastestream.

Rather than being discarded, the components or assemblies are collected from Honda dealerships and sent back to the original suppliers, where they undergo an assessment of their condition and potential for remanufacturing. Parts that meet the requirements are then remanufactured to the original specifi cations. Factory assembly standards and performance test standards ensure that these

remanufactured parts are of the same quality as the original parts.

Typical parts recycled in this program are drive shafts, air conditioner compressors, starter motors, antilock-break system modulators, brake calipers, power-steering racks and pumps, audio components, navigation and entertainment video screens, and automatic transmissions.

I N F A C T The total number of parts in this program has more than tripled since 2000, and Honda is working to expand the types of remanufactured parts it offers.

This remanufacturing system also conserves energy and other resources that would be consumed in the manufacture of new components.

Headlamp Recycling Program

Occasionally, during automotive production, vehicles are slightly

damaged by contact with machinery, worker tools, or other equipment. Any damage is unacceptable for Honda customers, so these vehicles are sent for repair and new original equipment parts and components are used to return the vehicles to new quality. As

part of Honda’s program to recycle materials and reduce landfi ll wherever possible, when headlights are damaged during the assembly of new vehicles, they are replaced. The damaged assembly is sent to another company for remanufacturing. Damaged headlight assemblies are taken apart, individual components replaced or

repaired, and the like-new headlight is offered for sale to Honda owners whose vehicles are damaged in use. This program not only reduces waste and recycles valuable materials, but offers a lower-cost option to Honda owners with older vehicles or with damage that is not covered by an insurance policy.




End of LifeCooperating with dismantlers to improve end-of-life treatment and to create new markets for recycled material.

Honda is actively collaborating with the automotive dismantling and material recycling industries to increase parts reuse and to reduce input to the waste stream. This collaboration is helping facilitate a better understanding of the issues surrounding end-of-life vehicle disposal, including the most effective means of removing parts for resale and removing fl uids, batteries and tires for proper processing. The information obtained can enhance the recyclability of end-of-life vehicles, improve dismantling processes, and lead to less scrappage and waste-stream input.

Hybrid Battery Recycling As the sales of hybrid vehicles grow, it is increasingly important to have a system in place to collect the nickel-metal-hydride (NiMH) battery packs at the end of their working lives. Of the small number of hybrid batteries replaced in fi scal 2007, almost all were sent directly to specialized battery treatment facilities for recycling. A small number were evaluated for quality, durability and specifi cations; eventually, these batteries will also be recycled. Although hybrid battery packs and related systems for vehicles that meet AT-PZEV requirements are warranted for 10 years or 150,000 miles, some individual owners have reported their packs lasting for more than 400,000 miles of vehicle use.

Catalytic Converter Recycling

Catalytic converters used in the exhaust system are designed and constructed with precious metals — platinum, palladium, and rhodium, collectively referred to as the platinum group metals (PGM) — facilitate the conversion of pollutants such as HC, CO, and NOx into less harmful gases

and vapors, including CO2, N2, and H2O before they reach the vehicle’s tailpipe. Honda has an aggressive program to recover intact catalysts from out-of-service vehicles and from Honda dealers who replace the units under warranty or in service, and to recycle the material for use in new catalytic converters. Collected canisters are cut open, the ceramic is crushed, and the metals are removed in a specialized, high-temperature process that does not generate a wastestream. This process ensures that the PGMs are properly recycled and not disposed of in landfi lls.

Honda Canada is also actively diverting warranty catalytic converters away from regular metal scrap recycling to recover the precious metals.

I N F A C T Honda Canada’s policy is to recycle 100 percent of the catalytic converters it replaces during the warranty period. From January to December 2006, more than 5,800 catalytic converters were diverted from landfi lls and recycled.

Recycling Total-Loss VehiclesDamage sometimes occurs to new vehicles during transportation, due to derailments or other reasons. When severe damage occurs, American Honda forwards total-loss vehicles to vehicle dismantlers and vocational schools for educational purposes whenever possible, thereby reducing waste input to landfi lls. The vocational schools that receive these Honda and Acura cars are affi liated with either the Automotive Youth Educational System (AYES) or Honda’s own Professional Automotive Career Training (PACT) program. The students use the damaged products for hands-on automotive training.

