2009 North American Environmental Report Honda 2009 North American Environmental Report 2

Table of Contents

Management Strategies, Goals Addressing Global Reducing Honda’s Supplemental and Direction and Actions Climate Change Environmental Footprint Information

About this Report

What’s inside To navigate this report Electronic format We value your opinion This report covers Honda’s • Click on the tabs at the top To reduce the environmental We are interested in your activities in the United States, of each page to jump to sections impact of our reporting, this response to this report, which Canada, and Mexico — including within the report, or use the year we begin publishing will help us improve our future company policies, the overall page forward/back arrows. this document in electronic reporting. Please click here direction of our environmental • Click on any item in the format only. to complete a brief survey. initiatives, and a current table of contents above assessment of the environmental to go to that page. impact of our operations — for the fiscal year that began • Use the left and right arrow April 1, 2008, and ended keys on your keyboard. March 31, 2009 (FY2009). • In full-screen mode (accessible from the “View” tab on the Adobe toolbar), left-click to move to the next page, right-click to move to the previous page. Honda 2009 North American Environmental Report 3

A Letter n 2009, we are commemorating 50 years of Honda operations in North America, from Honda’s Imarked by the establishment of American Honda Motor Co., Inc., on June 11, 1959. North American This milestone has afforded us the opportunity to reflect on our history, but also to Chief Operating look to the future and recommit ourselves to the core values that will help us continue Officer to meet the needs of our customers and society — most notably our commitment to advancing the fuel efficiency and emissions performance of Honda and Acura products.

As we take our first steps into the next half-century of our Further, we have accepted the challenge presented by new operations in North America, we are strengthening our efforts automobile fuel-efficiency requirements proposed by the U.S. to advance fuel-efficient gasoline engine and gas-electric federal government and are embracing this opportunity to further hybrid technology as critical near-term approaches to reducing advance Honda’s commitment to fuel-efficiency leadership. In greenhouse gas emissions from our products. model year 2008, the fleet-average fuel economy of new Honda In fiscal year 2009, we took a number of significant steps to and Acura cars and light trucks sold in the United States was up advance our environmental performance in both our products and 3.8% from the 2005 baseline to 30.3 miles per gallon, above the production operations. This included the introduction in the U.S. industry average. ". . . we are strengthening and Canada of the all-new Insight hybrid as the most affordable Finally, we have also undertaken efforts to reduce the our efforts to advance new hybrid automobile in North America, significantly expanding environmental impact of our reporting activity, including the fuel-efficient gasoline the appeal and accessibility of hybrid technology for a broader publishing of this year’s report in electronic format only. This range of consumers. Further, in 2010, we will introduce a third reduces the use of paper, energy, and waste associated with engine and gas-electric hybrid model in the United States and Canada. conventional printing methods, while providing you with a more hybrid technology We also began leasing of the next-generation FCX Clarity fuel interactive report. as critical near-term cell vehicle, reflecting Honda’s commitment to the real-world I sincerely hope that this fifth North American Environmental approaches to reducing deployment of advanced alternative-fuel technologies and our Report will help in your understanding of both Honda’s greenhouse gas emissions belief in fuel cell technology as one of the most promising environmental footprint in North America and our efforts to from our products." long-term solutions to society’s energy and environmental minimize that footprint through innovation and continuous concerns in the transportation sector. improvement at all levels of our organization. During the past fiscal year, we began production at two new plants that expand our local capacity to produce fuel-efficient Sincerely, Honda and Acura vehicles. Both plants — a new auto plant in Greensburg, Indiana, and a new engine plant in Alliston, Ontario — also seek to advance our commitment to more energy-efficient methods of production. Of course, the past year also has presented us with many difficult challenges as a result of a slumping global economy and an unprecedented downturn in demand for the products Tetsuo Iwamura we produce, including automobiles, motorcycles, and Chief Operating Officer, North American Regional Operation power equipment. President & CEO, American Honda Motor Co., Inc. Honda 2009 North American Environmental Report 4

Environmental Honda has long viewed the preservation of the environment as a core management responsibility. Management Our efforts are guided by the Honda Environmental Statement and extend to all aspects of our business operations and involve associates at all levels of our organization.

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

“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 strive to recycle 2. We will strive to minimize 3. As both a member of the 4. We will consider the influence materials and conserve resources and find appropriate methods to company and of society, each that our corporate activities have and energy at every stage of dispose of waste and contaminants associate will focus on the on the regional environment and our products’ life cycle — from that are produced through the use importance of making efforts society, and endeavor to improve research, design, production and of our products, and in every stage to preserve human health and the social standing of the company. sales, to service and disposal. of the life cycle of these products. the global environment, and will do his or her part to ensure that the company as a whole acts responsibly. Honda 2009 North American Environmental Report 5

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

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

Honda North America, Inc. Honda Canada, Inc. Honda Manufacturing of Alabama, LLC Honda of Canada Mfg. American Honda Motor Co., Inc. Honda of America Mfg., Inc. Honda Manufacturing of Indiana, LLC Honda R&D Americas, Inc.

Product Planning Manufacturing Recycling and Green Building Communication and Development Honda office and warehouse facilities

Coordinated by Coordinated by Coordinated by Coordinated by American Honda Motor Co., Inc. Honda of America Mfg., Inc. American Honda Motor Co., Inc. American Honda Motor Co., Inc. In-use fuel efficiency Natural resource conservation Recycling Product information Substances of concern (SOC) Energy efficiency Waste, emissions, and energy use Environmental reporting Design for recyclability Waste and toxic emissions reduction LEED Green Building Certification Alternative-fuel vehicle sales Promotion of environmentally responsible practices by Honda parts suppliers Honda 2009 North American Environmental Report 6

Environmental Honda’s regional operations, including the North America region, are given broad authority and responsibility Management to plan and to act in accordance with Honda’s environmental vision to minimize the environmental impact of (continued) their local business activities. This includes efforts to reduce harmful emissions, to improve efficiency, and to minimize the production of waste. Further, Honda strives 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.

Key Practices

Environmental Risk Management Environmental Laws and Regulations Honda considers risk management to be an integral part Regulatory compliance is fundamental to the production and of environmental management. Honda’s approach to risk in-use performance of Honda products, and to the continuance of management is reflected in various activities: Honda’s operations in North America. All Honda companies have systems in place to ensure that their activities comply with all • systems for preventing spills and unplanned releases; applicable legal requirements. • systems for reducing environmental releases; and Emissions-Related Product Recalls • systems for recycling products, components, and Honda’s policy on product recalls, including emissions-related manufacturing byproducts, in order to minimize landfill waste. recalls, is in accordance with the procedures of its Japan-based Quality Committee, which is composed of senior executives From long-term planning to daily operations, Honda strives from various divisions of the company. The Quality Committee to understand the risks of environmental impact and to make makes decisions about Honda products manufactured and sold prudent decisions to minimize impacts wherever possible. throughout the world, relying upon recommendations from Honda Honda North America, Inc., a subsidiary of Honda Motor Co., experts in each region. 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 implementing best practices for Honda’s environmental management activities in the region. Honda 2009 North American Environmental Report 7

Environmental Corrective Actions in FY2009 Management In the fiscal year ended March 31, 2009, Honda initiated four corrective actions in the U.S. market: (continued) two Voluntary Emission Recall Reports (VERRs) and two Product Update Reports (PUDR).

Corrective Actions in FY2009

Date Detail Model(s) Units

7/10/2008 VERR: Honda supplied GXV670 TAE2 general-purpose engines (670cc V-Twin vertical crankshaft Power Equipment Engine: 4,290 engines without intake air system) to an equipment manufacturer that builds riding lawn GXV670 mowers. The equipment manufacturer applied an intake system with specifications different from those Honda verified to be emission-compliant. The changed specifications were the air filter element and top intake cap, which did not sufficiently restrict intake airflow. As a result, the air-fuel mixture became leaner than what Honda had calibrated. 5/19/2008 PUDR: Some vehicles were manufactured with incorrect rocker arm shafts, resulting in Automobile: 24 insufficient oil supply to the VTEC (Variable Valve Timing and Lift Electronic Control) system MY 2008 Civic Si and camshaft journals. 5/15/2008 PUDR: The engine, which powers certain Honda walk-behind lawn mowers, was hard to start Power Equipment Engine: 2,713 or did not start due to inappropriate calibration of the automatic choke system. GCV190 (installed on HRX217 lawn mower) 4/7/2008 VERR: Some motorcycles may have had an improperly manufactured fuel control valve Motorcycle: 52,953 diaphragm. The diaphragm, constructed of rubber and a nylon backing material, controls the VT600 flow of fuel from the fuel tank to the carburetor based on vacuum input from the engine. Due VT750 to poor adhesion of the rubber to the nylon backing material, fuel could seep through the nylon fibers to the vented side of the diaphragm. When the motorcycle is stationary with the engine VTX1300 idling, the seeping fuel could result in a slow drip. When the motorcycle is in motion, the seeping fuel evaporates before it drips.

North American Environmental-Related Fines1 Honda reported no material fines in FY2009.

1 Material fines are defined as $100,000 or more by regulatory disclosure guidelines. Honda 2009 North American Environmental Report 8

A Summary of Environmental Strategies, Goals and Actions in FY2009 l = achieved goal s = made positive progress toward goal n = no progress or improvement

category Strategies Goals Actions Taken in fy2009 Link

Reducing Work with OEM parts suppliers to reduce or Continue to reduce SOCs in Honda products l Eliminated the use of hexavalent chromium by all SOCs eliminate substances of concern (SOCs) North American suppliers

Strategies, Reducing Reduce the use of PVC in automobile interiors Minimize the use of PVC in automobiles where s In FY2009, 11 of 20 Honda and Acura automobiles sold PVC Use and other applications technically and economically practical in the U.S., including the newly introduced Honda Fit and Goals and Insight hybrid, achieve a less than 1% concentration of chlorine in materials that can end up in the wastestream Actions as shredder residue

End-of-Life Work to improve end- Automobiles Minimum 90% design recyclability1 for all l Maintained 90% or greater level of design recyclability1 for Honda’s efforts to Recyclability of-life recyclability of automobiles sold in North America all Honda and Acura automobiles sold in North America products in the design, 1 1 reduce the environmental development and Powersports and Minimum 95% design recyclability for all l Maintained 95% or greater level of design recyclability for purchasing phases Power Equipment powersports products and power equipment all powersports products and power equipment sold in impact of its operations in sold in North America North America

CO2 Emissions Automobiles Improve fuel efficiency Increase CAFE by 5% over 2005 levels by 2010 s U.S. CAFE for model year 2008 was up 3.8% from MY2005 North America are guided levels, to 30.3 mpg by the following goals and Advance alternatives Advance Honda hydrogen-powered fuel cell l Began retail leasing of the FCX Clarity next-generation implemented according to to gasoline vehicle and refueling technology fuel cell car to selected customers in Southern California Continued operation of the fourth-generation the following strategies. Home Energy Station Expand markets for natural gas-powered l Added 11 new U.S. Civic GX dealers that comprise nine vehicles new markets for fleet customers, and four new markets in California for retail customers

Powersports Products Improve fuel efficiency Implement technologies for greater n No new action

Product Development Product fuel efficiency

Power Equipment Improve fuel efficiency Implement technologies for greater l Introduced new, more fuel-efficient BF40 and BF50 fuel efficiency 4-stroke outboard marine engines

Exhaust Automobiles Reduce engine All new Honda and Acura automobiles meet l All Honda and Acura vehicles released in the U.S. and Emissions emissions or exceed U.S. EPA and Transport Canada Tier Canada in FY2009 met or exceeded U.S. EPA and Transport 2 Bin 5 (LEV in California) exhaust emissions Canada Tier 2 Bin 5 emissions standards on an individual standards on an individual model basis model basis (without the use of fleet averaging)

Advance zero-emissions Continue to advance the performance l Began retail leasing of the FCX Clarity next-generation fuel vehicle technology and market acceptance of zero-emissions cell car to customers in Southern California alternative-fuel vehicle technologies

Powersports Products Apply 4-stroke engines, Continued improvements in exhaust l Exceeded U.S. requirements for exhaust emissions PGM-FI and other emissions performance. (HC, NOx and CO) advanced engine technologies

Power Equipment Apply PGM-FI and Comply with all applicable regulatory l Small-displacement and marine engines substantially other advanced engine requirements exceeded U.S. emissions requirements technologies

Purchasing Promote third-party certification of suppliers to Increase the number of ISO 14001-certified l 93% of key North American tier one suppliers and ISO 14001 environmental management standards suppliers 88% of all North American tier one suppliers were through communications, events, and recognition ISO14001-certified in FY2009 of supplier achievements Purchasing

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. Honda 2009 North American Environmental Report 9

A Summary of Environmental Strategies, Goals and Actions in FY2009 (continued) l = achieved goal s = made positive progress toward goal n = no progress or improvement

category Strategies Goals Actions Taken in fy2009 Link

Environmental Achieve third-party certification of major Honda Achieve 100% certification of all major s Thirteen of 16 Honda plants operating in North America Management manufacturing facilities to ISO 14001:2004 standards Honda plants in North America in FY2009 were certified to ISO 14001:2004 standards. Honda Precision Parts of Georgia progressed toward Strategies, achieving ISO 14001:2004 certification by the end of 2009. The Greensburg, Indiana, auto plant is also targeting Goals and certification by 2014 CO Emissions Improve energy efficiency and reduce energy loss Maintain inventory of greenhouse gas l Maintained inventory of CO emissions from consumption of Actions 2 2 in product manufacturing: emissions for all N.A. manufacturing operations purchased electricity and natural gas in all N.A. plants in FY2009 (continued) Automobiles Reduce the energy intensity of n CO2 emissions intensity of automobile production manufacturing operations rose 8.7%, to 747 kg/unit, due primarily to reduced production volumes

Powersports n CO2 emissions intensity of powersports product production rose 38.9%, to 289 kg/unit, due primarily to reduced Manufacturing production volumes

Power Equipment l CO2 emissions intensity of power equipment production was reduced 9.1%, to 12.0 kg/unit

Waste Reduce generation of waste material and Reduce landfill waste 70% from FY2001 levels l Total landfill waste reduced by 18.4% from FY2008 levels increase recycling by FY2010 (excluding mineral waste) and 82.7% from FY2001 baseline

Water Use Improve the water use intensity of automobile Maintain or improve water use intensity of n Water use per unit of automobile production rose 14.3%, manufacturing operations where practical automobile production from FY2008 levels due primarily to reduced production volumes

CO2 Initiate modal shifts and reduce vehicle miles Increase efficiency of Honda product l Increased use of more fuel-efficient Auto-Max railcars by Emissions traveled through more efficient logistics distribution process 5.5% over FY2008 levels

61% of trucks transporting Honda and Acura automobiles in North America were EPA Transport SmartWay ®-certified

Distribution Waste Reduce waste in packaging and administration Increase use of returnable crates l 100% of domestically produced motorcycles, ATVs, and of product distribution personal watercraft were shipped in returnable crates

Waste Adopt less wasteful processes and reduce use Reduce generation of waste and use of virgin l Expanded use of U.S. pallet recycling program in FY2009, of virgin and nonrecyclable materials and nonrecyclable materials used in service parts preventing 196,226 pallets from being sent to landfills

CO2 Adopt new more fuel-efficient methods for the Reduce CO2 emissions associated with l Introduced the U.S. automobile industry’s first Class 8

Service Emissions distribution of Honda and Acura service parts the transportation of Honda and Acura hybrid diesel-electric truck for distribution of service parts Sales and service parts

Recycling Increase the number and type of remanufactured Reduce waste associated with the disposal l Added 44 new parts to American Honda’s remanufactured components available for customer purchase of service parts service parts program

Reducing Increase the potential for material in end-of-life Reduce Honda’s input to the wastestream s Continued research on product designs that reduce Shredder vehicles to be reused in Honda and Acura products from end-of-life vehicle disposal wastestream inputs End-of-Life Residue or other applications

Green Building LEED Green Building certification Reduce energy use, waste and overall l One new U.S. facility joined five existing buildings certified environmental impact of Honda’s operations to LEED green-building standards in FY2009 outside of the product manufacturing realm Five additional new facilities (four in U.S. and one in Canada) under construction in FY2009 are being designed to achieve LEED certification in FY2010

American Honda instituted a program to evaluate existing facilities in the U.S. for future LEED certification

Energy Use Improve energy efficiency of Honda facilities Reduce energy consumption l American Honda instituted a national roof replacement

Administration program in the U.S. in FY2009

Upgraded to T5 lamps in Davenport, Iowa, parts warehouse as part of American Honda’s ongoing nation-wide energy efficiency program Honda 2009 North American Environmental Report 10

Addressing Global Honda recognizes climate change as a global phenomenon with Climate Change potentially serious and far-reaching consequences for all of humanity. Climate experts advise that significant reductions in greenhouse gas (GHG) emissions will be required from all sectors of the economy, including the transportation sector. As the world’s largest manufacturer of internal combustion engines, Honda embraces its responsibility to help meet these challenges and has committed itself to continuing efforts aimed at minimizing its environmental impact, with a particular emphasis

on the reduction of carbon dioxide (CO2) emissions. Honda 2009 North American Environmental Report 11

Addressing Global Global Climate Change: A Complex Challenge, A Shared Responsibility Climate Change Addressing an environmental challenge as complex as global climate change requires the coordinated and Reducing focused efforts of industry, government and consumers. Without the commitment of all three, significant Greenhouse Gas progress will be difficult to achieve. Public policy can have a profound impact on manufacturers’ ability Emissions to deploy new technologies effectively and efficiently and on the receptiveness of the marketplace to new, more fuel-efficient products. Accordingly, in conjunction with the company’s global effort to improve the fuel efficiency of its products and production operations, Honda has long supported complementary government policy initiatives that promote consumer interest in more fuel-efficient products and accelerate the deployment of new, more fuel-efficient technologies.

