North American Environmental 2010 Report 2

2010 North American Environmental Report

This report covers Honda’s activities in the United States, Canada, and Mexico — including company policies, the overall direction of Honda’s environmental initiatives, and a current assessment of the environmental impact of its operations — for the fiscal year that began April 1, 2009, and ended March 31, 2010 (FY2010).

To navigate this report We value your opinion Changes for FY2010

• Click on the tabs at the top of • Use the left and right arrow keys We are interested in your The FY2010 report combines operations associated with the sales each page to jump to sections on your keyboard. feedback to this report, which the Distribution component and and after-sale support of its products, within the report, or use the will help us improve future the Sales and Service component beginning with the shipping of finished page forward/back arrows. • In full-screen mode (accessible reporting. Please click here of the Life Cycle Assessment (LCA) products in North America from its from the “View” tab on the Adobe to complete a brief survey. model, as expressed in earlier factories and from port facilities to • Click on any item in the table of toolbar), left-click to move to the reports, into a single category the distribution of service parts from contents above to go to that page. next page, right-click to move to called Sales and Service. The new suppliers and warehouses to Honda the previous page. combined section includes all Honda and Acura dealers. 3

2010 North American Environmental Report

A Letter The past year was one of unprecedented challenge for our business, as we worked to counter the negative effects from Honda’s of the global economic recession. Despite these severe conditions, it was also a year in which Honda was able North American to strongly reaffirm its commitment to innovation and to the continued development of new products that help to Chief Operating address society’s most pressing environmental concerns, particularly global climate change. Officer his is in many ways an unprecedented environmental electricity for the reformation of hydrogen fuel from water. The system challenge for our business, but it is also the key to the future envisions a carbon-neutral solution to home-based refueling of fuel cell T of our company and our industry and the central focus of electric vehicles, and it exemplifies Honda’s commitment to working on Honda’s efforts to deliver significant new value to its customers. both the vehicle and infrastructure components of the alternative-fuel Accordingly, we have undertaken a series of initiatives in North vehicle challenge. America that are aimed at advancing Honda’s environmental vision, In the manufacturing realm, where North America plays a critical both locally and globally. In April 2009, we joined with the U.S. role as the largest producer of Honda and Acura automobiles, we government and other automakers in committing to significant continued our efforts to reduce the emissions of greenhouse gasses advancements in the fleet-average fuel economy of passenger vehicles and hazardous substances, and to minimize the generation of waste for the 2012 to 2016 time period. associated with production. This includes a goal to make all 14 of To realize our own goals for increased fuel efficiency, we continue Honda’s North American plants zero waste to landfill by the start of our effort to expand the appeal of hybrid technology for a broader range the next fiscal year, on April 1, 2011. By the end of March 2010, eight of of consumers. In August 2010, we launched the new Honda CR-Z sport 14 plants had achieved this goal. hybrid car in North America. In 2011, we will introduce a new Civic hese are but a few of the many efforts being undertaken by Hybrid that will become the first Honda hybrid to employ lithium-ion Honda associates at all levels and in all areas of our business battery technology. And in the coming years, we will introduce a range to minimize our environmental footprint in the region. This report of hybrid automobiles to our Acura luxury lineup. T is designed to provide all of our stakeholders and society at large with In the area of alternative fuel technologies, we continued to expand a deeper understanding of Honda’s environmental vision, our continuing the market for our natural gas-powered Civic GX, adding dealers in efforts to reduce our environmental impact in North America, and the Utah and Oklahoma, as we broaden the deployment of this technology results of those efforts over the past fiscal year. to additional regions of the U.S. We also continued to expand the We welcome your feedback to this report as an important number of U.S. customers for the FCX Clarity, who on a daily basis are mechanism in helping to better inform our future decision-making and demonstrating the real-world capabilities of Honda’s next-generation actions to advance Honda’s commitment to the environment, and to fuel cell electric vehicle. ensure that our company and its associates continues to operate in a In May 2010, we announced a series of new initiatives that include manner that makes Honda a company society wants to exist. the introduction of Honda plug-in hybrid and battery electric vehicle technologies to the U.S. market in 2012. We will advance this effort in Sincerely, 2010 with the kickoff of several demonstration programs, including the operation of Honda electric vehicles by customers at Google and Stanford University, and the placement of a Honda plug-in hybrid car with the City of Torrance, California, which is home to our U.S. headquarters. Also, in January 2010, we began operating a prototype solar Tetsuo Iwamura hydrogen station at Honda R&D Americas’ Los Angeles Center. Chief Operating Officer, North American Regional Operations The system utilizes Honda’s original thin-film solar cells to generate President & CEO, American Honda Motor Co., Inc. 4

2010 North American Environmental Report

Environmental Honda views 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, defining its commitment and guiding 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:

We will strive to We will strive to As both a member We will consider the recycle materials and minimize and find of the company and influence that our conserve resources appropriate methods of society, each corporate activities and energy at every to dispose of waste associate will focus have on the regional stage of our products’ and contaminants on the importance environment and 1life cycle — from research, that2 are produced through the 3of making efforts to preserve 4society, and endeavor to design, production and sales, use of our products, and in human health and the global improve the social standing to service and disposal. every stage of the life cycle environment, and will do his of the company. of these products. or her part to ensure that the company as a whole acts responsibly. 5

2010 North American Environmental Report

Environmental Honda’s regional operations, including the North America region, are given broad authority to fulfill their operational Management business responsibilities, which include planning and acting in accordance with Honda’s environmental vision to (continued) minimize the environmental impact of their local business activities. This includes efforts to reduce harmful emissions, to improve efficiency, and to minimize the production of waste. Further, Honda strives to mitigate environmental damage and to ensure compliance with all applicable environmental laws and regulations.

World Environmental Committee

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

North American Environmental Committee

The North American Environmental Committee serves as Honda’s North American Environmental Committee comprises the coordinating body for the region — the United States, eight major companies: Canada, and Mexico. It is charged with promoting ways to • Honda North America, Inc. • Honda Manufacturing of Alabama, LLC minimize the environmental impact of every aspect of • American Honda Motor Co., Inc. • Honda Manufacturing of Indiana, LLC Honda’s operations in the region. • Honda Canada, Inc. • Honda of Canada Mfg. • Honda of America Mfg., Inc. • Honda R&D Americas, Inc.

These eight companies work together in cross-functional teams organized under four themes:

Product Planning Recycling and Green Building Manufacturing communication and Development (for 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. and Honda R&D Americas, Inc. Natural resource conservation Recycling Product and corporate information Product in-use fuel economy Energy efficiency Waste, energy and emissions Environmental reporting Substances of concern reduction Waste and toxic emissions reduction Design for recyclability LEED Green Building certification Promotion of environmentally Alternative-fuel vehicle sales responsible practices by Honda-affiliated parts suppliers 6

2010 North American Environmental Report

Environmental Key Practices Management Environmental Risk Management Environmental Laws and Regulations (continued) 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 management is reflected in three broad areas: of Honda’s operations in North America. All Honda companies • systems for preventing spills and unplanned releases; have systems in place to ensure that their activities strictly comply with all applicable legal requirements. • systems for reducing permitted environmental releases; and • systems for recycling products, components, and Emissions-Related Product Recalls manufacturing byproducts, in order to minimize landfill waste. Honda’s policy on product recalls, including emissions-related recalls, is in accordance with the procedures of its global From long-term planning to daily operations, Honda strives Quality Committee, which is composed of senior executives to understand the risks its operations pose to the environment from various divisions of the company. The committee makes and to make prudent decisions to minimize those impacts decisions about Honda products manufactured and sold wherever possible. Honda North America, Inc., a subsidiary throughout the world, relying upon recommendations from of Honda Motor Co., Ltd., (HNA) serves as auditor, helping to Honda experts in each region. ensure that Honda’s various subsidiaries in the North America region are in compliance with all applicable environmental laws and regulations. It also provides support to those companies in identifying and implementing best practices for Honda’s environmental management activities in the region. HNA visits key facilities every 3-5 years for an on-site environmental assessment. This activity includes a self- assessment, conducted by local management to evaluate themselves on a large list of environmental factors, and on-site reviews conducted by HNA. The initial on-site review covers key aspects identified by the self-assessment and confirms the status of a large list of other key environmental factors, and it includes interviews, records review, activity monitoring and visual observations. Six months following the initial review, a follow-up review is conducted to confirm the status of countermeasures taken following from the formal audit report. 7

