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Honda North American

Environmental Report

2008

Supplemental InformationEnvironmental Technology Milestones 38 Environmental Community Activities 40North American Corporate Profile 41

SectIon one Management and DirectionA Letter from Our North American Chief Operating Officer 1Environmental Management 2 Honda Environmental Statement 2Environmental Laws and Regulations 3

SectIon two Global climate changeAddressing Global Climate Change 4Honda’s Voluntary Global CO2 Reduction Targets 5 Honda’s Approach to Reducing GHG Emissions 6Honda’s Position on Climate Change Policy 12

the 2008 north American environmental Report covers Honda’s activities in the United States, Canada, and Mexico — including company policies, the overall direction of our environmental initiatives, and the environmental impact of our operations — for the fiscal year that began April 1, 2007, and ended March 31, 2008 (FY2008).

we Value Your opinionWe are interested in your response to this report, which will help us improve our reporting in the future. Please visit our Website www.corporate.honda.com to complete a survey.

Honda 2008 North American Environmental Report

SectIon tHRee Reducing Honda’s environmental Footprint

This new organization reflects our focus on a Life Cycle Assessment (LCA) model in the measurement of our environmental footprint.

Honda’s Life cycle Assessment (LcA) Model 13 Summary of Environmental Goals and Actions in FY2008 14Product Development 16 Designing for the Environment 16 Reducing Substances of Concern 17 Product Environmental Performance 18 Automobiles 18 Fuel Efficiency 18 Application of Technology 19 Exhaust Emissions 20 Powersports Products 21 Fuel Efficiency/Exhaust Emissions 21 Power Equipment 22 Fuel Efficiency/Exhaust Emissions 22 Home Energy Cogeneration 22Purchasing — Green Purchasing 23Manufacturing — Green Factory 25 Production Activity 26 ISO Certification 26 CO2 Emissions 27 Energy Consumption 28 Waste to Landfill 29 Water Use 30 Air Emissions 30 Chemical Releases 31Distribution — Product Distribution 32Sales and Service 33end-of-Life — Product Recycling 34Administration — Green Buildings, Green Office, and Land Stewardship 35

For the 2008 Report, we have adopted a life-cycle approach to the organization of materials and data concerning the environmental impact of our operations in North America.

Development

PurchasingEnd-of-Life

ManufacturingSales and

Service

Distribution

Administration

Honda North American

Environmental Report

2008

In this spirit, we are not simply reflecting on the pioneering accomplishments of our past. Rather, in the area of environmental responsibility, we are rededicating ourselves to the goal first expressed by a group of young Honda engineers almost four decades ago — to use technology to preserve “Blue Skies for our Children.” In short, we recognize that it is our responsibility to help protect our environment and ensure a sustainable future for personal mobility.

Two years ago, Honda became the first automaker to set voluntary goals for the reduction of CO2 emissions from both its products and production operations on a global basis. Based on this commitment, we are accelerating our efforts to advance our environmental performance, with a strong focus on the reduction of CO2 emissions that contribute to global climate change.

toward this challenging goal, we are working to reduce the environmental footprint of our products by further advancing fuel efficiency and accelerating the introduction of alternative-fuel technologies.

Over the past year, we expanded the use of technology to make V6-powered Honda and Acura vehicles more fuel-efficient. And early next year, we will further advance Honda hybrid technology with the introduction of a new, more affordable hybrid car.

For the longer-term future, we remain committed to the development of fuel cell vehicle technology and to advancing this technology in the real world. In July 2008, we began leasing our next-generation FCX Clarity fuel cell car to retail customers in the United States as part of our global plan to lease 200 of these zero-emissions, hydrogen-powered vehicles over the next three years. Most of these vehicles will be placed in the hands of our customers in California, who live close to existing publicly accessible hydrogen refueling stations.

We are also working continuously to improve the energy efficiency of our factories, offices, and warehouse facilities,

and we are promoting similar efforts among our many business partners in the region. In 2006, Honda became the first automaker to earn a green building certification. Today, we have five facilities certified to the standards of the U.S. Green Building Council (the nonprofit organization dedicated to advancing green building design and construction), including the automobile industry’s only Platinum-certified existing building. At the same time, we are continuing our efforts to reduce waste and the use of potentially harmful substances. In 2007, six of our 14 North American manufacturing plants were operating as zero-waste-to-landfill facilities. Total waste from automobile production was reduced 78% from 2001 levels.

this 2008 north American environmental Report addresses these and the many other efforts being undertaken by Honda associates to reduce our environmental footprint in the region.

Over the past half century, we have enjoyed tremendous growth in North America, and we are thankful for the support we have received from our customers and society. But we will not consider our next 50 years to be a success unless we are able to make further progress in the environmental performance of our products and the operations that help bring them to market. Only in this way can we fulfill Honda’s environmental vision and our commitment to being “a company that society wants to exist.”

Sincerely,

Tetsuo Iwamura Chief Operating Officer, North American Regional OperationPresident & CEO, American Honda Motor Co., Inc.

Honda 2008 North American Environmental Report 1

A Letter from our north American chief operating officerNext year, we will mark the first 50 years of Honda’s operations in North America. As we consider this important milestone in our company’s history, we are fundamentally assessing the value that we bring to our customers and to the communities where we do business.

Tetsuo Iwamura, COO of Honda’s North American Regional Operation, introducing the new FCX Clarity hydrogen-powered fuel cell car at the 2007 Los Angeles International Auto Show.

Honda 2008 North American Environmental Report2

environmental Management


Honda has long viewed the preservation of the environment as a core management responsibility. Our efforts extend to all aspects of Honda’s business operations and involve associates at all levels of our organization.

Guiding Our Environmental Efforts

north American environmental committee

Honda North America, Inc.American Honda Motor Co., Inc.

Honda Canada, Inc.Honda of America Mfg., Inc.

Honda Manufacturing of Alabama, LLCHonda Manufacturing of Indiana, LLC

Honda of Canada Mfg.Honda R&D Americas, Inc.

The North American committee serves as the coordinating body for the region — including the United States, Canada and Mexico. It is charged with promoting ways to minimize the environmental impact of every aspect of Honda’s operations in the region. Honda’s North American Environmental Committee comprises major Honda companies in the region:

world environmental committee

The World Environmental committee, established in March 1995, considers global plans in accordance with our business plans, determines environmental policies consistent with the company’s environmental mission statement, and conducts annual reviews of their implementation. With guidance from the World Environmental Committee, regional committees set goals and objectives for their respective regions.

Honda environmental Statement

“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.”

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

1. We will make every effort 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 find 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 influence that our corporate activities have on the regional environment and society, and endeavor to improve the social standing of the company.DD

In June 1992, we established and announced the Honda Environmental Statement to define our commitment and to guide our efforts to address environmental issues.

Improving In-use Fuel Efficiency and Emissions

Reducing Substances of Concern

Improving Design For Recyclability

Alternative-Fuel Vehicle Technology

Product Planning and Development

Coordinated by American Honda Motor Co., Inc. and Honda R&D Americas, Inc.

Improving Energy Efficiency of Manufacturing

Reducing Waste and Toxic Substances

Green Purchasing

Manufacturing (Green Factory)

Coordinated byHonda of America Mfg., Inc.

Enhancing Recycling Activities

Reducing Waste, Emissions, and Energy Use

LEED Certification

Recycling and Green Building

Coordinated by American Honda Motor Co., Inc.

Environmental Reporting

Product Information

communication

Coordinated by American Honda Motor Co., Inc.

3Honda 2008 North American Environmental ReportHonda 2008 North American Environmental Report 3

coRRectIVe ActIonS In FY2008

In the fiscal year ended March 31, 2008, we initiated four corrective actions in the U.S. market: two Voluntary Emission Recall Reports (VERRs), one Product Update Report (PUDR), and one Warranty Extension Report (WER).

DAte DetAIL MoDeL(S) UnItS

11/06/2007 VERR: Incorrect throttle bodies, with inadequate evaporative purge ports, were installed on some vehicles at dealers to remedy a known defect (throttle position sensor function)

MY2005Acura RSX

130

12/14/2007 VERR: Some fuel tanks developed a small crack at the air vent pipe due to vibration, resulting in gasoline leakage

MY2006-2007CBR1000RR (motorcycle)

25,422

7/11/2007 PUDR: On-board diagnostics (OBD) system may falsely detect catalyst deterioration and/or NOx adsorptive catalyst deterioration, due to inappropriate calibration of the OBD system

MY2001-2005 Insight 3,755

MY2003-2005Civic Hybrid

64,738

1/28/2008 WER: Engine speed may be higher than target rpm at high vehicle load, due to continuously variable transmission (CVT) belt slip

MY2003-2005 Civic Hybrid

66,757

SUMMARY

DAte DetAIL

12/11/2007 Honda voluntarily reported labeling violations for about 4,000 small spark-ignited engines that were produced and imported in 2001. These engines, the GX22, GX610, and GX670 models, met all applicable emissions standards but did not have the required EPA compliance label. Honda reached a settlement agreement with the U.S. EPA in December 2007.

1 Material fines are defined as $100,000 or more by regulatory disclosure guidelines.

north American environmental-Related Material Fines1

environmental Risk ManagementHonda considers risk management to be an integral part of environmental management. Honda’s approach to risk management is reflected in various activities. These include systems for preventing spills and releases, systems for reducing volatile organic compounds (VOCs) and other air emissions, and systems for recycling products, components, and manufacturing by-products, in order to minimize landfill waste. From long-term planning to daily operations, Honda makes efforts to understand the risk of environmental impact and seeks to make prudent decisions to minimize impacts wherever possible. Honda North America, Inc., a subsidiary of Honda Motor Co., Ltd., serves as auditor, helping to ensure that Honda’s various subsidiary companies and its affiliated suppliers in the North America region are in compliance with all applicable environmental laws and regulations. It also provides support to those companies in determining and assisting in the implementation of best practices for Honda’s environmental management activities in the region.

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

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

As outlined on the previous page, regional operations, including North America, are given broad authority and responsibility to plan and to act in accordance with Honda’s environmental vision to minimize the environmental impact of their local business activities. This includes efforts to reduce harmful emissions, to improve efficiency, and to minimize the production of waste material. Further, Honda makes every effort to mitigate environmental damage and to ensure compliance with all applicable environmental laws and regulations, and to initiate product updates, warranty extensions, and recalls when necessary.

Provide limited market-based incentives to

promote consumer interest in

more fuel-efficient products

Offer and promote cleaner, more

fuel-efficient products that meet customer

expectations for product performance

and value

Provide honest and accurate feedback

on technology and market conditions

Adopt performance-based regulatory policy

ADDRESSINGGLOBAL CLIMATE

CHANGE

CONSUMER

GOVERNMENT INDUSTRY


Global climate change and energy sustainability are the two most serious and difficult environmental challenges facing society today. As the world’s largest manufacturer of gasoline-powered internal combustion engines, Honda recognizes its responsibility to help meet these challenges and is committed to continuing efforts aimed at minimizing our environmental footprint, with a particular emphasis on the reduction of carbon dioxide (CO2 ) emissions.

AddressingGlobal ClimateChange

A complex challenge and a Shared Responsibility

Addressing an environmental challenge as complex as global climate change requires the concerted efforts of industry, government, and consumers. Without the commitment of all three, significant progress will be difficult to achieve.

InDUStRY: Motor vehicle manufacturers and energy suppliers must work to provide consumers with products that support the goal of reduced greenhouse gas emissions (particularly CO2 as the predominant greenhouse gas) while meeting customers’ expectations for product performance — including safety, utility, comfort, quality and reliability.

conSUMeRS: Consumers must be willing to purchase products that achieve lower greenhouse gas emissions.

GoVeRnMent: Governments should adopt policies and incentives that promote the development and sale of products with reduced greenhouse gas emissions. One means of accomplishing this is by offering incentives that help to jump-start the market for new products that address critical environmental objectives but may not yet be fully price- or market-competitive. Honda supports such incentives so long as they are limited in duration and based on performance, not tied to a particular technology. In addition, government-supported research into critical technologies, such as advanced batteries, hydrogen storage, and cellulosic-based biofuels, can be an important catalyst for the development of new technologies. Also, government grants should be awarded on the merits of the research, and the fruits of publicly funded research should be made widely available.


Honda’s Voluntary co2 Reduction targets

The greatest opportunity to reduce CO2 emissions from Honda products will come by improving the in-use energy efficiency of those products, which account for 78% of a Honda product’s life-cycle CO2 emissions.

In May 2006, we established a series of voluntary targets to significantly reduce the fleet-average CO2 emissions of Honda products and the CO2 emissions intensity of production operations, on a global basis, by 2010.

Our overall goal is to develop products with the lowest in-use CO2 emissions manufactured at plants with the lowest CO2 emissions intensity (emissions per unit of production).

Life-Cycle CO2 Emissions*

Q 78% Product In-UseQ 6% ProductionQ 16% Other Factors:

• raw materials • procurement • distribution • service and disposal

* Based on estimates by the American Council for an Energy Efficient Economy (ACEEE).

Global co2 Reduction Targets

(from 2001 baseline)Results

DoMAIn SeGMent 2010 FY2001 FY2007 FY2008 ScoPe oF tARGetS

PRoDUct

Auto

10% (per g/km)

100.0 94.094.0

Automobiles sold in Japan, North America, Europe/Middle East/Africa, Asia/Oceania, China, South America (more than 90% of Honda’s worldwide automobile sales)

Powersports

10% (per g/km)

100.0 86.888.8

Motorcycles sold in Japan, North America, Europe, Thailand, India, China, Indonesia, Vietnam, Brazil, the Philippines, Malaysia, Pakistan (more than 90% of Honda’s worldwide motorcycle sales)

Power Equipment

10% (per kg)

100.0 93.1

90.3

All worldwide power equipment product sales, excluding outboard marine engines

PRoDUctIon

Auto

10% (per unit)

100.0 91.292.8

Powersports

20% (per unit)

100.0 70.859.0

Power Equipment

20% (per unit)

100.0 103.8112.3

1 We attained a 11.2% reduction in FY2008. We will strive to achieve additional CO2 reductions.2 Despite an increase in the energy- efficiency of automobile production in FY2008, per-unit CO2 emissions from automobile manufacturing rose because of increased production activity in regions

with more CO2-intensive methods of energy production.3 Although we have surpassed our target, we foresee an expansion of production in a region where CO2 emissions are relatively high.

We will strive to maintain the target level and achieve an even greater reduction by 2010.4 Higher per-unit emissions in Power Equipment production can be attributed to larger and more feature-rich new products and to fluctuations in production volumes.