INDUSTRY A Shared Responsibility Government

Motor vehicle manufacturers Governments must adopt and energy suppliers must market-based policies that work to provide consumers Consumers promote consumer interest with products that support the in products with reduced goal of reduced greenhouse Consumers must be willing to greenhouse gas emissions and gas emissions (particularly purchase products that achieve support the development and

CO2 , the predominant GHG) lower greenhouse gas emissions. deployment of more fuel-efficient while meeting customers’ products. In setting mandatory expectations for product requirements, government performance — including programs should adhere to safety, utility, comfort, quality performance-based standards and reliability. that give manufacturers the flexibility to pursue multiple near- and longer-term technological approaches to increasing fuel efficiency and advancing market- viable alternatives to petroleum. Honda 2009 North American Environmental Report 12

Addressing Global Honda’s overall goal is to develop products with the lowest in-use CO2 emissions manufactured Climate Change at plants with the lowest CO2 emissions intensity (emissions per unit of production). Global CO Emissions 2 Reducing CO2 Emissions Reduction Targets The greatest opportunity to reduce CO emissions from Honda 2 Life-cycle CO Emissions products is to improve the in-use energy efficiency of those 2

products, which accounts for 78% of a Honda product’s life-cycle 16% Q 78% Product In-Use CO emissions. In May 2006, Honda established a series of voluntary Q 6% Production 2 6% Q targets to reduce significantly the fleet-average CO2 emissions of its 16% Other Factors: • raw materials • procurement products and the CO2 emissions intensity of production operations, 78% on a global basis, by 2010 from FY2001 levels. • distribution • service and disposal

Honda’s Voluntary Global CO2 Emissions Reduction Targets for 2010 2010 GOAL DOMAIN SEGMENT (Reduction from FY2001 FY2007 FY2008 FY2009 Details of Result Scope of Targets 2001 baseline) Auto Due primarily to a shift toward smaller vehicles Automobiles sold in Japan, North 8.6% % and enhanced engine fuel efficiency, Honda America, Europe/Middle East/Africa, has reduced average per-unit CO emissions Asia/Oceania, China, South America 10 100.0 94.0 94.0 2 from its global automobile fleet by 8.6% from (more than 90% of Honda’s (g/km) Baseline 91.4 FY2001 levels. worldwide automobile sales)

Having already attained its 2010 target, Honda Motorcycles sold in Japan, North Powersports % 12 America, Europe, Thailand, India, has further reduced the fleet-average CO2 % emissions of its global motorcycle fleet by China, Indonesia, Vietnam, Brazil, 10 100.0 86.8 88.8 implementing programmed fuel injection the Philippines, Malaysia, Pakistan (more than 90% of Honda’s (g/km) Baseline (PGM-FI) on small motorcycles, and by

Product 88.0 expanding the use of low-friction engines. worldwide motorcycle sales)

Honda has reduced the fleet-average CO All worldwide power equipment Power % 2 11.8 products, excluding outboard Equipment % emissions of its power equipment products 10 100.0 93.1 90.3 by increasing the percentage of midsize and marine engines handheld engines sold, and by further enhancing (per kg) Baseline 88.2 engine fuel efficiency. Auto Per-unit CO emissions in global automobile All manufacturing by Honda Motor 4.9% 2 % production are down 4.9% from FY2001 levels Co., Inc., and 75 other Honda Group 10 100.0 91.2 92.8 but were up in FY2009 as a result of lower companies that assemble Honda production levels brought about by the global products and major components. (per unit) Baseline 95.1 economic downturn. Vietnam Auto Parts Co., Ltd. and Honda Manufacturing of Indiana, LLC, were added in FY2009. Powersports % Honda has exceeded its 2010 target for per-unit 40.4 CO emissions from motorcycle production % 2 20 100.0 70.8 59.0 by combining production lines and optimizing production facilities for greater efficiency. (per unit) Baseline 59.6

Production Power Honda has reduced per-unit CO emissions 16% 2 Equipment % from power equipment production by 20 100.0 103.8 112.3 combining production lines and optimizing production efficiency. (per unit) Baseline 84.0 Honda 2009 North American Environmental Report 13

Addressing Global There are numerous policy options available to governments that want to address climate change. Climate Change Honda’s positions on some of the most prominent are summarized below. Honda’s Outlook on Climate Prominent Public Policy Initiatives Change Policy Federal Fuel Economy Beginning in 2005, Honda encouraged the U.S. government to adopt higher fuel economy standards and worked Greenhouse Gas Emission Standards with Congress in 2007 on the adoption of the new 35 mpg nationwide Corporate Average Fuel Economy (CAFE) requirement by 2020. In 2009, Honda actively participated in and supported a White House initiative to adopt harmonized national fuel economy and greenhouse gas emission standards for motor vehicles. The new standards will be attribute based, resulting in a different overall requirement for each manufacturer based on the size of vehicles in its fleet. Because Honda’s average vehicle is smaller than other manufacturers’ average vehicle, Honda will be required to attain an even more stringent standard than many competitors. Federal GHG reduction and fuel economy regulations should provide adequate lead-time for manufacturers to plan for compliance. 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 Programs are needed that send market signals to consumers to purchase fuel-efficient products. A properly constructed national feebate system (a federal government program of rebates and fees) is one approach that is being considered. 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 Cap-and-trade is now recognized as one potential approach for the regulation of stationary source CO2 emissions. This approach should be avoided for mobile sources, 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 2009 North American Environmental Report 14

Addressing Global No single technology holds the key to our energy future. Meeting society’s rapidly expanding demand for Climate Change transportation energy while curbing the growth in global CO2 emissions will require the rapid development and Reducing implementation of many technologies. Honda has developed a strategy that encompasses multiple technology Greenhouse Gas pathways and that seeks to address comprehensively the challenges associated with the deployment of new Emissions Through energy and vehicle technologies. Innovative Construction Lightweighting

Advantage: Reducing vehicle mass can play an important role in performance. In some instances, the use of advanced materials improving fuel economy. In general, a 10% reduction in vehicle can enhance safety performance, improving the vehicle’s ability mass results in about a 6.5% improvement in fuel economy at to resist intrusion in a collision and offsetting the weight gains constant performance levels. that can accompany the addition of new safety equipment, such Challenge: Reducing the cost and energy-consumption impact as advanced airbag systems. In FY2009, every Honda and Acura and improving the manufacturability of advanced materials that vehicle sold in North America used an engine made primarily of can help reduce vehicle mass. aluminum. In addition, aluminum body panels are employed in the Our effort: One means of reducing vehicle mass is the Acura RL and TL sedans, and in the Acura MDX and Honda Pilot application of advanced materials, such as aluminum or high- sport-utility vehicles. Also, high-strength steel is being applied strength steel, in the vehicle’s body structure. These materials, extensively in new models, including the Accord, Civic, Pilot, CR-V which offer a higher level of rigidity at a given thickness, and the new Insight hybrid, each with a body structure composed provide engineers with the opportunity to reduce vehicle mass of at least 50% high-strength steels. without sacrificing other critical targets such as vehicle safety

Reducing Body Weight while Enhancing Safety The 2009 Pilot uses more than four times as much high-strength steel as the preceding model. The Pilot also uses an aluminum hood (not shown).

Colors denote the grades of high-strength steel:

 980 grade steel  780 grade steel  590 grade steel  440 grade steel  340 grade steel increasing strength increasing  270 grade steel Honda 2009 North American Environmental Report 15

Addressing Global Honda Gasoline Engines and Powertrains Climate Change Advantage: Broad market acceptance and a well-established Reducing service support network and refueling infrastructure. Greenhouse Gas Challenge: Achieving further significant gains in fuel Emissions Through efficiency while maintaining reasonable cost and performance Advanced for the customer. Fuel-Efficient OUR EFFORT: Honda is pursuing many advancements in powertrain fuel efficiency, several of which are summarized Technologies V6-powered 2009 Accords use an advanced i-VTEC valvetrain, a 5-speed electronically in the table below. 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 to improve fuel efficiency

and reduce CO2 emissions.

Honda Gasoline Engines and Powertrains

technology detail

VCM™ (Variable Cylinder Management™ Second-generation VCM — with 3-, 4-, and 6-cylinder modes — has been applied to four Honda models: cylinder deactivation technology) Accord V6 Sedan, Accord V6 Coupe, Odyssey minivan, and Pilot sport-utility vehicle. VTEC™ (Variable Valve Timing VTEC™ engine technology, which provides variable valve timing, duration, and lift for improved performance and Lift Electronic Control) and fuel efficiency, is being applied to all Honda and Acura automobiles. CVT (Continuously Variable The 2009 Civic Hybrid and 2010 Insight are equipped with a CVT that optimizes transmission ratios Transmission) for improved fuel efficiency. 5AT (5-speed electronically controlled All Honda and Acura automobiles equipped with automatic transmissions are using electronically controlled 5AT automatic transmissions) technology for improved performance and fuel economy. Reduced engine friction To reduce friction, Honda uses technologies such as offset cylinders, and engines designed to work with low-viscosity oil.

Honda Diesel Technology

Advantage: Modern diesel engines offer up to a 30% improvement Honda’s plans to introduce a diesel-powered Acura model in in fuel efficiency over comparable gasoline-powered engines — or North America in 2009 were postponed indefinitely because of

up to a 15% reduction in CO2 emissions when you include the recent dramatic increases in the cost of raw materials for the 15% higher carbon content of diesel fuel versus gasoline. engine and emissions systems and because of fluctuations in fuel prices. Both conditions significantly offset the potential Challenge: Reducing NOx emissions to stringent regulatory benefits from fuel-efficiency gains relative to the cost of the levels, and overcoming customer resistance to diesel technology technology for the customer. Honda continues to monitor the and high diesel fuel cost in the United States. market to determine what potential may exist for the application Our Effort: Honda is actively marketing its diesel engine of Honda diesel technology in the North American market in the technology in numerous Honda models sold in other markets, future. On a global basis, Honda is focusing its R&D activities on including Europe, where diesel fuel prices are more competitive diesel engines for smaller vehicles, where it feels they provide with gasoline prices. The company has developed 4-cylinder diesel the greatest potential benefit. engine technology able to meet EPA Tier 2 emissions standards. Honda 2009 North American Environmental Report 16

Addressing Global Hybrid Electric Vehicles (HEVs) Climate Change Advantage: Significant gains in fuel efficiency through the capture and reuse of braking energy along with engine shutoff Reducing at idle, and the potential for engine downsizing. Greenhouse Gas Emissions Through Challenge: Reducing technology cost and improving value for Drivetrain the customer. Advancements Our Effort: Honda introduced the first gasoline-electric hybrid vehicle in North America with the launch of the Honda Insight to the United States in 1999 and in Canada in 2000. Honda applied hybrid technology to its best-selling Civic small car in 2002, and to the world’s first V6 hybrid, the Accord Hybrid, in 2004 (discontinued in 2006). In March 2009, Honda introduced a new Insight, a five-passenger hybrid with the lowest retail price of any hybrid automobile in North America. This low-price approach enhances the appeal for consumers who had previously considered a hybrid but could not afford the price premium. The Insight will be followed in 2010 by a new sporty hybrid car based on the Honda CR-Z Concept. Honda Motor Co., Ltd., in Japan, In March 2009, Honda introduced a new Insight, a five-passenger hybrid car for under has also established a joint venture with GS Yuasa Corporation $20,000, the lowest retail price for any hybrid automobile in North America. to develop, manufacture and sell high-performance lithium-ion batteries for hybrid vehicles. Honda will further enhance its hybrid lineup and is considering the possibility of applying hybrid technology to medium and larger vehicles.

A new sporty Honda hybrid car based on the CR-Z Concept (pictured here) will be introduced in North America in 2010.

The 2009 Civic Hybrid employs fourth-generation Honda IMA hybrid technology and achieves Advanced Technology Partial Zero Emissions (AT-PZEV) certification in California. Honda 2009 North American Environmental Report 17

Addressing Global Battery-Electric Vehicles (BEVs) Climate Change Advantage: Using electricity generated offboard in place of discharges. New lithium-ion battery chemistries show potential petroleum can lead to reduced dependence on oil and lower for much-improved power and durability, particularly in hybrid Reducing tailpipe emissions, including smog-forming pollutants and applications. As to their impact on greenhouse gas emissions, Greenhouse Gas mobile-source CO2 emissions. BEVs will be best suited to areas with low-carbon electricity Emissions Through production from sources such as hydroelectric, solar, wind, natural Challenge: Lowering battery cost, improving battery gas, and nuclear. BEVs that are charged with electricity generated Alternative Fuels performance and durability, and reducing stationary-source CO 2 in the typical U.S. mix (in which 45%* of the electricity comes emissions from utilities that produce electricity mainly from from coal-fired energy plants or other carbon-intensive production coal. Batteries for use in battery-electric vehicles, whether in a processes) may have little or no positive impact on well-to-wheel dedicated battery-only or plug-in hybrid application, need high CO emissions. energy storage to support extended operation in electric-only 2 mode. BEV batteries require a much higher level of energy Our Effort: Honda’s research and development of BEV storage and consequently much higher energy density compared technology is focused on improving the energy density, to hybrid electric (HEV) and plug-in hybrid (PHEV) vehicles, which durability, and safety of automobile battery technology.

use a gasoline engine either as a primary or secondary source *U.S. Energy Information Administration estimate of net U.S. electricity generation shares of power. Also, BEV batteries must operate in the much more by energy source, January-May, 2009. technologically hostile environment of constant deep charges and

Natural Gas

Advantage: Natural gas is a viable near-term alternative to Our Effort: The Civic GX is the only dedicated gasoline as a transportation fuel. With 25% less tank-to-wheel natural-gas-powered passenger vehicle available for

CO2 emissions than a gasoline-powered automobile (on a retail sale from a major automaker in North America. per-mile-driven basis), it provides an immediate opportunity It is also the only vehicle from a major automaker to be to displace petroleum and to significantly reduce smog and certified by the EPA to meet both federal Tier 2 Bin 2 exhaust greenhouse gas emissions. emissions and Inherently Low Emission Vehicle (ILEV) zero evaporative emissions certification standards. In FY2009, Challenge: Limited driving range, high vehicle cost, and limited American Honda added 11 new Honda dealers to its Civic GX availability of vehicle refueling options. sales network for a total of 129 dealers in 33 states. This included the opening of nine new markets for fleet customers and four new markets in California for retail customers.

The Civic GX is the only dedicated natural-gas-powered passenger vehicle available for retail sale from a major automaker in North America. Honda 2009 North American Environmental Report 18

Addressing Global Biofuel Advantage: Climate Change Biofuel-powered vehicles offer significant benefits, such as negative CO2 emissions. One of these is opportunities to replace petroleum and to reduce greenhouse methane emissions from landfills or other waste converted to Reducing gas emissions. biogas to fuel CNG or LNG vehicles or for hydrogen production. Greenhouse Gas Before the U.S. further commits itself to any particular biofuel, Challenge: Sustainable and economically viable production Emissions Through additional research is needed to identify more sustainable and of biofuel and its economical use with existing products. economically viable feedstocks, production processes, and Energy and Some first-generation biofuels (corn, sugar cane, etc.) have been Infrastructure distribution methods. found to have negative impacts on land use, net CO2 emissions, and possibly food production and cost. Second-generation Our Effort: All Honda and Acura automobiles, as well as all of biofuels, which are cellulosic or algae-based, have the potential to the company’s motorcycle and power equipment products, are address many of the negative impacts of first-generation biofuels. capable of operating on E10. Honda continues to research the Ethanol has been blended at levels up to 10% (E10) in the feasibility of higher blends, including mid-level blends such as E15 or U.S. gasoline supply. Testing is needed to ensure that higher E20. Honda also is a member of the Coordinating Research Council, blends do not pose problems for the performance and emission an organization that directs engineering and environmental studies systems of the millions of vehicles on the road today or for small on the interaction between automobiles and fuel. In partnership engines such as those that power lawn and garden products. with the Research Institute of Innovative Technology for the Earth Higher blends may require a separate distribution infrastructure, (RITE) in Japan, Honda is also conducting independent research and they may only work in specially designed vehicles and into the efficient production of ethanol from cellulosic feedstocks. products. In addition, ethanol has only about two-thirds the Honda Motor Co., Ltd., is building a new research facility in Japan energy content of gasoline, with corresponding decreases in fuel that will work toward the establishment and practical application of economy and driving range at higher-level ethanol blends. There bio-ethanol production technology from inedible cellulosic material are other promising biofuels that may prove to have additional such as that found in the stems and leaves of plants.