2010 North American Environmental Report

Environmental Corrective Actions in FY2010 During the fiscal year ended March 31, 2010, Honda initiated one corrective action in Canada and three corrective actions Management in the United States: one Voluntary Emission Recall Report (VERR1) and two Product Update Reports (PUDRs2). (continued)

Corrective Actions in FY2010

Date Details Model(s) Units

11/26/2009 Canada: Insufficient weather-resistant materials result in surface cracking of a rubber VT1300CXA and 201 elbow hose used in both the crankcase breather and PAIR. VT1300CXEA motorcycles 11/18 / 2009 U.S. VERR: Insufficient weather-resistant materials result in surface cracking of a VT1300CX motorcycle 6,006 rubber elbow hose used in both the crankcase breather and PAIR systems, which could result in leakage. 8/3/2009 U.S. PUDR: Under certain driving conditions, the vehicle’s torque converter may Odyssey 515,309 vibrate noticeably. The cause of the failure is inappropriate calibration of the power control module. 7/7/2009 U.S. PUDR: Under certain conditions, the on-board diagnostics (OBD) system may Civic Hybrid 2,872 falsely detect deterioration of the IMA (Integrated Motor Assist) battery. The cause of the failure is inappropriate programming of the power control module and battery control module, and IMA battery variance.

North American Environmental-Related Fines Honda reported no material fines in fiscal year 2010. Financial disclosure guidelines of the U.S. Securities and Exchange Commission (SEC) define material fines as $100,000 or more.

1 A VERR is voluntary emissions recall report. It is mandated under Part 85 of the U.S. Clean Air Act — Control of air pollution from mobile sources, Subpart T — Emission defect reporting requirements.

2 A voluntary emission recall is defined as shall mean a repair, adjustment, or modification program voluntarily initiated and conducted by a manufacturer to remedy any emission-related defect for which direct notification of vehicle or engine owners has been provided, including programs to remedy defects related to

emissions standards for CO2 ,CH4 ,

N2O, and/or carbon-related exhaust emissions. 8

2010 North American Environmental Report

Honda’s effort to manage and reduce the environmental impact of its operations in North America in FY2010 were guided by the following goals and implemented according to the following strategies.

l = achieved goal s = made progress toward goal (Table 1 of 3) Summary n = no progress or improvement

CATEGORY STRATEGIES GOALS Actions taken in FY2010 link

Substances of Working with OEM parts Continue to reduce SOCs in Honda and l Initiated International Materials Data System (IMDS) activity for Strategies, Concern (SOCs) suppliers to reduce or Acura products where technically feasible parts and materials sourced from suppliers globally Goals and eliminate SOCs and economically practical Polyvinyl Reduce the use of PVC in Minimize the use of PVC in automobiles l 13 of the 20 Honda and Acura automobile models sold in FY2010 Actions Chloride (PVC) automobile interiors and where technically feasible and economically contained a less than 1% concentration of chlorine in materials that other applications practical could end up in the wastestream as shredder residue

Eliminated the use of PVC in vehicle underbody coatings in all North American manufacturing plants

End-of-life Maintain or improve Automobiles Minimum 90% design l Maintained 90% level of design recyclability for all new Honda Recyclability new-product designs to recyclability1 and Acura models sold in North America facilitate dismantling for end-of-life recycling of Powersports Minimum 95% design l Maintained 95% level of design recyclability for all powersports materials and components and Power recyclability1 and power equipment products sold in North America Equipment Products

CO2 Emissions Maintain or improve fuel Automobiles Increase CAFE by 5% l Increased U.S. CAFE for MY2009 Honda and Acura automobiles efficiency of new Honda over 2005 levels by 2010 7.2% from MY2005 levels, to 31.3 mpg2 and Acura products Powersports Improve fuel economy of l Fleet average fuel economy of motorcycles in North America in Products powersports products CY2009 improved an estimated 12.0% from the 2001 baseline

Power Implement technologies l Introduced new GX Series general-purpose engines with 12% evelopment Equipment for improved fuel efficiency higher fuel efficiency than the models they replaced

Introduced new BF115 and BF60 marine outboard engines with 20% higher fuel efficiency than the models they replaced

Product D Advance alternatives Improve the real-world appeal and l Increased the number of FCX Clarity fuel cell electric vehicles in the to petroleum practicality of electrically powered vehicles, hands of customers in North America such as fuel-cell electric vehicles, and supporting infrastructure Began operation of next-generation prototype solar-powered hydrogen refueling station in Torrance, Calif. 1 Honda’s calculation of product recyclability is based on the Continue to expand the market for l Added eight Honda dealers in Utah to U.S. network of dealers authorized ISO standard 22628, titled natural gas-powered vehicles to conduct retail sales of the natural gas-powered Civic GX. “Road Vehicles Recyclability and Recoverability Calculation Criteria Maintain or improve Meet or exceed all applicable l Automobiles All Honda and Acura vehicles released in FY2010 met or Method,” which bases its estimates Air Pollutants the exhaust emissions regulatory requirements for exhaust exceeded U.S. EPA and Transport Canada Tier 2 Bin 5 on existing, proven treatment performance of new emissions performance emissions standards on an individual model basis technologies and takes into account Honda and Acura products l Powersports All model year 2009 Honda motorcycles and all-terrain the mass of materials recycled, Products vehicles, excluding competition models, met or exceeded reused, recovered for energy or EPA and CARB emissions requirements otherwise diverted from landfill disposal. In addition to these l Power Honda power equipment and marine engines met guidelines, Honda’s calculation also Equipment the EPA’s more stringent Phase 3 exhaust and evaporative takes into account the recyclable emissions standards beginning in January 2010 mass within nonmetal residue. Purchasing >

Manufacturing > 2 Estimate based on mid-model year fuel economy report for model Sales & Service >

year 2009 End-of-Life >

Administration > 9

2010 North American Environmental Report

l = achieved goal s = made progress toward goal Summary (Table 2 of 3) n = no progress or improvement

CATEGORY STRATEGIES GOALS Actions taken in FY2010 link

Product Development > Environmental Promote ISO 14001 Maintain or increase the number of l 88% of tier-one suppliers in Honda’s North American Management certification of tier-one ISO-certified tier-one suppliers in supply chain had ISO 14001 certification in FY2010, Strategies, suppliers to Honda North America the same percentage as in FY2009 Goals and

CO2 Emissions Promote more energy- Reduce CO2 emissions from the manufacture l Launched Supply Chain Sustainability initiative, requiring suppliers Actions efficient operations within and transport of parts and materials supplied to manage, collect and report on energy use Honda’s North American to Honda plants in North America (continued) supply chain

Adopt more efficient parts Began operations at new parts consolidation centers in Ohio and South Carolina, reducing CO2 emissions associated with the distribution of

Purchasing logistics processes parts at these factories by an estimated 1,290 metric tons annually