All manufacturing by Honda Motor Co., Inc., and 74 other Honda Group companies that assemble Honda products and major components

6.0% Reduction from 2001 b a s e l i n e

12.3% I n c re a s e from 2001 b a s e l i n e





78%

16%

6%

Honda’s Approach to Reducing Greenhouse Gas emissions

No single technology holds the key to our energy future. Meeting society’s rapidly expanding demand for transportation energy and curbing the growth in global CO2 emissions will require the rapid development and implementation of as many market-viable technologies as possible.


Honda Solar Cells

TECHNOLOGIES

Fuel-e�cient Engines

AlternativeFuels

CO 2 EMISSIONS REDUC TIONS and ENERGY SUSTAINABILIT Y

Energy and Infrastructure

InnovativeConstruction

DrivetrainAdvancements

StationarySources

Fuel cell vehicle home refueling (Home Energy Station)1

Home heat and electricity cogeneration (MCHP)

4-valves per cylinder

Variable valve timing and lift control (VTEC )

Cylinder deactivation (VCM)

Transportation — more energy-e�cient distribution of products and parts

Manufacturing — more energy-e�cient production of products and parts

CNG ... from low- or no-carbon sources

Battery EV and Plug-in HEV1

Fuel Cell2

Hybrid (IMA)

Lightweighting

Aerodynamic improvements

Advanced transmissions

Advanced Combustion including HCCI1

Clean diesel (i-DTEC)

Hydrogen ... from renewables

Biofuel ... from cellulosics1

Electricity ... from low- or no-carbon sources

Now Future

Honda’s Multiple Pathways Approach to co2 emissions Reduction

Honda has developed a strategy that encompasses multiple technology pathways and that seeks to address in a comprehensive fashion the challenges associated with the deployment of new energy and vehicle technologies. What follows is a visual representation of Honda’s effort for today and the future to reduce CO2 emissions and promote a more sustainability energy future.

1Currently undergoing research and development 2Currently undergoing research and development and deployment

Honda’s efforts include:

research into new means of

energy production and distribution

the advancement of real-world

alternatives to gasoline

the development of more

fuel-efficient engines

Lightweighting

ADVAntAGe: Advanced materials such as aluminum and high-strength steel can be used to improve fuel economy and performance while helping to enhance safety. In general, a 10% reduction in vehicle weight results in about a 6.5% increase in fuel economy at constant performance levels. Lightweighting is particularly important to offset the weight of added safety features.

cHALLenGe: Reducing the cost and energy impact of production, and improving the manufacturability of lighter weight materials.

oUR eFFoRt: Honda is ambitiously applying lightweight materials, such as aluminum and high-strength steel, to minimize or eliminate weight increases. In FY2008, every engine that Honda built was made of aluminum. We have also been actively increasing the use of lightweight materials in vehicle bodies. Aluminum body panels are employed in the 2008 Acura MDX and RL, and Honda Pilot. Also, high-strength steel is being applied in significantly higher amounts on many new models. The current

Accord and Civic, our two top-selling models in the region, each have bodies composed of approximately 50% lighter weight high strength steel, and the body of the 2009 Pilot is 52% lighter weight high-strength steel, compared with 13% for the outgoing model.


Fuel-efficient engines

Honda Gasoline engine technologies

ADVAntAGe: Broad market acceptance and well-established service support network and refueling infrastructure.cHALLenGe: Achieving significant further gains in fuel efficiency while maintaining reasonable cost for the customer. oUR eFFoRt: Honda is pursuing many advancements in powertrain fuel efficiency, several of which are summarized below.

tecHnoLoGY DetAIL

Variable cylinder Management™ (VcM™) cylinder deactivation technology

Second-generation VCM, with three-, four-, and six-cylinder modes, has been applied to four Honda models — to 2008 and newer Accord V6 Sedans, Accord V6 Coupes and Odyssey minivans, and to the 2009 Pilot sport-utility vehicle, introduced in May 2008.

i-Vtec™ i-VTEC™ engine technology, which provides for variable valve timing, duration, and lift for improved performance and fuel efficiency, is being applied to virtually all Honda and Acura automobiles.

continuously Variable transmission (cVt)

The Civic Hybrid is equipped with a CVT that optimizes transmission ratios for improved fuel efficiency.

5-speed electronically controlled automatic transmissions (5At)

All Honda and Acura automobiles equipped with automatic transmissions are using electronically controlled 5AT technology for improved performance and fuel economy.

Incremental engine improvements Reducing friction losses with technologies such as offset cylinders and engines designed to work with low-viscosity oil.

Homogenous charge compression Ignition (HccI)

Honda is intensively researching HCCI, which has a much higher heat release rate than conventional spark ignition, lowering heat losses and increasing overall efficiency.

OV6-powered 2008 Accords use an advanced i-VTEC valvetrain, a 5-speed electronically controlled transmission, and second-generation VCM technology with the ability to run on just three or four of its six cylinders under light engine loads.

Honda Diesel engine technology

ADVAntAGe: 20% -25% higher fuel efficiency than gas-powered engine.

cHALLenGe: Reducing NOx emissions to stringent regulatory levels, and addressing U.S. consumer perceptions of diesel vehicles as lower performing and inconvenient to refuel.

oUR eFFoRt: We will apply the next generation of Honda 4-cylinder clean diesel technology on existing Honda and Acura models in the United States and Canada within several years. The new i-DTEC clean diesel engine will achieve U.S. EPA Tier 2 Bin 5 emissions levels.

The 2009 Pilot uses more than four-times as much high-strength steel as the preceding model. It also uses aluminum to reduce body weight while enhancing safety.

Illustration colors denote use of aluminum and high strength steel:

P ALUMINUM

P 980 GRADE STEEL

P 780 GRADE STEEL

P 590 GRADE STEEL

P 440 GRADE STEEL

P 340 GRADE STEEL

P 270 GRADE STEEL

IncR

easI

ng s

TRen

gTh


The 2008 Civic Hybrid employs

fourth-generation Integrated Motor Assist

(IMA) hybrid technology mated to a highly

efficient 1.3 liter i-VTEC engine and

a continuously variable automatic

transmission (CVT).

ADVAntAGe: The capture and reuse of braking energy, along with engine shut-off at idle, and the potential for engine downsizing, provide for significant increases in fuel efficiency.

cHALLenGe: Reducing technology cost and improving value for the customer.

oUR eFFoRt: Honda introduced the first gasoline-electric hybrid vehicle to consumers in North American when we launched the Honda Insight in the U.S. in 1999 and in Canada in 2000. Since then, we have continued to advance our Integrated Motor Assist™ (IMA) technology with a focus on efficiency and

affordability for the consumer, which we believe are the keys to broader market acceptance of hybrid technology. In 2009, we will introduce a new purpose-built hybrid car, with good family utility, at a price below that of the current Civic Hybrid. It will be followed within several years by a new sporty hybrid car based on our CR-Z concept. With the introduction of these new models, we will target a more than fourfold increase in the annual sales of Honda hybrid vehicles in the United States.

Hybrid electric Vehicles (HeVs)

Battery-electric Vehicles (BeVs)

ADVAntAGe: Use of energy generated off-board as a power source.

cHALLenGe: Lowering battery cost, improving battery performance and durability, and reducing stationary-source CO2 emissions from coal-powered electricity production. Batteries for use in battery-electric vehicles, whether in a dedicated battery-only or plug-in hybrid application, need high energy storage to support extended operation in electric-only mode. BEV batteries are very different from HEV batteries, which capture regenerative braking energy to assist with acceleration but do not need a high level of static energy storage. Also, BEV batteries must operate in the much more technologically hostile environment of constant deep charges and discharges.

New lithium-ion battery chemistries show potential for much-improved power and durability, but progress in energy density and cost is far more limited. In terms of their impact on greenhouse gas emissions, BEVs will be best suited to areas with low-carbon electricity production from such sources as hydroelectric, solar, wind, natural gas, and nuclear energy. BEVs charged with electricity generated in a coal-fired energy plant or other carbon-intensive production process may have limited or no positive net impact on well-to-wheel CO2 emissions.

oUR eFFoRt: Our research and development of BEV technology is focused on improving the energy density, durability, and safety of the battery.


ADVAntAGe: Natural gas is a viable near-term alternative to gasoline as a transportation fuel. With only 75% of the tank-to-wheel CO2 emissions of a gasoline-powered automobile (on a gallon-equivalent basis), it provides an immediate opportunity to displace petroleum and to significantly reduce greenhouse gas emissions. The Civic GX is also the only vehicle certified by the EPA to meet both federal Tier 2-Bin 2 and Inherently Low Emission Vehicle (ILEV) zero evaporative emission certification standards.

cHALLenGe: Limited driving range, vehicle cost, and limited availability of vehicle refueling options.

oUR eFFoRt: The Civic GX is the only dedicated natural gas-powered passenger vehicle available from a major automaker in North America. Traditionally, natural gas vehicles were available only to fleet operators, because of the need for a centralized fueling operation. Honda has extended the accessibility of this technology to consumers through the deployment of a home-based refueling device known as Phill™ (pictured at top left) manufactured by FuelMaker Corporation and marketed through Honda dealerships. In 2007, Honda expanded marketing of the Civic GX to 20 Honda dealers in New York state and to additional markets in California.

natural Gas

Biofuel

ADVAntAGe: Biofuel-powered vehicles offer significant opportunities to displace petroleum and to reduce greenhouse gas emissions.

cHALLenGe: Sustainable and economically viable production of biofuel, and its economical use with existing products. The net energy benefits of corn-based ethanol, depending on production and distribution methods, may be marginal at best; and the use of corn for fuel purposes can have many unintended consequences. The supply of corn-based ethanol can be blended into the U.S. gasoline supply at 10% levels (E10 gasoline). Testing is needed to ensure that higher blends, up to 20%, do not pose problems for the performance of existing vehicles and small engines. Higher blends may require even greater production of ethanol from grains such as corn. They may also require a separate distribution infrastructure and they may only work in specially designed vehicles. In addition, ethanol has only about two-thirds the energy content of gasoline, leading to corresponding decreases in fuel economy and driving range at higher-level ethanol blends — raising questions about consumer acceptance.

There are other promising biofuels that do not have the inherent deficiencies of ethanol and may prove to be superior alternatives to gasoline.

Biofuels for diesel vehicles, such as biodiesel and renewable diesel, have a role in reducing greenhouse emissions and in

meeting our future energy needs. Recent progress on U.S. standards for biodiesel blends could improve the availability of a high-quality fuel for the North American marketplace.

Before the U.S. commits itself to any particular biofuel, including higher blends of ethanol, additional research and development is needed to identify more sustainable and economically viable feedstocks and production processes.

oUR eFFoRt: All Honda and Acura automobiles, as well as all motorcycle and power equipment products, are capable of operating on E10. We continue to research the feasibility of higher blends, including “mid-level” blends such as E15 or E20. Honda, in partnership with the Research Institute of Innovative Technology for the Earth (RITE), is also conducting research into the efficient production of ethanol from cellulosic feedstocks.

the Ideal Biofuel

• reduces greenhouse gas emissions throughout the entire lifecycle

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

• does not affect the price or availability of food

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

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

• is sustainable and can be transported using the existing pipeline and fuel pump infrastructure

Hydrogen Fuel cell

ADVAntAGeS: Fuel cell vehicles have more than three times the tank-to-wheel energy efficiency and three times the fuel economy of conventional gasoline-powered vehicles, and can reduce greenhouse gas emissions by as much as 60% compared with a gasoline-powered car — even when using hydrogen reformed from natural gas.

cHALLenGe: Technology cost, hydrogen production and storage, and limited hydrogen refueling infrastructure.

oUR eFFoRt: We are accelerating the development of the hydrogen-powered fuel cell car as the ultimate solution for a clean and sustainable mobility future. In November 2007, we took a major step forward with the introduction of the FCX Clarity, a next-generation fuel cell car with performance, space and comfort on par with a gasoline-powered sedan in the 2.0-liter engine range. In July 2008, we began leasing the FCX Clarity to individual retail customers in Southern California, who live and work near existing, publicly accessible hydrogen refueling stations.


Many of the major advancements to the zero-emissions FCX Clarity are based on the entirely new Honda V Flow fuel cell stack. This more compact, powerful, and efficient stack fits into the center console of the car, creating the first FCV with a full-size cabin and low-floor sedan-style platform. The FCX Clarity is also the first fuel cell vehicle built from the ground up as an FCV. Major improvements over the current-generation FCX include:

Stack output: 100 kilowatts (kw) Motor output: 100 kw (127 hp)Battery: Lithium IonHydrogen Storage: 171-liter tank at 5,000 psiRange: 280 miles1

Fuel economy: 72 miles/kg-H21 (gasoline gallon equivalent)Seating: Four adultsSpecial features: Application of Honda biofabric, made from

plant material, to interior surfaces (seat fabric, armrests, and door linings)

Honda V Flow fuel cell stack

Hydrogen Production and Distribution

The fourth generation Home Energy Station is being tested at Honda R&D Americas, state-of-the-art hydrogen refueling station in Torrance, California.

Although the FCX Clarity represents a substantial step forward in fuel cell vehicle technology, the ultimate success of the fuel cell vehicle will depend on the ability to produce, distribute and store hydrogen fuel. Honda’s experimental Home Energy Station (HES), created in partnership with Plug Power Corp., is in its fourth generation of development. Using natural gas as its energy source, the Home Energy Station is designed to provide a home-based refueling solution that produces enough hydrogen to power a fuel cell vehicle while generating enough heat and electrical energy for an average home. In 2007, we began operation of a fourth-generation unit that is 70% smaller1 with increased fuel efficiency and the integration of the gas purification and electric power generating components.

1 Compared to first-generation Home Energy Station

Performance Attribute Improvement (vs. previous FcX)

Fuel Efficiency Up 20% to 72 miles/kg-H21 (gasoline gallon equivalent)

Driving Range Up 33% with only a 10% increase in fuel tank storage capacity (up 59% from the first FCX)

Fuel Cell Stack Size Down 20% and weight down 30%

Subfreezing Start-up -20F° 2(versus -4F° on previous model)

1Based on official EPA-estimated combined fuel economy and driving range.2Not applicable to vehicles being deployed in Southern California.

Large compressed air pumps at the East Liberty Auto Plant have been outfitted with new controls to operate more efficiently.