Honda-RITE Process: Methodology for Producing Ethanol from Cellulosic Feedstocks

Conventional Methodology

Edible Parts Food

Sugar Edible Parts Biomass Extraction refinement Conversion to alcohol

Inedible Parts Biomass Separation Cellulose Saccharification Sugar Conversion to alcohol

(High pressure, (Enzymes) (RITE strain) high temperature) Bio-ethanol New Methodology Honda 2009 North American Environmental Report 19

Addressing Global Hydrogen Fuel Cell Climate Change Advantage: The hydrogen-powered fuel cell car has the potential California. The entirely new Honda V Flow fuel cell stack in the to be the ultimate solution for a clean and sustainable mobility FCX Clarity is more compact, powerful, and efficient. It fits into Reducing future. Unlike some alternative-fuel vehicles, the hydrogen- the center console of the car, creating the first fuel cell vehicle Greenhouse Gas powered fuel cell vehicle has the potential to be a full-function with a full-size cabin and low-floor sedan-style platform. The FCX Emissions Through replacement for the internal combustion engine vehicle. Fuel cell Clarity is also the first U.S.-certified FCV built from the ground up Energy and vehicles can deliver two to three times the tank-to-wheel energy as a fuel cell vehicle and the first to be produced on a dedicated Infrastructure efficiency and more than twice the fuel economy of conventional assembly line. gasoline-powered vehicles. From the standpoint of well-to-wheel The challenge of a fueling infrastructure is being addressed (continued) efficiency, fuel cell vehicles can reduce greenhouse gas emissions through cooperative efforts with the California Fuel Cell Partnership by as much as 62% when using hydrogen reformed from natural (CaCFP), fuel providers, and universities aimed at fostering a cluster gas, and as much as 100%* when using hydrogen produced using approach to the deployment of new hydrogen refueling stations, renewable energy. carefully matching infrastructure growth to the marketing of the vehicles themselves. In addition, Honda has continued its efforts Challenge: Fuel cell cost and durability, hydrogen storage, to develop a refueling solution scaled for residential installation and and limited hydrogen refueling infrastructure. use (see page 20, “Hydrogen Production and Distribution”).

Our Effort: Honda developed and is now leasing the zero- *When compared to a similar sized gasoline-powered automobile. emissions FCX Clarity to individual customers in Southern

Honda FCX Clarity (Hydrogen Fuel Cell Vehicle)

Performance Attribute Improvement (vs. previous FCX) specifications

Fuel Economy Up 28% — to 60 miles/kg H2 Stack Output: 100 kilowatts (kw) (gallon gasoline equivalent) Motor Output: 189 lb.-ft. torque @ 0-3056 Driving Range Up 33% — with only a 10% increase Battery: Lithium-Ion in storage capacity (up 59% from the Hydrogen Storage: 3.92 kg at 5,000 psi first-generation FCX) Range: 240 miles

Fuel Cell Stack Size Volume down 20% and weight Fuel economy: 60 miles/kg H2 (gallon gasoline equivalent) down 30% Seating: Four adults

Subfreezing Startup -20°F (versus -4°F on previous model) Special features: Application of Honda biofabric, made from plant material, to interior surfaces (seat fabric and door linings)

Right: Honda FCX Clarity Far Right: Honda V Flow fuel cell stack Honda 2009 North American Environmental Report 20

Addressing Global Hydrogen Production and Distribution Hydrogen Production from Renewable Energy Climate Change Although the FCX Clarity represents a substantial step forward Honda is also experimenting with a solar-powered hydrogen in fuel cell vehicle technology, the ultimate success of the fuel station, which extracts hydrogen from water through electrolysis. Reducing cell vehicle will depend on the efficient production, distribution An experimental solar-powered hydrogen station has been in Greenhouse Gas and storage of hydrogen. Honda’s experimental Home Energy operation at Honda R&D Americas’ Torrance, California, campus Emissions Through Station, created in partnership with Plug Power Corp., is in its since 2001. The station uses Honda-developed thin-film solar cells Energy and fourth generation of development. Using natural gas as its to power a highly efficient electrolyzer that extracts hydrogen energy source, the Home Energy Station is designed to provide from water. This process emits no CO and demonstrates Infrastructure 2 a home-based refueling solution that produces enough hydrogen the potential for producing hydrogen from renewable energy (continued) to power a fuel cell vehicle while generating enough heat and sources in a practically carbon-free energy cycle. Hydrogen also electrical energy for an average home. In 2007, Honda began can be produced from biomass or as a byproduct of the biofuel operation of a fourth-generation unit that is 70% smaller than production process. Further, hydrogen can provide a substantial

the previous version with increased fuel efficiency and the CO2 emissions reduction due to the high operating efficiency of integration of the hydrogen gas purification and electric power fuel cell vehicles. generating components.

The fourth-generation Home Energy Station is being Honda solar-powered hydrogen refueling station uses Honda-developed tested at Honda R&D Americas’ state-of-the-art hydrogen thin-film solar cells that require half as much energy to manufacture refueling station in Torrance, California. as conventional crystalline silicon solar cells. Honda 2009 North American Environmental Report 21

Addressing Global Home Energy Manufacturing

Climate Change Although Honda is first and foremost a mobility company, its R&D Honda is striving to reduce the energy and CO2 emissions activities also include new energy technologies for stationary intensity of its manufacturing operations by improving the energy Reducing sources. Honda and its technology partner, Climate Energy, LLC, efficiency of production processes. As more energy-efficient Greenhouse Gas have collaborated on a micro-combined heat and power (MCHP) alternatives for equipment are developed, Honda will try to use Emissions Through system for home use. The system, called freewatt,® supplements those alternatives for equipment replacement and renewal, and Stationary Sources traditional natural gas heating systems with technology that for new equipment installations. Honda is also working to use less

produces heat and electricity for the home, reducing CO2 energy — by operating production equipment with less variability, emissions by as much as 30%, compared with a conventional by ensuring that process energy requirements are met and not 80-percent-efficient home heating system. exceeded, and by designing equipment that can be easily shut down when not in use.

The Marysville Auto Plant’s Line 2 paint shop uses more environmentally responsible waterborne primer and basecoat. It also employs Honda “intelligent” paint booth technology to reduce energy used in body painting.

Product and Parts Distribution

Honda is undertaking numerous efforts to reduce CO2 emissions associated with the distribution of its parts and finished products The freewatt® system, using Honda micro-combined heat and power (MCHP) in North America. In the past year, this included the deployment cogeneration technology, is being marketed to consumers in the Northeastern of the industry’s first Class 8 diesel-electric hybrid truck for the United States. transportation for service parts, and the deployment of “Route Tracker”technology that helps truck drivers to adopt more fuel-efficient operating habits.

Honda 2009 North American Environmental Report 22

Reducing Honda’s Honda recognizes Life Cycle Assessment (LCA) as a critical tool for Environmental Footprint understanding the impact of its products and activities on the environment, and is working to minimize that impact in virtually every aspect of its business.

Click on any area of the lifecycle diagram for more detail. Honda 2009 North American Environmental Report 23 Product Development

• We view improvements to in-use fuel efficiency (CO2 reduction) and smog-forming 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. Honda 2009 North American Environmental Report 24

Designing for the Environment Environmental factors are considered early and in each its useful life. Accordingly, Honda engineers take into phase of the design and development of every Honda account such factors as dismantling complexity, component product. In component design and in the selection of materials, remanufacturing, the minimization of substances of concern Honda looks for opportunities to reduce a product’s total (SOCs), and shredder residue. Product environmental footprint, including its impact at the end of Development Product Recyclability Honda has achieved and is committed to maintaining a minimum the 90% target. Honda will continue to look for new ways to 90% level of design recyclability1 for all Honda and Acura improve the design recyclability of future products, in balance automobiles, and a minimum 95% level of design recyclability with other critical considerations, such as quality, efficiency, for all powersports and power equipment products. All new cost and durability. Honda and Acura automobiles, as of 2004, have met or exceeded

Reducing Substances of Concern (SOCs) In accordance with its goal to be proactive as a leader in Honda has continued to comply with all laws addressing environmental performance, Honda has created a global team substances of concern around the world. With the effort and and has established policies related to the handling of substances cooperation of its supply base, Honda has taken and continues of concern. These policies are intended to make it clear to to take the necessary actions to maintain compliance with the Honda’s associates and its business partners the company’s European Union End of Life Vehicle (ELV) Directive. Honda has intentions and direction: also been able to make progress toward voluntary reductions of substances of concern — meaning substances that are currently 1. Honda will comply to the extent feasible with the strictest or exempted from legal requirements or non-regulated substances. earliest regulations across the world for substances that are Even with the progress Honda has made, it continues to face currently regulated or scheduled to be regulated in the future. new challenges. Honda must work to meet not only the European 2. Honda will set standards for voluntary reduction and REACH (Registration, Evaluation, Authorisation and Restriction control of environmentally sensitive substances that are of Chemical substances) regulation but also the China REACH not currently regulated but are considered harmful to people regulation, and regulations in Canada, the United States, Japan, and the environment. Korea and Taiwan. In addition to understanding the chemical composition of its products, Honda will also continue investigating In both of these cases, Honda will apply to the extent feasible and finding alternative substances to use in preparation for the these standards to all models produced around the world. ban of substances of very high concern. 3. Honda will develop global expectations when feasible, so that each Honda Division (automobile, motorcycle and power products) can consistently communicate supplier requirements across all regions.

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. Honda 2009 North American Environmental Report 25

Substances of Concern (SOCs) In 2002 Honda created a set of guidelines to minimize SOCs in Honda products (specified BDEs), and azoic compounds. In FY2008, Honda surveyed all of assembled in North American. In 2007, Honda updated those guidelines, its North American suppliers to assess their use of perfluorooctanesulfonic which are now called the Honda North America Chemical Substance Standard. acid (PFOS) and brominated flame retardants. As new substances are being Honda works closely with its suppliers in the product design and part regulated globally, Honda will revise its Chemical Substance Standard to ensure Product purchasing phases of product development to reduce or eliminate lead and compliance with the strictest global laws and standards consistently throughout lead compounds, hexavalent chromium, mercury and mercury compounds, the company’s global operations. Development cadmium and cadmium compounds, brominated diphenyl ether compounds (continued) Current Status Opportunities for Future Reductions Lead — used in electronic applications for its good melting characteristics, long-term stability, and vibration durability. Used in metal alloys for its superior machinability, strength, and fatigue resistance. • Reducing use in electronics, light bulbs, and corrosion-resistant paints. • Working with individual suppliers to introduce lead-free circuit boards that • Replaced with nonhazardous materials in electrodeposition coatings and steel meet Honda’s requirements for durability and performance. bars, with the exception of contaminants. • Working to overcome strength and fatigue weaknesses when lead inclusions • Eliminated from automobile and on-highway motorcycle wheel weights; in the microstructure of the steel alloys are replaced with manganese sulfide replaced with a zinc alloy. (MnS) inclusions. Planning to introduce a lead-free ATV wheel hub by 2011. Hexavalent Chromium — used to protect exterior parts from corrosion • All North American suppliers have phased out the use of • Completed. hexavalent chromium. • Continue to monitor our compliance. Mercury — used for bright and uniform illumination • Honda has never used mercury in switches, radios, or ride-leveling • Phasing in mercury-free displays using a new type of backlight, beginning devices. However, Honda still uses very small quantities of mercury with new models introduced in model year 2010. in high-intensity discharge (HID) headlights and in illuminated entertainment • Start to employ mercury-free HID bulbs in the next few years, as the and navigation systems. remaining technical challenges are overcome. • A closed-loop recycling system is employed for damaged or broken screens. • Honda advises and encourages dealers to comply with all relevant state regulations for proper management and disposal of mercury parts. Polybrominated Diphenyl Ethers (PBDEs) — used as a flame retardant and as a surfactant • Phased out the use of octa- and penta- PBDEs. Working with suppliers to • Working with suppliers to eliminate deca-BDEs from products when verify that these substances are no longer used in products. technically feasible. Perfluorooctane Sulfonate (PFOS) — used as a water repellent agent • Eliminated PFOS in all parts delivered to North American • Completed. manufacturing facilities. • Continue to monitor our compliance. 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 • Working with suppliers to implement PVC-free technologies for components • Working to eliminate PVC used for underbody coating and weld sealer such as interior and exterior trim pieces, door sealants, adhesives, window applications from all North American manufacturing plants within two years. moldings, floor mats, and seat coverings. • Continuing to investigate effective alternatives to PVC for all paint • Replacing PVC used in instrument panels, inner-door weather stripping, department applications. Honda will begin to apply the technology and shift knobs. once it has been proven. Honda 2009 North American Environmental Report 26

Reducing PVC in Honda and Acura Automobiles Honda is engaged in efforts to significantly reduce the chlorine • Honda continues to investigate high-quality and cost-effective that ends up in shredder residue, primarily by reducing the use alternatives to PVC in an effort to minimize and eventually of polyvinyl chloride (PVC) in its vehicles. eliminate it from all products. Although the company has minimized the number of vehicle parts containing PVC, cost • Eleven of the 20 Honda and Acura models sold in the United Product and quality barriers present a challenge to its total elimination. States in FY2009 have a less than 1% concentration of chlorine Development in materials that can end up in the wastestream as shredder (continued) residue. They are the Honda Fit, Insight, Civic Coupe, Civic Sedan, Civic Hybrid, Civic GX, Accord Coupe, Accord Sedan, CR-V; and the Acura RL and RDX.

The redesigned 2009 Honda Fit (left) and the all-new 2010 Insight hybrid car (right), both introduced in the U.S. and Canada in FY2009, achieve Honda’s target of less than a 1% concentration of chlorine in materials — primarily PVC — that can end up in the wastestream as shredder residue. PVC is typically used in applications such as weld sealer and for interior surfaces such as seat upholstery. Honda 2009 North American Environmental Report 27

Emissions from Honda and Acura automobiles — including CO2 , which contributes to global climate change, and smog-forming emissions such as hydrocarbons (HC) and nitrogen oxide (NOx) — are the most significant environmental impacts resulting from Honda’s global and regional business operations. On the basis of this understanding, Honda has worked for the past 40 years to improve the fuel efficiency and emissions performance of its automobiles as the central Product focus of our efforts to minimize our environmental impact and to add new value for our customers and society. Development Automobiles — Honda and Acura Automobile Fuel Efficiency Product In-Use Improving automobile fuel efficiency is the single best approach CAFE has risen 6.3% in the same time period, to 27.0 mpg for Environmental Honda can take to achieve significant near-term reductions in the MY2008, but remains 3.3 mpg, or 12%, below Honda’s CAFE. CO2 emissions that contribute to global climate change. Honda’s Honda has increased its CAFE even as it increased the mix of light Performance Corporate Average Fuel Economy (CAFE), as determined by the trucks in its Honda and Acura lineups to meet customer demand U.S. Department of Transportation, rose to its highest level in for these models. Honda, in 2006, targeted a 5% improvement in nine years in model year 2008 (MY2008) and was up 3.8%, to its CAFE over MY2005 levels by MY2010. 30.3 mpg, over the MY2005 baseline. The U.S. industry average

U.S. Car and Light Truck Fuel Economy Canadian Car and Light Truck Fuel Consumption (CAFE) (CAFC) The U.S. Environmental Protection Agency (EPA) calculates “fuel economy” by the Transport Canada calculates “fuel consumption” by the amount of fuel consumed per amount of miles traveled per gallon of gasoline for cars and light trucks and calculates kilometer traveled. Transport Canada does not issue a combined number for cars and light a Corporate Average Fuel Economy (CAFE) number for both passenger cars and trucks. The combined numbers reported below were calculated by Honda, using Transport light trucks. We show the combined values here for comparison purposes. Canada car and light truck CAFC results, along with available calendar year sales data.