I N F A C T Over the past four years, American Honda has recycled an average of 147 vehicles per year and donated an average of 53 vehicles per year for educational use.

Fluid RecoveryOne of the most important steps in the treatment of end-of-life vehicles is the collection of fl uids: gasoline, engine oil, radiator coolant, transmission fl uid, brake and power steering oils. Under the best of circumstances, dismantlers and automotive

Signifi cant opportunities remain to reduce the

environmental impact of product and parts disposal.




49

recyclers capture most of these potentially harmful fl uids; however, in many cases, fl uid evacuation is less than complete, and some is left in its system or component. For example, plastic gasoline tanks in late-model vehicles are molded into complex shapes that allow for easier placement under the vehicle, but may result in multiple low points that prevent complete fuel draining. Sometimes additional efforts are required to completely drain the fuel and avoid leakage during processing, transport and fi nal treatment of the cars. Honda is participating in a study to identify better ways to drain or capture the fl uids from old cars. The Automobile Recyclers Association (ARA) is researching techniques and design characteristics that may improve collection during scrap vehicle processing and prevent the subsequent release of the fl uids left behind.

Treatment of Plastic Fuel Tanks (PFTs)Plastic fuel tanks (PFTs) are becoming increasingly prevalent in light-duty vehicles and other products. Honda currently uses plastic fuel tanks in more than 98 percent of its vehicles in North America. Although PFTs offer a number of advantages — such as reduced weight, effi cient use of space, and superior corrosion resistance — they also present a number of end-of-life issues. These include the presence of residual gasoline in the tanks; associated fuel system components such as hoses, gaskets, and valves; and dismantling and transportation costs.

In fi scal year 2006, Honda evaluated the alternatives to sending PFTs to landfi lls. The company considered existing infrastructure and technology for recycling postconsumer automotive plastic fuel tanks, and it identifi ed economically viable options for closed-loop recycling. Several possibilities were considered:

1. PFT disposal in municipal solid waste incinerators with energy recovery

2. PFT use as an alternative fuel in cement kilns 3. Material recycling of postindustrial PFT

plastic scrap

Honda found that disposal in municipal solid waste incinerators and use as fuel in cement kilns were both technically possible. But these alternatives were not economically viable because of collection, transportation and processing costs. As a result of this project, material recycling of manufacturing scrap from PFT production facilities was undertaken. It has proved to be both economically and commercially successful. The recyclate generated from the postindustrial scrap is collected from Honda’s North American plants and brokered to the market. Purchasers use it to make both automotive and nonautomotive products.

Automotive Shredder Residue (ASR)The end-of-life treatment of vehicles involves a number of environmental issues, including disposal of automotive shredder residue. Shredder residue is the nonmetal portions of the vehicle — such as plastics, glass and rubber — accumulated in the shredding process. Shredder residue cannot be reused or recycled. Most of it ends up in landfi lls.

American Honda is observing a high-temperature residue treatment pilot project that was initiated by a large shredder company to produce alternative fuels from shredder waste. The project will evaluate various aspects of gasifying shredder waste to produce methanol, ethanol and biodiesel fuels. The fuels produced will be used to operate machinery on site and to generate electricity, which may be sold back to local municipal grids. Shredder waste has an energy content of approximately 7,000 Btu/pound. Automotive shredder facilities normally produce more than 100 tons per day. Some generate as much as 500 tons per day, which could hold signifi cant potential for generation of fuels and electricity.

COMMON AUTOMOBILE FLUID SYSTEM CAPACITIES

Gasoline 17.5 gallons

Engine Oil 4.5 quarts

Transmission Fluid 2.0 quarts

Radiator Coolant 5.0 quarts

Regrigerant 30 ounces

Wiper Fluid 2.6 quarts

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Environmental Community Activities

In addition to reducing the environmental impact of its own operations, Honda is always looking for ways to make positive contributions to the communities where

it does business. Many of these efforts focus on community-based environmental preservation and restoration efforts, in the form of corporate charitable giving foundation giving, in-kind contributions, and in company support of volunteer efforts by Honda associates who want to take an active role in their communities.

Environmental Volunteer EffortsHonda associates pitch in to restore and preserve their local environment.