Utilize EPA SmartWay- Increase use of SmartWay-certified trucks l Increased to 68% the proportion of SmartWay-certified trucking certified trucks for partners involved in the shipment of parts from North American the shipment of parts suppliers to Honda plants in the region, up from 45% in FY2009 from suppliers to Honda factories

Environmental Third-party certification Achieve third-party certification to ISO s Honda Precision Parts Georgia certified as the thirteenth Management of Honda manufacturing 14001:2004 environmental management of 14 Honda plants in North America to achieve facilities to ISO standards for all major Honda manufacturing ISO 14001:2004 certification 14001:2004 certification facilities in North America standards

CO2 Emissions Improve energy efficiency Reduce the energy intensity of manufacturing n Automobiles Energy efficiency improvement initiatives were of manufacturing operations (kg/unit) implemented to offset the negative impact of reduced

operations production. Despite these efforts, the CO2 emissions intensity of auto production rose 1% in FY2009

n Powersports The CO2 emissions intensity of powersports product Products production rose 64.8% from the previous fiscal year, as Honda completed the phaseout of motorcycle production in the U.S., which negatively affected per-unit energy efficiency

l Power The CO2 emissions intensity of power equipment anufacturing Equipment production fell 12.9% from the previous fiscal year M Waste Reduce generation Reduce landfill waste (excluding mineral l Waste sent to landfills (excluding mineral waste) was reduced 22% in FY2010 of waste material and waste) 70% from FY2001 levels by FY2010 from the previous fiscal year and 87% from the FY2001 baseline increase recycling Make progress toward target: to achieve l North American manufacturing plants made progress toward their target by zero waste to landfill at all North American implementing numerous waste reduction, reuse and recycling initiatives. manufacturing facilities by April 1, 2011

Water Use Reduce the generation Reduce the water use intensity of automobile l Water use intensity in automobile production decreased of waste water where manufacturing operations 2.5% from the previous year, to 780 gallons/unit economically practical and technically feasible

Sales & Service >

End-of-Life >

Administration > 10

2010 North American Environmental Report

l = achieved goal s = made progress toward goal Summary (Table 3 of 3) n = no progress or improvement

CATEGORY STRATEGIES GOALS Actions taken in FY2010 link

Product Development >

Purchasing >

Manufacturing > Strategies, CO Emissions Shift to more fuel-efficient Reduce CO emissions associated with l Opened new West Coast port facility, reducing CO emissions 2 2 2 modes of distributing the shipment of finished products and from truck transport Goals and finished products and service parts Increased the use of EPA SmartWay-certified truck carriers by 50% service parts Actions Began using LNG-powered trucks to ship service parts Continued to evaluate Class-8 hybrid diesel-electric truck technology (continued) Reduce vehicle miles Continued use of Route Tracker technology to improve fuel economy traveled through more efficient logistics and driving methods

Improve utilization of Reduced CO2 emissions associated with the shipment of service shipping capacity by an estimated 2,500 metric tons through improved cube utilization Sales & Service

Waste Reduce packaging and Reduce the volume of packaging and shipping l Eliminated 4,500 wood pallets; reduced wood waste sent to landfills by utilize more returnable materials being sent to landfills 6.5 million pounds; and eliminated 513,800 pounds of corrugated material dunnage in the shipment of service parts

Waste Increase the supply and Increase the number of remanufactured parts l Introduced 106 new remanufactured parts offerings variety of remanufactured available for customer purchase

ife service parts L

Reduce the flow Reduce the quantity of parts sent to landfills l Diverted an estimated 82,000 pounds of regulated materials of overstock and (such as electronic waste) and 188,000 pounds of materials from

End-of- end-of-life parts into overstock parts from disposal in landfills the wastestream

Green Building Certify facilities to LEED Certify new buildings to U.S. Green Building l Two new facilities earned LEED certification: Honda R&D Americas’ Marine Engine green building standards Council LEED standards Research Facility and American Honda Finance’s Mid-Atlantic Regional Facility

CO2 Emissions Adopt more energy Reduce energy consumption from l Replaced single-purpose printer, copier and fax machines efficient processes and administrative functions with more energy-efficient multifunction printers deploy more energy efficient office equipment Initiated automatic shutdown and/or hibernation of associates’ PCs and PC monitors when not in use

Eliminated 140 physical computer servers in the U.S. Administration Introduced energy-use-awareness activities at Honda Canada’s sales headquarters 11

2010 North American Environmental Report

Addressing Honda embraces its responsibility to help meet the challenges of climate change. Recognizing that Global Climate climate change is a global phenomenon, Honda has committed itself to continuing efforts aimed at minimizing Change its environmental impact, both regionally and globally, with a particular emphasis on the reduction of carbon

dioxide (CO2) emissions.

Global Climate Change: A complex challenge, a shared responsibility

Addressing an environmental challenge as complex as global reduce the greenhouse gas emissions (GHGs) of its products and climate change requires the coordinated and focused efforts of production operations, Honda has long supported complementary industry, government and consumers. Significant progress is government policy initiatives that promote consumer interest in difficult without the commitment of all three. In conjunction with more fuel-efficient products and to accelerate the deployment of the company’s global effort to improve the fuel efficiency and new, more fuel-efficient technologies.

INDUSTRY Consumers Government

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

(particularly CO2 as the and deployment of products predominant GHG generated with reduced GHG emissions by Honda products during and high fuel efficiency. In their life cycle) while meeting setting mandatory requirements, customers’ expectations government programs should for product performance — adhere to performance-based including safety, utility, comfort, standards that give manufacturers quality and reliability. the flexibility to pursue multiple A Shared Responsibility near- and longer-term technological approaches to increasing fuel efficiency. 12

2010 North American Environmental Report

Addressing Honda’s overall goal is to develop products with the lowest in-use CO2 emissions manufactured at plants with the

Global Climate lowest CO2 emissions intensity (emissions per unit of production). Change

Reducing the CO2 Emissions of Honda Product and Production Facilities

The greatest opportunity to reduce GHG emissions from Sources of Automobile Life-Cycle GHG Emissions1 Honda products is to improve the in-use energy efficiency of those products. In the case of automobiles, fuel consumed 86% Product In-Use during driving accounts for an estimated 86% of life-cycle 7% 7% Production GHG emissions. In May 2006, Honda established a series of 86% 7% Other Factors voluntary targets to reduce the fleet-average CO2 emissions 7% • raw materials • distribution of its products and the CO2 emissions intensity of production • procurement operations, on a global basis, from FY2001 levels by 2010. • service and disposal

1 Results are Honda estimates based on automobile life-cycle greenhouse gas data collected within North America for CY2008.

Honda’s Voluntary Global CO2 Emissions Reduction Targets for 2010 (from 2001 levels)

2010 FY2010 DOMAIN SEGMENT REDUCTION DETAILS OF RESULT SCOPE OF TARGET GOAL RESULT

Automobile Public campaigns for vehicle replacement and other CO2-reducing measures, Automobiles sold in Japan, North America, -12.6% primarily carried out in developed countries, have dramatically increased Europe/ Middle East/Africa, Asia/Oceania, 10% sales of products with high fuel efficiency (smaller automobiles and hybrid China, and South America (more than 90% (g/km/unit) vehicles). As a result, Honda has exceeded its CO2 reduction targets. of Honda’s worldwide automobile sales)

Powersports -14.4% Sales for FY2010 were largely unchanged year on year, but sales of small Motorcycles sold in Japan, North America, Products vehicles that use both electronically controlled programmed fuel injection Europe, Thailand, India, China, Indonesia, 10% (PGM-FI) and low-friction engines were increased, further reducing average Vietnam, Brazil, the Philippines, Malaysia (g/km/hour) CO2 emissions. and Pakistan (more than 90% of Product Honda’s worldwide motorcycle sales)

Per-unit average CO emissions for power products increased from FY2009 All power equipment products, Power -10.8% 2 Equipment levels. This was due to increased sales of large engines, and a lower in all regions (excluding marine 10% percentage of sales of mid-sized engines, handheld engines and compact outboard engines) (kg/unit) household cogeneration units that have relatively low per-unit emissions.