32 10

30 30.3 30.2 30.0 9.3 29.8 9 9.2 9.2 29.5 9.0 9.0 29.2 29.1 29.2 29.1 8.9

28 Industry Average 8.6 Honda/Acura 8.5 8.1 8 27.0* More Fuel-Efficient 26.7 26 7.6 25.8 More Fuel-Efficient 7.5 7.5 Fuel Economy: MPG 25.4 7.4 7.4 7.4 7.4 7.4 25.1 7.3 24.8 24.7 7 24.5 24.6 Honda/Acura

24 Fuel Consumption: Liters/100 Km Industry Average

22 6 MY00 MY01 MY02 MY03 MY04 MY05 MY06 MY07 MY08 MY00 MY01 MY02 MY03 MY04 MY05 MY06 MY07 MY08

*Honda/Acura CAFE is final. Industry average is Honda’s estimate based on each manufacturer’s mid-model-year CAFE report as submitted to the NHTSA. Honda 2009 North American Environmental Report 28

Application of Technology for Improved Fuel Efficiency and Reduced Emissions Honda is applying a broad range of advanced technologies to the materials, more aerodynamic vehicle bodies, low-rolling-resistance full range of Honda and Acura automobiles in order to realize gains tires, and the further evolution of gasoline-electric hybrid in fuel efficiency and lower exhaust emissions for all vehicles. At technologies will all play critical roles in future improvements to the same time, the company is accelerating its efforts to develop Honda’s vehicle fleet performance. The chart below summarizes Product and deploy new technologies that will further improve its products’ the application of the most common environmental technologies Development environmental performance. More energy-efficient engines and applied to our best-selling Honda and Acura vehicles within each transmissions, along with advancements in the use of lightweight model line. Automobiles — Product In-Use Technology Application, Emissions, and Fuel Economy for Selected MY2009 Honda and Acura Automobiles in the United States and Canada Environmental Electric Emissions EPA Fuel Economy Performance Power Cylinder Model Engine Trans Valvetrain VTEC Steering deactivation U.S. EPA CARB City Hwy (continued) Fit 1.5L I4 SOHC 5AT 16-valve i-VTEC P P Tier 2 Bin 5 ULEV-2 27 33

Insight 1.3L I4 SOHC + IMA CVT 8-valve i-VTEC P P P Tier 2 Bin 3 AT-PZEV 40 43

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

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

Passenger Cars Passenger Civic GX 1.8L I4 SOHC 5AT 16-valve i-VTEC P Tier 2 Bin 2 ILEV AT-PZEV 24 36

Accord Sedan 3.5L V6 SOHC 5AT 24-valve i-VTEC P P Tier 2 Bin 5 ULEV-2 19 29

Honda Accord Sedan 2.4L I4 DOHC 5AT 16-valve i-VTEC P Tier 2 Bin 5 PZEV 21 30

CR-V (4WD) 2.4L I4 DOHC 5AT 16-valve i-VTEC P Tier 2 Bin 5 ULEV-2 20 26

Element (4WD) 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

Light Trucks Light Pilot (4WD) 3.5L V6 SOHC 5AT 24-valve i-VTEC P P Tier 2 Bin 5 ULEV-2 16 22

Ridgeline (4WD) 3.5L V6 SOHC 5AT 24-valve i-VTEC P Tier 2 Bin 5 ULEV-2 15 20

TSX 2.4L I4 DOHC 5AT 16-valve i-VTEC P P Tier 2 Bin 5 ULEV-2 21 30

TL 3.5L V6 SOHC 5AT 24-valve VTEC P P Tier 2 Bin 5 ULEV-2 18 26

Passenger Cars Passenger RL 3.7L V6 SOHC 5AT 24-valve VTEC P Tier 2 Bin 5 ULEV-2 16 22 Acura

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 Light Trucks Light Honda 2009 North American Environmental Report 29

Automobile Exhaust Emissions — Compliance with Tier 2 Emissions Standards Honda has consistently played a leading role in reducing vehicle Canada Tier 2 Bin 5 emissions standards. Due to the challenging exhaust emissions, and in meeting and exceeding U.S. federal nature of these standards, all automakers are permitted to meet vehicle emissions standards. Beginning with model year 2007 them by using a fleetwide average. However, all Honda and Acura Honda and Acura models, every vehicle sold in the United States automobiles meet or exceed these standards on an individual Product and in Canada has met or exceeded the U.S. EPA and Transport model basis, without the use of fleet averaging. Development

Automobiles — Honda Low-emission Classification in Mexico Product In-Use All new Honda and Acura cars sold in Mexico have been Honda Low-emission Classification in Mexico Environmental classified as Double Zero (00) by Mexico City’s Hoy No Circula Performance emissions control program. The Double Zero classification is Certification Period Model (continued) given to vehicles certified as having low NOx emissions and Up to six years Honda Civic IMA, Civic Si, Civic 1.8, high city fuel efficiency. Vehicles meeting this standard may be (Recertification every 2 years) CR-V, Fit and Acura TSX driven in Mexico City and its suburbs without restriction. Many Up to four years Honda Accord L4, Pilot, Ridgeline, new models from other automakers received a Single Zero (Recertification every 2 years) Acura RL, TL 3.7 and RDX classification, and so must be retested every six months. Certified for two years Honda Odyssey, Accord V6, Acura MDX and TL 3.5

Gasoline-Electric Hybrids In March 2009, Honda introduced the all-new 2010 shared with other Honda automobiles. The new Insight gas-electric hybrid vehicle. Honda was the Insight, starting at $19,800 in the U.S. and $23,900 first company to introduce a mass-produced gas- in Canada, is the most affordable hybrid in North electric hybrid vehicle to the U.S. market, with America. It is helping to expand the availability the first-generation Insight, in December of hybrid technology to a wider range of the 1999. In 2002, Honda introduced the consumers and a new generation of car buyers. Civic Hybrid, the first application of This greater accessibility gives more people hybrid technology to an existing, mass- the opportunity to switch from gasoline- produced automobile; and in 2004, Honda powered cars to gasoline-electric hybrids. introduced the world’s first V6 hybrid, the Honda is committed to increasing the Accord Hybrid (discontinued in 2006). number of gas-electric hybrids in its automobile With the introduction of the 2010 Insight, fleet to further improve fuel efficiency and Honda has increased the efficiency of hybrid will introduce another dedicated small hybrid production methods, improving production in 2010.

capacity while realizing cost reductions. This Honda’s Integrated Motor AssistTM technology uses an ultra-thin was achieved through the enhanced efficiency motor integrated with the engine. It operates as a starter motor, of the production process, a smaller and more enabling engine-stop during idle. It also acts as a generator to capture energy from vehicle braking, and as a motor to boost efficient battery package, and the use of parts engine output and improve engine efficiency. Honda 2009 North American Environmental Report 30

Promoting More Fuel-efficient Driving Habits A feature unique to the new Insight is its Ecological Drive Assist • A driver feedback function uses an innovative speedometer System (Eco Assist™), which uses a display to engage the driver display with changing background colors to provide real-time in achieving enhanced fuel efficiency. This driver-focused fuel guidance on achieving higher fuel efficiency. efficiency enhancement technology combines multiple functions. Product • A fuel-efficiency scoring function uses a unique graphic to • A driver-activated ECON mode optimizes control of the provide feedback to the driver both about current-trip fuel Development continuously variable automatic transmission (CVT), adjusts efficiency and lifetime fuel-efficient driving performance. Automobiles — air conditioner operation, allows for earlier engagement of Product In-Use the engine’s idle-stop feature, and increases battery charging Environmental during regenerative braking. Performance Ecological Drive Assist System (Eco AssistTM) (continued) DASHBOARD COMPONENTS BENEFITS

The feedback provided by Eco Assist™ simply and effectively helps drivers accelerate and brake in ways conducive to enhanced fuel efficiency. Fuel-saving activities such as smooth acceleration and braking make the speedometer background glow green. Somewhat less-efficient driving makes the meter glow blue-green. Aggressive starts and stops that consume extra fuel make the meter glow blue. By observing the speedometer background’s response and adjusting their driving practices, drivers can develop driving habits that typically enhance fuel efficiency. In addition, the system provides a fuel-efficient driving score that allows the user to monitor their performance during a single trip and over the life of their vehicle ownership. Honda 2009 North American Environmental Report 31

ACEEE 2008 Environmental Performance Ratings The American Council for an Energy-Efficient Economy (ACEEE) consecutive year and was joined by the gasoline-powered Civic, released its environmental ratings for model year 2009 vehicles, the Fit, and the Civic Hybrid on the list of the 12 vehicles with an annual rating of automakers’ U.S. fleets based on a single the highest overall green score. Below are the scores for Honda’s score that takes into account both vehicle exhaust emissions highest-scoring models in each class in which it competes, Product and greenhouse gas emissions over the full product life cycle. each model’s class ranking, and the highest and lowest scores Development The natural-gas-powered Civic GX ranked first for the sixth in each class. Automobiles — Product In-Use Honda and Acura ACEEE 2008 Green Scores Honda /Acura Best-in-Class Worst-in-Class Honda /Acura Model Environmental Green Score Green Score Green Score ACEEE Class Ranking

Performance Fit 45 45 31 Superior Small Wagon (continued) Civic GX 57 57 18 Superior Compact Car

Civic Hybrid 51 Superior

Civic 44 Above average

Accord Sedan 46 18 Midsize Car 39 Average (4-cylinder)

Accord Coupe (V6) 36 Average Honda CR-V 36 38 26 Average Compact SUV

Element (2WD) 34 Average

Odyssey 31 32 29 Above average Minivan

Pilot (2WD) 31 39 21 Average Midsize SUV

Ridgeline 28 36 28 Below average Compact Pickup

TSX 39 57 18 Average Compact Car

46 18 Midsize Car TL 34 Average

RL 30 Inferior Acura

RDX 31 38 26 Below average Compact SUV

MDX 28 39 21 Average Midsize SUV

Note: Vehicles are scored on a scale of zero to 100. A higher score means a lower environmental impact. Honda 2009 North American Environmental Report 32

Honda strives to balance the demands of its powersports product customers, who typically seek greater performance, with society’s need for improved fuel efficiency and reduced exhaust emissions.

Honda U.S. Motorcycle Emissions for MY2008 Honda has consistently met or exceeded U.S. EPA and CARB Product emissions requirements for on-road and off-road motorcycles. Development In model year 2008, Honda exceeded both EPA and CARB Tier 2 Powersports requirements for hydrocarbon (HC), nitrogen oxides (NOx), Products — and carbon monoxide (CO) exhaust emissions, in part through the broad application of 4-stroke engine and fuel-injection Product In-Use technologies. In model year 2008, Honda also exceeded both Environmental EPA and CARB requirements for evaporative emissions and fuel Performance permeation. Globally, Honda is expanding the use of programmed electronic fuel injection (PGM-FI), catalytic converters, and

other advanced engine technologies that provide additional Among the new models introduced for 2009 was the DN01”crossover” motorcycle, opportunities for further reductions in motorcycle exhaust which uses Honda PGM-FI electronically controlled fuel injection technology to emissions and improvements in fuel efficiency. provide high performance in combination with good fuel economy and low emissions.

Honda U.S. Motorcycle Emissions for MY2008

HC (g/kwh) HC + NOx (g/kwh) CO (g/kwh) Class Honda1 EPA2 CARB3 Honda1 EPA2 CARB3 Honda1 EPA2 CARB3

I (50-169cc) 0.6 1.0 1.0 n/a n/a n/a 8.1 12.0 12.0

II (170-279cc) 0.8 1.0 1.0 n/a n/a n/a 7.6 12.0 12.0

III (>279cc) n/a n/a n/a 0.5 1.4 0.8 4.6 12.0 12.0

Off-road (all) 0.7 n/a 1.2 1.0 2.0 n/a 8.7 25.0 15.0

Honda U.S. ATV Emissions for MY2008

HC + NOx (g/kwh) CO (g/kwh) Class Honda1 EPA2 CARB3 Honda1 EPA2 CARB3

I (<225cc) 13.4 16.1 16.1 190 400 400

II (≥ 225cc) 9.4 13.4 13.4 269 400 400

1 Based on average 2008 model year U.S. EPA and CARB motorcycle emissions data 2 U.S. EPA emissions standards for 2008 model year motorcycles 3 California Air Resources Board (CARB) emissions standards for 2008 model year motorcycles Honda 2009 North American Environmental Report 33

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

Product U.S. Power Equipment Engine Emissions Development General-Purpose Engine Emissions Marine Engine Emissions Power Equipment — California’s Air Resource Board’s regulations for small-engine Honda marine engines are individually certified Product In-Use emissions are significantly stricter than those of the U.S. below 2008 California exhaust emissions Environmental EPA. Though very close to the stringent CARB standards in standards. These same engines are offered in Performance measurable emission values, Honda Power Equipment’s series all 50 states in the U.S and in Canada. Honda of small general-purpose engines met 2008 CARB exhaust and outboard engines are therefore 65% cleaner

evaporative emissions standards through the use of averaging than what is required by the U.S. EPA and and banked credits. However, Honda’s Environment Canada. New U.S. EPA standards entire small-engine line substantially effective in 2010 are expected to harmonize exceeds 2008 EPA emission standards. with California exhaust standards. They will also EPA emissions standards are expected introduce evaporative emissions requirements to be revised to match the more that phase in through 2015. Honda marine stringent CARB standards in 2011 engines already comply with California’s exhaust and 2012. It is Honda’s goal to be in emissions standards and are expected to meet compliance with the new, harmonized the new evaporative controls. 50-state standards. In FY2009, American Honda introduced the redesigned BF40 and BF50 outboards, incorporating electronic fuel injection for improved fuel efficiency and reduced emissions.

new generation V-Twin Engine Series introduced In FY2009, American Honda introduced an all-new generation of than previous models, on a par with similar-size fuel-injected its V-twin general purpose engines, which combine high output engines. In addition, a high-capacity cooling fan and compact with enhanced environmental performance. These 2-cylinder, three-chamber muffler help reduce noise by 1.5 decibels overhead-valve (OHV) V-twin engines feature an integrated compared to previous-generation models. cylinder and head with enhanced cooling performance, along with Digital Capacitive Ignition (CDI) variable ignition timing and The GXV690 is one of a series of new Honda V-twin general twin-barrel, inner-vent carburetion. They offer a compression ratio purpose engines that offer higher of 9.3:1 — extremely high for air-cooled engines — along with fuel economy, reduced noise, and enhanced induction and volumetric efficiency. As a result, the emissions performance that meets the U.S. EPA’s Phase 3 emissions new Honda V-twin engines — which will power products such as standards without the use of a lawn mowers, pressure washers, and commercial generators — catalytic converter. meet the U.S. EPA’s Phase 3 emission standards without the use of a catalytic converter, and offer 10% higher fuel efficiency Honda 2009 North American Environmental Report 34

Increasing Home Energy and Heating Efficiency Honda introduced an all-new micro-sized combined heat and When the Honda MCHP Deluxe module is paired with a furnace power (MCHP) Deluxe cogeneration unit in 2008. The original system, such as the ECR International freewatt,® the total system Honda MCHP, introduced in Japan in 2003 and in the U.S. in 2007, provides heat for the home with the added benefit of electricity is a heat transfer and power generation device that can provide production. In the freewatt application, the Honda MCHP module Product home heating or water heating, as well as electrical power for a has provided as much as 75% of a home’s heating demand plus Development variety of home applications. The new Honda MCHP Deluxe enough electricity to power lights, small appliances and security system incorporates a battery backup system that includes a systems. The electric power produced by the system displaces Power Equipment — long-life nickel-metal hydride battery for dependable starts electricity that consumers would otherwise purchase from the Product In-Use during utility power outages. With the independent battery local electric utilities, helping homeowners save $500 to $1,000 Environmental starting system, the MCHP can function as a residential standby per year on their electric bills. In states where net-metering Performance generator that provides a small amount of emergency power in policies are legislated, homeowners can receive credit for surplus (continued) the event of a power failure. power generated by the MCHP from the public utilities in their communities, thus potentially realizing additional savings on electricity costs.

The new Honda MCHP Deluxe system incorporates Heat to Electricity a battery backup Building to Building system that includes a long-life nickel- metal hydride battery for dependable starts during utility power outages.

MCHP unit: Electricity & Heat Exchanger and “Base-load” Heat Supply “Peaking” Heat Supply Furnace Honda 2009 North American Environmental Report 35 Purchasing • Our approach to environmental management extends to our supply chain of 620 parts and materials suppliers in North America. • We encourage suppliers to adopt measures to reduce the environmental impact of producing and transporting materials and component parts, including energy use, emissions, and packaging waste. • We recognize our suppliers’ environmental efforts through the Supplier Environmental Achievement Recognition program. Honda 2009 North American Environmental Report 36

Third-party ISO 14001 Certification of Suppliers

Honda’s efforts to promote environmental improvements ISO 14001-Certified North American OEM Suppliers to Honda with its North America supply base began in 1998, when the company asked OEM suppliers to its Ohio and Ontario, Canada, auto plants to implement environmental management systems FY05 50 Purchasing and to obtain third-party ISO 14001 certification. Initially, the FY06 58 company focused on its top 42 tier one suppliers. In 2005, the FY07 80 request was extended to additional key suppliers to the Lincoln, FY08 85 FY09 88 Alabama, automobile and engine plant. In FY2009, 93% of key suppliers, including all original 42 tier one suppliers, and 88% of 0 25 50 75 100 all companies in Honda’s North American tier one supply chain Percent were third-party ISO 14001-certified.