Pitching In at Palos Verdes Land Conservancy in CaliforniaMore than 70 Honda associates, family and friends cleaned up Abalone Cove beach, maintained trails, collected seeds, and cleared invasive plants at the Portuguese Bend Nature Preserve in Rancho Palos Verdes, California. The June 2006 event was the fi rst time the Palos Verdes Peninsula Land Conser-vancy has worked with a large company on a volunteer project. Honda also donated a Ridgeline truck.

Protecting the Fish Population in OhioWhen the expansion of a Honda transmission plant in Russells Point, Ohio, required relocation of a stormwater retention pond, associ-ates at the plant contacted rangers at Indian Lake State Park to ensure the survival of the pond’s fi sh population. Five loads of fi sh were carefully moved using a vacuum tanker truck. The few remaining fi sh were collected by hand and released in Indian Lake.

Logan Martin Lake Cleanup in Alabama More than 100 associates from Honda’s Lincoln, Alabama, automobile plant joined local volunteers to remove 13 tons of trash and debris from nearby Logan Martin Lake. Sponsored by Honda, this outing was part of an annual “Renew Our Rivers” campaign aimed at protecting a valuable source of recreation, education and wildlife in Talladega and St. Clair counties.

50


This group of Community Action

Team volunteers created two access

ramps in and out of the canyon at Abalone

Cove, California, and destroyed several

fi re pits.

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Environmentally Responsible Land ManagementHonda’s North American manufacturing operations encompass more than 12,000 acres of land, including a number of environmentally sensitive areas.

Big Darby CreekIn West Central Ohio, near Honda’s Marysville and East Liberty, Ohio, plants, are the headwaters of Big Darby Creek, a state and national scenic river that serves as home to more than 100 species of fi sh and 40 species of freshwater mussels, and is recognized by the Nature Conservancy as one of the “Last Great Places.”

Since 1991, Honda has partnered with the Nature Conservancy to support volunteer watershed protection programs, water quality monitoring, and research. This year, Honda announced a $300,000 grant to the Nature Conservancy’s Ohio Chapter for land acquisition that will help establish the Big Darby Creek

Headwaters Preserve along the headwaters of the creek. As part of the project, the Nature Conservancy will recreate natural stream channels and restore fl oodplain habitats on more than 700 acres of land.

During the past year, Honda also completed a detailed study of the hydrogeologic characteristics of the Flat Branch, a headwater tributary to Big Darby Creek. The study will help to determine the best long-term management practices to protect both the Flat Branch and the Big Darby Creek. Recently, seven new agricultural grass waterways were constructed to prevent soil erosion and sediment deposits from entering the Flat Branch.

Enhancing Habitat in CanadaEach year more than 80 associates from Honda Canada volunteer their time to enhance Spring Creek (a signifi cant coldwater stream) and the surrounding area. Located on the east side of the Alliston, Ontario, auto plant, the creek is home to several environmentally sensitive species, including brook trout. In 2006, associates planted 50 trees and 350 native shrubs, including red osier dogwood, alder berry, and willows, to stabilize the creek banks and provide shade. Associates also removed three truckloads of garbage, added six bird houses to the plant’s blue bird trail, and removed an invasive species called garlic mustard that chokes out native wildfl owers.

51


As a steward of these lands, Honda is committed to practices that protect and enhance the land in a manner compatible with manufacturing operations, farmland management and environmental conservation.

Soil Stabilization at Flat Branch Creek

Honda of America Mfg., Inc., and the Columbus Zoo

in Ohio have partnered to manage the growth and health of willow trees that inhabit the banks of the Flat Branch, helping contribute to soil stabilization. The zoo periodically prunes the willows, using the trimmings as a vital addition to the diet of its moose population.

Edward the moose, at the Columbus Zoo, enjoys a diet enhanced by willow tree

branches pruned from willows located on the banks of the Flat Branch.

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Honda 2 0 0 7 N O R T H A M E R I C A N E N V I R O N M E N T A L R E P O R T52


Community Environmental Preservation EffortsHonda actively supports a broad range of organizations active in protecting their local environment.

Living Lands & Waters Foundationwww.livinglandsandwaters.orgA group of volunteers has cleaned up more than 1,200 miles of Mississippi River bank and have now added the Illinois River to their mission.