Hydrogen Production from Renewable energy

Although Honda is first and foremost a mobility company, our R&D activities also include new energy technologies for stationary sources. Honda and technology partner Climate Energy, LLC, have collaborated on a micro combined heat and power (MCHP) system for home use. The system, called freewatt,™ supplements traditional natural gas heating systems with technology that produces heat and electricity for the home, reducing CO2 emissions by as much as 30% compared to a conventional 80-percent-efficient home heating system. The electricity can be consumed by the homeowner or sold back to the grid in areas where net metering is available. The system is currently being marketed in Massachusetts and New York.

The freewatt™ micro-combined heat and power system, using Honda cogeneration technology, is being marketed to consumers in the Northeastern United States.

Manufacturing

StAtIonARY SoURceS

We are striving to reduce the energy and CO2 emissions intensity of our manufacturing operations by improving process energy efficiency and using renewable energy. As more energy-efficient alternatives for equipment are developed, we try to utilize those alternatives for equipment replacement and renewal, and for new equipment installations. We are also working to use less energy — operating with less variability, ensuring that requirements are met and not exceeded, and designing equipment that can be easily shut down when not in use. We also believe that renewable energy should be part of our energy portfolio and have initiated study and pilot projects to evaluate opportunities for renewable energy use at our manufacturing sites. We have also created an inventory of direct and indirect emissions from manufacturing activity for all six greenhouse gasses as identified by the World Resources Institute (WRI)/World Business Council for Sustainable Development (WBCSD) Greenhouse Gas Protocol.

We are also experimenting with a solar-powered station, which extracts hydrogen from water through electrolysis.

An experimental solar-powered hydrogen station has been in operation at Honda R&D Americas’ Torrance, California, campus since 2001. The station uses Honda-developed thin film solar cells to power a highly efficient electrolyzer that extracts hydrogen from city-supplied water. This process emits no CO2 and demonstrates the potential for producing hydrogen from renewable energy sources in a wholly carbon-free energy cycle.

Hydrogen also can be produced from biomass or as a byproduct in the biofuel production process. Honda is exploring this approach to producing hydrogen because it represents a greater per-mile benefit to CO2 emissions reduction than using biomass-produced alcohol in a flex-fuel vehicle.

Honda solar-powered hydrogen refueling station, using Honda-developed thin-film solar cells that require half as much energy to manufacture as conventional crystalline silicone cells.

Home energy


Honda’s Position on climate change Policy

Honda is committed to pursuing national policy initiatives that are technically feasible and competitively fair, and that lead to greater fuel efficiency and reduced greenhouse gas emissions.

Honda Supports new Federal Fuel economy StandardsBeginning in 2005, Honda encouraged the U.S. government to adopt higher fuel economy standards and worked with Congress for the adoption of the new nationwide Corporate Average Fuel Economy (CAFE) requirement by 2020. The law requires attribute-based standards, which means each manufacturer will have a different overall fuel economy requirement based on the size of vehicles in its fleet. Because our average vehicle size is smaller relative to some other manufacturers, Honda will be required to attain an even higher fleet-wide average than some competitors.

Although the United States, Canada, and Mexico are sovereign nations, each with its own traditions, processes and politics, Honda strongly urges harmonization of regulations among countries and within North America. The motor vehicle industry is global: Vehicles are routinely built and distributed worldwide. Inconsistent policies will result in inefficiencies in the production process and complex product development challenges. Similarly, standards should be national rather than regional, within each country.

PRoMInent PUBLIc PoLIcY InItIAtIVeS

There are numerous policy options available to governments that want to address climate change. Honda’s position on some of the most prominent is as follows:

InItIAtIVe HonDA’S PeRSPectIVe

Motor Vehicle Fuel efficiency Standards

We have supported aggressive national fuel-efficiency standards. In adopting such standards, governments must be cognizant of lead-time requirements, technological realities, and market demands.

Incentives Financial incentives can be constructive in stimulating nascent and expensive technologies, such as fuel cell vehicles. Incentives should be limited in duration and be based on performance.

Feebates A properly constructed national feebate system (a federal government program of rebates and fees) targeted at new vehicle manufacturers can be effective in accelerating the market introduction of new fuel-efficient technologies.

Registries Any regulatory approach that is calibrated to baseline emissions requires registries that accurately reflect the current situation. Registries should be nationwide to ensure consistent and reliable reporting obligations.

cap-and-trade Any cap-and-trade system should isolate the auto sector from other sectors, because of the potential for double counting with fuel sector emissions and the unmanageable administrative burden. Additionally, a cap-and-trade system can severely prejudice manufacturers whose sales are expanding and provide a windfall for those with contracting sales.

Honda’s Position on california’s Proposed Greenhouse Gas StandardsBecause climate change has worldwide effects and greenhouse gas emissions can not be contained within any state or national border, Honda believes that GHG emissions from motor vehicles can be addressed successfully only at the national and international level. Equally important, there is no single solution akin to a catalytic converter (which reduces smog-forming exhaust emissions) available to reduce the level of GHG emissions from motor vehicles. As a result, the technology necessary to reduce GHG emissions is fundamental to the design of a vehicle and its powertrain. It is extremely difficult and not economically practicable to tailor fuel-efficient technologies to meet different requirements for different states or to market different vehicle types for specific states.


Reducing Honda’s environmental Footprint

P Improving in-use

fuel efficiency and emissions, reducing

the use of toxic substances, and improving

product recyclability in the design phase

P Promoting a

“green factory” approach

to the production

and distribution of

component parts

P Improving energy

efficiency, minimizing

toxic emissions, and

reducing the production

of waste materials

in manufacturing

P Reducing CO2 emissions

and waste from transporting

products to dealers

P Reducing energy

consumption,

emissions, and waste

material from the

sales and servicing

of products

P Improving

parts and materials

recycling and

reducing landfill

waste

Reducing the environmental

footprint

of Honda facilities and

office operations

Honda recognizes Life Cycle Assessment (LCA) as a critical tool for understanding the impact of our products and activities on the environment, and we are working to minimize that impact in virtually every aspect of our business — from product design and production all the way through to distribution, sales and service, in-use fuel efficiency and emissions, and finally the recycling of service parts and complete vehicles at the end of their useful life.

Development(In-Use Emissions and

Fuel E�ciency)

PurchasingEnd-of-Life


Service

Distribution

Administration Reducing the

environmental footprint

of Honda facilities and

office operations

Our efforts to reduce the environmental impact of our operations in North America are guided by the following goals, and they are being implemented according to the following strategies.


A Summary of environmental Strategies, Goals, and Actions in FY2008

1 Honda calculation based on the ISO standard 22628, titled “Road Vehicles Recyclability and Recoverability Calculation Method,” which bases its estimates on existing proven treatment technologies and takes into account the mass of materials recycled, reused, recovered for energy or otherwise diverted from landfill disposal. In addition to these guidelines, Honda’s calculation also takes into account recyclable mass within nonmetal shredder residue.

cAteGoRY StRAteGIeS GoALS ActIonS In FY2008For

Add’l Info

Reducing SOCs

Automobiles Work with OEM parts suppliers to reduce or eliminate the use of potentially harmful or toxic substances

Continue to reduce SOCs in Honda products

l With the exception of one part from one supplier, eliminated the use of hexavalent chromium for corrosion-resistance purposes

Pg. 17

Reducing VOCs

Continue to reduce VOCs in Honda products

l Introduced new Accord with low-VOC interior Pg. 16

Reducing PVC

Continue to reduce the use of PVC in Honda products

l 10 of the 19 model year 2008 (MY08) Honda and Acura models have less than a 1% concentration of chlorine in material that can end up in the wastestream as automotive shredder residue. Three more models will be added in the 2009 model year

Pg. 17

End-of-life recyclability

Autos Work to improve end-of-life recyclability of products in the design, development and purchasing phases

Minimum 90% design recyclability1 for all automobiles sold in North America

l Maintained 90% level of design recyclability for all Honda and Acura autos sold in North America1

Pg. 16

Powersports Products andPower Equipment

Minimum 95% design recyclability1 for all powersports products and power equipment sold in North America

l Maintained 95% level of design recyclability for all powersports products and power equipment sold in North America

Pg. 16

Fuel Efficiency Automobiles Improve fuel efficiency Increase CAFE 5% over 2005 levels by 2010

s Increased Honda’s U.S. CAFE in model year 2007 (MY2007) to 29.5 mpg, a 1% increase over the MY2005 baseline.

Pg. 18

Advance Honda hydrogen-powered fuel cell vehicle and refueling technology

l Introduced FCX Clarity next-generation Honda fuel cell car with three times the fuel efficiency of a gasoline-powered automobile

Pg. 10Advance alternatives to gasoline

l Began operation of fourth-generation experimental hydrogen Home Energy Station (HES IV)

Pg. 10

Expand market for natural gas-powered vehicles

l Increased retail sales of Civic GX in New York and California

Pg. 9

Powersports Products Improve fuel efficiency Continued incremental gains in the fuel efficiency of powersports products

n No new actions in FY2008 Pg. 21

Power Equipment Improve fuel efficiency (hours/gallon)

Continued incremental gains in the fuel efficiency of power equipment

n No new actions in FY2008 Pg. 22

Exhaust Emissions

Automobiles Reduce engine emissions All new Honda and Acura automobiles meet or exceed U.S. EPA and Transport Canada Tier 2 Bin 5 (LEV in California) exhaust emissions standards on an individual model basis

l All Honda and Acura automobiles released in the U.S. and Canada in FY2008 met or exceeded U.S. EPA and Transport Canada Tier 2 Bin 5 emissions standards on an individual model basis, without the use of fleet averaging

Pg. 20

Advance zero-emissions vehicle technology

Continue to advance the performance and market acceptance of alternative fuel vehicle technologies

l Introduced zero-emissions FCX Clarity fuel cell car and announced plans to begin limited retail leasing in 2008

Pg. 10

l Increased sales of the natural gas-powered Civic GX, with Inherently Low Emissions Vehicle (ILEV) U.S. EPA emissions rating

Pg. 9

Powersports Products Application of 4-stroke engines, PGM-FI, and other advanced engine technologies

Continued reductions in HC and NOx emissions from powersports products

l 4-stroke engine technology applied to all powersports products including all off-road competition models

Pg. 21

Power Equipment Application of PGM-FI and other advanced engine technologies

Continued reductions in HC + NOx emissions from Honda’s global fleet of power equipment products

l Global fleet average HC and NOx emissions reduced 32% from the FY2001 baseline

Pg. 22

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l = achieved goals = made positive progress toward goal n = did not achieve goal

cAteGoRY StRAteGIeS GoALS ActIonS In FY2008For

Add’l Info

Green Purchasing

Promote third-party certification of suppliers to ISO 14001 environmental management standards through communications, events, and recognition of supplier achievements

Increase the number of ISO 14001-certified suppliers

l 93% of key North American OEM suppliers and 85% of all North American OEM suppliers (up from 58% in FY2007) were third-party certified to ISO 14001 standards

Pg. 23

Environmental Management

Ensure third-party certification of major Honda manufacturing facilities to ISO 14001:2004 standards

Achieve 100% certification of all major Honda plants in the U.S., Canada and Mexico

s 13 of 14 Honda plants certified to ISO 14001:2004 standards; the Tallapoosa, Georgia, transmission plant is targeting certification by 2009

Pg. 26

CO2 Emissions Improve energy efficiency and reduce energy loss in product manufacturing

Maintain inventory of greenhouse gas emissions for all N.A. manufacturing operations

l Maintained inventory of CO2 emissions from the consumption of purchased electricity and natural gas in all N.A. manufacturing plants.

Pg. 27

Reduce energy intensity of product production

l Reduced CO2 emissions intensity (from electricity and natural gas) in automobile production 1.7% from FY2007 levels and 1.4% from the FY2001 baseline

Pg. 27

Landfill Waste Reduce generation of waste material and increase recycling

Reduce waste to landfills 70% from FY2001 levels by FY2010 (excluding mineral waste)

l Reduced waste to landfills 35% from FY2007 levels and 79% from the FY2001 baseline (excluding mineral waste)

Pg. 29

Fuel Efficiency Concentration on rail distribution and reductions in truck miles traveled through more efficient logistics

Increase efficiency of Honda product distribution

l Industry-leading 81% of automobiles were transported by train (more fuel-efficient than truck or ship)

Pg. 32

l Utilized fleet of 400 fuel-efficient Auto Max rail cars, reducing diesel fuel consumption by 531,048 gallons (5,493 metric tons CO2)

Pg. 32

l Completed $7 million modernization of Ohio automobile distribution facility, reducing fuel consumption by 2,436 gallons (25.2 metric tons CO2)

Pg. 32

Waste Reduce waste in packaging and administration of product distribution

Reduce product packaging l 100% of domestically-produced motorcycles, ATVs, and personal watercraft were shipped in returnable crates

Pg. 32

Reduce waste from administration l Implemented new wireless yard management system in Ohio and Alabama, eliminating 1,000 reams of paper annually

Pg. 32

Waste Adopt less wasteful processes and reduce use of virgin and nonrecyclable materials

Reduce waste from sales and service administrative activities

l Established new electronic statement option for customers of Honda Financial Services division

Pg. 33

Reduce generation of waste and use of virgin and nonrecyclable materials in service parts

l Eliminated 1.45 million pounds of cardboard through redesign of parts packaging and consolidation of packaging operations

Pg. 33

l Implemented new service support program for Honda motorcycle dealers, reducing by 41% the replacement and disposal of used motorcycle batteries

Pg. 33

Recycling Increase the number and type of remanufactured components available for customer purchase

Increase sales of remanufactured components

l Added 32 new part numbers to list of remanufactured components

Pg. 34

Reducing Automobile Shredder Residue

Increase separation and recycling of material in shredder residue

Reduce waste to landfills s Identified promising technologies for further research

Pg. 34

Green Building Leadership in Energy and Environmental Design (LEED) certification by the U.S. Green Building Council

Increase new and existing facilities achieving LEED certification

l Three new U.S. facilities joined two existing buildings certified to LEED green building standards, including first Version 2.2 Silver-certified data center in the United States

Pg. 35

l Three additional new facilities (two in the U.S. and one in Canada) are targeted to achieve LEED certification in 2009

Pg. 35

Energy Use Improve energy efficiency of Honda facilities Apply more energy-efficient lighting and HVAC systems

l Upgraded lighting systems in Irving, Texas, and Chino, California, service parts facilities

Pg. 36

l = achieved goals = made positive progress toward goal n = did not achieve goal


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Product Recyclability

Honda views improvements to in-use fuel efficiency (to minimize CO2 output) and exhaust emissions as the two most significant opportunities to reduce the environmental impact of Honda products. We are also aggressively pursuing opportunities to reduce the use of virgin and nonrecyclable materials where technically and economically feasible, and to reduce or eliminate the use of potentially harmful substances in all of our products.