Promotion of Improved Environmental Practices among Honda Suppliers In addition to being honored for environmental achievement, their business relationship with Honda. In each of the last 16 years, Bridgestone Americas Tire Operations, LLC, of Wilson, North Honda has held supplier symposiums to share best environmental Carolina, received Honda’s Corporate Citizenship Award for FY2009 ideas and practices. In November 2008, 72 North American OEM at the annual OEM supplier conference. This award recognizes suppliers participated in the environmental symposium, submitting environmental improvements by suppliers as an important part of 15 applications for recognition of their environmental achievements.

FY2009 Supplier Environmental Achievement

Category Supplier Environmental Impact

Waste JTEKT of North America, • Upgraded powder coating pretreatment system, reducing wastewater generation Reduction Vonore, Tenn. by 87% and eliminating waste to landfill Furukawa Electric North America APD • Reduced landfill waste by reusing cardboard pallets and reducing their use, and by Mexicali, B.C., Mexico optimizing use of packing material Highland Industries, Inc. • Recycling activities have reduced landfill waste by 60% Kernersville, N.C. Toyoda Gosei N.A. Corp. • Recycling of cured rubber (EPDM) and other materials has reduced landfill waste Waterville, Quebec, Canada by 43% Energy Bucyrus Precision Tech, Inc. • Reduced plant’s compressed air pressure, for 16% reduction in energy consumption Reduction Bucyrus, Ohio Celina Aluminum Precision Technology (CAPT) • Modified operation of heat-treating furnaces during nonproduction times, yielding Celina, Ohio a 9% reduction in natural gas use TK-Holdings Inc. • Achieved an 8% reduction in electricity consumption through multiple projects and Aeropuerto, Apodaca, N.L., Mexico equipment installations

Natural Toyoda Gosei N.A. Corp. • Implemented an associate carpool program that reduced CO2 emissions by an estimated Resource Waterville, Quebec, Canada 327 tons per year Conservation • Installed closed-loop systems that reduced water consumption by 60% Bridgestone Americas Tire Operations, LLC • Enlarged and improved the natural wildlife habitat on company property, Wilson, N.C. creating educational areas for schools and Boy Scouts • Hosted 150 middle school students at a mock “Envirothon” to help prepare them for a regional competition Honda 2009 North American Environmental Report 37 Manufacturing • We have worked continuously to reduce the environmental impact of our manufacturing activities in North America, including efforts to reduce the energy intensity of production, as well as initiatives to reduce water use, air emissions, and waste materials at all of our manufacturing facilities in the region. Honda 2009 North American Environmental Report 38

Volatile Markets Hamper Environmental Performance Even as Honda increased domestic production capacity in North American plants were significantly reduced. Because North America, severe economic conditions caused a historic manufacturing systems remain in operation whenever production reduction in customer demand for automobiles, motorcycles, is taking place, reduced unit production negatively affects per-unit

and power equipment products during FY2009. To manage measures of energy use, CO2 emissions, waste, and water use. Manufacturing rising product inventories, production volumes at Honda’s Production Activity Honda and Acura Automobile, Powersports, and Power Equipment Production in North America

N Automobile Production Totals N Powersports Production Totals

• Automobile 0.4 • Automobile Engine .41 • Transmission .38 .38 1.5 .36 .36 .36

1.44 0.3 1.43 .32 1.40 “Severe economic 1.4 .26 1.41 conditions caused a 0.2 1.39 Units (millions) dramatic reduction in 1.37

consumer demand for 1.3 1.28 .16

Honda products and 1.25 1.25 0.1 subsequent reductions FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 in production volumes, 1.19 1.2 1.24 N Power Equipment Production Totals which negatively affected 1.23 2.5 per-unit measures of 1.18

energy use and 1.1 1.99 1.14 2.0 1.82 Units (million) 1.08 CO2 emissions.” 1.71 1.55 1.04 1.04 1.02 1.5 1.34 1.07 1.01 1.01 1.01 1.0 1.15 1.04 1.08 1.0 .87 .94 .93 Units (millions) .56 0.9 .5 .87 .84 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 0.8 Power equipment production totals have been updated from previous years’ reports FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 based on revised Honda methodology for the counting of production units. Honda 2009 North American Environmental Report 39

ISO 14001 Certification The central element of Honda’s environmental oversight and • Honda of Canada Manufacturing, Inc., has a new automobile management structure for North American manufacturing engine plant, which started production in late 2008, and operations was implemented in 1998: a commitment to achieve achieved certification in 2009. and maintain third-party ISO 14001 certification for environmental • Honda Precision Parts of Georgia, LLC, manufacturer of Manufacturing management at Honda manufacturing facilities throughout the automobile transmissions since 2006, is working toward region. Thirteen of the 16 Honda plants operating in FY2009 are Production Activity certification by the end of calendar year 2009. certified to the ISO 14001:2004 standard. (continued) • Honda Manufacturing of Indiana, LLC, which started automobile production in fall 2008, is scheduled to achieve certification by 2014.

Responsible Growth of Local Manufacturing Honda’s long-held global strategy of manufacturing products Honda’s North American factories, in cooperation with more than in the markets where they are sold, including the local sourcing 620 North American component and material suppliers, produced of component parts, helps to mitigate the environmental impact approximately 75% of Honda and Acura automobiles sold in the of producing and distributing Honda products in North America. region, the highest percentage of any international automaker. It can significantly reduce the energy, emissions, and waste In response to customer demand for fuel-efficient Honda and associated with the shipping of parts from suppliers to Honda Acura products, the company continued to further localize its factories and the distribution of finished products from Honda’s manufacturing capabilities in the region. factories to its dealers. In the automobile sector in FY2009,

New Plants Opened in FY2009

Honda Manufacturing of Indiana, LLC INITIATIVES undertaken to reduce the plant’s environmental footprint include: Honda Manufacturing of Indiana, LLC, began building Civic Sedans in October • The recycling of spent purge from paint and plastics production 2008 and took over production of the near-zero-emissions natural-gas-powered • Use of a “dry” paint booth design to decrease the size of painting Civic GX from Honda’s East Liberty, Ohio, plant in May 2009. The new Indiana operations, resulting in less energy for air conditioning plant began production as a zero-waste-to-landfill facility. • Higher-efficiency body and plastics paint circulation systems • A new paint booth design that allows for painting of both bumpers and instrument panels on one paint line, reducing plant size and resultant energy use • Eliminating some bake ovens and shortening remaining bake ovens through the use of combined direct and indirect burners that reduce natural gas consumption • A “point of use” heating system with high-efficiency burners instead of a central heating/distribution system • Use of conveyor motors that automatically turn off when idle • Use of waterborne primer and basecoat painting processes • An on-site parts consolidation center that reduces miles traveled for shipments of parts to the factory Honda 2009 North American Environmental Report 40

New Plants Opened in FY2009 (continued) Honda of Canada Mfg. Engine Plant MAPCAN (Molten Aluminum Producer Canada)

Manufacturing Production Activity (continued)

Honda’s third automobile engine facility in North America began production MAPCAN, a joint venture between Honda and Asahi Seiren Co., Ltd., of of fuel-efficient 4-cylinder engines in the fall of 2009 for Civic Sedan and Osaka, Japan, is the first Honda supplier in North America to deliver molten Civic Coupe models built at the adjacent Auto Plant 1 in Alliston, Ontario. aluminum directly to die-cast machines, generating significant energy savings

The synchronous production of engines and automobiles at adjacent by eliminating the need for an additional re-melt step, reducing CO2 emissions plants reduces the environmental impact of transporting engines, which by as much as 1,600 metric tons annually. were previously sourced from Honda’s Anna, Ohio, engine plant. Further, virtually all the aluminum used in the production of these engines is The MAPCAN facility further reduced its environmental footprint with a derived from recycled material, which is consolidated and melted down combination of energy-efficient initiatives to achieve energy savings of at the adjacent MAPCAN (Molten Aluminum Producer Canada) facility. 30% to 50%: • Housing for large, energy-efficient and regenerative furnaces to recycle INITIATIVES to reduce the plant’s environmental footprint process heat • Insulating the entire facility to retain process heat within the facility • Recycling sand from aluminum casting into cement products during the winter • Use of immersion heaters instead of conventional radiant hoods • Use of recycled aluminum that requires only 5% as much energy as to maintain aluminum in its molten state aluminum processed from virgin materials • Treatment of wastewater using a membrane bio-reactor and ultra-filtration • Ensuring that all processes, inputs, and waste are contained within the facility • Employing a wide range of recycling options to achieving zero waste to landfill

From scrap aluminum ... to molten aluminum ... to die cast engines. Honda 2009 North American Environmental Report 41

Honda’s efforts to reduce CO2 emissions from manufacturing focus on increasing the energy efficiency of its operations per unit of production (energy intensity).

Manufacturing CO2 Emissions Manufacturing Sources of Honda North American Manufacturing CO2 Emissions —

Honda North American Manufacturing CO2 Emissions* Total CO2 Emissions (electricity and natural gas only) CO2 Emissions

1.25 4% Q 72% Electricity Q 24% Natural Gas 1.05 1.06 1.06 24% Q  4% Other Fuels: 1.00 1.01 .99 • propane .96 • fuel oil .94 • gasoline • coke .84 • kerosene .75 .78 72%

*Based on FY2009 data MetricTons x 1 Million

.50 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

About 96% of CO2 emissions from manufacturing results from Total CO2 emissions from electricity and natural gas consumed consumption of electricity and natural gas. Electricity is used at Honda’s North American manufacturing operations amounted for automation, lighting, motors and compressors, and cooling. to 0.99 million metric tons in FY2009, a decrease of 6.6% from Natural gas is used for heating and conditioning fresh air, and the previous fiscal year. for manufacturing processes such as melt furnaces and paint bake ovens. Reduced production levels, especially in the last quarter of FY2009, significantly affected operating efficiencies.

Although total CO2 emissions decreased, lower production levels resulted in a reversal of a trend of decreased per-unit

CO2 emissions (see charts on following page). Honda 2009 North American Environmental Report 42

Manufacturing CO2 Emissions (continued)

Honda and Acura Automobile Honda Powersports Products Manufacturing Honda Power Equipment 1 1 1, 2 Manufacturing Per-Unit CO2 Emissions Per-Unit CO2 Emissions Manufacturing Per-Unit CO2 Emissions (electricity and natural gas only) (electricity and natural gas only) (electricity and natural gas only)

Manufacturing 1000 300 15

289 CO2 Emissions (continued) 13.2 13.2 250 900

12 11.9 11.5 12.0 200 208 11.1 10.8

800 kg/Unit kg/Unit

kg/Auto 10.2 150 9.8 761 151 148 756 747 9 727 700 714 7153 121 709 7053 119 117 100 114 687 110

600 50 6 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

Automobiles Powersports Power Equipment

Average CO2 emissions per automobile Average CO2 emissions per unit of Despite significant reductions in produced rose 5.4% from the FY2001 powersports product production rose production volumes, Honda’s North baseline and 8.7% from the previous fiscal 138.8% from the FY2001 baseline and American power equipment manufacturing year, to 747 kg. Production of automobiles 38.9% from the previous fiscal year to operations were able to lower per-unit

in FY2009 decreased by 190,000 units, 289 kg, as FY2009 production volumes CO2 emissions by eliminating shifts or 13.2% from the previous fiscal year. fell by 100,000 units, or 38.5% from and consolidating operations, and by the previous fiscal year. implementing strong efforts to reduce energy use during nonproduction­ periods.

Average CO2 emissions per unit of 1 Honda’s North American manufacturing operations track CO2 emissions from fuel combustion and process uses in accordance production fell 9.1% from the FY2001 with guidelines published in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition. baseline and 9.1% from the previous fiscal 2 All CO2 emissions data for power equipment production has been updated from previous years’ reports based on revised Honda methodology for the counting of production units. year, to 12.0 kg, as production volumes

3 in FY2009 decreased by 470,000 units, CO2 emissions results for automobile production in FY06 and FY07 are revised downward from previous years’ reports because of an error that resulted in the over-reporting of natural gas usage. or 30.3% from the previous fiscal year. Honda 2009 North American Environmental Report 43

Energy Consumption Improving the energy efficiency of Honda factories is the Honda North American Manufacturing Total Energy Use single biggest focus of the company’s efforts to reduce the environmental impact of its manufacturing operations in 12 8 7.2 7.1 North America. 6.9 6.8 6.7 6.7 Manufacturing 6.5 6.7 Total energy consumed in all production activity in North 6.2 6 American decreased 13.2% in FY2009 compared with the previous Energy Use 9.43 9.73 9.63 9.56 8 9.09 8.82 8.30 fiscal year, to 8.30 million gigajoules, primarily as a result of lower 7.61 7.76 production volume and energy-saving initiatives. 4 Energy use per unit of automobile production in North America

4 GJ/Auto increased 8.1%, to 6.7 GJ/auto, in the same period, primarily GJ x 1 Million 2 because lower production volumes resulted in reduced capacity utilization. For 2009, the North America region cut production

0 0 volume primarily by reducing the number of production days. FY01 FY02 FY03 FY04 FY05 FY06 FY073 FY083 FY09 This significantly reduced energy consumption on those days.  Total Energy Use1 However, energy consumption continued to support maintenance • Average Energy Used Per Auto Produced 2 and training activities taking place on nonproduction days. This 1Total energy use (from consumption of electricity and natural gas) resulted in a decrease in energy efficiency per auto produced. includes all North American manufacturing operations. 2Energy per auto includes all auto-related manufacturing operations, including automobile engine and transmission production; it does not include power equipment and powersports products. 3Total and per-unit energy use results for FY07 and FY08 are revised downward from previous years’ reports because of an error that resulted in the over-reporting of natural gas usage.

‘Intelligent’ Paint Booth Technology in North America Building on its success at reducing energy consumption and

related CO2 emissions from body painting by 25% on the Marysville Auto Plant’s Line 2 in Ohio, Honda installed “Intelligent Paint Booth” technology at other major North American automobile plants in FY2009. Honda has implemented this new control system at four of its 10 automobile assembly lines in North America. In addition to the Marysville Auto Plant Line 2, they are the East Liberty, Ohio, Auto Plant; Line 2 in Lincoln, Alabama; and Line 1 in Alliston, Ontario, Canada. Plans call for expanded implementation in other areas during FY2010, including plastic painting operations.

To meet quality and safety requirements, automobile body painting booths use large amounts of energy to control air temperature and humidity. Developed in collaboration with The Ohio State University, Honda’s “Intelligent Paint Booth” system uses a predictive control mechanism for highly efficient automatic regulation of temperature and humidity levels. Honda 2009 North American Environmental Report 44

Energy Consumption (continued)

Honda Plant-Specific Energy Reduction Initiatives in FY2009

Plant Energy Conservation Initiatives Energy Savings CO2 Emissions Reduction Alliston, Ontario, Implemented a modified airflow design in Plant 2 Paint • Over 1 million kwh • 1,200 metric tons Manufacturing Auto Plant to reduce overall airflow. electricity Energy Use • 500,000 m3 natural gas 3 (continued) Added heat recovery to process water cooling towers. • Over 330,000 m • 625 metric tons Recovered heat is used for winter space heating. natural gas Timmonsville, South Added variable-speed drive motor control and carbon monoxide • 54,000 kwh electricity • 37 metric tons Carolina, ATV Plant sensors to Test Track Building exhaust fans so that they operate only when needed. Marysville, Ohio, Added recirculation of topcoat air blow exhausts. • 1.5 million kwh electricity • 2,145 metric tons Auto Plant • 11,000 m3 natural gas Lincoln, Alabama, Implemented recycling of cleaned, conditioned process air • 45,000 GJ natural gas • 2,250 metric tons Auto Plant from non-painting operations to paint booth air-supply hoses as a replacement for fresh air on Line 2. Installed variable-speed drive controls to air handling fans. • 30% less energy use n/a

Optimized paint air supply unit performance by improving • 3.7 million kwh electricity • 2,500 metric tons efficiency of control of chilled water supply through use of pressure independent valves.