The River Projectwww.riverproject.org The River Project has operated a private monitoring station at Pier 26 of New York’s Hudson River since 1986. Its Marine Biology Internship Program provides opportunities for students to become directly involved in the protection of signifi cant urban wildlife and habitat.

Tampa Baywatchwww.tampabaywatch.org A nonprofi t stewardship program dedicated to the protection and restoration of the Tampa Bay Estuary, Tampa Baywatch has dedicated countless hours to salt marsh plantings, shorebird protection and coastal cleanup.

Chesapeake Bay Foundationwww.savethebay.cbf.orgThe Chesapeake Bay Foundation is working to reduce pollution, improve fi sheries, and protect/restore natural resources such as wetlands, forests and underwater grasses for the Chesapeake Bay Watershed.

Upper Chattahoochee Riverkeeperwww.chattahoochee.orgThe Upper Chattahoochee Riverkeeper (UCR) uses advocacy, education and research to protect and preserve the Chattahoochee River Basin, the primary source of drinking water for more than 3.5 million people in the region.

San Francisco Baykeeperswww.sfbaykeeper.orgWith assistance from Honda, San Francisco Baykeepers launched the fi rst power boat on the entire West Coast to run on clean-burning compressed natural gas. It is being used in a high-visibility citizen monitoring program to detect and eliminate pollution in the bay and delta.

Ducks Unlimitedwww.ducks.orgDucks Unlimited (DU) conserves, restores and manages wetlands and associated habitats for North America’s waterfowl and hundreds of species of wildlife, helping to preserve more than 220,000 acres of U.S. wetlands in 2005.

South River Federationwww.southriverfederation.netDedicated to preservation, education and outreach, the South River Federation in Maryland aims to achieve widespread public understanding of the interconnection of individual and collective actions that affect the river’s health.

Student Conservation Associationwww.thesca.org Honda has provided ATVs and recently donated a Ridgeline pickup truck to the Student Conservation Association for desert restoration and forest fi re mitigation projects in North Carolina, Florida and Michigan.

Ridley Sea Turtle Recovery Projectwww.ridleyturtles.org Joining a cooperative effort by the U.S. Fish and Wildlife Service, the Gladys Porter Zoo in Brownsville, Texas, and the government of Mexico, Honda donated 16 ATVs to the Ridley Sea Turtle Recovery Project. They are being used to patrol the beaches of South Padre Island, Texas, and more than 100 miles of remote beaches in the Mexican state of Tamaulipas in an effort to preserve the endangered sea turtle species.

Auntie Litter www.auntielitter.org Honda Manufacturing of Alabama has partnered with Auntie Litter, Inc., to increase environmental awareness among elementary school students, including the development of a DVD that is being used in schools throughout the state to promote the importance of recycling.



Earth Rangers www.earthrangers.ca

With programs designed to complement the school curriculum, Earth Rangers sends “Animal Ambassadors” and presenters to

Toronto-area primary schools and community groups to teach children about nature and the environment.

Earth Ranger’s animal ambassador inspires students to take action in the environment.

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53


Community Environmental EducationHonda provides fi nancial support to a number of environmental education programs throughout the United States and Canada.

Aquatic Adventures Science Education Foundationwww.aquaticadventures.orgFounded in 1999, the Aquatic Adventures Science Education Foundation in San Diego, California, provides educational programs that connect underserved youth to science, inspire environmental action, and increase exposure to marine habitats.

McHenry County Schools Environmental Education Program www.mchenry.k12.il.us/enviro_ed_program.htmlThe McHenry County Schools Environmental Education Program, in northern Illinois, addresses multiple issues of ecological concern, such as solid waste disposal, over-consumption, watershed and water quality, preservation of biodiversity, and the connection between energy use, depletion of natural resources and global climate change.

Nature CanadaNature Canada brings Canada’s youth groups together with dedicated naturalists at national parks, national marine conservation areas, and other protected areas to nurture a passion for nature and motivate students to become active stewards of the environment.

Chicago Botanic Gardenwww.chicago-botanic.orgThe Chicago Botanic Garden Center for Teaching and Learning uses its 23 exhibition gardens for programs that engage learners through hands-on interactive experiences involving plant and environmental science, ecology and nature.

ActuaActua’s Environment and Engineering Program for Youth, based in Ottawa, Ontario, features a “Dream Team” of instructors in science, engineering and technology who deliver customized programming directly to underserved or disadvantaged youth.