16

Designing for the environmentEnvironmental factors are considered early and in each phase of the design and development of every Honda product. In component design and in the selection of materials, we look for opportunities to reduce a product’s total environmental footprint,

including its impact at the end of its useful life. Accordingly, our engineers take into account such factors as dismantling complexity, component remanufacturing, the minimization of substances of concern (SOCs), and shredder residue.

Addressing Product Environmental Performance in the Development Stage

Product Development

Honda has achieved and is committed to maintaining a minimum 90% level of design recyclability1 for all Honda and Acura automobiles, and a minimum 95% level of design recyclability for all powersports and power equipment products. All new Honda and Acura automobiles, beginning in 2004, have met or exceeded the 90% target. We will continue to look for new ways to improve the design recyclability of future products, in balance with other critical considerations, such as quality, efficiency and durability.

Designing for the environment case Study: 2008 AccordThe redesign of the 2008 Accord included a comprehensive effort to reduce the vehicle’s environmental impact. Honda engineers reduced the use of materials containing VOCs which could be emitted into the interior cabin of the vehicle, including low-VOC parts and adhesives for the sunroof, a low-VOC sealer for the front defroster, and low-VOC window glass adhesive, door hole sealant and wiring harness tape. In addition, alternatives to PVC such as thermoplastic olefin and thermoplastic styrenes for interior materials, and acrylic or urethane for the body undercoating, were utilized. As a result, the chlorine content of automotive shredder residue is less than 1%. The Accord also achieves a greater than 91% level of design recyclability,1 above the company’s 90% target for all new automobiles.

All Powersports and Power Equipment products target a minimum

95% level of design recyclability.

All Honda and Acura automobiles target a minimum 90%

level of design recyclability.

90% 95%

The 2008 Honda Accord has a low-VOC cabin.

1 Honda’s calculation of product recyclability is based on the ISO standard 22628, titled “Road Vehicles Recyclability and Recoverability Calculation Method,” which bases its estimates on existing, proven treatment technologies and takes into account the mass of materials recycled, reused, recovered for energy or otherwise diverted from landfill disposal. In addition to these guidelines, Honda’s calculation also takes into account recyclable mass within nonmetal residue.

ProductDevelopment

End-of-Life


Service

Distribution

Administration

Purchasing


Substances of concerncURRent StAtUS oPPoRtUnItIeS FoR FUtURe ReDUctIonS

Lead — used in electronic applications for its good melting characteristics, long-term stability, and vibration durability. Use in metal alloys for its superior machinability, strength, and fatigue resistance

P Reducing use in electronics, light bulbs, and corrosion-resistant paints.

P Replaced with nonhazardous materials in electrodeposition coatings and steel bars, with the exception of contaminants.

P Eliminated from automobile and on-highway motorcycle wheel weights and replaced with a zinc alloy.

P Working with individual suppliers to introduce lead-free circuit boards that meet Honda’s requirements for durability and performance.

P Working to overcome strength and fatigue weaknesses when lead inclusions in the microstructure of the steel alloys are replaced with manganese sulfide (MnS) inclusions. Planning to introduce a lead-free ATV wheel hub by 2011.

Hexavalent chromium — used to protect exterior parts from corrosion

P Working with suppliers since 2005 to switch to trivalent chromium and nonhazardous alternatives used for corrosion-resistant purposes; we set a target to complete this activity by the end of 2007. As of the end of 2007, 99% of suppliers had fully phased out hexavalent chromium.

P By June 2008, all but one North American supplier had phased out all hexavalent chromium used for corrosion-resistant purposes.

Mercury — used for bright and uniform illumination

P Honda has never used mercury in switches, radios, or ride-leveling devices. However, Honda still uses very small quantities of mercury in high-intensity discharge (HID) headlights and in illuminated entertainment and navigation systems.

P A closed-loop recycling system is employed for damaged or broken screens.

P Honda advises and encourages dealers to comply with all relevant state regulations for proper management and disposal of mercury parts.

P Phasing in mercury-free displays using a new type of backlight, beginning with new models introduced in model year 2010.

P Start to employ mercury-free HID bulbs in the next few years, as the remaining technical challenges are overcome.

Polybrominated Diphenyl ethers (PBDes) — used as a flame retardant and as a surfactant

P Phased out the use of octa- and penta- PBDEs. Working with suppliers to verify that these substances are no longer used in products.

P Working with suppliers to eliminate deca-BDEs from products when technically feasible.

Perfluorooctane Sulfonate (PFoS) — used as a water repellent agent

P Eliminated PFOS in all parts delivered to North American manufacturing facilities.

P Ensuring total elimination of PFOS by suppliers.

Polyvinyl chloride (PVc) — used in sealants and interior materials to reduce weight and to meet high standards for durability, fade resistance, and other critical quality criteria

P Working with suppliers to implement PVC-free technologies for components such as interior and exterior trim pieces, door sealants, adhesives, window moldings, floor mats, and seat coverings.

P Replacing PVC used in instrument panels, inner-door weather stripping, and shift knobs.

P Working to eliminate PVC used for underbody coating and weld sealer applications from all North American manufacturing plants within two years.

P Continuing to investigate effective alternatives to PVC for all paint department applications. We will begin to apply the technology once it has been proven.

Addressing Product Environmental Performance in the Development Stage

Reducing Substances of concern (Socs)In keeping with Honda’s global policy to voluntarily reduce and control substances considered harmful to people and the environment, in 2002 we created a set of guidelines to minimize SOCs in Honda products assembled in North American. In 2007, we updated those guidelines, which are now called the Honda North America Chemical Substance Standard. Honda works closely with its suppliers in the product design and part purchasing phases of product development to reduce or eliminate lead and lead compounds, hexavalent chromium, mercury

and mercury compounds, cadmium and cadmium compounds, brominated diphenyl ether compounds (specified BDEs), and azoic compounds. In FY2008, we surveyed all of our North American suppliers to assess their use of perfluorooctanesulfonic acid (PFOS) and brominated flame retardants. As new substances are being regulated globally, Honda will revise its Chemical Substance Standard to ensure compliance with the strictest global laws and standards consistently throughout the company’s global operations.

Reducing PVc in Honda and Acura Automobiles

Honda is engaged in a comprehensive effort to significantly reduce the chlorine that ends up in automobile shredder residue (ASR), primarily by reducing the use of polyvinyl chloride (PVc) in its vehicles.

• Ten of 19 Honda and Acura models sold in the U.S. have a less than 1% concentration of chlorine in materials that can end up in the wastestream as automotive shredder residue (ASR). They are the Honda Civic Coupe, Civic Sedan, Civic Hybrid, Civic GX, Accord Coupe, Accord Sedan, CR-V and Fit; and the Acura RL and RDX.

• By the end of 2009, most Honda and Acura models sold in North America will have achieved this target for the reduction of chlorine in automobile shredder residue.

Honda Motor Co., Inc., Honda’s global parent company, established a global hazmat /recycling compliance team. Its goal is to ensure that Honda complies with the strictest regional hazardous material regulations and to enact policies to meet or exceed these regulations globally. The team consists of representatives from the Automobile, Power Equipment, and Powersports divisions, and representatives from the Purchasing, R&D, Manufacturing, and Certification departments of all six operating regions, including North America.

With the implementation of the European Union’s REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) regulation, Honda Motor established a separate Global REACH Team within the Global Hazmat Compliance Team to manage all requirements related to that regulation.

2008 Honda CR-V is one of 10 Honda and Acura models with a less than 1% concentration of chlorine in materials that can end up in the wastestream as automotive shredder residue.

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Product Environmental Performance | Automobiles

For more than 35 years, we have worked with a strong and continuous focus to advance the environmental performance of our automobiles. It began in the early 1970s with the introduction of the Civic CVCC — the first vehicle to meet U.S. Clean Air Act standards without the use of a catalytic converter — and has continued through many pioneering accomplishments in improved fuel efficiency, reduced emissions, and advanced alternative fuel vehicle technologies.


Environmental Performance of Honda and Acura Automobiles

Customers in North America purchased more than 1.85 million Honda and Acura automobiles in FY2008.

Honda and Acura Automobile Fuel efficiency

The U.S. Environmental Protection Agency (EPA) calculates “fuel economy” by the amount of miles traveled per gallon of gasoline for cars and light trucks and calculates a Corporate Average Fuel Economy (CAFE) number for both passenger cars and light trucks. We show the combined values here for comparison purposes.

Transport Canada calculates “fuel consumption” by the amount of fuel consumed per kilometer traveled. Transport Canada does not issue a combined number for cars and light trucks. The combined numbers reported below were calculated by Honda, using Transport Canada car and light truck CAFC results along with available calendar year sales data.

Improving automobile fuel efficiency is the single best approach we can take to achieve significant near-term reductions in CO2 emissions that contribute to global climate change. Through continuous effort and the broad application of leading-edge technologies, Honda has maintained the lowest total fleet average CO2 emissions of any automaker operating in the U.S. over the past 15 years. Honda’s CAFE declined marginally from the 2002 to 2003 model year because of an increased ratio of light trucks to passenger cars in the fleet. Further increases in sales of light trucks since 2003 have been more than offset by technology and efficiency improvements. Honda’s CAFE for model year 2007 (MY2007) of 29.5 mpg was up 1% over the MY2005 baseline.

2008 Honda Civic 2009 Acura TSX

22

24

26

28

30

32

MY07MY06MY05MY04MY03MY02MY01MY00

Fuel

Eco

nom

y: M

PG

More FuelE�cient

29.829.5

24.8

30.2

24.5

30.0

24.7

29.2

25.1

29.1 29.1

24.6

29.2

25.425.8

Canadian Car and Light Truck Fuel Consumption (CAFC)

U.S. Car and Light Truck Fuel Economy (CAFE)

26.7

Honda/Acura

Industry Average

6

7

8

9

10

MY07MY06MY05MY04MY03MY02MY01MY00

Fuel

Con

sum

ptio

n: L

iters

/100

Km

More FuelE�cient

9.3

8.5*

7.6

9.2

7.4

9.2

7.5

9.0

7.5

9.0

8.6

7.4

8.9

7.4 7.3 7.4

Industry Average

Honda/Acura

* Preliminary estimate of MY2007 Industry Average Corporate Average Fuel Consumption


Application of technology for Fuel efficiency and Reduced emissionsWe are applying a broad range of advanced technologies to our full range of products in order to realize gains in fuel efficiency and lower exhaust emissions for all vehicles. At the same time, we are accelerating our efforts to develop and deploy new technologies that will allow us to further improve our products’ environmental performance. More energy-efficient engines

and transmissions, along with advancements in the use of lightweight materials, more aerodynamic vehicle bodies, low rolling resistance tires, and the further evolution of gasoline-electric hybrid and clean diesel powertrain technologies will all play critical roles in future improvements to our vehicle fleet performance.

Environmental Performance of Honda and Acura Automobiles technology Application, emissions and Fuel economy for Selected MY2008 Honda and Acura Automobiles Sold in the United States

Model engine trans Valvetrain Vtec VcMelectric Power Steering

emissions ePA Fuel economy

U.S. ePA cARB city Hwy

Fit 1.5L I4 SOHC 5MT 16-valve VTEC P P Tier 2 Bin 5 LEV-2 28 34

Civic 1.8L I4 SOHC 5AT 16-Valve i-VTEC P Tier 2 Bin 5 ULEV-2 25 36

Civic Hybrid 1.3L I4 SOHC CVT 8-valve i-VTEC P P Tier 2 Bin 2 AT-PZEV 40 45

Civic GX 1.8L I4 SOHC 5AT 16-Valve i-VTEC P Tier 2 Bin 2 ILEV

AT-PZEV 24 36

Accord Coupe 3.5L V6 SOHC 5AT 24-valve i-VTEC P P Tier 2 Bin 5 PZEV 19 28

Accord Sedan 2.4L I4 DOHC 5AT 16-Valve i-VTEC P Tier 2 Bin 5 PZEV 21 31

CR-V4WD

2.4L I4 DOHC 5AT 16-valve i-VTEC P Tier 2 Bin 5 ULEV-2 20 26

Element4WD

2.4L I4 DOHC 5AT 16-valve i-VTEC P Tier 2 Bin 5 LEV-2 19 24

Odyssey EX-L 3.5L V6 SOHC 5AT 24-valve i-VTEC P P Tier 2 Bin 5 ULEV-2 17 25

Pilot4WD

3.5L V6 SOHC 5AT 24-valve i-VTEC P MY09 Tier 2 Bin 5 ULEV-2 15 20

Ridgeline 3.5L V6 SOHC 5AT 24-valve VTEC P Tier 2 Bin 5 ULEV-2 15 20

TSX 2.4L I4 DOHC 5AT 16-valve i-VTEC P MY09 Tier 2 Bin 5 LEV-2 20 28

TL 3.2L V6 SOHC 5AT 24-valve VTEC P MY09 Tier 2 Bin 5 ULEV-2 18 26

RL 3.5L V6 SOHC 5AT 24-valve VTEC P Tier 2 Bin 5 ULEV-2 16 24

RDX 2.3L I4 DOHC Turbo

5AT 16-valve i-VTEC P Tier 2 Bin 5 ULEV-2 17 22

MDX 3.7L V6 SOHC 5AT 24-valve VTEC P Tier 2 Bin 5 ULEV-2 15 20

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Selected Honda and Acura models: The Honda S2000 roadster is excluded based on very low sales volumes. i-VTEC is an advancement to the original VTEC technology that includes a range of both performance and efficiency enhancing technologies.

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Honda Low-emission classification in MexicoAll new Honda and Acura cars sold in Mexico have been classified as Double Zero (00) by Mexico City’s Hoy No Circula emissions control program. The Double Zero classification is given to vehicles certified as having low NOx emissions and high city fuel efficiency. Vehicles meeting this standard may be driven in Mexico City and its suburbs without restriction. Many new models from other automakers received a Single Zero classification, and so must be retested every six months.