Energy Consumption (continued)

Compressed Air Use Percent of Total North American Manufacturing Though compressed air is needed for many manufacturing Electricity Consumption from Generating Compressed Air* processes, it can consume high amounts of electricity — and

result in high CO2 emissions. Generating compressed air accounts for more than 12.5% of total electricity consumption, or more 12.5% than 5% of total energy use, so the company is focusing on more effectively managing this plant energy resource at all of its manufacturing facilities in North America. As a result, associates are finding ways to improve the overall efficiency of producing compressed air, or replacing compressed air with other systems, such as air blowers. Examples of Honda’s efforts to reduce 87.5% 87.5% *Based on FY2009 data compressed air use in FY2009 include the initiatives summarized in the table on the following page. Honda 2009 North American Environmental Report 45

Honda FY2009 Compressed Air Initiatives

Initiative Plant Detail

Replacing Compressed Air Lincoln, Alabama, Auto Plant • High-volume air blowers replaced compressed air for sanding and cleaning blow-off in painting operations Manufacturing Anna, Ohio, Engine Plant • High-volume air blowers replaced compressed air for cooling of fan bearings in the spin-casting of iron cylinder sleeves Energy Use Efficiency Improvements Tallapoosa, Georgia, • Added a smaller compressor to more efficiently satisfy reduced demand (continued) Transmission Plant during nonproduction times • Modified compressors to achieve a more efficient cold air intake • Cut energy use by reducing system pressure Timmonsville, South Carolina, • Added a compressed air storage tank to reduce start-up demand ATV Plant East Liberty, Ohio, Auto Plant • Added a booster heater to the dryer and re-piped the third stage to enhance compressor heat recovery

Russells Point, Ohio, Transmission Plant • Installed more efficient compressors Canadian Auto Plants • Added heat recovery systems to air compressors Control Systems Marysville, Ohio, Auto Plant • Upgraded air compressor system controls and Russells Point, Ohio, Transmission Plant

Ohio and Alabama Auto Plants Earn Energy Star from EPA Honda’s auto plants in Ohio and Alabama received Energy Star awards from the U.S. Environmental Protection Agency (EPA) in FY2009 for their advances in curbing energy use during production of passenger cars and light trucks. The EPA bases the award points on the amount of energy needed to produce an automobile, and taking into account factors such as vehicle size and production volume. Honda 2009 North American Environmental Report 46

Waste Reduction

Honda Waste Management Honda North American Waste to Landfill Hierarchy (excluding mineral waste)

14.9 Manufacturing 24 15 Waste Zero Waste 10.2 16 10

Reuse

4.9 kg/Auto 8 5 5.53 3.3

MetricTons x 1000 2.7 Energy 2.3 2.3 1.9 Recovery Recycling 17.9 13.8 11.0 10.4 8.3 6.7 5.8 3.8 3.1 0 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 Landfill Landfill – Alternate Daily  Total Waste to Landfills in Metric Tons x 10001 Cover • Average Waste to Landfills Per Auto Produced in Kilograms2

1Total landfill waste includes all North American manufacturing operations. 2Landfill waste per auto includes all auto-related manufacturing operations; it does not include powersports products and power equipment production. 3F Y03 data for per-unit waste to landfill is corrected from previous year’s report.

Waste management hierarchy Waste to Landfill Honda has established a waste management hierarchy for its Honda works to minimize waste sent to landfills by designing North American manufacturing operations. While Honda strives efficient manufacturing systems that produce less waste and to eliminate waste generation, the company also continually tries maximize recycling and reuse. to improve overall waste management by moving wastestream Total waste from manufacturing processes sent to landfills was management methods up the hierarchy. reduced 18.4% in FY2009 from the previous fiscal year and 82.7% from the FY2001 baseline, exceeding the target of a 70% reduction from the baseline by FY2010. As a result of this success, Honda has set new metrics and a new target: to achieve “nearly zero” landfill waste (less than 1% waste to landfill) at all of its North American plants by FY2012. The prior target excluded mineral waste sent to landfill and wastes sent to landfills to be beneficially reused. By FY2012, Honda will eliminate virtually all waste going to landfills for any purpose. Honda 2009 North American Environmental Report 47

Waste Reduction

Zero Waste-to-Landfill Plants In FY2009, Honda’s two newest North American plants — in to landfills, including mineral waste. This includes Honda Greenburg, Indiana, and Alliston, Ontario — joined six existing Manufacturing Alabama, LLC, the first automobile plant in plants as facilities that are operating with zero waste sent North American to achieve zero waste to landfill. Manufacturing Waste Honda Zero Waste-to-Landfill Plants LOCATION PRODUCTION CAPACITY ZERO WASTE-TO-LANDFILL SINCE (continued) United States Lincoln, Alabama 300,000 automobiles and engines FY2002 (at start-up)

Swepsonville, North Carolina 340,000 lawn mowers, FY2007 2 million engines Greensburg, Indiana 200,000 automobiles FY2009 (at start-up)

Canada Allison, Ontario, Plant 1 195,000 automobiles FY2008

Alliston, Ontario, Plant 2 195,000 automobiles FY2008

Alliston, Ontario, Engine Plant 200,000 engines FY2009 (at start-up)

Mexico El Salto, Jalisco, Auto Plant 50,000 automobiles and engines FY2003

El Salto, Jalisco, Motorcycle Plant 30,000 motorcycles FY2003

Plant-Specific Waste Reduction Initiatives in FY2009

Honda Plant-Specific Waste Reduction Initiatives in FY2009

Location Initiative Waste Reduction

United States Marysville and East Liberty, Ohio, Paint sludge and wastewater 521 metric tons of paint sludge moved Auto Plants treatment sludge recycling at from waste-to-energy to recycling cement kiln East Liberty, Ohio, Auto Plant On-site extraction of liquids from 27,000 pounds of used rags sent used rags off-site to be remanufactured into auto parts Anna, Ohio, Engine Plant Spent mold sand and core sand from 3,070 metric tons of mineral waste casting operations reused to produce diverted from landfill soil amendment and mulch materials Canada Alliston, Ontario, Engine Plant Spent sand from aluminum die casting 438 metric tons of mineral waste recycling at cement kiln diverted from landfill Alliston, Ontario, Auto Plant Paint sludge water recovery system 10% reduction in paint sludge generated Honda 2009 North American Environmental Report 48

Water Use

Honda North American Manufacturing Efforts to minimize water use and wastewater production have Total Water Use continued at all Honda’s North American plants. Total water used for manufacturing in FY2009 was reduced 1%, .79 .79 .80 1200 .8 .75 .73 or 11 million gallons, from the previous fiscal year, to 1.05 billion .70 .71 .70 Manufacturing .67 gallons. Average water use per unit of automobile production Water Use rose 14.3%, or 100 gallons, to 800 gallons. These changes were 800 primarily the result of reduced production levels.

.4

400 Gallons x 1 Million Gallons x 1000/Auto

769 766 931 923 1,016 1,112 1,076 1,064 1,053 0 .0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

 Total Water Use1 • Average Water Use Per Auto Produced 2 1Total water use includes all North American manufacturing operations. 2Water used per auto produced includes all auto-related manufacturing operations; it does not include powersports products and power equipment production.

Water Reduction Efforts in FY2009

Honda Water Reduction Efforts in FY2009

Location Initiative Waste Reduction

United States Russells Point, Ohio, Eliminated the billet quench tank. 60,000 gallons/month Transmission Plant The billet press utilizes a water/die lubricant mix in the process, which can also be used for billet quenching, eliminating the need for a separate quenching water system. Canada Alliston, Ontario, Auto Plant 2 Developed a static water leak tester 90% reduction in water used to replace an existing conveyor water per test cycle leak tester. Honda 2009 North American Environmental Report 49

Wastewater Management Industrial wastewater is generated primarily from painting, surface Manufacturing plants also discharge wastewater directly to local treatment, and machining operations. Manufacturing plants waterways. Several plants also have National Pollutant Discharge that generate industrial wastewater pretreat it on-site to reduce Elimination Systems (NPDES) permits allowing discharge of contaminants below regulated levels before discharging the water stormwater associated with industrial activation, including cooling Manufacturing to local municipal wastewater treatment plants. The pretreated tower blowdown and air-conditioning condensate. The NPDES Wastewater wastewater must meet regulatory requirements established at permits set contaminant limits and regulate periodic sampling municipal, state, and federal levels. Less than 1% of wastewater and reporting. Management is trucked off-site for treatment.

Honda North American Honda North American Industrial Wastewater Discharged NPDES = National Pollutant Discharge Elimination System

1200 .8

800 .47 .48 .4

400 Q 52% Sanitary Wastewater 48% 52%

Gallons x 1 Million Q 48% Industrial Wastewater Gallons x 1000/Auto

702 624 0 .0 FY08 FY09

 Total Industrial Wastewater Discharged • Average Wastewater Discharged per Auto Produced Total wastewater discharged includes all North American manufacturing operations. Industrial wastewater discharged used per auto produced includes all auto-related manufacturing operations; it does not include powersports products and power equipment production.

Zero Wastewater at Mexico Factory Honda de Mexico discharges no wastewater from its manufacturing and used for on-site irrigation. Sludge generated from the operations. All wastewater, both domestic and industrial, is treated wastewater treatment process is recycled at a cement kiln. Honda 2009 North American Environmental Report 50

Air Emissions Honda’s plants release various air contaminants, primarily volatile Honda North American VOC Emissions* organic compounds (VOCs), particulate matter (PM), oxides From Automobile Body Painting of nitrogen (NOx), and carbon monoxide (CO). VOC emissions typically come from painting operations. PM emissions usually Manufacturing result from metal casting and finishing processes, and from 30 28.7 painting operations. NOx and CO emissions typically result from 28.6 Air Emissions 24.5 the combustion of natural gas and other fuels for heating and 23.6 20 22.0 20.8

process needs and from the use of engine and full-vehicle testing 2

dynamometers. Air emissions are controlled in accordance with 15.6 15.7 g/m applicable laws and regulations. 15.3 10 The company routinely monitors, tracks and reports emissions levels to regulatory agencies in accordance with federal, provincial and state requirements. Honda factories are routinely 0 inspected for compliance with legal requirements. FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

VOC Emissions *Mexico is included for FY2008 and FY2009. Volatile organic compounds (VOCs) are the primary air pollutants released from Honda’s North American manufacturing plants, with about 60% coming from painting operations. It has always been Honda’s policy to minimize the release of VOCs by adopting less-polluting processes whenever possible. VOC emissions from auto body painting operations in FY2009 were down 2.5% from the previous fiscal year and 46.7% from the FY2001 baseline. At 15.3 g/m2, VOC emissions in FY2009 were well below the company’s target of 20 g/m2. Honda 2009 North American Environmental Report 51

VOC Technology Improvements Honda’s strategy for reducing VOC emissions from painting For clearcoating lines, Honda has used thermal oxidizers on new and operations has been to implement the use of inherently lower- renovated clearcoat booth exhausts as an end-of-pipe technology emitting technologies where possible and, where that is not since 2005. This technology reduces by 75% emissions from possible, to expand the use of end-of-the-pipe emissions clearcoating operations. With the construction of the new Indiana Manufacturing reduction technology. Typically, the implementation of lower plant, Honda implemented the use of thermal oxidizer controls on Air Emissions emitting technologies is possible only during new plant the entire electrodeposition coating operation. Thermal oxidizers construction or extensive renovation of existing painting lines. are combustion devices that burn gaseous exhausts to destroy (continued) Waterborne coating technology has been implemented for all volatile organic compounds. Typically, over 95% of VOCs that basecoat lines installed or renovated since 1989, and for all enter the device are destroyed. primer coating lines installed or renovated since 2005.

Application of VOC Reduction Technology in Honda’s North American Auto Plants

VOC Reduction Technology

plant start date Auto Plant Waterborne Waterborne Solvent-borne clearcoat ElectroDeposition Coating basecoat surfacer /primer with controls with Controls 1982 Marysville, Ohio Line 1 No No No No

1986 Alliston, Ontario Plant 1 No No No No

1989 East Liberty, Ohio Yes No No No

1995 El Salto, Jalisco, Mexico Yes No No No

2001 Alliston, Ontario Plant 2 Yes No No No

2005 Lincoln, Alabama Line 1 Yes Yes Yes No

Line 2 Yes Yes Yes No

1982 Marysville, Ohio Line 2 Yes Yes Yes No (Line 2 paint shop redesigned in 2006) 2008 Greensburg, Indiana Yes Yes Yes Yes Honda 2009 North American Environmental Report 52

Reducing Chemical Releases — TRI/NPRI Reporting Honda has reduced its total Toxic Release Inventory (TRI) and TRI/NPRI emissions per unit of automobile production increased National Pollutant Release (NPRI) emissions more than 34.0% from calendar year 2007 by 17.2%. since calendar year 2000, despite significant expansions in In the United States, TRI data are submitted to both state production capacity. Automobile-specific TRI/NPRI emissions per and federal environmental protection agencies. They are available Manufacturing unit of production were reduced about 45.0% in the United States for public review at www.epa.gov. In Canada, NPRI data are Chemical Releases and Canada in the same period. Honda operations in the United submitted to Environment Canada and to the Ontario Ministry States and Canada report total chemical releases annually in of the Environment; they are available for public review at accordance with regulatory requirements. In calendar year 2008, www.ec.gc.ca/pdb/npri. total TRI/NPRI emissions were lower due to reduced production.

United States and Canada United States and Canada Total Honda TRI/NPRI Releases Total Honda TRI/NPRI Auto Releases

2.0 1.5

1.36 1.24 1.24 1.24 1.5 1.497 1.509 1.556 1.0 1.00 1.314 1.260 1.200 0.87 1.0 .948 0.68 0.68 .860 kg/Auto 0.58 .828 .5 .5 Metric Tons x 1000

.0 .0 CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08

Ohio Tox-Minus Program With a voluntary commitment to reduce TRI emissions, Ohio-based 25% by 2011 from a 2005 baseline. Through 2008, Honda has Honda of America Mfg., Inc., is participating in the Ohio EPA’s reduced TRI emissions by 29%, primarily through the innovation Tox-Minus Program. Honda’s two automobile plants and one of the Marysville Auto Plant Line 2 painting operations. The decline engine plant in Ohio have committed to reduce total TRI emissions in production volumes also contributed to the overall reduction.

Accidental Spill and Release Prevention, Tracking and Reporting Prevention of environmental spills and releases is a key design alarms to give advance warning of overfilling. Virtually all materials consideration for all Honda manufacturing facilities. Exterior with the potential for release are handled within enclosed chemical and wastewater storage tanks and transfer systems buildings. Learning from accidental releases is critical to are constructed with materials and designs that minimize the preventing future occurrences. Therefore Honda tracks all risks of leaks and spills. Most exterior tanks and piping systems significant incidents. Major incidents undergo root-cause analysis, have backup containment capabilities to recover any leaked or and the information gained is used to improve operations. spilled material. Additionally, storage tanks are equipped with Honda 2009 North American Environmental Report 53 Product Distribution • We are working to reduce the environmental impact of transporting our products from the factory to the dealer through more efficient logistics processes, new transportation technologies, and a shift toward more fuel-efficient modes of transport. Honda 2009 North American Environmental Report 54

More Efficient Distribution By Train The vast majority of Honda and Acura automobiles are moved CO Emissions Intensity of Rail vs. Truck Transport from their North American manufacturing origin or marine port 2 of entry by train, the most efficient mode of transportation

among all available inland options. In FY2009, 81% of all Honda 500 .14 Lower Emissions Product and Acura automobiles manufactured in the U.S. or arriving at .12 Distribution U.S. ports were transported by train. Studies indicate that *1 ton of cargo per Mile transport of products by rail is substantially more fuel-efficient on 1 gallon 2 of gasoline .08 than transport by truck. A gallon of diesel fuel will move one ton 250 of cargo 436 miles by train or 175 miles by truck. Rail use results .04

in a reduction in CO2 emissions of about 0.076 metric ton per MilesTraveled* mile traveled. Higher Efficiency 436 175 .051 .127 0 of CO tons Metric .0 RAIL TRUCK RAIL TRUCK

Auto-Max Railcars — A More Efficient Approach to Automobile Distribution American Honda Auto Logistics, the U.S. sales planning and distribution arm of American Honda, was the first automaker to deploy a fleet of versatile and efficient multilevel Auto-Max railcars, in FY2008. In FY2009, American Honda operated the largest private fleet of Auto-Max railcars and increased their use by 5.5% over the previous fiscal year. The increased Auto-Max use in FY2009 resulted in the savings of 125,481 gallons of diesel fuel that would otherwise have been expended to haul these same vehicles on conventional railcars. According to the U.S. EPA

formula, this savings translates into a CO2 emissions reduction of 1,392 metric tons. In addition, American Honda increased the number of traffic lanes served by Auto-Max railcars in North America. Three of the company’s automobile distribution centers in the U.S. — in Marysville and East Liberty, Ohio, and in Lincoln, Alabama — have specific Auto-Max utilization targets, for which the centers are held accountable. American Honda is planning to transport even more vehicles to additional destinations via Auto-Max railcars in Auto-Max trilevel railcars, which American Honda helped to design and deploy, are the coming year. able to transport more units per railcar and employ an improved aerodynamic design, unit-body construction, and lightweight composite materials to reduce per-unit consumption of fuel associated with the transport of Honda and Acura automobiles from the factory or port of origin to their final railhead destination. Honda 2009 North American Environmental Report 55

EPA Transport SmartWay® Initiative

American Honda has made of CO2 emissions annually per truck. These carriers together participation in the U.S. operate more than 5,000 trucks, yielding a savings of over ® EPA Transport SmartWay - 50,000 tons of CO2 annually. One of American Honda’s truck certification program a priority carriers even reduced road speed for its trucks from 65 to Product for trucking carriers who wish to 62 mph and found that every mile-per-hour reduction improved Distribution do business with the company. This initiative is intended fuel economy by one tenth of a mile per gallon. ® (continued) to reduce fuel use and emissions associated with the Partnership in the EPA’s SmartWay program is a parameter for transportation of new Honda and Acura vehicles in North America. shipping logistics suppliers who wish to do business with American In FY2009, 61% of truck-transported Honda and Acura vehicles Honda’s Automobile Division. All of American Honda’s freight in North America were hauled by SmartWay®-certified carriers. carrier partners in the U.S. have committed to either becoming Additionally, all five Class 1 railroads used by American Honda’s SmartWay®-certified (if not now certified) or to evaluating the Auto Logistics group are currently SmartWay®-certified. potential for participation. The SmartWay® program requires that American Honda’s SmartWay®-certified carrier fleets certified carriers assess operations and take actions to improve employ tire inflation monitoring, advanced lubricants, and fleet fuel efficiency. Each SmartWay®-certified carrier determines reduced engine idle systems to reduce fuel consumption and its baseline fuel consumption, mileage, and freight carried, and

CO2 emissions. On a fleetwide basis, American Honda’s four commits to improve fuel efficiency. current SmartWay®-certified trucking partners save 10.07 tons

Powersports Products — Returnable Crates 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 FY2009, 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 reduced waste. In FY2009 Honda introduced Big Red, a multiutility vehicle (MUV) manufactured by Honda in Mexico. The MUVs are shipped from Mexico to their U.S. point of disembarkation on reusable pallets. From there, they are transported via truck without packaging, which reduces waste associated with their distribution.