Automobiles The per-unit increase stems from a decrease in production quantities, All manufacturing by Honda Motor -2.3% but non-production energy reduction measures held CO2 emissions Co., Ltd., and 76 other Honda Group 10% to a 2.6% increase over FY2009 levels. companies that assemble Honda products (kg/unit) and major components.

Powersports -47.1% Consolidation of production bases and measures to reduce Products non-production energy use resulted in a per-unit drop of 20% 6.7% over FY2009 levels and 47.1% from baseline. (kg/unit) Production Power -17.6% Consolidation of production bases and measures to reduce Equipment non-production energy use resulted in a per-unit drop of 20% 1.6% over FY2009 levels and 17.6% from baseline. (kg/unit) 13

2010 North American Environmental Report

Addressing Honda’s Outlook on Climate Change Policy Global Climate There are numerous policy options available to governments to to province, making a standard that may be appropriate in one Change address climate change. state or province unrealistic or otherwise inappropriate for the Honda’s Outlook • Because vehicles and other gasoline-powered products, such circumstances that exist in another. Invariably, state-by-state or on Climate as lawn-care equipment, are sold nationwide, Honda believes region-by-region requirements raise costs for consumers. Change Policy that mandates on vehicle and product performance should be • Further, Honda believes that mandates and incentives should be adopted at the federal level. Any effort to apply the standards defined in terms of technology-neutral performance goals. Examples of a single state or province on a nationwide basis will inevitably of this would be fuel economy or greenhouse gas emissions result in inefficiencies and customer dissatisfaction. Vehicles and standards. Establishing a performance goal for all manufacturers other gasoline-powered products are currently designed, built to achieve, rather than dictating or favoring a particular technology, and distributed to meet the needs of an entire country. Moreover, will provide the optimal flexibility for researchers and engineers to the local circumstances on which a single state’s or province’s realize the most effective and efficient means of achieving societal standard might be based, such as driving patterns, vehicle mix objectives in a free and fair marketplace. Honda’s positions on some and utility infrastructure, will differ from state to state or province of the most prominent policy options are summarized below.

Prominent Public Policy Initiatives

Federal Fuel Economy Beginning in 2005, Honda encouraged the U.S. government to adopt higher fuel-economy standards. Honda worked with (CAFE) Standards Congress in 2007 on the adoption of the new 35 mpg nationwide Corporate Average Fuel Economy (CAFE) requirements Greenhouse Gas by 2020. Honda also was an early participant and supporter of the White House initiative to adopt harmonized national fuel Emissions Standards economy and greenhouse gas emission standards for motor vehicles for 2012-2016, announced by the Obama administration in May 2009 and adopted on April 1, 2010. Honda takes seriously the commitment it made, along with other stakeholders in the initiative, to work together to adopt a strong, coordinated national program for the model years after 2016. Further, the company supports the U.S. Administration’s May 21, 2010, initiation of a process involving federal and state regulators, which Honda hopes will lead to national standards for 2017 and beyond. Incentives Financial incentives implemented by government entities can be constructive in stimulating nascent and expensive technologies, such as those used in fuel cell electric vehicles. Incentives should be technology-neutral, performance-based and limited in duration. Programs that incentivize the purchase of more fuel-efficient products could be helpful (in the context of the shared responsibility to reduce GHG emissions as outlined on the previous page). A national feebate program1 warrants evaluation to determine whether it can meet these objectives without unintended negative consequences. 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. Honda supports the U.S. EPA mandatory greenhouse gas reporting rule. Cap-and-Trade Cap-and-trade is now recognized as one potential means of regulating greenhouse gas emissions from stationary sources; however, cap-and-trade can penalize companies that are growing their market share while providing an unearned windfall to companies that are

losing market share. On the mobile source side, GHG regulations already address CO2 emissions, thus cap-and-trade is unnecessary. Biofuels Biofuels offer promising opportunities to displace petroleum and reduce greenhouse gas emissions. However, some biofuels are more sustainable and economically viable than others, and will achieve greater consumer acceptance. Compatibility with 1 A program of rebates and fees on existing and future products is a critical consideration. Strong safeguards must be in place to prevent misfueling with biofuels vehicles that exceed or fall short of a that are incompatible with existing products. specified performance benchmark 14

2010 North American Environmental Report

Addressing At this point in time, there is no single technology that holds the key to the world’s energy future. Honda’s strategy Global Climate encompasses multiple technology pathways and seeks to address comprehensively the challenges associated with Change the deployment of new energy and vehicle technologies. Improving Fuel Efficiency Powertrain and Reducing Honda’s Effort Advantages challenges Greenhouse Gas Improvements Honda is pursuing advancements in Broad market acceptance and a Achieving further significant gains in fuel to internal powertrain fuel efficiency, several of which well-established service support efficiency while maintaining reasonable Emissions combustion are summarized in the table below. network and refueling infrastructure. cost and performance for the customer. Powertrain engines and powertrains

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 five Honda models for 2010: Accord cylinder deactivation technology) V6 Sedan, Accord V6 Coupe, Accord Crosstour, Odyssey minivan and Pilot sport-utility vehicle. Cylinder deactivation is also employed in the Civic Hybrid and Insight.

VTEC™ (Variable Valve Timing and VTEC engine technology, which provides for variable valve timing, duration, and lift for improved performance and fuel Lift Electronic Control) efficiency, is being applied to all Honda and Acura automobiles.

CVT (Continuously Variable The 2010 Civic Hybrid, Insight and all-new 2011 CR-Z are equipped with a CVT that optimizes transmission ratios Transmission) for improved fuel efficiency.

5- and 6-speed electronically controlled All Honda and Acura automobiles equipped with automatic transmissions are using electronically controlled 5-speed or automatic transmissions 6-speed transmission 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 Variable Cylinder Management 2009 Honda Accord 3.5-liter V-6 i-VTEC 2011 Honda CR-Z continuously Automatic transmission gears (VCM) cylinder deactivation technology, engine with Super Ultra-Low Emission variable transmission (CVT) being inspected at Honda operating in 3-cylinder mode. Vehicle (SULEV) emissions performance transmission factory 15

2010 North American Environmental Report

Addressing Powertrain (continued)

Global Climate Honda’s Effort Advantages challenges

Change Hybrid Electric Honda markets three hybrid models in the Significant gains in fuel efficiency through Reducing technology costs and Vehicles (HEVs) U.S. and Canada — the Insight, Civic Hybrid engine downsizing, engine shutoff at idle, improving value for the customer. Improving and CR-Z sport hybrid. The company is also and the capture and reuse of energy from Fuel Efficiency working on hybrid technology for larger cars vehicle braking. and light trucks and will also introduce a range and Reducing of hybrid models to its Acura luxury vehicle Greenhouse Gas lineup in the future. Emissions Honda Motor Co., Ltd., in Japan, has also established a joint venture with GS Yuasa Powertrain (continued) Corporation to develop, manufacture, and sell high-performance lithium-ion batteries for hybrid vehicles, beginning with a

redesigned Civic Hybrid in 2011. 2010 Insight

Diesel engine Honda is actively marketing its i-DTEC™ Diesel engines offer up to a 30% improvement Reducing NOx emissions at reasonable cost to technology diesel engine technology in Europe, in fuel efficiency over comparable gasoline- meet stringent U.S. regulatory requirements. where diesel fuel is considerably less powered engines — or up to a 20% reduction

costly than gasoline. in CO2 emissions when taking into account the 13% higher carbon content of diesel fuel versus gasoline.1

Plug-In Hybrids Honda is developing a new plug-in hybrid Using electricity generated off-board in place Lowering battery cost and improving battery and Battery system for mid-size to larger vehicles to go on of petroleum can lead to reduced consumption performance (durability, temperature toughness, Electric Vehicles sale in 2012 in the U.S. and Japan. Honda is of petroleum and zero on-board emissions etc.), including increased energy density, and

also working on the development of a battery (including both smog-forming pollutants and reducing stationary-source CO2 emissions from electric vehicle, also to be introduced in 2012. GHG emissions). utilities that produce electricity mainly from coal. While the cost competitiveness of these vehicles in the near to mid-term is highly uncertain, their long-term potential encourages us to make efforts now. Utilities have the additional challenge of developing PEV favorable rate structures, and preparing their grids for the impact PEVs may have on existing assets.