Aullwood Audubon Center The Aullwood Audubon Center and Farm in Dayton, Ohio, provides hands-on environmental experiences. It has promoted lifelong learning for adults and children for three generations.

Environmental Education in Washington, D.C., SchoolsThe Living Classrooms Foundation provides unique environmental educational opportunities for at-risk youth in Washington, D.C., schools.

Eastern Michigan University Eastern Michigan University’s innovative Design by Nature program introduces middle-school students to the cutting-edge fi eld of environmental product design, which explores the science of materials use and product lifecycles.

Kirkmont CenterThe Kirkmont Center in Zanesfi eld, Ohio, serves thousands of children and adults every year. It has a teacher-certifi ed naturalist staff that provides environmental educational instruction to 2,200 individuals, 23 public schools, and 10 other organizations.


Environmental Technology Milestones



� World’s fi rst fuel cell family, Jon and Sandy Spallino, take delivery of the fi rst fuel cell vehicle leased to an individual customer.

� The city of Las Vegas, Nevada, leases two Honda FCX vehicles.

� First application of hybrid technology is made to an existing mass-market car: the Civic Hybrid.

� Honda FCX becomes the fi rst and only hydrogen-powered fuel cell vehicle to receive both U.S. EPA and CARB certifi cation for commercial use, and the fi rst to meet applicable federal motor vehicle crash safety standards.

� Honda is fi rst with an entire personal watercraft lineup of 4-stroke engines. Honda now produces only 4-stroke PWCs.

� World’s fi rst commercial application of a fuel cell vehicle occurs.

� The city of Los Angeles begins a lease program for fi ve Honda FCX vehicles.

� First production motorcycle certifi ed to meet California Air Resources Board 2008 emission standards, the Honda Gold Wing, is sold.

� Honda is the fi rst mass-market automaker to offer an entire lineup of cars and light trucks as low-emission vehicles (LEV) or better: 2002 Honda and Acura models.

� First solar-powered hydrogen production and fueling station for fuel cell vehicles built and operated by an automaker opens at Honda R&D Americas’ Los Angeles Center.

� Honda develops breakthrough fuel cell stack: It starts and operates at temperatures below freezing while improving fuel economy, range, and performance with reduced complexity.

� Honda begins experiments with a hydrogen Home Energy Station (HES).

� The Civic Hybrid is the fi rst hybrid vehicle certifi ed as an advanced technology partial zero-emission vehicle (AT-PZEV) by the California Air Resources Board.

� FCX vehicles are leased to the state of New York, the cities of San Francisco and Chula Vista, and the South Coast California Air Quality Management District.

� 2005 FCX, Honda’s second-generation fuel cell vehicle, is certifi ed by the U.S. EPA as a Tier 2 Bin 1 (ZEV) vehicle and by the CARB as a zero-emission vehicle (ZEV).

� Union of Concerned Scientists gives Honda its “Greenest Automaker” award.

� First V6 hybrid car is introduced: 2005 model year Honda Accord.

� Honda announces it will aim for a 5% improvement in its U.S. corporate average fuel economy (CAFE) from 2005 levels by 2010.

� North American debut of Honda FCX Concept with more compact, powerful and effi cient V Flow stack points toward an all-new Honda fuel cell vehicle to be introduced in 2008.

2001200420052006

� First natural gas home refueling device, “Phill,” is offered for lease in California together with Honda Civic GX natural gas vehicle.

� Honda introduces the iGX, a revolutionary intelligent computer-controlled general-purpose engine. It sets an even higher standard for fuel effi ciency and quiet operation.

� 2006 Civic hybrid introduced 4th-generation Honda IMA technology with 50 mpg combined EPA city and highway fuel economy.

20022003

� World’s youngest fuel cell customer, 17-year-old Q’orianka Kilcher, takes delivery of her Honda FCX in Los Angeles.

� No. 1 fuel economy status maintained: Honda has the highest corporate average fuel economy (CAFE) rating among the six major automakers for the 2006 model year.

2007

� Honda Soltec, LLC established for production and sales of Honda-developed CIGS solar panels in Japan.

Retail sales of natural gas-powered Civic GX expanded from California to New York state.

� Honda develops plant-based bio-fabric for use in automobile interiors.