All Honda motorcycles, ATVs, and personal watercraft produced in the United States are shipped in reusable crates, which significantly reduces waste associated with their transport from factory to dealer. Honda 2009 North American Environmental Report 56 Sales and Service • We have undertaken numerous efforts in the past fiscal year

to reduce waste and CO2 emissions associated with the packaging and distribution of service parts for Honda and Acura automobile, powersports and power equipment products. Honda 2009 North American Environmental Report 57

Improving Distribution Efficiency Significant initiatives to improve the energy efficiency of service parts distribution in FY2009 included increasing the efficiency of truck loading, deployment of the automobile industry’s first Class 8 hybrid truck, and employing new technologies to improve truck operating efficiency. Cube efficiency Deploying Hybrid Truck Technology Route Tracker Technology Sales and Service To improve Honda responsiveness to its customers, American Honda’s Parts Operations Division completed the rollout of its Daily Stock Order (DSO) program in FY2007 — providing for the overnight shipment of service parts to its Honda and Acura dealers via a dedicated fleet of delivery trucks. To help reduce the More efficient stacking of parts in shipping cubes reduces Honda deployed the auto industry’s first Class 8 environmental impact of daily shipments, CO emissions from the shipment of service parts. diesel-electric hybrid truck. 2 the company partnered with UPS Freight American Honda trucks travel on average more In March 2009, American Honda deployed Truckload to install Route Tracker equipment than 20 million miles each year in transporting the automobile industry’s first Class 8 on its DSO truck fleet at the Alpharetta, parts between three distribution hubs and nine hybrid diesel-electric truck into its fleet that Georgia, Parts Center. The equipment regional parts centers. In FY2009, the company distributes Honda and Acura service parts allows monitoring of driver speed, braking undertook an initiative to more efficiently utilize in the United States. Built for Honda by habits, acceleration, and idle time. This truck cargo space to reduce cost, energy use, Peterbilt Motors Company, the SmartWay®- information is then used to facilitate driver and emissions. certified Model 386 hybrid truck is expected training to further reduce fuel consumption

Through optimal stacking of parts storage to reduce CO2 emissions by almost 45 and CO2 emissions. The data are also used crates, the company was able to realize a tons per year compared with its non-hybrid to administer a Driver Incentive Program, 2.2% reduction in parts shipments, yielding a diesel counterpart. Honda is conducting a in which incentives are provided to drivers

reduction of 704 metric tons in CO2 emissions yearlong test to evaluate the fuel-efficiency who exceed established norms. This associated with the transfer of service parts gains associated with the use of hybrid program is fully funded by the savings between Honda warehouse facilities. truck technology. it generates. Number of Pallets Recycled(thousands)

Pallet Recycling Program American Honda Pallet Recycling Honda’s North American Service Parts Packaging Operations 196.2 implemented 47 projects in FY2009 to reduce packaging 200 12 materials, resulting in an estimated reduction of 967,000 pounds 157.7 10.79 150 9 of corrugated material and 653,000 pounds of wood, over the 141.2 138.7 135.4 120.2 8.67 previous fiscal year. The group also continued to expand its pallet 7.63 7.45 7.77 recycling program and has repaired and recycled more than 100 82.2 6.60 6 971,000 pallets since 2002, preventing 53 million pounds of 4.52 wood waste from entering landfills. Metric Tons 50 3

0 2002 2003 2004 2005 2006 2007 2008 Saved (million lbs.) Landfill Waste Honda 2009 North American Environmental Report 58 End-of-Life • We are engaged in various initiatives to reduce the environmental impact associated with the disposal of our products at the end of their useful lives. • Our efforts begin with the 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 our products’ input to the wastestream. Honda 2009 North American Environmental Report 59

Recycling of Warranty Parts American Honda began recycling parts replaced under warranty American Honda Service Parts Recycling Process in December 2006. The initial parts involved were catalytic converters, identified as an early candidate for recycling based End-of-Life on the limited availability of precious metals needed for the production of new converters, including rhodium, palladium OEM supplier to Honda

Product Recycling and platinum. In late 2007, recycling efforts increased with the Honda Factory

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have prevented nearly 150,000 used auto parts from going to W Honda and Honda and landfills. In addition to these plans, still under investigation are Acura Acura Dealer a variety of engine and transmission components for new authorized authorized automobile automobile recycling opportunities, as well as opportunities to divert dealers dealers destroyed parts to recyclers.

More Efficient Use of Honda Delivery Trucks One significant change in the recycling process for service parts in FY2009 was the use of Honda Daily Service Order (DSO) trucks to return Honda and Acura replacements parts from dealers to American Honda’s part centers, where they can be consolidated and shipped to recycling centers. Honda’s dedicated fleet of delivery trucks allow for overnight shipment of service parts to Honda and Acura dealers. Prior to the establishment of this initiative, the trucks would return empty to Honda’s part centers, and warranty parts would be returned via a third-party freight carrier. Honda 2009 North American Environmental Report 60

Remanufactured Parts American Honda has an extensive parts remanufacturing program. introductions, American Honda had offered approximately The use of remanufactured parts reduces the generation of waste 2,000 parts from 10 different product groups. The company is and the use of virgin materials. Further, remanufactured parts use gearing up to launch almost 100 new parts in FY2010, including less energy in the production phase than new parts. In FY2009, compressors, alternators, starters, steering pumps, and steering End-of-Life Honda added 44 parts: 34 starters and 10 alternators, to its list racks. American Honda is in regular communication with its Product Recycling of remanufactured components marketed to customers as suppliers to identify opportunities to expand these offerings. affordable alternatives to new parts. Prior to this year’s (continued) Battery Recycling Honda has a very efficient process for recycling lead acid the same totes to collect used NiMH batteries from dealers, batteries used in automobiles, motorcycles and ATVs. Honda’s independent repair shops and dismantlers. To assist with the battery distribution partner regularly delivers new batteries to program, all Honda hybrid models have a label affixed close to the Honda dealers and picks up used batteries at the same time for battery that explains how to contact Honda for return assistance. recycling. In 2009, Honda collected and recycled almost a million This label is usually applied to the battery case so it is visible used batteries. when the battery is removed from the vehicle. In some cases, Honda also uses recyclable nickel-metal hydride (NiMH) this label is also applied directly to the top surface plate of the batteries packs in all of its hybrid vehicles. Honda ships battery. Virtually all hybrid batteries are refurbished for reuse or replacement battery assemblies in multiple-use totes and uses fully recycled.

The Recycling Path of Honda Batteries The Recycling Path of Honda Batteries In 2009, American Honda collected and recycled nearly 1 million used batteries from Honda dealers.

Authorized battery Distributor ships Manufacturer ships Smelter crushes distributor picks used batteries to used batteries to batteries to break up used batteries battery manufacturer US EPA licensed down units into from Dealers for consolidation lead smelter component parts

Authorized Honda Authorized Honda Lead alloys are sold to Materials are Plates and battery manufacturer battery distributor battery manufacturers added to produce other lead parts ships new batteries delivers new batteries for new battery a lead alloy for are melted in to authorized Honda to Honda Dealers construction new batteries a furnace distributor

Plastic parts are Plastic parts are sent to plastic skimmed from acid recycler for reuse

Acid and paste are sold to laundry, glass and paper industries for reuse Honda 2009 North American Environmental Report 61 Administration • We operate dozens of facilities in North America, including regional sales offices, training centers, and parts warehouses. Ongoing efforts to reduce the environmental impact from these facilities include improving building energy efficiency, reducing waste and water use, and adopting green-building standards for both new and existing facilities. Honda 2009 North American Environmental Report 62

Green-Building Initiatives Honda’s commitment to reducing the environmental impact of efficient lighting. In FY2009, Honda certified its sixth green its North American operations extends to its own offices and building in North America under the U.S. Green Building Council’s buildings. Honda is incorporating sustainable concepts into LEED rating system: Honda Aircraft Company, Inc., headquarters facility construction and operation, including the use of locally in Greensboro, North Carolina. Honda anticipates that five Administration harvested and manufactured construction materials, cool roofs, additional buildings will achieve LEED (Leadership in Energy and dual-paned glass, high-recycled-content materials, and energy- Environmental Design) certification within the next fiscal year.

Leadership in Energy and Environmental Design (LEED)

FACILITY CERTIFICATION DETAIL

Honda Aircraft Co. Gold December The 68,134-square-foot office building achieved LEED Gold certification by World Headquarters 2008 incorporating such green features as steel wall panels with almost 35% Greensboro, recycled content. Panels were precision cut at the factory so that no waste North Carolina was generated at the job site. Water conservation measures included the New installation of low-flow toilets and urinals, infrared sensor faucets, and landscaping with native species and plants with low water needs.

Acura Design Gold March Opened in May 2007, the Acura Design Studio uses reclaimed water Studio 2008 for toilets and irrigation. It also has a highly efficient displacement Torrance, California ventilation system.

Midwest Gold April 2008 The 547,000-square-foot warehouse facility has a reflective roof and Consolidation energy-efficient lighting. Its second-floor mezzanine was constructed Center from wood certified by the Forest Stewardship Council. Troy, Ohio

Data Center Silver April 2008 Data centers are considered very difficult to certify because of their large Longmont, Colorado (version 2.2) energy consumption. The Longmont facility is the first LEED Version 2.2 Silver certified data center in the country. Existing

Northwest Platinum June 2008 Honda’s first LEED-certified facility was also the first new mixed-use Regional Facility industrial building in the United States to earn Gold certification. It has Gresham, Oregon since become the first LEED Platinum-certified existing building in the automobile industry. The facility is 48% more energy efficient than is required by Oregon’s Energy Code.

Honda R&D Gold April 2006 The central plant at Honda R&D’s Ohio Center has rainwater-supplied toilets, Central Plant a biodiesel-powered emergency generator, and an ice chiller system that Raymond, Ohio reduces peak energy demand from air conditioning by as much as half. Honda 2009 North American Environmental Report 63

Leadership in Energy and Environmental Design (LEED) — continued

FACILITY CERTIFICATION DETAIL

Honda Canada In process Honda Canada’s new headquarters on its 53.3-acre campus is under Headquarters construction, with three interconnected buildings. The four-story head office Markham, Ontario building is aiming for LEED Gold Certification in 2010. Water consumption is Administration expected to be reduced by 40%. Landscape design provides on-site storm (continued) water treatment through the use of bioswales and water collection. There is an energy-efficient underfloor air distribution system in the office space.

Honda R&D Marine In process Honda R&D Marine is aiming for LEED Gold level Certification for its Grant-Valkaria, Florida 11,000-square-foot marine engine R&D facility. Approximately 5% of the 2.08-acre site will be converted to a permanent conservation easement, to protect and preserve local wetlands and wildlife. Other sustainable features include energy-efficient lighting, low VOC paints and finishes, and recycled materials.

Honda Financial In process Honda Financial Services is aiming for a LEED Silver Certification for Services Commercial Interiors for its 26,000-square-foot Mid Atlantic Region leased Wilmington, facility. More than 95% of business equipment and kitchen appliances qualify Delaware for an Energy Star rating, ensuring minimum electrical consumption. Skylights in the interior office areas introduce additional natural light and incorporate

Future shades to control lighting levels and reduce solar heat gain.

Honda Mfg In process Honda Manufacturing of Indiana is aiming for a LEED Certification for its of Indiana 22,978-square-foot Welcome Center in 2009. The center includes a lobby, Greensburg, Indiana meeting rooms, an auditorium, and locker facilities.

Honda Engineering In process Honda Engineering Americas Powertrain Division is aiming for LEED 2.2 Silver America, Certification for its 18,500-square-foot office expansion. Water conservation Powertrain Division measures include installation of low-flow toilets and urinals, which reduced Anna, Ohio the building’s water usage by about 30%. Sustainable HVAC system features include enhanced equipment commissioning and refrigeration management. Other sustainable features are energy-efficient lighting controls, use of locally manufactured materials, installation of cool roofing materials, and indoor air quality management. Honda 2009 North American Environmental Report 64

Evaluating Existing Building for LEED Certification A new program was initiated in FY2009 to evaluate American Honda’s existing buildings across the United States and their potential for certification under the U.S. Green Building Council’s LEED-EB Rating System. The program’s main focus will be on water use and energy use reduction as two areas that reduce Honda’s operating costs and environmental impact. American Honda’s Facility Services administrators will conduct audits of their facilities to evaluate their current status. When an item needs replacing, the material or part Administration with the most sustainable attributes and the potential to earn LEED credits will be selected. (continued)

Energy-efficient Office Initiatives In addition to its green-building certification initiatives, Honda facilities throughout North American are engaged in activities aimed at reducing waste and improving the energy efficiency of daily operations.

More Energy-efficient Lighting U.S. Nationwide Roof Replacement Program American Honda’s nationwide energy efficiency program involves American Honda has a nationwide roof replacement program. replacing existing warehouse lamps with T5 lamps and adding When existing roofs are due for replacement, they are retrofitted motion sensors. T5s reduce power consumption and generate with a cool roof coating, which extends the life of the roof for a less heat. Light fixtures in the aisles will be on at full strength further five years. This also reduces the solar heat gain, reducing only when there is activity in the aisle; otherwise, they will air conditioning demand and lowering energy use. automatically dim down by 50%. • American Honda Motor Co.’s headquarters in Torrance, • In 2008, the Davenport, Iowa, warehouse completed this California, already has three campus buildings with cool roofs. upgrade. Data is being gathered to show cost savings and • Around the U.S., the following American Honda facilities have electrical use reductions. cool roofs: Irving, Texas; French Camp, California; Davenport, • Three parts warehouses have already completed the change Iowa; Chino, California; Troy, Ohio; Alpharetta, Georgia (part to T5s: Troy, Ohio; Irving, Texas; and Chino, California. Data from warehouse); and America Honda’s Power Equipment Division the Chino facility show a 31% decrease in the consumption of headquarters in Alpharetta, Georgia. electricity since T5 installation two years ago. Honda 2009 North American Environmental Report 65

Land Stewardship Initiatives

Global climate change, the loss of endangered species, and the Continuing Development of Wetlands overuse of renewable resources such as groundwater point to Containing many unique aquatic species, Honda of America Mfg.’s a worldwide need to protect, restore and maintain our natural 8,200-acre property supporting automobile manufacturing and ecosystems. Honda’s commitment to the environment includes R&D operations near Marysville, Ohio, is at the headwaters of Administration the preservation of delicate ecosystems on land surrounding Big Darby Creek, a state and national scenic river widely recognized (continued) Honda’s manufacturing, R&D and warehouse facilities. as one of the most biologically diverse watercourses of its size in the Midwest.