Hydrogen Honda is producing the FCX Clarity in limited FCEVs are electric vehicles that have the Reducing the cost and improving durability of Fuel Cell Electric volumes for lease to retail consumers in potential to be full-function replacements the fuel cell. Vehicles Southern California. An advanced fuel cell to conventional vehicles, since their range, Developing a public infrastructure of hydrogen (FCEV) electric vehicle which operates on hydrogen performance, amenities and quick refueling refueling stations. fuel stored on-board the vehicle, the FCX characteristics are similar to today’s internal Clarity has a Honda-designed fuel cell stack, combustion engine vehicles. Using hydrogen located in the console between the two in place of petroleum reduces consumption front seats. Honda continues to lease Clarity of petroleum and results in zero on-board 1 Figures are based on tailpipe emission FCEVs to a limited number of customers emissions (including both smog-forming calculations from the U.S. EPA (http:// in California where a network of hydrogen pollutants and GHG emissions). Hydrogen is www.epa.gov/oms/climate/420f05001. stations is developing. produced domestically from a wide variety of htm). CO2 emissions are calculated as 8,887 grams per gallon for gasoline and renewable and non-renewable energy sources. 10,084 grams per gallon for diesel. 16

2010 North American Environmental Report

Addressing Body Design

Global Climate Honda’s Effort Advantages challenges

Change Lightweighting Improving vehicle fuel-efficiency through Reducing vehicle mass can improve fuel Improving the manufacturability and cost the application of advanced materials such efficiency regardless of the vehicle’s impact of applying lighter weight materials. Improving as aluminum and high-strength steel to the powertrain or energy source. vehicle’s body structure. Fuel Efficiency In general, a 10% reduction in vehicle mass and Reducing All new Honda and Acura automobiles results in about a 6.7% improvement in fuel introduced over the past several years have economy at constant performance levels. Greenhouse Gas used increasing amounts of high-strength steel, Emissions which typically accounts for about half of a new Honda and Acura vehicle’s steel body structure. Body Design Aerodynamics Reducing the size of a vehicle’s frontal area Reducing aerodynamic drag can improve Achieving improved aerodynamics while Fuels and making more streamlined exterior shape fuel efficiency regardless of the vehicle’s meeting customers’ expectations for style for new models. powertrain or energy source. and product functionality.

Fuels

Honda’s Effort Advantages challenges

Natural Gas The Honda Civic GX is sold to fleet consumers Natural gas is an abundant, inexpensive Improving limited driving range, through 134 U.S. Honda dealers in 33 states domestic fuel source and a viable near term reducing vehicle cost, and expanding and to retail customers in four states. alternative to gasoline as a transportation fuel. vehicle refueling options. Honda has produced and marketed the With zero particulate emissions and 25% less

Civic GX — a dedicated, mass-produced tank-to-wheel CO2 emissions than a gasoline- natural gas-powered vehicle — since 1998. powered model (on a per-mile-driven basis), Manufactured1 in Indiana, the Civic GX is natural gas can displace certified as an Inherently Low Emissions petroleum and significantly Vehicle (ILEV), meaning a low reduce smog and green- emissions vehicle with no house gas emissions.

evaporative emissions. 2010 Civic GX

Biofuels All Honda and Acura automobiles, as well Biofuel-powered vehicles offer significant Realizing sustainable and economically viable as the company’s motorcycle and power opportunities to reduce both petroleum use production of biofuel and its economical use equipment products, are capable of operating and greenhouse gas emissions. with existing products and infrastructure. on E10 (10% ethanol in gasoline). Second-generation biofuels, which are cellulosic Honda is researching the feasibility of higher or algae-based and have the potential to address blends, including midlevel blends such as many of the negative impacts of first-generation E15 or E20, for cars and light trucks only. biofuels, are still not in the marketplace. Midlevel blends (higher than E10) must be tested for In partnership with the Research Institute of vehicles and other gasoline engine products Innovative Technology for the Earth (RITE) to ensure that they do not pose problems for in Japan, Honda is conducting independent performance, safety or emissions. research into the efficient production of ethanol from cellulosic feedstocks. E85 and other ethanol blends offer lower fuel economy and operating range as a result of reduced energy content compared with gasoline. Consumer acceptability will therefore depend to a significant degree on fuel pricing. 1 Using domestic and globally sourced parts. 17

2010 North American Environmental Report

Fuels (continued)

Addressing Honda’s Effort Advantages challenges

Global Climate Hydrogen In January 2010, Honda R&D Americas began Potential use as a home refueling appliance, Development of codes and standards for Change operating a more compact next-generation leveraging the cost differential of “smart meter- home refueling. prototype Solar Hydrogen Station at its ing” to provide convenient and energy-neutral Improving Los Angeles R&D center. overnight refueling of fuel-cell electric vehicles. Integrating of fuel cell electric vehicle home refueling into the smart grid. Fuel Efficiency This new system does not require a compressor, significantly reducing the energy consumed and Reducing in the refueling process. It provides enough Greenhouse Gas hydrogen for daily commuting of 30 miles per day via an 8-hour refuel. Emissions The station employs next-generation thin-film solar Fuels (continued) cells, developed by Honda Engineering Co., Ltd. These cells are being mass produced and sold in Stationary Japan by Honda subsidiary Honda Soltec, LLC. Source Emissions Stationary Source Emissions

Honda’s Effort Advantages challenges

Cogeneration Honda and technology partner Climate Energy, Long-term energy cost savings for customers Reducing system cost relative to a

technology LLC, have collaborated on a micro-combined and CO2 emissions reduced by as much as conventional heating system. heat and power (MCHP) system for home use. 30%, compared with a conventional home heating system operating in colder climates. The freewatt® system supplements traditional natural gas heating systems with technology Cogeneration technology opens the door for that produces heat and electricity for the home. distributed power systems. It also makes possible the resale of electricity to the grid The system, using Honda cogeneration during periods of peak power demand. technology, is being marketed to U.S. consumers in cold weather states. Sales were expanded to Canada in 2009.