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Double Zero classification

certification Period Model

Certified for up to 6 years (recertification every two years)

Honda Accord, Civic IMA, Civic Si, CR-V and Acura TL

Certified for up to 4 years(recertification every two years)

Honda Fit, Ridgeline, Pilot, Acura RL and Acura RDX

Certified for 2 years Honda Odyssey and Acura MDX

Aceee 2008 environmental Performance RatingsThe American Council for an Energy-Efficient Economy (ACEEE) released its 2008 vehicle green scores, an annual rating of automakers’ U.S. vehicle fleets based on a single score that takes into account both vehicle exhaust emissions and greenhouse gas emissions over the full product life cycle. The natural gas-powered Civic GX ranked first with the gasoline Civic, Fit and Civic Hybrid joining it on the list of the 12 vehicles with the

highest overall green score. It was the eighth straight year that a Honda vehicle earned the highest green score and the seventh consecutive year that Honda vehicles held at least four of the top 12 positions. Below are scores for Honda’s highest-scoring models in each class in which we compete, as well as their class ranking and the highest and lowest scores recorded in each class.

Model Honda/Acura Green Score

Best-In-class Green Score

worst-In-class Green Score

Honda/Acura Aceee class Ranking

Fit 44 44 39 Superior Small Wagon

civic GX 57 57 21 Superior Compact Car

civic Hybrid 51 Superior

civic 44 Above average

Accord Sedan (I4) 40 53 19 Above average Midsize Car

Accord coupe (V6) 37 Average

cR-V 36 42 28 Average Compact SUV

element 34 Average

odyssey 31 33 29 Above average Minivan

Pilot 30 36 17 Above average Midsize SUV

Ridgeline 27 36 24 Below average Compact Pickup

tSX 36 57 21 Average Compact Car

tL 35 53 19 Average Midsize Car

RL 32 Below average

RDX 31 42 28 Below average Compact SUV

MDX 28 36 17 Average Midsize SUV

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cura

Automobile Exhaust Emissions

Honda has consistently played a leading role in reducing vehicle exhaust emissions, and in meeting and exceeding U.S. federal vehicle emissions standards. Beginning with model year 2007 Honda and Acura models, every vehicle sold in the United States and in Canada meets or exceeds the U.S. EPA and Transport Canada Tier 2 emissions standards. Due to the difficult nature of these standards, automakers are permitted to meet them by using a fleetwide average. All Honda and Acura automobiles meet these standards on an individual model basis without the use of fleet averaging.

1 The chart applies to vehicles of less than 6,000 pounds gross vehicle weight rating (GVWR). Light trucks with a GVWR greater than 6,000 pounds have a later phase-in period. All Honda and Acura vehicles, including the Ridgeline truck, whose GVWR is greater than 6,000 pounds, met the 2006 requirement two years ahead of schedule.

Environmental Performance of Honda and Acura Automobiles

Compliance with Tier 2 Emissions Standards1

0

20

40

60

80

16.1

51.458.3

79.6

99.9 100100

MY02 MY03 MY04

25

50

75

100

MY05 MY06 MY07 MY08

Phas

e In

%

Honda U.S. Vehicle Fleet

REQUIREMENT100


Environmental Performance of Honda Powersports Products

Customers in North America purchased more than 400,000 Honda motorcycles, scooters, all-terrain vehicles (ATV) and personal waster craft (PWCs) for recreational and professional purposes in FY2007.

Product Environmental Performance | Powersports Products

Honda strives to balance the demands of its powersports product customer, who typically seek greater performance, with society’s need for improved fuel efficiency and reduced exhaust emissions, while also promoting responsible use of public lands.

efficient, Low-emission Personal watercraft

Honda Aquatrax personal watercraft

The 2008 Honda Aquatrax personal watercraft (PWC) is powered by an efficient, low-emissions 4-stroke engine that consumes less fuel than a comparable 2-stroke engine and achieves CARB three-star (ultra-low) emissions status, with 65% lower emissions than a one-star (low emissions) engine and 87% lower emissions than a conventional carbureted 2-stroke engine.

Honda U.S. Motorcycle emissions for MY2007

class Hc Hc+nox co

Honda1 EPA2 CARB3 Honda1 EPA2 CARB3 Honda1 EPA2 CARB3

I (50-169cc) 0.63 1.0 1.0 n/a 7.00 12.0 12.0

II (170-279cc) 0.78 1.0 1.0 n/a 8.36 12.0 12.0

III (>279cc) n/a 0.66 1.4 1.4 5.07 12.0 12.0

Off-road (all) 0.73 1.2 0.95 2.0 8.68 25.0 15.0

Honda has consistently met or exceeded U.S. EPA and CARB emissions requirements for on-road and off-road motorcycles. In MY2008, we exceeded both EPA and CARB Tier 2 requirements for HC, NOx and CO exhaust emissions, in part through the broad application of 4-stroke engine technology. In MY2008, we discontinued the use of 2-stroke engines in our competition models, completing our transition to 4-stroke engine technology throughout our powersports product lineup, including all motorcycles, ATVs, and personal watercraft. Globally, we are expanding the use of programmed electronic fuel injection (PGM-FI), catalytic converters, and other advanced engine technologies which provide additional opportunities for further improvements in motorcycle exhaust emissions and fuel efficiency in the future.

In the 2008 model year, 100% of all Honda powersports products, including all competition off-road motorcycles, employed 4-stroke engine technology.

1Based on average 2007 model year U.S. EPA motorcycle emissions data2U.S. EPA emissions standards for 2007 model year motorcycles3California Air Resources Board (CARB) emissions standards for 2007 model year motorcycles


Global Power equipment emissions PerformanceContinuing its efforts to reduce hydrocarbons and NOx contained in exhaust emissions, we reduced the global fleet-average1 emissions of our power equipment products 32% in FY2008 compared to the FY2001 baseline. Honda will continue to strive for even cleaner power product exhaust emissions.

1 Includes all global Power Equipment products with the exception of outboard marine engines.

22

Environmental Performance of Honda Power Equipment

Honda markets a complete range of power equipment products, including lawn mowers, pumps, generators, and marine engines for commercial, rental and residential use. The company also supplies more than 2.3 million small displacement engines annually to more than 2000 original equipment manufacturers.

Product Environmental Performance | Power equipment

Increasing Home energy and Heating efficiency In April 2007, Honda and technology partner Climate Energy LLC, began retail sales of the freewatt cogeneration system in the northeastern United States.

The ultra-quiet micro-combined heat and power (MCHP) unit produces 3.26 kilowatts of heat and 1.2 kilowatts of electric power, helping homeowners to reduce their utility bills and curb carbon dioxide emissions while improving overall energy efficiency and comfort. Test data from Climate Energy has shown that when the freewatt system replaces a typical 80% efficiency home heating system, homeowners can realize an average 30% reduction in energy costs and CO2 emissions.

In certain states, net metering allows homeowners to sell any unused electric power to their community’s power grid, which yields additional cost savings.

Consumers who installed the freewatt system can realize a significant reduction in energy costs without changing their home heating habits. In addition, freewatt customers can remotely monitor and change their heating use and temperature settings via personal computer, which further enhances their ability to control heating costs.

Honda has worked continuously to improve the fuel economy, and reduce the exhaust emissions and noise of its power equipment products. We have led the industry in the application of cleaner, quieter and more fuel efficient overhead valve (OHV) 4-stroke engine technology, which has been applied to all Honda power equipment products for many years.

U.S. Power equipment engine emissions

General-Purpose Engine EmissionsCalifornia’s Air Resource Board’s regulations for small engine emissions are significantly stricter than those of the U.S. EPA. Though very close to the stringent CARB standards in measurable emission values, Honda Power Equipment’s series of small, general-purpose engines met 2008 CARB exhaust and evaporative emissions standards through the use of averaging and banked credits. However, Honda’s entire small engine line substantially exceeds 2008 EPA emission

standards. EPA emissions standards are expected to be revised to match the more stringent CARB standards in 2011 and 2012. It is Honda’s goal to be in compliance with the new, harmonized 50-state standards.

Marine Engine EmissionsHonda marine engines are individually certified below 2008 California exhaust emissions standards. These same engines are offered in all 50 states in the U.S and in Canada. Honda outboard engines are therefore 65% cleaner than what is required by the U.S. EPA and Environment Canada. New U.S. EPA standards, effective in 2010, are expected to harmonize with California exhaust standards and will also introduce evaporative emissions requirements that phase in through 2015. Honda marine engines already comply with California’s exhaust emissions standards and are expected to meet the new evaporative controls.

LowerEmissions

HC

+ N

Ox

%

0

20

40

60

80

100

FY08FY07FY06FY05FY04FY01

Power Equipment – Global Fleet Exhaust Emissions (HC + NOx)

32%Reduction

Global Power equipment emissions PerformanceContinuing its efforts to reduce hydrocarbons and NOx contained in exhaust emissions, we reduced the global fleet-average1 emissions of our power equipment products 32% in FY2008 compared to the FY2001 baseline. Honda will continue to strive for even cleaner power product exhaust emissions.

1 Includes all global Power Equipment products with the exception of outboard marine engines.


third-party ISo 14001 certification of SuppliersOur “green purchasing” efforts in North America began in 1998 when we asked suppliers to our Ohio and Ontario, Canada, auto plants to implement environmental management systems and to obtain third-party ISO 14001 certification. Initially, we focused on the top 42 key suppliers. In 2005, our request was extended to additional key suppliers to the Lincoln, Alabama, automobile and engine plant.

In FY2008, 93% of key suppliers, including all original 42 suppliers, and 85% of all companies in Honda’s North American OEM supply chain were third-party ISO 14001-certified.

Reducing environmental Impact of transporting component PartsEven as we encourage suppliers to take leadership in adopting green factory principles, we also strive to reduce the environmental impacts of moving parts from suppliers to our factories. To realize greater efficiencies in our North American parts logistics system, we conducted a comprehensive, end-to-end analysis of the total parts supply chain. Based on this study, we implemented a new hub-and-spoke system based around three hubs — an existing facility in Ohio, and two new facilities in Tennessee and Ontario — which together serve factories in Ohio, Alabama, Georgia, and in Ontario, Canada. Where each of these

plants once conducted its parts shipping independently, today all of the plants are integrated in a single system that is geared toward optimizing efficiency throughout the total supply chain, reducing the number of shipments and total miles of truck travel.

In FY2008, this effort resulted in roughly 3 million fewer miles of truck travel, saving approximately 480,000 gallons of fuel and reducing CO2 emissions from parts shipments by about 4,900 metric tons. The next major expansion of the system will come with the integration of the new automobile plant in Greensburg, Indiana, in the fall of 2008.

Green Purchasing

Promoting a “green factory” approach to the production and distribution of component parts

Honda works with more than 650 original equipment manufacturers (OEMs) in North America, encouraging them to adopt a green factory approach to production of component parts by reducing their packaging waste, adopting more energy-efficient processes, and adhering to ISO 14001 environmental-management standards.

Marine Engine EmissionsHonda marine engines are individually certified below 2008 California exhaust emissions standards. These same engines are offered in all 50 states in the U.S and in Canada. Honda outboard engines are therefore 65% cleaner than what is required by the U.S. EPA and Environment Canada. New U.S. EPA standards, effective in 2010, are expected to harmonize with California exhaust standards and will also introduce evaporative emissions requirements that phase in through 2015. Honda marine engines already comply with California’s exhaust emissions standards and are expected to meet the new evaporative controls.

The Ohio parts consolidation center is one of three hub facilities that consolidates parts being transported from suppliers to Honda automobile plants in the region, helping reduce truck travel, fuel consumption, and CO2 emissions.

North American OEM Suppliers ISO 14001-Certi�ed

Perc

ent

0

25

50

75

100

FY08FY07FY06FY05

50%58%

80%85%

ProductDevelopment

End-of-Life


Service

Distribution

Administration

Purchasing

24 Honda 2008 North American Environmental Report

Promotion of Green Factory Practices

Honda works to promote and encourage green factory practices in the OEM community. In each of the last 15 years, Honda has held a supplier symposium to share the best environmental ideas and practices, and to recognize suppliers’ environmental achievements.

Official recognition of suppliers’ environmental achievements was initiated with Honda’s “Green Partner” awards in 1999, and was incorporated into the Corporate Citizenship award program in 2006. The environmental achievement award program provides for recognition in three key areas:

pollution prevention, energy reduction, and conservation of natural resources. In November 2007, 139 North American parts suppliers participated in our annual environmental symposium, submitting 50 applications for recognition of environmental achievement.

Supplier environmental Achievement Recognition in FY2008

PoLLUtIon PReVentIon eneRGY ReDUctIon conSeRVAtIon oF nAtURAL ReSoURceS

Celina Aluminum Precision Technology• Recycling spent foundry sand at a

concrete facility, reducing landfill waste by 74%.

North American Lighting, Inc.• Reduced hazardous wastestream

by 75%, and at the same time conserved resources by reducing virgin solvent use by 45%.

AGC Automotive Americas• Developed process to filter glass

solids out of wastewater for recycling, reducing waste by 70% and improving water quality.

AGC Automotive Americas• Implemented several projects and

new equipment installations with higher efficiency motors, variable and slow ramp-up drives, and power control monitoring of all furnaces.

AY Manufacturing• Installed new energy-efficient

lighting fixtures, reducing electricity use by about 10%.

KAMCO Industries• Installed large circulating fans to

move warm upper air down to floor level, reducing natural gas use by more than 50% and improving the work environment for associates.

Bridgestone Firestone• Improved and expanded on-site

natural wildlife habitat, including the creation of an educational area for local schools.

Asama Coldwater Manufacturing• Installed equipment and improved

machining processes so that water-based coolant can be recycled, reducing water use by more than 400,000 gallons a year.

Metaldyne Sintered Components• Developed a fluid reclamation system

in wet-tumbling operations for chemicals and wastewater. The project reuses 90,000 gallons of water per year and has reduced chemical usage.

corporate citizenship Award

In addition to being recognized for its environmental achievement, Metaldyne Sintered Components received the Corporate Citizenship Award for FY2008 at Honda’s annual OEM supplier conference. The promotion and recognition of environmental improvements are integrated into this annual award given to suppliers who embrace a culture that enables them to make significant contributions to their communities and the environment. The winners have demonstrated excellence

in six areas: health and safety, equal opportunity, government relations, community involvement, ethics and compliance, and the environment.

In addition to Metaldyne, three other Honda suppliers received Recognition Awards in corporate citizenship: Bridgestone Firestone of Wilson, North Carolina; Toyoda Gosei of Brighton, Michigan; and Toyoda Gosei of Waterville, Canada.

Promoting a “green factory” approach to the production and distribution of component parts


Manufacturing – Green FactoryThrough Honda’s Green Factory initiative, we have worked aggressively to reduce the environmental impact of our manufacturing activities in North America, including significant efforts to reduce the energy intensity of automobile production, as well as initiatives to reduce water use, air emissions, and waste materials at all of our manufacturing facilities in the region.