Nature Conservancy Preserve Showcases Big Darby After upgrading water outlet structures on retention ponds The Nature Conservancy in 2008 celebrated the opening of a throughout the property and creating a 14-acre wetland to manage nature preserve and trail showcasing the Big Darby headwaters, water flow in FY2008, Honda continued significant watercourse located adjacent to Honda’s manufacturing and R&D operations restoration efforts in FY2009. These included the completion in Marysville, Ohio. Honda has supported the project for more of another major wetland to filter sediment from water flowing than a decade. In addition to preserving 800 acres around the through Honda property into the Flat Branch, a tributary near headwaters, the project protects wetlands and floodplain habitat the headwaters of the Big Darby. throughout the preserve, and it benefits water quality downstream. Honda of America Mfg., Inc., supported the project through a Honda R&D Marine Engine Research Facility monetary donation, as well as volunteer preservation activities: Honda R&D America’s opened a new Marine Engine Research Honda associates cleared unwanted invasive, non-native Facility in Grant-Valkaria, Florida, in December 2008. In addition to vegetation. Funding also was provided by the Ohio EPA, seeking LEED green-building certification for the 11,000-square- the U.S. EPA, and private donors. foot facility, the company is converting about 5% of the two- acre site to a permanent conservation easement to help protect and preserve local wetlands and the wildlife they support. The wetlands, which abut the Indian River Lagoon, currently support a high percentage of invasive/exotic species (80% in an aerial view). Honda is enhancing these wetlands by reducing the area covered by invasive/exotic species, most notably Australian pine, and maintaining these species so that they account for less than 5% aerial coverage. In addition, Honda will be replacing the invasive/exotic plants with native vegetative species that will benefit the Indian River Lagoon. Although it is not required, Honda chose to utilize a grating material for its dock construction that allows greater light penetration compared to wood planks and has a direct benefit to the underlying seagrass and benthic (shallow water) communities. Honda is removing approximately 915 cubic-yards of muck from the Indian River Lagoon’s bottom, resulting in a net reduction in suspended organics in the water A new wetland controls runoff from parking and roofs at Honda R&D America’s Ohio Center, column, which will in turn improve water quality and directly lowering sediment levels before water flows into the headwaters of the Big Darby Creek benefit nearby seagrass beds. Honda 2009 North American Environmental Report 66

Environmental Honda is always looking for ways to make positive contributions to the communities where it does business. Community We focus chiefly on community-based environmental education, preservation and restoration efforts, in the Activities 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. Following is a partial list of the environmentally focused organizations supported by Honda.

Organizations Supported by Honda

Environmental Education

Actua — Environment and Community Against Pollution, Inc. Madison Children’s Museum Pollution Probe Clean Air and Engineering Program Anniston, Ala., USA Madison, Wis., USA Commuter Challenge Ontario, Canada www.ag.auburn.edu/auxiliary/ www.madisonchildrensmuseum.org Toronto, Ontario, Canada www.actua.ca grassroots/cap/index.htm www.pollutionprobe.org National Aquarium in Baltimore Alaska Whale Foundation Franklin Park Conservatory & Baltimore, Md., USA Recycling Council of Ontario Seattle, Wash., USA Botanical Gardens www.aqua.org Toronto, Ontario, Canada www.alaskawhalefoundation.org Columbus, Ohio, USA www.rco.on.ca www.fpconservatory.org Nature Canada Alabama 4-H Center Ottawa, Ontario, Canada Sea, Sand & Stars Nature Center Columbiana, Ala., USA Earth Rangers www.naturecanada.ca Orange Beach Elementary School www.aces.edu/4hcenter Woodbridge, Ontario, Canada Orange Beach, Ala., USA www.earthrangers.org New Haven Ecology Project www.orangebeachelementary.com Algalita Marine Research New Haven, Conn., USA Foundation Glen Helen Ecology Institute www.commongroundct.org Science World Long Beach, Calif., USA Yellow Springs, Ohio, USA Vancouver, B.C., Canada www.algalita.org www.glenhelen.org Ohio Area IV Envirothon www.scienceworld.ca Shelby Soil and Water Aullwood Audubon Center The Jane Goodall Institute Conservation District Wallowa Resources, Inc. and Farm of Canada Sidney, Ohio, USA Enterprise, Ore., USA Dayton, Ohio, USA Toronto, Ontario, Canada www.areaivenvirothon.org www.wallowaresources.org http://aullwood.center.audubon.org www.janegoodall.ca The Otesha Project Auntie Litter, Inc. Legacy, Inc. Ottawa, Ontario, Canada Birmingham, Ala., USA Montgomery, Ala., USA www.otesha.ca www.auntielitter.org www.legacyenved.org Pee Dee Research and Education Cedar Bog Education Center Living Classrooms of the Center (Clemson University) Urbana, Ohio, USA National Capital Region Pickens, S.C., USA www.cedarbog.org Washington, D.C., USA www.clemson.edu/public/rec/peedee www.livingclassroomsdc.org Clean Air Champions Preservation Parks of Ottawa, Ontario, Canada Long Beach Aquarium of the Pacific Delaware County www.cleanairchampions.ca Long Beach, Calif., USA Delaware, Ohio, USA www.aquariumofpacific.org www.preservationparks.com Honda 2009 North American Environmental Report 67

Environmental Organizations Supported by Honda (continued)

Community Environmental Preservation & Restoration Activities California Science Center Keep America Beautiful Mojave Desert Resource South Carolina Vocational (continued) Los Angeles, Calif., USA (“Honda’s Road to a Conservation District Rehabilitation Department www.californiasciencecenter.org Cleaner America”) Victorville, Calif., USA Bennettsville, S.C., USA Stamford, Conn., USA www.mdrcd.ca.gov www.scvrd.net Conservancy of Southwest www.kab.org Florida Loggerhead and Mote Marine Laboratory Tree Canada Green Turtle Project Keep Etowah Beautiful, Inc. Sarasota, Fla., USA Ottawa, Ontario Naples, Fla., USA Gadsden, Ala., USA www.mote.org www.treecanada.ca www.conservancy.org Keep Florence Beautiful — Nature Conservancy Upper Chattahoochee Dubs Etc. Great American Clean Up Ohio Chapter Riverkeepers Florence, S.C., USA Florence, S.C., USA Dublin, Ohio, USA Gainesville, Ga., USA www.dubsetcinc.us www.cityofflorence.com www.nature.org/wherewework www.ucriverkeeper.org /northamerica/states/ohio Friends of the Cahaba River National Keep Logan County Beautiful Williamson Park Wildlife Refuge Bellefontaine, Ohio New Tecumseth (Woodland Preserve) West Blocton, Ala., USA www.logancountyrecycles.com Streams Committee Darlington, S.C., USA http://cahabafriends.org Alliston, Ontario, Canada www.williamsonpark.org Logan Martin Lake www.nottawasaga.com Gladys Porter Zoo Protection Association Brownsville, Tex., USA Pell City, Ala., USA Ocean Alliance www.gpz.org/ridley.htm www.lmlpa.org Lincoln, Mass., USA www.oceanalliance.org Heal the Bay (California Living Lands & Waters Foundation Coastal Cleanup Day) East Moline, Ill., USA Palos Verdes Peninsula Santa Monica Calif., USA www.livinglandsandwaters.org Land Conservancy www.healthebay.org Rolling Hills Estates, Calif., USA Madrona Marsh Preserve www.pvplc.org Indian Lake Watershed Project Torrance, Calif., USA Bellefontaine, Ohio www.friendsofmadronamarsh.com South Carolina Wildlife Federation www.co.logan.oh.us/ILWP/index.htm Columbia, S.C., USA www.scwf.org Honda 2009 North American Environmental Report 68

Environmental Technology Milestones 1971- 2001

1971 1973 1989 1990 1995 1998 1999 2001

1971 1990 • First advanced battery-powered • First product of any kind receives electric vehicle is introduced and the Sierra Club Excellence in • Honda announces CVCC (Compound • VTEC (Variable Valve Timing and leased to customers: the 1997 Environmental Engineering Award: Vortex-Combustion Controlled), the Lift Electronic Control) — Honda’s Honda EV Plus. the 2000 Honda Insight. first engine technology to meet U.S. foundational technology for Clean Air Act standards without the • First vehicle certified as an advanced achievements in low emissions, 1998 need for a catalytic converter. high fuel-efficiency, and high technology partial zero-emission performance, is introduced in • U.S. EPA recognizes the 1998 vehicle (AT-PZEV) by California’s Air 1973 the U.S. in the Acura NSX. Honda Civic GX natural gas vehicle Resource Board (CARB): the 2001 • Honda introduces 4-stroke marine as the cleanest internal combustion Civic GX. engines that are cleaner, more fuel- 1995 engine it has ever tested. 2001 efficient and quieter than the 2-stroke • First gasoline low-emission vehicle • Honda introduces ultra-quiet outboard motors standard at the (LEV) in the industry is introduced in portable inverter generators that • First production motorcycle certified time. Honda has manufactured only California: the 1996 Honda Civic. achieve substantially higher fuel to meet CARB’s 2008 emission 4-stroke outboard motors since 1973. economy and lower emissions than standards, the Honda Gold Wing, • Fuel economy leadership puts four conventional generators. is sold. 1974 Honda models on the U.S. EPA’s list of the 10 most fuel-efficient cars. • Honda becomes the first company • Honda is the first mass-market • First car to meet U.S. Clean Air to introduce an entire line of high- automaker to offer an entire lineup Act without the use of a catalytic 1996 performance outboard motors that of cars and light trucks that meet converter solely through engine • The Honda Civic HX Coupe with meet U.S. EPA emission standards or exceed low-emissions vehicles performance: the 1975 Honda a continuously variable transmission proposed for the year 2006. (LEV) standards. Civic CVCC. is the only automatic transmission • First solar-powered hydrogen 1999 1977 vehicle to make the U.S. EPA’s production and fueling station for fuel top-10 list of fuel-efficient cars. • First CARB-certified gasoline cell vehicles built and operated by • The Civic tops the U.S. EPA’s list of super-ultra-low-emission vehicle an automaker opens at Honda R&D America’s most fuel-efficient cars. 1997 (SULEV) in the industry is introduced: Americas’ Los Angeles Center. the 2000 Honda Accord. 1986 • First CARB-certified gasoline • America’s first zero-waste-to-landfill ultra-low-emission vehicle (ULEV) is • Honda Introduces fuel-cell prototype auto plant opens in Lincoln, Alabama. • The Civic CRX-HF is the first mass- introduced: the 1998 Honda Accord. vehicles: the FCX-V1 and the FCX-V2. produced 4-cylinder car to break • Honda introduces FCX-V3 fuel the 50-mpg fuel economy mark. • Honda becomes the first automaker • First gas-electric hybrid vehicle is cell prototype. to introduce low-emission vehicle introduced in North America: the 2000 • Honda introduces first personal 1989 (LEV) technology voluntarily in Honda Insight. mass-market vehicles (Honda Civic) watercraft to meet 2006 EPA • Honda becomes the first automaker throughout the U.S. and Canada. 2000 emissions standards: 2002 AquaTrax in America to use waterborne F-12 and F-12X basecoat paint in mass production. • World’s first 360-degree inclinable • First 50-state ultra-low-emission mini 4-stroke engine for handheld vehicle (ULEV) is introduced: the power equipment is introduced 2001 Civic. by Honda. It is more fuel-efficient and virtually smoke-free, with ultra-low noise. Honda 2009 North American Environmental Report 69

Environmental Technology Milestones 2002–present (continued) 2002 2003 2004 2005 2006 2008 2009

2002 2004 • Honda introduces the iGX, a 2007 • First application of hybrid technology • FCX vehicles are leased to the cities revolutionary, intelligent, computer- • Union of Concerned Scientists to an existing mass-market car: the of San Francisco and Chula Vista, and controlled general-purpose engine. It names Honda the “greenest 2002 Civic Hybrid. the South Coast California Air Quality sets an even higher standard for fuel automaker” for the fourth Management District. efficiency and quiet operation. • First hydrogen-powered fuel cell consecutive time in its biennial vehicle to receive both U.S. EPA and • The 2005 FCX, Honda’s second- • The 2006 Civic hybrid introduced report on automakers’ environmental CARB certification for commercial generation fuel cell vehicle, is certified 4th-generation Honda IMA technology performance. use, and the first to meet applicable by the U.S. EPA as a Tier 2 Bin 1 (ZEV) with 50 mpg combined EPA city and • World debut of the FCX Clarity federal motor vehicle crash safety vehicle and by the CARB as a zero- highway fuel economy. next-generation fuel cell car, powered standards: Honda FCX emission vehicle (ZEV). by a more powerful, efficient and 2006 • Honda is first with an entire lineup of • First V6 hybrid car is introduced: compact new Honda V Flow fuel personal watercraft (PWC) powered the 2005 model year Honda Accord. • Honda Soltec, LLC, established for cell stack. production and sales of Honda- by 4-stroke engine technology. • Began testing of fourth-generation • FCX with cold-weather start developed CIGS solar panels in Japan. • World’s first commercial application capability is leased to state of New experimental hydrogen Home Energy of a fuel cell vehicle: a Honda FCX is York, the first fuel cell customer in • Retail sales of natural-gas-powered Station. leased to the city of Los Angeles. the northeastern U.S. Civic GX to retail consumers expanded from California to New York State. 2008 • Union of Concerned Scientists 2003 gives Honda its “Greenest • Honda develops plant-based • 2008 Civic GX tops the American • First hybrid vehicle certified as Automaker” award. biofabric for use in automobile Council for an Energy Efficient an advanced technology partial interiors. Economy’s “Green Car” list for the fifth straight year. zero-emission vehicle (AT-PZEV) 2005 • Honda announces it will aim for a by the CARB: 2002 Civic Hybrid. • World’s first fuel cell family, Jon 5% improvement in its U.S. corporate • Honda begins delivery of its • Honda begins experiments with a and Sandy Spallino, take delivery of average fuel economy (CAFE) from next-generation zero-emissions hydrogen Home Energy Station (HES). the first fuel cell vehicle leased to 2005 levels by 2010. FCX Clarity fuel cell car to retail an individual customer. customers in Southern California. • Honda develops breakthrough fuel • North American debut of Honda cell stack that starts and operates at • First natural gas home refueling FCX Concept with more compact, 2009 temperatures below freezing while device, Phill, is offered for lease in powerful and efficient V Flow stack improving fuel economy, range, California with Honda Civic GX points toward an all-new Honda fuel • The 2010 Honda Insight is launched and performance with reduced natural gas vehicle. cell vehicle to be introduced in 2008. in the U.S. and Canada as North complexity. America’s most affordable • Introduction of Honda Variable mass-produced gas-electric Cylinder Management (VCM) hybrid automobile. technology, the first cylinder deactivation system for an overhead cam (OHC) V6 engine: the 2006 Odyssey minivan. Honda 2009 North American Environmental Report 70

North American Honda manufactures, sells, and services a diverse range of automobile, power equipment, and powersports Corporate Profile products in North America. This is Honda’s single largest market for the production and sales of Honda and Acura automobiles. As such, Honda’s North American region plays a critical role in the company’s global effort

to reduce its environmental footprint, particularly in automobile production and in-use CO2 emissions.

Capital Investment Key North American Locations More than $14.4 billion

Employment More than 32,000 associates

Parts Purchases More than $19.5 billion in parts and materials purchased from more Map Legend than 620 North American original equipment manufacturers in the Major Manufacturing fiscal year ended Facilities March 31, 2009.

Major Manufacturing Facilities (under development)

Research and Development Centers

Parts Centers

Sales and Marketing Headquarters Honda 2009 North American Environmental Report 71

Additional United States Canada Mexico Information 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 companies American Honda Motor Co., Inc. Honda Canada, Inc. Honda de Mexico, S.A. de C.V. covered in this report: American Honda Finance Corp. Honda of Canada Mfg., Honda North America, Inc. a division of Honda Canada, Inc. Honda of America Mfg., Inc. Honda R&D Americas, Inc. (Canada) Honda Manufacturing of Alabama, LLC Honda Power Equipment Mfg., Inc. Honda of South Carolina Mfg., Inc. Honda Transmission Mfg. of America, Inc. Honda Manufacturing of Indiana, LLC Honda Engineering North America, Inc. Honda R&D Americas, Inc. Honda Trading America Corp. Honda Precision Parts of Georgia, LLC Honda Aircraft Company, Inc. Honda Aero, Inc.

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©2009 American Honda Motor Co., Inc.

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