Manufacturing Honda strives to reduce the energy and CO2 More efficient operation of manufacturing Identifying economically practical emissions intensity of manufacturing by and nonmanufacturing facilities reduces opportunities for increased energy efficiency. operating production equipment with less production and operational costs and variability, by ensuring that process energy GHG emissions. requirements are met but not exceeded, and by designing equip­ment that can be easily shut down when not in use. Honda is implementing many energy-efficient technology and process changes where econ­omically practical and technically feasible. These focus on reducing energy use from painting operations, compressed air, motor systems, and lighting. Further, the company has undertaken a sustainability initiative with its parts suppliers in North America to enhance communication, increase awareness, and promote action to minimize the environmental impact of manufacturing and logistics operations. 18

2010 North American Environmental Report

Addressing

Global Climate Stationary Source Emissions (continued)

Change Honda’s Effort Advantages challenges

Improving Green Buildings Honda was the first automaker in the U.S. More energy-efficient buildings offer Incorporating green building features into Fuel Efficiency to achieve LEED certification from the opportunities for reduced operating costs. existing facilities in a cost-effective manner. U.S. Green Building Council for a mix-used and Reducing industrial facility — its Gresham, Oregon, Greenhouse Gas parts distribution center. The company has since certified an additional eight facilities in Emissions North America to LEED standards. Stationary The company has also undertaken efforts to conserve energy in its office and warehouse Source Emissions (continued) facilities through the use of more energy- LEED-NC Gold - American Honda’s Logistics efficient lighting and computer systems. Midwest Consolidation Center in Troy, Ohio

Logistics

Honda’s Effort Advantages challenges

Product and Honda’s efforts to reduce GHG emissions Improved fuel efficiency (and reduced CO2 The mix of service parts of widely varying Parts Distribution associated with the distribution of parts and emissions) from truck fleets. size and shape can make it difficult to stack finished products in the past year include: additional product in trucks without increasing Reduced cost and fewer trucks needed to the risk of damage to parts. • Use of EPA SmartWay-certified trucks and deliver goods to parts centers. early deployment of diesel-electric hybrid Reduction in GHG emissions in parts logistics truck technology for the transportation of depends on a myriad of factors including both OEM and service parts size and weight of parts, the location of the • Deployment of “route tracker” technology, supplier facility relative to the manufacturing which promotes more fuel-efficient plant, and lead time for parts delivery. operating habits by truck drivers. • Re-engineered delivery programs and improved cube efficiency programs (optimizing the volume of material carried in a trailer) to reduce truck miles traveled. 19

2010 North American Environmental Report Minimizing Honda’s Environmental Footprint

Honda recognizes Life Cycle Assessment (LCA) as a critical Life Cycle tool for understanding the impact of its products and operations on the environment. Using the LCA framework, the company Assessment is working to minimize that impact in virtually every aspect of its business.

Click on any color-coded segment of the diagram for more detail.

Honda Environmental Management 20

2010 North American Environmental Report Product Development

overview The reduction of Honda’s environmental focus The single largest impact of Honda’s products footprint begins with the development of products on the environment comes from the consumption of that use less fuel, contain fewer substances believed nonrenewable fossil fuels and the byproducts of fuel

to be harmful to the environment, and are designed to combustion, including CO2 emissions that contribute to be manufactured using fewer scarce or non-recyclable global climate change. Honda is pursuing further advances materials, along with improved ease of dismantling to in product fuel efficiency as the core of its commitment accommodate the recycling of parts and materials at the to reducing Honda’s environmental impact. end of a product’s useful life.

Strategies, Goals and Results

Category STRATEGIES GOALS Actions taken in FY2010 link

Substances of Working with OEM Continue to reduce SOCs in Honda Initiated International Materials Data System (IMDS) activity Concern (SOCs) parts suppliers to and Acura products where technically for parts and materials sourced from suppliers globally reduce or eliminate feasible and economically practical SOCs

Polyvinyl Chloride Reduce the use of Minimize the use of PVC in 13 of the 20 Honda and Acura automobile models sold (PVC) PVC in automobile automobiles where technically feasible in FY2010 contained a less than 1% concentration interiors and other and economically practical of chlorine in materials that could end up in the applications wastestream as shredder residue

Eliminated the use of PVC in vehicle underbody coatings in all North American manufacturing plants

End-of-life Maintain or improve Minimum 90% design recyclability for Maintained 90% level of design recyclability1 for all new Recyclability new-product automobiles and minimum 95% design Honda and Acura models sold in North America Honda products are devel- designs to facilitate recyclability for powersports and power oped locally and globally. dismantling for equipment products Maintained 95% level of design recyclability1 for all The company in 2010 is marking end-of-life recycling powersports and power equipment products sold in 35 years of R&D operations in of materials and North America North America, where today it operates components 14 major R&D facilities engaged in the creation of new products – from 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, initial concept all the way through to 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, support for mass production. Honda’s calculation also takes into account the recyclable mass within nonmetal residue. 21

2010 North American Environmental Report

Design for the Environment

Environmental factors are considered early and during each phase footprint, including its impact at the end of its useful life. of the design and development of every Honda and Acura product. Accordingly, Honda engineers take into account such factors as In component design and in the selection of materials, Honda dismantling complexity, component remanufacturing, and the looks for opportunities to reduce a product’s total environmental minimization of substances of concern (SOCs).

Product Product Recyclability Development Product In accordance with its global standard for the development of products sold in North America. As of 2004, all new Honda and Honda products, the company has achieved and is committed to Acura automobiles have met or exceeded the 90 percent target. Recyclability maintaining a minimum 90 percent level of design recyclability1 for Honda will continue to look for new ways to improve the design and Substances all Honda and Acura automobiles, and a minimum 95 percent level recyclability of future products, in balance with other critical of Concern of design recyclability1 for all powersports and power equipment considerations, such as quality, efficiency, cost and durability.

Reducing Substances of Concern (SOCs)

Honda’s efforts to reduce SOCs have been consistent with sealers in automobiles produced in the U.S., where no regulatory evolving government regulations. The tools detailed below will standards exist. Honda monitors the use of chemical substances help the company to better understand and track the presence categorized as restricted, as hazardous, or as possessing high of SOCs in its products and enable the company to continue to potential for being regulated in the future. reduce the negative impacts of its products throughout their life cycle. This information will be essential as society moves toward Implementation of International Material Data System (IMDS) a comprehensive approach to chemical management and green In FY2010, Honda began to prepare for the implementation chemistry. The company is committed to eliminating restricted of the International Material Data System (IMDS) in North substances and other hazardous substances where technically America, as part of a new company-wide internal system, which feasible and economically practical, in advance of regulations. will enable Honda to ensure globally consistent management of chemical substances in parts and materials. While primarily Compliance with ELV Directive an automotive data system, IMDS will also be used to gather With the cooperation of its supply base, Honda has taken the data for Honda’s powersports and power equipment divisions.

1 Honda’s calculation of product recyclability necessary actions to comply with the European Union’s End-of- Honda will track its use of chemicals in its companywide system, is based on the ISO standard 22628, titled Life Vehicle (ELV) Directive for automobiles manufactured in which registers and classifies chemical substances. All suppliers “Road Vehicles Recyclability and Recoverability Calculation Method,” which bases its North America, even though these models are not exported providing products to any Honda manufacturing entity, as well as estimates on existing, proven treatment to Europe. Honda has also been able to make progress toward suppliers of service parts, will be required to enter material data technologies and takes into account the mass of materials recycled, reused, recovered for voluntary reductions of substances currently exempted from into the IMDS. As a result of this business process change, all energy or otherwise diverted from landfill legal requirements, as well as nonregulated substances, in suppliers of parts and materials procured by Honda will be required disposal. In addition to these guidelines, Honda’s calculation also takes into account accordance with global and local trends, whether legislative, to provide comprehensive data on the chemical composition of recyclable mass within nonmetal residue. social or environmental, such as the switch to PVC-free weld parts and materials. 22

2010 North American Environmental Report

Honda Chemical Management Standards Compliance with REACH In 2004, Honda created a chemical substance guideline to In accordance with Honda’s efforts to manage chemical minimize and monitor hazardous materials and substances of substances in our products, the company has worked with its concern (SOCs) contained in Honda products. This guideline, supply chain to achieve compliance with the European Union’s which has gone through several revisions, is now called the REACH regulation (Registration, Evaluation, Authorization and Honda Chemical Substance Management Standard (HCSMS). Restriction of Chemicals) for products and parts being supplied The HCSMS identifies those chemicals that should no longer from North America to customers in the European Union, primarily Product be used, those chemicals for which a phaseout period has power equipment products and ATVs produced in the U.S. been identified, and those chemicals that Honda is monitoring Honda has issued chemical substance surveys to all impacted Development for potential elimination. This document follows the Global suppliers to confirm whether the targeted chemical substances Substances Automotive Declarable Substance List (GADSL). The GADSL exist in current parts and materials and, if so, to ascertain if of Concern addresses only automotive requirements, but the HCSMS possible the content percentage amount of the substances at additionally addresses power sports, motorcycle and power a product level. equipment requirements. Honda is committed to reducing and, if possible, eliminating SOCs in all products, in accordance with global regulations, even if those products may not be sold in an effected region.