Growth of Local Manufacturing capabilitiesHonda’s strategy of building products in the markets where they are sold helps to reduce energy, emissions, and waste associated with the transportation of products and component parts. In the automobile sector in FY2008, about 75 out of every 100 Honda and Acura vehicles sold in North America were produced in the region,1 the highest percentage of any international automaker.

In keeping with this strategy and in response to growing consumer demand for fuel-efficient Honda and Acura automobiles, we undertook numerous initiatives in FY2008 to expand and further localize our manufacturing capabilities in the region.

Reducing the environmental impact of product manufacturing

• Began construction of a new 200,000-units per year automobile plant to produce fuel-efficient 4-cylinder passenger cars beginning with the Civic Sedan in late 2008.

• The new Indiana plant is expected to have the smallest environmental footprint of all North American auto plants.

(new) Greensburg, Indiana, auto plant

• Began construction of a new 200,000-units per year engine plant to produce fuel-efficient 4-cylinder engines that will be supplied to the adjacent automobile plants (beginning Fall 2008).

(new) Alliston, Ontario, engine plant

• Completed a 135,000-square-foot expansion of the Anna, Ohio, engine plant to increase production of steel engine parts and to add new processes, including ferrous cylinder sleeve casting and camshaft quick-casting.

• Increased production of camshafts, crankshafts, cylinder sleeves, and connecting rods that were previously imported from Japan.

(growth) Anna, Ohio, engine plant

• Continued installation of new processes to localize gear production, offsetting the import of gear sets from Japan.

• The Russells Point, Ohio, transmission plant also started production of four-wheel drive differentials, which were previously imported from Japan.

(growth) Russells Point, Ohio, transmission plant

1Using domestically and globally sourced parts.

ProductDevelopment

End-of-Life Purchasing


Service

Distribution

Administration


ISo 14001 certification

Honda north American Manufacturing operationsLocAtIon FAcILItY ISo 14001:1996 ISo 14001:2004 cAPAcItY

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

Motorcycle Plant 1998 2006 75,000 motorcycles75,000 engines

Anna, Ohio Engine Plant 1998 2005 1.18 million engines

East Liberty, Ohio Auto Plant 1998 2006 240,000 units

Russells Point, Ohio Transmission Plant 1998 2005 750,000 transmissions288,000 gear sets110,000 rear differentials

Swepsonville, North Carolina Power Equipment Plant 2002 2005 2 million engines340,000 lawnmowers

Timmonsville, South Carolina All-Terrain Vehicle 2003 2006 340,000 ATVs310,000 engines29,000 PWCsPersonal Watercraft 2003 2006

Lincoln, Alabama Automobile and Engine Plant N/A 2006 300,000 autos300,000 V6 engines

Tallapoosa, Georgia Transmission Plant N/A 2009 300,000 transmissions

Greensburg, Indiana Automobile Plant (opening fall 2008) N/A 2011-2014 (planned) 200,000 autos

canada Alliston, Ontario Automobile Plant 1 1999 2006 195,000 autos

Automobile Plant 2 1999 2006 195,000 autos

Engine Plant (opening fall 2008) N/A 2010 (planned) 200,000 engines

Mexico El Salto, Estada de Jalisco Automobile Plant 1999 2006 50,000 autos and engines

Motorcycle Plant 1999 2006 30,000 motorcycles

Automobile, Powersports, and Power equipment Production in north America


The central element of Honda’s environmental oversight and management structure was implemented in 1998, with our commitment to achieve and maintain third-party ISO 14001 certification for environmental management at Honda manufacturing facilities throughout the North American region. Thirteen of the 14 Honda plants operating in FY2008 were certified to the ISO 14001:2004 standard.

• The Tallapoosa, Georgia, transmission plant is working toward certification by the end of calendar year 2009.

• The new automobile plant under construction in Greensburg, Indiana, and the new engine plant under construction in Alliston, Ontario, will begin working toward certification when production begins in late 2008.

Automobile Production Totals

Automobile ProductionAutomobile Engine ProductionTransmission Production

1.04 1.02 1.011.01 1.01

0.93

1.43 1.441.40

1.281.25

1.19

1.18

.94

1.08

1.07

0.87

1.04

1.04

1.231.24

1.37 1.391.41

0.8

0.9

1.0

1.1

1.2

1.3

1.4

FY08FY07FY06FY05FY04FY03FY02FY01

Mill

ions

Powersports Products Production Total

Power Equipment Production Total

Mill

ions

1.46

1.04

0.72

1.962.29

1.802.10

1.60

0.360.38

0.360.32

0.41

0.36

0.26

0.38

0.2

0.5

0.3

0.4


Mill

ions

0.0

0.5

1.0

1.5

2.0

2.5


1.5



Manufacturing co2 emissions

About 96% 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.

Sources of north American Manufacturing co2 emissions*

Q 70% electricityQ 26% natural GasQ 4% other Fuels:

• propane • fuel oil • gasoline • coke • kerosene

*Based on FY2008 data

Our efforts to reduce CO2 emissions from manufacturing are focused on cutting CO2 emissions intensity (emissions per unit of production), primarily through greater efficiency. In North America, our objective is to reduce the CO2 emissions intensity of automobile manufacturing 2% from FY2006 levels by FY2010.

4%

70%

26%

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.

co2 emissions from electricity and natural gas used at Honda’s North American manufacturing operations totaled 1.08 million metric tons in FY2008, an increase of 1.1% from the previous fiscal year.

Automobile: Average CO2 emissions per automobile produced in North America decreased 1.4% from the FY2001 baseline and 1.7% from the previous fiscal year to 699 kg, the lowest level since we began measuring our results in FY2001.

Powersports: Average CO2 emissions per unit of production in North America rose 40.5% to 208 kg in FY2008 from the previous fiscal year.

Power equipment: Average CO2 emissions per unit of production in North America rose 9.7% to 11.4 kg in FY2008 from the previous fiscal year.

Average CO2 emissions per unit of powersports and power equipment production rose significantly in FY2008 as a result of reduced levels of production in both categories and, in the powersports product domain, the in-sourcing of certain manufacturing processes.

North American Manufacturing CO2 Emissions —Total CO2 Emissions

(Electricity & Natural Gas only)

Met

ric

Tons

x 1

Mill

ion

0.780.84

0.96 0.94

North American CO2 Emissions — Powersports Products Manufacturing Per-Unit CO2 Emissions (Electricity & Natural Gas only)

North American CO2 Emissions — Power Equipment Manufacturing Per-Unit CO2 Emissions


kg/U

nit

10.3

9.0 9.4

11.410.4

9.7

8.28.5

150

121 119 117

148

208

110 114

50

100

150

200

250

FY08FY07FY06FY05FY04FY03FY02FY010.50

0.75

1.00

1.25


kg/U

nit

6

9

12

15


North American CO2 Emissions — Automobile Manufacturing Per-Unit CO2 Emissions


709756 761

699711715714727kg/A

uto

600

700

800

900

1000


1.011.05 1.07 1.08



Met

ric

Tons

x 1

Mill

ion

0.780.84

0.96 0.94




kg/U

nit

10.3

9.0 9.4

11.410.4

9.7

8.28.5

150

121 119 117

148

208

110 114

50

100

150

200

250


0.75

1.00

1.25


kg/U

nit

6

9

12

15




709756 761

699711715714727kg/A

uto

600

700

800

900

1000


1.011.05 1.07 1.08



Met

ric

Tons

x 1

Mill

ion

0.780.84

0.96 0.94




kg/U

nit

10.3

9.0 9.4

11.410.4

9.7

8.28.5

150

121 119 117

148

208

110 114

50

100

150

200

250


0.75

1.00

1.25


kg/U

nit

6

9

12

15




709756 761

699711715714727kg/A

uto

600

700

800

900

1000


1.011.05 1.07 1.08



Met

ric

Tons

x 1

Mill

ion

0.780.84

0.96 0.94




kg/U

nit

10.3

9.0 9.4

11.410.4

9.7

8.28.5

150

121 119 117

148

208

110 114

50

100

150

200

250


0.75

1.00

1.25


kg/U

nit

6

9

12

15




709756 761

699711715714727kg/A

uto

600

700

800

900

1000


1.011.05 1.07 1.08


ongoing efforts to Improve energy efficiency Lighting• Replacing old fixtures with energy-

efficient lighting, which can reduce energy use by as much as half.

• Realigning controls to improve lighting management, increasing the ability to turn lighting off during nonproduction periods, and providing light in areas only as needed.

Heating, Ventilating, and Air Conditioning (HVAC)• Improving management and

control of HVAC systems to reduce energy use.

Chiller Systems• Optimizing chillers with

energy-efficient systems that are properly sized to the areas they serve.

Compressed Air• Managing compressed air systems

to provide the right pressure to the right areas at the right times. This includes reducing overall pressure; weekend pressure reductions; installing smaller systems to serve areas more efficiently; and implementing cool-air intakes.

Motor Efficiency • Installing highly efficient variable-

frequency drives (VFDs) and impellers to optimize the flow of pumped fluids.

Metering• Installing electrical metering

equipment in specific areas to monitor and manage power use. Metering in key areas also helps to identify the best locations for conservation projects, and to measure the impact of new systems.

• New Web-based metering system allows users to monitor energy use in real time, allowing associates to identify equipment that is running and turn it off during nonproduction periods. Web-based metering was implemented in four plants in FY2008, and we are now developing operational standards to further optimize the system use.

Honda Plant-Specific energy Reduction Initiatives in FY2008LocAtIon InItIAtIVe ReSULtInG SAVInGS

United States Marysville, Ohio, Auto Plant

Reprogrammed plastic injection molding machine pumps to run in an on-demand sequential cycle, stepping up loads as required by machine function

600 kWh/yr (36 metric tons CO2 /yr)

East Liberty, Ohio, Auto Plant

Replaced older, oversized (150 hp) chiller condenser pumps with new, more efficient 100 hp pumps

295,000 kWh/yr (231 metric tons CO2 /yr)

Anna, Ohio, Engine Plant

Installed variable frequency drives on the supply and return pumps and cooling towers

1.2 million kWh/yr (940 metric tons/yr CO2)

Tallapoosa, Georgia, Transmission Plant

Implemented new Web-based energy monitoring system to exercise more comprehensive control of lighting and HVAC energy use

not available

Lincoln, Alabama, Auto Plant

Implemented a program on Paint Line 2 to monitor equipment use and to turn off processes between shifts, during lunch breaks, and on weekends.

9.9 million kWh/yr (7,755 metric tons CO2 /yr) and 45,493 MMBtu of natural gas

canada Alliston, Ontario, Auto Plant

Installed a heat recovery unit between vehicle tailpipe exhaust and outside-air pipe

$46,678 per year

energy consumptionImproving the energy efficiency of Honda factories is the single biggest focus of our efforts to reduce the environmental impact of our manufacturing operations in the region.

Total energy consumed in all production activity increased 0.5% in FY2008 to 9.88 million gigajoules , primarily as a result of increases in production volumes and added production of powertrain components.

Energy use per unit of automobile production in North American was reduced 1.5%, to 6.5 GJ/auto in the same period, primarily because of energy efficiency gains, more efficient utilization of production capacity, and a warmer than usual winter.

North American Manufacturing Total Energy Use

GJ x

1 M

illio

n GJ/A

uto

Total Energy Use1

Average Energy Used Per Auto Produced2

1 Total energy use (from consumption of electricity and natural gas) includes all North American manufacturing operations.

2 Energy per auto includes all auto-related manufacturing operations, including automobile engine and transmission production; it does not include power equipment and power sports.

0

2

4

6

8

10

12

0

2

4

6

8


7.61

7.76

9.09

8.82

9.43

9.73

9.83

9.91

6.9 6.8 7.26.7 6.7 6.6 6.5

7.1




waste to LandfillHonda works continually to minimize the generation of waste sent to landfills, by both designing of more efficient manufacturing systems that produce less waste and by maximizing recycling and reuse. In North America, we targeted a 70% reduction in total waste to landfill (excluding mineral waste) from FY2001 levels by FY2010.

Total waste from manufacturing processes sent to landfills (excluding mineral waste) was reduced 34.5% in FY2008 from the previous fiscal year and 78.7% from the FY2001 baseline, exceeding our target of a 70% reduction from baseline by FY2010.

Honda Zero-Waste-to-Landfill PlantsIn FY2008, Honda Canada Mfg. Inc.’s two automobile plants in Alliston, Ontario, joined four other Honda manufacturing plants as zero-waste-to-landfill facilities, including Honda Manufacturing Alabama, LLC, which began operations in 2001 and is the first automobile plant in North America to achieve zero waste to landfill.

Automobile body painting consumes large amounts of energy, because automakers need to regulate the temperature and the relative humidity of the air to achieve the desired product appearance and finish quality. In collaboration with the Mechanical Engineering Department at The Ohio State

University, Honda of America Mfg., Inc., developed a new paint booth air conditioning system that reduces energy consumption and related CO2 emissions as much as 25% through the continuous, automatic control of temperature and humidity using a predictive control mechanism.

Following a pilot demonstration at the Marysville Motorcycle Plant’s paint shop in 2006, “intelligent paint booth” operations started at the Marysville Automobile Plant’s Line 2 paint shop in November 2007. Other Honda plants in North America, including the East Liberty Auto Plant, Honda Mfg. of Alabama Line 2, and Honda of Canada Mfg. Line 1, are implementing this new control system. Honda of America Mfg., Inc., has applied for a patent on this unique predictive technology. Other Honda companies in the United Kingdom, Japan, and China are currently studying the possibility of implementing this technology in their automobile paint shops.

new “Intelligent Paint Booth” technology

LocAtIonPRoDUctIon cAPAcItY

ZeRo wASte to LAnDFILL SInce

United States Lincoln, Alabama 300,000 automobiles and engines

FY2002

Swepsonville, North Carolina

340,000 lawnmowers, 2 million general purposes engines

FY2007

canada Alliston, Ontario Plant 1

195,000 automobiles FY2008

Alliston, Ontario Plant 2

195,000 automobiles FY2008

Mexico El Salto, Estada de Jalisco

30,000 automobiles and engines

FY2003

30,000 motorcycles FY2003

North American Waste to Land�ll (excluding mineral waste)

Met

ric

Tons

x 1

000

kg/Auto

Total Waste to Land�lls in Metric Tons x 10001

Average Waste to Land�lls Per Auto Produced in Kilograms2

1 Total land�ll waste includes all North American operations.2 Land�ll waste per auto includes all auto-related manufacturing

operations; it does not include power sports products and power equipment production.