� Union of Concerned Scientists names Honda “greenest automaker” for the fourth consecutive time in its biennial report on automakers’ environmental performance.

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Environmental Technology Milestones

55

� Honda announces CVCC (Compound Vortex-Combustion Controlled) engine technology that meets U.S. Clean Air Act standards without the need for a catalytic converter.

� First car meets U.S. Clean Air Act standards solely through engine performance: the 1975 Honda Civic CVCC.

� Fuel economy leadership puts four Honda models on the U.S. government’s list of the 10 most fuel-effi cient cars.

� First gasoline low-emission vehicle (LEV) in the industry is intro-duced in California: the 1996 Honda Civic.

� First CARB-certifi ed gasoline ultra-low-emission vehicle (ULEV) is introduced: the 1998 Honda Accord.

� Honda becomes the fi rst automaker to introduce low-emission vehicle (LEV) technology voluntarily in mass-market vehicles (Honda Civic) throughout the U.S. and Canada.

� World’s fi rst 360-degree inclinable mini 4-stroke engine for handheld power equipment is introduced by Honda. It is more fuel-effi cient and virtually smoke-free, with ultra-low noise.

� First four-passenger advanced battery-powered electric vehicle is introduced and leased to customers: the 1997 Honda EV PLUS.

� Honda introduces 4-stroke marine engines that are cleaner, more fuel-effi cient and quieter than the 2-stroke outboard motors standard at the time. Honda has manu-factured only 4-stroke out-board motors since 1973.

� A Honda car is No. 1 on the U.S. EPA list of most fuel effi cient cars: the Honda Civic.

� The Honda Civic CRX-HF is the fi rst mass-produced 4-cylinder car to break the 50-mpg fuel economy mark.

� Foundation technology for Honda’s achievements in low-emission, high fuel effi ciency and high performance engines is achieved with the announcement of VTEC (Variable Valve Timing and Lift Electronic Control) engine.

� Honda becomes the fi rst automaker in America to use waterborne basecoat paint in mass production.

� The Honda Civic HX Coupe with a continuously variable transmission is the only automatic transmission vehicle to make the U.S. EPA’s top-10 list of fuel-effi cient cars.

� First gas-electric hybrid vehicle is introduced in North America: the2000 Honda Insight.

� First CARB-certifi ed gasoline super-ultra-low-emission vehicle (SULEV) in the industry is introduced: the 2000 Honda Accord.

� Honda Introduces fuel-cell prototype vehicles: the FCX-V1 and the FCX-V2.

1999

� U.S. EPA recognizes the 1998 Honda Civic GX natural gas vehicle as the cleanest internal combustion engine it has ever tested.

� Honda introduces ultra-quiet portable inverter generators that achieve substantially higher fuel economy and lower emissions than conventional generators.

� Honda becomes the fi rst company to introduce an entire line of high-performance outboard motors that meet the U.S. EPA emission standard proposed for the year 2006.

2000

� First product of any kind receives the Sierra Club Excellence in Environmental Engineering Award: the 2000 Honda Insight.

� First vehicle is certifi ed as an advanced technol-ogy partial zero-emission vehicle (AT-PZEV) by CARB: the 2001 Civic GX.

� First 50-state ultra-low-emission vehicle (ULEV), the 2001 Civic, is introduced.

1989 1988 1986 1977 1974 1973 197119951998 19961997

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Automobiles

More than 1.75 million cars and light trucks

More than 1,500 Honda and Acura dealers

Passenger cars, minivans, sport utility vehicles, and light trucks

Customers in the North American region purchased more than 1.75 million Honda and Acura automobiles in calendar 2006. In recent years, the company has expanded its offerings in both the small car and light truck categories to meet the diverse needs of its customers in North America. The company has also diversifi ed its powertrain technology to include high-effi ciency gasoline, gas-electric hybrid, and compressed natural gas (CNG) — as well as hydrogen-powered fuel cells. Moreover, the company is applying advanced fuel effi cient technologies to all of its cars and light trucks, making it the most fuel effi cient car company in the United States and Canada for the 2006 model year.

Honda’s Civic GX is powered by the cleanest internal combustion engine ever tested by the U.S. EPA.