Supplier SOCs Management Manual To document its intentions, Honda has issued a Supplier Substances of Concern Management manual. In North America, this manual is issued as a specification of the North American Purchase and Sale Agreement (PSA) and is intended as an extension of the terms the supplier has already agreed to in the PSA (revised October 5, 2007) or comparable terms in earlier versions of the PSA. The manual’s main purpose is to document precisely Honda’s expectations for all producers of parts and materials used in Honda products with respect to SOCs and recyclability. This supplier manual incorporates Honda’s global and regional environment, recyclability, and SOCs policies, the HCSMS, and reporting requirements and timing. 23

2010 North American Environmental Report

Substances of Concern in Honda and Acura Products

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 meet Honda’s requirements for durability and performance. Product Replaced lead with non-hazardous materials in electro-deposition coatings In ATV wheel hubs, Honda is replacing the lead inclusions in the microstructure and steel bars with the exceptions of residual amounts of lead contaminants of steel alloys with manganese sulfide (MnS). This activity was started with Development in steel (limited to 0.1% by weight), and trace amounts of lead in recycled the model year 2009 TRX420FA and is expected to be completed on all ATVs Substances aluminum (limited to 0.4% by weight). by the 2014 model year. of Concern Eliminated from automobile and on-highway motorcycle wheel weights; Completed. replaced with a zinc alloy. (continued) Hexavalent Chromium — used to protect exterior parts from corrosion. All North American suppliers have phased out the use of Fully eliminated. Continue to monitor suppliers for compliance. hexavalent chromium. 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 with devices. However, Honda still uses very small quantities of mercury new models introduced in model year 2010. in high-intensity discharge (HID) headlights and in illuminated entertainment and navigation systems. All damaged and broken navigation-system screens brought back to Start to employ mercury-free HID bulbs in the next several years, as the Honda and Acura dealers are recovered and remanufactured by Honda. remaining technical challenges are overcome. Polybrominated Diphenyl Ethers (PBDEs) — used as a flame retardant and as a surfactant. Phased out the use of octa- and penta-PBDEs in 2004. Working with Working with suppliers to eliminate deca-BDEs from products when technically suppliers to verify that these substances are no longer used in products. feasible. Honda will phase out deca-PBDEs from all ATV and off-road A small number of original equipment parts still contain PDBEs. motorcycles by 2011. Perfluorooctane Sulfonate (PFOS) — used as a water repellent agent. Eliminated PFOS in all parts delivered to North American Fully eliminated. Continue to monitor suppliers for compliance. manufacturing facilities. 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. Eliminated PVC used for underbody coating in all North American Working with suppliers to implement PVC-free technologies for components manufacturing plants. Also introducing PVC-free weld sealers at plants in such as interior and exterior trim pieces, door sealants, adhesives, window North America. moldings, floor mats, and seat coverings. Replacing PVC used in instrument panels, inner-door weather stripping, Continuing to investigate effective alternatives to PVC for all paint department and shift knobs. applications. Honda will begin to apply the technology once it has been proven effective. 24

2010 North American Environmental Report

Reducing PVC in Honda and Acura Automobiles

Honda is working to significantly reduce the chlorine that ends • Honda continues to investigate high-quality and cost-effective up in shredder residue, primarily by reducing the use of polyvinyl alternatives to PVC in an effort to minimize and eventually chloride (PVC) in its vehicles. eliminate the substance from all of its products. Although Honda • Thirteen of the 20 Honda and Acura automobile models sold in has minimized the number of vehicle parts containing PVC, cost the United States in FY2010 had a less than 1% concentration and quality barriers present a challenge to its total elimination. Product of chlorine in materials that can end up in the wastestream as • In December 2009, Honda introduced a PVC-free undercoating Development shredder residue. They are the Honda Fit, Insight, Civic Coupe, at its East Liberty Plant (producing the CR-V, Element and Civic Sedan, Civic Hybrid, Civic GX, Accord Coupe, Accord Accord Crosstour) and on two lines at its Lincoln, Alabama Reducing PVC in Sedan, CR-V, Acura RL, Acura RDX, and the newly introduced plant (producing the Odyssey, Pilot, Ridgeline and Accord V6 Honda and Acura 2010 Accord Crosstour and Acura ZDX. Sedan). In FY2010, the company was able to eliminate the the Automobiles use of PVC in underbody coating operations at all of its North American plants. • Honda will continue to eliminate PVC used for paintable dust sealers from all manufacturing plants in North America. The greatest challenge to complete elimination of PVC will be its replacement in the coatings of electrical parts and wires.

Application of a PVC-free, paintable weld sealer Application of PVC-free underbody coating to an at Marysville Auto Plant Acura RDX at Marysville Auto Plant 25

2010 North American Environmental Report

Product Development Automobiles

Product Development Strategies, Goals and Results Automobiles Category STRATEGIES GOALS Actions taken in FY2010 link

CO2 Emissions Maintain or improve Increase the CAFE of American Honda’s Increased U.S. CAFE for MY2009 Honda and Acura fuel efficiency of new U.S. light-duty vehicle fleet by 5% over automobiles 7.2% from MY2005 levels, to 31.3 mpg 1 Honda and Acura 2005 levels by 2010 products

Advance alternatives Improve the real-world appeal and Increased the number of FCX Clarity fuel cell electric to petroleum practicality of electrically powered vehicles in the hands of customers in North America vehicles, such as fuel-cell electric vehicles, and supporting infrastructure Began operation of next-generation prototype solar- powered hydrogen refueling station in Torrance, Calif.

Continue to expand the market for Added eight Honda dealers in Utah to U.S. network of dealers natural gas-powered vehicles authorized to conduct retail sales of the natural gas-powered Civic GX

Criteria Maintain or improve Meet or exceed all applicable regulatory All Honda and Acura vehicles released in FY2010 met Air Pollutants the exhaust emissions requirements for exhaust emissions or exceeded U.S. EPA and Transport Canada Tier 2 Bin 5 performance of performance emissions standards on an individual model basis 1 Estimate based on mid-model new Honda and year fuel economy report for Acura products model year 2009

The Automobile segment includes Honda and Acura brand passenger cars, minivans, sport-utility vehicles, and pickup trucks. 26

2010 North American Environmental Report

Gains in fuel efficiency are the most effective way to achieve lower CO2 emissions. Honda has been committed to improving automobile fuel efficiency since it introduced its first high-volume automobile, the Civic, in the United States in 1970. The company is working to achieve further significant gains in fuel efficiency in order to

achieve near-term reductions in CO2 emissions that contribute to global climate change.