0

4

8

12

16

20

24

0

3

6

9

12

15


17.9

13.8

11.0

10.4

8.3

6.7

5.8

3.8

14.9

10.2

4.9 4.9

2.7 2.3 1.93.3

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08


water UseEfforts to minimize water use and wastewater production are continually undertaken at all of our North American plants.

Total water used for manufacturing activity in FY2008 was reduced 1.1%, or 12 million gallons, from the previous fiscal year, to 1.064 billion gallons. Average water use per unit of automobile production was reduced 4.1%, or 30 gallons, to 700 gallons.

Air emissionsHonda’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 finishing 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.

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

VOC emissions from auto body painting operations in FY2008 were up 0.4% from the previous fiscal year and down 45.3% from the FY2001 baseline. At 15.7 g/m2, VOC emissions in FY2008 were well below the company’s target of 20 g/m2.

Reducing wastewater

Marysville Auto Plant water RecyclingProduction of pure water using reverse-osmosis systems produces about one gallon of wastewater for every three gallons of “good” water. Beginning in early 2008, wastewater previously released to the sanitary wastewater treatment system in Paint Line 2 was directed to a storage tank for recycling into the body painting pretreatment process, saving roughly 6.5 million gallons of water per year.

In a similar process, wastewater recovered from the reverse-osmosis process on Paint Line 1 is recycled into the Paint Line 1 sludge pits, where it is used to capture and remove painting solids that do not adhere to painted products.


North American Manufacturing Total Water Use

Gal

lons

x 1

Mill

ion

Gallons x 1000/A

uto

Total Water Use1

Average Water Use Per Auto Produced 2

1 Total water use includes all North American operations.2 Water used per auto produced includes all auto-related

manufacturing operations; it does not include power sports products and power equipment manufacturing.

0

200

400

600

800

1000

1200

0.0

0.2

0.4

0.6

0.8


769

766

931

923

1,01

6

1,12

2

1,07

6

1,06

4

0.70 0.670.75 0.71

0.790.73 0.70

0.79

North American VOC Emissions* From Automobile Body Painting

g/m

2

*Mexico is included for FY08 only.

0

6

12

18

24

30


28.7

28.6

24.5

23.6

22.0

20.8

15.7

15.6



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

VOC emissions from auto body painting operations in FY2008 were up 0.4% from the previous fiscal year and down 45.3% from the FY2001 baseline. At 15.7 g/m2, VOC emissions in FY2008 were well below the company’s target of 20 g/m2.

Reducing chemical Releases — tRI/nPRI ReportingHonda has reduced its total Toxic Release Inventory (TRI) and National Pollutant Release (NPRI) emissions more than 36.9% despite significant expansions in production capacity since calendar year 2000. Automobile-specific TRI/NPRI emissions per unit of production were reduced about 53.2% in the United States and Canada in the same period.

Honda 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.

emergency ResponseAll of Honda’s manufacturing facilities have response plans that define 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 personnel and local community responders.

Honda’s U.S. and Canada manufacturing operations report TRI (section 8.1) and NRPI (Schedule 1, Part 1) releases and transfers for disposal.

waterborne Paint

In 2006, the Marysville, Ohio, auto plant, Honda’s highest volume auto plant in North America, began operating a new state-of-the-art paint shop that reduced body painting emissions approximately 47%. In FY2008, six of eight automobile production lines, which account for 70% of total North American automobile production capacity, were using a waterborne basecoat paint process. Additionally, three production lines — Marysville Line 2 and both lines in Lincoln, Alabama — are now using waterborne primer/surfacer.

Accidental Spill and Release Prevention, tracking and ReportingPrevention 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 overfilling. 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 significant incidents. Major incidents undergo root-cause analysis, and the information gained is used to improve operations.

United States and Canada TRI/NPRI/Auto Releases*

kg/A

uto

0.0

0.5

1.0

1.5

CY07CY06CY05CY04CY03CY02CY01CY00

1.24

1.36

1.24

1.24

1.00

0.87

0.68

0.58

United States and Canada Total TRI/NPRI Releases*

Met

ric

Tons

x 1

000

0.0

0.5

1.0

1.5

2.0

CY07CY06CY05CY04CY03CY02CY01CY00

1.31

4

1.49

7

1.50

9

1.55

6

1.26

0

1.20

0

948

828


Product Distribution

Reducing the environmental impact of transporting products from factories to dealers

AutomobilesHonda and Acura automobiles are moved primarily by train, which is the most efficient mode of transport among all available options, including truck, air and ship. In FY2008, 81% of all Honda and Acura automobiles manufactured in the U.S. or arriving at U.S. ports were transported by train, the highest percentage of any automaker operating in the United States.

Also, in FY2008, we purchased and deployed a fleet of 400 flexible and efficient multilevel Auto-Max railcars — the only railcar fleet of its kind in the U.S. auto industry. Auto-Max railcars transport more units per railcar using less fuel than traditional auto transport railcars, because of their improved aerodynamic design and unit-body construction using lightweight composite materials.

As a result of the shift to Auto-Max railcars, in FY2008 we saved 531,048 gallons of diesel fuel and reduced CO2 emissions from automobile transport 5,493 metric tons from the previous fiscal year.

Powersports Products — Returnable crates

Rail Infrastructure ImprovementsIn FY2008, we made a $7 million investment in our Ohio product distribution center, adding rail capacity and improving the total efficiency of operations at Honda’s largest automobile distribution center in North America. According to CSX Railroad, which provides rail services for the center, these infrastructure improvements have resulted in a fuel savings of 2,436 gallons, or 25.2 metric tons of CO2, compared with the previous calendar year.

We also implemented a new wireless yard management system at our Ohio and Alabama manufacturing facilities, eliminating 1,000 reams of paperwork each year.

Since 2002, Honda’s U.S. Motorcycle Division has been using returnable crates for its U.S.-made powersports products. In FY2007, the initiative was further expanded to include Gold Wing motorcycles and the FourTrax ATV. In FY2008, all domestically produced motorcycles, ATVs, and personal watercraft were shipped in returnable containers. The reverse logistics process includes powersports dealers in all states, including Alaska and Hawaii, who are linked via an interactive computer network to the supply chain and return process. Locally, both Honda dealers and consumers benefit from reducing waste.

ProductDevelopment

End-of-Life


Service

Distribution

Administration

Purchasing


Sales and ServiceSalese-Statements for Honda Financial Services (HFS) customersIn FY2008, Honda Financial Services implemented a new electronic-statement and notification process, giving its customers the option of paperless transactions. By the end

of the fiscal year, roughly 65% of the HFS customers had elected the e-statement option. Based on a very positive early response from customers, HFS estimates that the new system will eliminate the production and mailing of more than a million paper statements each year.

Service

Reducing the environmental impact of Honda and Acura product sales and servicing

The lifespan of motorcycle and ATV batteries are typically shorter than those of automotive batteries because of initial preparation, storage, and seasonal use factors. Over the past four years, we embarked on an aggressive program to provide Honda dealers with training and with testing tools to minimize premature and unnecessary battery replacement. The program has led to a 41% reduction in new-unit battery replacements. Honda also subcontracts with a national battery supplier who provides free dealer pickup and recycling of any battery, which helps to minimize the potential for improper battery handling and disposal.

Motorcycle and AtV Battery Recycling

case Study: Package Simplification of Large Sheet Metal — Accord FenderPReVIoUS new MAteRIAL ReDUctIon (%)

Size 12.43 cu. ft/pc 10.17 cu. ft/pc 18.2%

number of Materials 3 pcs. 2 pcs. 33.3%

weight 19.0 lbs 18.25 lbs 3.9%

Reducing Service Parts PackagingHonda’s North American Service Parts Operations Division continued to reduce waste by reducing packaging material. The continuous improvement and redesign of packaging for sheet metal parts was implemented throughout the year, enabling us to reduce corrugated waste and to minimize weight and the space required for the shipping and storage of parts. Along with sheet metal parts, many other parts have undergone a packaging revision to reduce material.

In addition, the division has consolidated three packaging operations into one out-sourced operation that allows for the consolidation of packaging specification activity and reduced transportation. Through the expansion of the existing program, and the establishment of new initiatives, we eliminated about 1.45 million pounds of corrugated cardboard from the wastestream in FY2008. In addition to reductions in packaging, we also require that suppliers of plastic containers for Honda service products and accessories contain a minimum of 24% postconsumer plastics.

ProductDevelopment

End-of-Life


Service

Distribution

Administration

Purchasing


the Automotive Dismantling Process

Product Recycling

Reducing the environmental impact of product end-of-life treatment

Honda is engaged in various initiatives to reduce the environmental impacts of the disposal of its products at the end of their useful lives. Our efforts begin with design and development of new products, where we work to achieve a high level of recyclability, and continue in our collaboration with recyclers, where we look for ways to further improve our designs to enhance dismantling efficiency and to minimize the production of automobile shredder residue (ASR).

SteP 1: Pre-treatment

Recycle Fluids

Honda is participating in a multi-industry study to evaluate the efficacy of fluid collection and to identify product design changes that will improve the process.

Recycle Materials

Catalytic converters — Honda actively recycles the precious metals in automobile catalytic converters, including all units collected during warranty service at Honda and Acura dealerships in the United States and Canada.

Hybrid batteries — we use recyclable nickel-metal hydride battery packs in all our hybrid vehicles. Honda is recycling virtually all hybrid batteries recovered during warranty service at Honda dealers in the United States and Canada.

Wheels — we recycle aluminum and steel wheels collected from Honda and Acura dealers, using these metals to produce new wheels.

SteP 2: Dismantling

Plastic Fuel Tanks

Honda completed a major study of disposal methods for plastic fuel tanks and found that recycling for energy recovery may be an economically feasible alternative to disposal in landfills. Most plastic fuel tanks contain as much energy as a full-size automotive tire, approximately 20,000 BTUs.

Remanufactured Parts

Honda has an extensive parts remanufacturing program. In FY2008, we added 32 new parts to our list of remanufactured components marketed to customers as more affordable and environmentally responsible alternatives to new parts.

SteP 3: Metal Separation

Metal Recovery

LKQ Corporation, a large supplier of recycled auto parts, and Honda are conducting a pilot project in Southern California for the recycling of aluminum components from the auto shredder. Making new aluminum from recycled aluminum takes 95% less energy than primary aluminum production and 4 pounds of bauxite are saved for every pound of aluminum recycled. Honda is monitoring the progress of this pilot project to determine if an economically and technically viable advantage exists for the use of recycled aluminum in Honda products and component parts.

Metallic Content of Automobiles

P 73% Ferrous metalsP 3% Non-ferrous metalsP 24% Other materials

Honda meets with and exchanges information with selected shredder operators to understand the challenges and to monitor the development of new equipment and technology that would reduce the production of landfill waste and improve the recovery of valuable resources. Promising technologies among the approximately 200 shredder companies operating in the United States are being evaluated. Honda will consider supporting new approaches through investment, market development, and infrastructure support.

ASR is composed of: 38% Plastics 21% Rubber 14% Glass 4% Fluids 15% Other

About 1.5% of material sent to landfills is ASR

SteP 4: Automobile Shredder Residue (ASR)

D D

DProduct

Development

End-of-Life


Service

Distribution

Administration

Purchasing

3% 24%

73%


Reducing the environmental footprint of Honda facilities and office operations

AdministrationGreen Building Initiatives Honda’s commitment to reduce the environmental impact of its North American operations extends to its offices and buildings. We are incorporating sustainable concepts into facility construction and operation, including locally harvested and manufactured construction materials, cool roofs, dual-paned glass, high-recycled-content materials, and energy-efficient lighting.

Honda certified three new green buildings within the past year. These new facilities join two existing LEED-Gold buildings, including our Gresham, Oregon facility, the first mixed-use industrial facility in America to earn Gold certification as a new building. Three additional Honda facilities are being designed to achieve LEED certification in the future.

FAcILItY ceRtIFIcAtIon DetAIL

Acura Design Studio Torrance, Calif.

Gold March 2008

Opened in May, 2007, the Acura Design Studio uses reclaimed water for toilets and irrigation, and a highly-efficient displacement ventilation system.

Midwest Consolidation Center Troy, Ohio

Gold April 2008

The 547,000-square-foot warehouse facility has a reflective roof, and energy-efficient lighting, and its second-floor mezzanine was constructed from wood certified by the Forest Stewardship Council.

Data Center Longmont, Colo.

Silver (version 2.2)

April 2008

Data centers are considered very difficult to certify because of their large energy consumption. The Longmont facility is the first LEED Version 2.2 Silver-certified data center in the country.

Northwest Regional Facility Gresham, Ore.

Platinum June 2008

Honda’s first LEED-certified facility was also the first new mixed-use industrial building in the United States to earn Gold certification, and has since become the first LEED Platinum-certified existing building in the automobile industry. The facility is 48% more energy-efficient than required by Oregon’s Energy Code.

Honda R&D Central Plant Raymond, Ohio

Gold April 2006

The central plant at Honda R&D’s Ohio Center uses rainwater for flushing toilets, a biodiesel-powered emergency generator, and an ice chiller system that reduces peak energy demand from air conditioning by as much as half.

Honda Aircraft Co. Headquarters Greensboro, N.C.

N/A N/A This 68,000-square-foot office complex for support of Honda’s aviation business opened in August 2008.

Honda R&D Marine Engine Facility Grant-Valkaria, Fla.

N/A N/A Honda R&D broke ground in December 2007 on this 11,000-square-foot facility for the research and development of Honda outboard marine engines.

Honda Canada Headquarters Markham, Ontario

N/A N/A Honda Canada’s new headquarters facility, situated on a 53.3-acre campus, will seek LEED Gold certification from the Canadian Green Building Council (CaGBC). The 500,000-square-foot facility will house approximately 700 associates.

eXIS

tIn

GFU

tURe

new

ProductDevelopment

End-of-Life


Service

Distribution

Administration

Purchasing


Green office Initiatives

In addition to our green building certification initiatives, associates at Honda facilities throughout North American are engaged in activities aimed at reducing waste and improving the energy efficiency of our daily operations.

Improving Warehouse EfficiencyThis year the company continued to roll out the use of energy-efficient fluorescent lighting and motion sensors in facilities around the country.

• A lighting retrofit was conducted at our Irving, Texas, service parts warehouse, resulting in an annual savings of 432,956 kwh, or roughly 8.4% of total power use at the 259,900-square-foot facility.