More than 501,000 motorcycles, all-terrain vehicles, and personal watercraft

More than 1,300 Honda dealers

Motorcycles, scooters, all-terrain vehicles, and personal watercraft

In 2006, customers in North America purchased more than 500,000 Honda motorcycles, motor scooters, all-terrain vehicles, and personal watercraft for recreational and professional purposes. Virtually all of these products use inherently cleaner, quieter and more effi cient 4-stroke engine technology. The company continues to advance its fuel economy and emissions performance, and is actively engaged in educating and training its customers concerning the safe and environmentally responsible use of their Honda products.

In addition to meeting strict Tier 2 emissions standards, the Gold Wing is the fi rst motorcycle equipped with an airbag.

Power Equipment

More than 3.1 million engines and power equipment products

More than 2,000 Honda dealers

Lawn-and-garden equipment, generators, general-purpose engines, and outboard engines

Honda markets a complete range of power equipment products for commercial, rental and residential use, including lawn mowers, generators, tillers, trimmers, and outboard marine engines. The company also supplies more than 2.3 million engines annually to more than 200 original equipment manufacturers. The company is a leader in the application of advanced OHV 4-stroke engine technology, applied to its entire North American product lineup for a long time, and is consistently among the industry’s leading companies in meeting and exceeding all applicable emissions and product performance standards.

The latest Honda power equipment product: the freewatt™ micro-cogenerator provides heat and electricity for the home with up to 30 percent less CO2 emissions than a conventional home heating system.

North American Corporate Profi le



Major Business Segments

Honda manufactures, sells and services a broad array of automobile, power equipment, and power sports products in its North American region. It is Honda’s single largest market for the production and sales of Honda and Acura automobiles, and as such represents a signifi cant part of the company’s global effort to reduce its total environmental footprint, particularly from automobile production and in-use CO2 emissions.

Capital InvestmentMore than $9 billion in North America

EmploymentMore than 35,000 associates in North America

Suppliers/PurchasingMore than $17.6 billion in North American parts and materials purchased by Honda from more than 600 original equipment suppliers in the fi scal year ending March 31, 2007

Segment

Fiscal Year 2007

Sales

Dealer Network

Products

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Honda Companies Covered by the Report

United StatesAmerican Honda Motor Co., Inc.

Honda North America, Inc.Honda of America Mfg., Inc.Honda Mfg. of Alabama, LLC

Honda Power Equipment Mfg., Inc.Honda of South Carolina Mfg., Inc.

Honda Transmission Mfg. of America, Inc.Honda Engineering North America, Inc.

Honda R&D Americas, Inc.Honda Trading America Corp.

Honda Precision Parts of Georgia, LLCHonda Aircraft Company, Inc.

Honda Aero, Inc.

CanadaHonda Canada, Inc.

Honda of Canada Mfg., a division of Honda Canada, Inc. Honda R&D Americas, Inc. (Canada)

MexicoHonda de Mexico, S.A. de C.V.

Key LocationsMajor Manufacturing Facilities

Major Manufacturing Facilities (under development)

Research and Development Centers

Parts Centers

Sales and Marketing Headquarters

More information on Honda and Acura products can be found at:

U.S. www.honda.com

Canada http://www.honda.ca

Mexico http://www.honda.com.mx

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©2007 Honda. Advanced Compatibility Engineering (ACE) is a trademark of Honda Motor Company, Ltd., covered by patent rights issued and/or pending. All other trademarks, trade names, service marks and logos referenced herein belong to their respective companies. All images contained herein are either owned by American Honda Motor Co., Inc., or used under a valid license. It is a violation of federal law to reproduce these images without express written permission from American Honda Motor Co., Inc., or the individual copyright owner of such images. Specifi cations, features, illustrations and equipment shown in this report are based upon the latest information available at the time of printing. Although descriptions are believed to be correct, accuracy cannot be guaranteed.

The 2007 Honda Environmental Report is printed with soy-based inks on recycled paper containing 100 percent postconsumer waste fi ber. The paper is manufactured with wind power and certifi ed by the independent, nonprofi t U.S.-based Green Seal organization and by the independent, U.K.-based Forest Stewardship Council (FSC). The report is also 100 percent recyclable.

©2007 American Honda Motor Co., Inc. NAER 2007http://corporate.honda.com


2007 north american environmental report...honda north america, inc. 700 van ness avenue torrance,...

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