• Motion sensors added to lighting at the Chino, California, service parts warehouse saved 122,360 kwh annually, or roughly 5.1% of the facility’s total power use.

Electricity Cogeneration at American Honda

At our American Honda headquarters facility in Torrance, California, we have dramatically increased the production of electricity with an efficient natural gas-powered cogeneration system. Cogeneration produces heat and power in a single thermodynamic process. In FY2008, 30% of the electricity used to power the Torrance campus was derived from cogeneration, approximately the same level as the previous fiscal year.

Recycling at Honda R&D Americas

Honda R&D Americas’ Ohio new-model development center (HRA-Ohio) in CY2007 increased its volume of recycled materials 50% over CY2006 levels. The facility had already doubled its recycling activity over the previous three years (CY2004 through CY2006). Although total waste production at the facility has increased due to continued growth in its activities, HRA is now focused on reducing total waste production.

Water Use at American HondaAmerican Honda began to use recycled water on its Torrance headquarters campus in 2007. More than 18% (almost 10.5 million gallons) of water used annually at the facility is now recycled water.


0

5

10

15

20

25

30

FY08FY07FY06FY05FY04

Electricity from Cogeneration

kWh

in M

illio

ns

Annual Production Cumulative Production

0

100

200

300

400

500

600

700

800


HRA-Ohio Land�ll vs. Recycle

Met

ric

Tons

Land�ll Recycle


Land Stewardship Initiatives

In recent years, global warming, the loss of endangered species, and the overuse of renewable resources such as groundwater have pointed to a worldwide necessity to protect, restore and maintain our natural ecosystems. Honda’s commitment to the environment includes efforts to preserve delicate ecosystems on land surrounding its manufacturing, R&D and warehouse facilities.

New Wetlands in Ohio

Honda of America Mfg., Inc., in Marysville, Ohio, has partnered with the Nature Conservancy and the Ohio EPA to restore the headwaters of the Big Darby Creek, a state and national scenic river widely recognized as one of the most biologically diverse streams of its size in the Midwest.

As part of an initiative to upgrade water outlet structures on retention ponds throughout Honda’s 8,200-acre automobile manufacturing and R&D property near Marysville, Ohio, the company in 2007 completed work on a new 14-acre wetlands area that is helping to preserve Big Darby and the wildlife it sustains. Honda is augmenting this new floodplain with aquatic plantings to further filter sediment from the water that flows into the Flat Branch, a tributary near the headwaters of the Big Darby.

Preserving Natural Ecosystems in Indiana

In constructing Honda’s newest automobile plant in Greensburg, Indiana, Honda sought to minimize the impact to local ecosystems, including the environment surrounding two streams within property boundaries: Muddy Fork Creek and Buck Run Creek.

A small portion of the Buck Run headwaters, located in the center of the property, and about two-thirds of the Muddy Fork Creek floodplain had narrow forested creek buffers extending beyond their banks. To minimize the impact to these areas, Honda elected to avoid the Muddy Fork Creek floodplain, and to hold work in the Buck Run floodplain to a minimum. Construction of the new plant, along with the relocation of an existing rail-bed necessitated the filling of approximately 1,400 linear feet of jurisdictional stream. To mitigate the Buck Run habitat loss and to restore some of the previously modified Buck Run floodplain, the construction project included 7.7 acres of riparian forested buffer restoration and 16.9 acres of native grassland buffer. This new native landscape will not require mowing, and the native seedlings used in the riparian buffer will produce nuts, fruit, and seeds to attract birds, butterflies, and other animals, helping to enhance the biodiversity of the area.

encouraging Responsible Use of Public Lands by Motorcycle and AtV Riders

Honda recognizes that environmental stewardship associated with off-road motorcycles and ATVs includes not only clean and efficient vehicles, but also riders who act responsibly, limiting their use to designated trails. This is particularly important on public lands where off-road riders must respect both fragile ecosystems and the interests of other public land users.

To this end, Honda partners with numerous industry groups, government agencies, and the recreation and environmental communities to find solutions that encourage responsible use of motorized recreation.

Honda also works closely with responsible national organizations, such as the National Off-Highway Vehicle Conservation Council and Tread Lightly, to teach responsible riding. We also maintain partnerships with public land agencies and local conservation groups to promote environmental protection.

In addition to rider education, Honda recognizes the importance of law enforcement to discourage misuse of the public lands. The combination of responsible riding and accountability through enforcement will promote a riding ethic that encourages responsible use and enjoyment of public lands.



environmental technology Milestones

Honda’s continuous focus on improvement in the fuel efficiency and emissions performance of its automobile, powersports and power equipment products has resulted in a number of environmental performance milestones and industry-leading achievements.

1971

P Honda announces CVCC (Compound Vortex-Combustion Controlled) , the first engine technology to meet U.S. Clean Air Act standards without the need for a catalytic converter.

1973

P Honda introduces 4-stroke marine engines that are cleaner, more fuel-efficient and quieter than the 2-stroke outboard motors standard at the time. Honda has manufactured only 4-stroke outboard motors since 1973.

1974

P First car to meet U.S. Clean Air Act without the use of a catalytic converter solely through engine performance: the 1975 Honda Civic CVCC.

1977

P The Civic tops the U.S. EPA’s list of America’s most fuel-efficient cars.

1990

P VTEC (Variable Valve Timing and Lift Electronic Control) — Honda’s foundational technology for achievements in low emissions, high fuel-efficiency, and high performance, is introduced in the U.S. in the Acura NSX.

1995

P First gasoline low-emission vehicle (LEV) in the industry is introduced in California: the 1996 Honda Civic.

P Fuel economy leadership puts four Honda models on the U.S. EPA’s list of the 10 most fuel-efficient cars.

1996

P 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-efficient cars.

1997

P First CARB-certified gasoline ultra-low-emission vehicle (ULEV) is introduced: the 1998 Honda Accord.

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

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

P First advanced battery-powered electric vehicle is introduced and leased to customers: the 1997 Honda EV Plus.

1986

P The Civic CRX-HF is the first mass-produced 4-cylinder car to break the 50-mpg fuel economy mark.

1989

P Honda becomes the first automaker in America to use waterborne basecoat paint in mass production.

1998

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

P Honda introduces ultra-quiet portable inverter generators that achieve sub-stantially higher fuel economy and lower emissions than conventional generators.

P Honda becomes the first company to introduce an entire line of high-performance outboard motors that meet U.S. EPA emission standards proposed for the year 2006.

1999

P First CARB-certified 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.

P First gas-electric hybrid vehicle is introduced in North America: the 2000 Honda Insight.

1970 1980 19901971 1973 1989 1995 1998 19991990


2000

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

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

P First vehicle certified as an advanced technology partial zero-emission vehicle (AT-PZEV) by California’s Air Resource Board (CARB): the 2001 Civic GX.

2001

P First production motorcycle certified to meet CARB’s 2008 emission standards, the Honda Gold Wing, is sold.

P Honda is the first mass-market automaker to offer an entire lineup of cars and light trucks that meet or exceed low-emissions vehicles (LEV) standards.

P 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.

P America’s first zero-waste-to-landfill auto plant opens in Lincoln, Alabama.

2002

P First application of hybrid technology to an existing mass-market car: the 2002 Civic Hybrid.

P First hydrogen-powered fuel cell vehicle to receive both U.S. EPA and CARB certification for commercial use, and the first to meet applicable federal motor vehicle crash safety standards: Honda FCX.

P Honda is first with an entire lineup of personal watercraft (PWC) powered by 4-stroke engine technology.

P World’s first commercial application of a fuel cell vehicle with the lease of a Honda FCX to the city of Los Angeles.

2003

P First hybrid vehicle certified as an advanced technology partial zero-emission vehicle (AT-PZEV) by the CARB: 2002 Civic Hybrid.

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

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

2004

P 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.

P The 2005 FCX, Honda’s second-gen-eration fuel cell vehicle, is certified by the U.S. EPA as a Tier 2 Bin 1 (ZEV) vehicle and by the CARB as a zero-emission vehicle (ZEV).

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

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

2005

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

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

P Introduction of Honda Variable Cylinder Management (VCM) technology, the first cylinder deactivation system for an overhead cam (OHC) V6 engine: the 2006 Odyssey minivan.

P Honda introduces the iGX, a revolu-tionary, intelligent, computer-controlled general-purpose engine. It sets an even higher standard for fuel efficiency and quiet operation.

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

2006

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

P Retail sales of natural gas-powered Civic GX to retail consumers expanded from California to New York State.

P Honda develops plant-based biofabric for use in automobile interiors.

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

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

2007

P 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.

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

P World debut of the FCX Clarity next-generation fuel cell car, powered by a more powerful, efficient and compact new Honda V Flow fuel cell stack.

P Began testing of fourth-generation experimental hydrogen Home Energy Station (HES IV).

2008

P 2008 Civic GX tops the American Council for an Energy Efficient Economy’s “Green Car” list for the fifth straight year.

20002000 2001 2002 2003 2004 2004 2005 2006 2008

Honda is always looking for ways to make positive contributions to the communities where it does business. We focus chiefly on community-based environmental education, preservation and restoration efforts, in the form of corporate charitable giving, foundation giving, in-kind contributions, and company support of volunteer efforts by Honda associates who take an active role in their communities.

environmental community Activities

environmental education

Aullwood Audubon Center and FarmDayton, Ohio http://aullwood.center.audubon.org

Actua — Environment and Engineering Program Ontario, Canada

Alabama 4-H CenterColumbiana, Alabamawww.aces.edu/4hcenter/index.php

Auntie Litter, Inc.Birmingham, Alabamawww.auntielitter.org

Aquatic Adventures Science Education FoundationSan Diego, Californiawww.aquaticadventures.org

Brukner Nature CenterTroy, Ohio www.bruknernaturecenter.com

Clean Air ChampionsOttawa, Ontario, Canadawww.cleanairchampions.ca

The Columbus ZooZooAides Teen Volunteer ProgramColumbus, Ohiowww.columbuszoo.org

Community Against Pollution, Inc. Anniston, Alabamawww.ag.auburn.edu/auxiliary/grassroots/cap/index.htm

Earth RangersWoodbridge, Ontario, Canadawww.earthrangers.ca

Legacy, Inc. Montgomery, Alabamawww.legacyenved.org

Living Classrooms of the National Capital RegionWashington, D.C.www.livingclassroomsdc.org

Madison Children’s MuseumMadison, Wisconsin www.madisonchildrensmuseum.org

Nature Canada Ottawa, Ontario, Canadawww.naturecanada.ca

North Carolina A&T State University School of Agriculture & Environmental ScienceGreensboro, North Carolinawww.ag.ncat.edu

Ohio Wildlife CenterPowell, Ohio www.ohiowildlifecenter.org

O’Neill Sea OdysseySanta, Cruz, California www.oneillseaodyssey.org

Otesha Ottawa, Ontario, Canadawww.otesha.ca

Pee Dee Resource and Education Center (Clemson University)Pickens, South Carolinawww.clemson.edu/peedeerec

Pollution Probe Clean Air and Commuter ChallengeToronto, Ontario, Canadawww.pollutionprobe.org/2007CAC

Recycling Council of OntarioToronto, Ontario, Canada

Sea, Sand & Stars Nature Center Orange Beach Elementary School Orange Beach, Alabamawww.orangebeachelementary.com

Seattle Aquarium SocietySeattle, Washington www.seattleaquarium.org

Wallowa Resources, Inc.Enterprise, Oregon www.wallowaresources.org

The WildsCumberland, Ohio www.thewilds.org

environmental Preservation & Restoration

Conservancy of Southwest Florida Loggerhead and Green Turtle ProjectNaples, Floridawww.conservancy.org

Friend of the Cahaba River National Wildlife Refuge West Blocton, Alabama

Gladys Porter Zoo Sea Turtle Conservation ProgramBrownsville, Texaswww.gpz.org

Gulf of Maine Research InstitutePortland, Maine www.gmri.org

Heal the Bay (California Coastal Cleanup Day)Santa Monica Californiawww.healthebay.org

Keep America Beautiful (Great American Cleanup)Stamford, Connecticutwww.kab.org

Keep Etowah Beautiful, Inc.Gadsden, Alabama

Logan Martin Lake Protection AssociationPell City, Alabamawww.lmlpa.org

Living Lands & Waters FoundationEast Moline, Illinoiswww.livinglandsandwaters.org

Madrona Marsh PreserveTorrance, Californiawww.friendsofmadronamarsh.com

Nature ConservancyOhio ChapterDublin, Ohiowww.nature.org/wherewework/northamerica /states/ohio

New Tecumseh Streams CommitteeAlliston, Ontario, Canada

Palos Verdes Peninsula Land ConservancyRolling Hills Estates, Californiawww.pvplc.org

Upper Chattahoochee RiverkeepersGainesville, Georgiawww.ucriverkeeper.org

South Carolina Adopt-A-Highwayhttp://www.dot.state.sc.us/community /adoptahiway.shtml

Tree CanadaOttawa, Ontario, Canadawww.treecanada.ca


Selected environmental organizations Supported by Honda in Fiscal Year 2008

north American corporate Profile

United States canada Mexico

Honda companies covered in this Report

American Honda Motor Co., Inc.American Honda Finance Corp.Honda North America, Inc.Honda of America Mfg., Inc.Honda Manufacturing of Alabama, LLCHonda Power Equipment Mfg., Inc.Honda of South Carolina Mfg., Inc.Honda Transmission Mfg. of America, Inc.Honda Manufacturing of Indiana, LLCHonda 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.

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

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

Additional information on Honda and Acura products and corporate activities can be found at: www.honda.com http://www.honda.ca http://www.honda.com.mx

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

Map Legend

Major Manufacturing Facilities

Major Manufacturing Facilities (under development)

Research and Development Centers

Parts Centers

Sales and Marketing Headquarters

41Honda 2008 North American Environmental Report

key north American Locations

41

capital InvestmentMore than $10 billion in North America

employmentMore than 35,000 associates in North America

Parts PurchasesMore than $18.8 billion in parts and materials purchased from more than 600 North American original equipment manufacturers in the fiscal year ended March 31, 2008.

key Data

©2008 American Honda Motor Co., Inc.

The 2008 Honda Environmental Report is printed with soy-based inks on recycled paper containing 100% post-consumer waste fiber. The paper is manufactured with wind power and certified by the independent, nonprofit U.S.-based Green Seal organization and by the independent, U.K.-based Forest Stewardship Council (FSC). The report is also 100% recyclable.

All 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. Specifications, 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.

www.corporate.honda.com

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