Product Corporate Average Fuel Economy Development Honda’s Corporate Average Fuel Economy (CAFE) and Acura light trucks since 2003 have been more than offset by Automobiles Corporate Average Fuel Consumption (CAFC), as determined technology and efficiency improvements in the company’s total by the U.S. Department of Transportation and Transport product lineup. Honda’s MY2009 CAFE was up 1 mpg, or Fuel Efficiency Canada, respectively, have continued to improve since model 3.3%, over the previous model year, exceeding the industry year 2006 (MY2006). This occurred after a moderate decline, average by 2.8 mpg, or 9.8%. Since MY2005, Honda’s CAFE from the MY2001 to MY2004 because of the increased ratio of has increased 7.2%, outpacing the company’s voluntary goal, light trucks to passenger cars in the company’s U.S. and Canada established in May 2006, to achieve a 5% gain in CAFE over automobile fleets. Further increases in sales of Honda and 2005 levels by 2010.

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

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

35 10 Industry Average

Honda/Acura 9.3

T 9.2 9.2 31.3 9.0 9.0 30 EN 8.9 30.2 I 30.3 C 29.8 30.0 29.5 I 8.6 29.2 29.1 29.2 29.1 8.5 1 28.5 EFF 8 Honda/Acura L 8.1 Industry Average UE 27.0 7.8 MORE FUEL EFFICIENT 26.7 F 25 Fuel Economy: MPG 25.8 7.6 7.5 7.5 25.4 7.4 7.4 7.4 7.4 7.4 25.1 ORE 7.3 24.8 24.5 24.7 24.6 7.2 M Fuel Consumption: Liters/100 Km

20 6 MY00 MY01 MY02 MY03 MY04 MY05 MY06 MY07 MY08 MY09 MY00 MY01 MY02 MY03 MY04 MY05 MY06 MY07 MY08 MY09 1 Industry average is Honda’s estimate based on each manufacturer’s mid-model-year CAFE report as submitted to the NHTSA. 27

2010 North American Environmental Report

EPA CO2 Emissions and Fuel Economy Ratings

Honda is introducing EPA fuel economy ratings to this report range of fuel economy that users may actually experience, in

for the first time in 2010. The U.S. EPA issues an annual report regard to both CO2 emissions and fuel consumption. In MY2008,

on automakers fleetwide CO2 emissions and CO2-adjusted fuel the most recent year for which the EPA has complete and final economy. The EPA report, unlike CAFE data administered by the production data, American Honda, which includes both Honda U.S. DOT, does not use adjustments or credits, such as those and Acura vehicles, substantially outperformed the industry Product for vehicles capable of operating on E85. Moreover, the EPA average and had the lowest fleetwide adjusted composite system employs multiple test-cycle factors. For these reasons, CO2 emissions and highest CO2-adjusted fuel economy of any Development Honda believes the EPA system more accurately estimates the automobile marketing group operating in the United States. Automobiles

CO2 Emissions U.S. Fleetwide Adjusted Composite CO Emissions U.S. CO -adjusted Fleetwide Fuel Economy and Fuel Economy 2 2

25 500 25 500 500 500

24 24 Honda/Acura Honda/Acura Industry Average Industry Average Industry Average Industry Average 23.9 23.9

23.3 23 23.3 23 T 432 432

T 432 432 424 424 424 424 EN EN EMISSIONS EMISSIONS I I 2 2 400 400 400 400 C C Honda/Acura Honda/Acura (g/mi) Honda/Acura Honda/Acura (g/mi) (g/mi) (g/mi) I I 2 2 2 2 C0 C0 C0 C0 EFF 22 EFF 22 L L 382 382 382 382 UE UE Fuel Economy: MPG Fuel Economy: MPG F LOWER CO F 372 LOWER CO 372 372 372 Industry Average Industry Average ORE 21 ORE 21 M 21.0 M 21.0 20.6 20.6 20 300 20 300 300 300 MY07 MY08 MY07 MY08 MY07 MY07 MY08 MY08 MY07 MY08 MY07 MY08

Source: U.S. EPA Light Duty Automotive Technology, Carbon Dioxide, Emissions, and Fuel Economy Trends: 1975-2009 — published November 2009 28

2010 North American Environmental Report

Automobile Exhaust Emissions — Compliance with Tier 2 Emissions Standards

Honda has consistently played a leading role in reducing vehicle standards. Due to the challenging nature of these standards, all exhaust emissions and in meeting and exceeding U.S. federal automakers are permitted to use fleetwide averaging to meet the vehicle emissions standards (see Environmental Milestones). requirements; however, Honda and Acura automobiles meet the Beginning in model year 2007, every Honda and Acura vehicle Tier 2 Bin 5 and more stringent standards on an individual model sold in the United States and in Canada met or exceeded the basis without the need for fleet averaging (click here for a chart of Product U.S. EPA and Transport Canada Tier 2 Bin 5 emissions Honda and Acura U.S. emissions ratings) Development Automobiles Honda Low-Emissions Classification in Mexico Criteria Air Pollutants All new Honda and Acura cars sold in Mexico have been classified Honda Low-Emissions Classification in Mexico as Double Zero (00) by Mexico City’s “Hoy No Circula” emissions control program. The Double Zero classification is given to Certification Period Model vehicles certified as having low NOx emissions and high city Up to six years Accord Crosstour, City, Fit, Civic, fuel efficiency. Vehicles meeting this standard may be driven (recertification every 2 years) Civic Si, Civic IMA, and Acura TSX V6 in Mexico City and its suburbs without restriction. Up to four years Ridgeline, Accord L4, Pilot, CR-V, (recertification every 2 years) Acura RL, Acura MDX, Acura RDX, and Acura ZDX Certified for two years Odyssey, Accord V6, Acura TL 29

2010 North American Environmental Report

Application of Technology for Improved Fuel Efficiency and Reduced Emissions

A broad range of advanced technologies, such as VTEC Cylinder Management™) cylinder deactivation and IMA™ (Variable valve Timing and lift Electronic Control) valvetrain (Integrated Motor Assist™) gas-electric hybrid systems. More technology, have been applied to the full range of Honda and energy-efficient engines and transmissions, advancements Acura automobiles in order to realize gains in fuel efficiency in the use of lightweight materials, more aerodynamic vehicle and lower exhaust emissions for all vehicles. Honda has also bodies, lower-rolling-resistance tires, and the further evolution of Product accelerated its efforts to develop and deploy new technologies gasoline-electric hybrid and clean-diesel powertrain technologies that will allow the company to further improve its products’ all will play critical roles in future improvements to Honda’s Development environmental performance — such as its VCM™ (Variable vehicle fleet performance. Automobiles Fuel Economy and Technology Application, Emissions and Fuel Economy for Emissions Reduction Selected MY2010 Honda and Acura automobiles in the United States and Canada Electric Cylinder Emissions Rating EPA Fuel Economy Technology Application Trans- Model Engine Valvetrain Power Deactiva- mission Steering tion U.S. EPA CARB City Hwy Fit 1.5L I4 SOHC 5AT 16-valve i-VTEC l Tier 2 Bin 5 ULEV-2 28 35 (Single Overhead Cam) Insight 1.3L I4 SOHC CVT 8-valve i-VTEC l l Tier 2 Bin 3 AT-PZEV 40 43 Civic Sedan 1.8L I4 SOHC 5AT 16-valve i-VTEC Tier 2 Bin 5 ULEV 2 25 36 Civic Hybrid 1.3L I4 SOHC + IMA CVT 8-valve i-VTEC l l Tier 2 Bin 2 AT-PZEV 40 45 Civic GX 1.8L I4 SOHC 5AT 16-valve i-VTEC Tier 2 Bin 2 ILEV AT-PZEV 24 361

Passenger Cars Accord Sedan 2.4L I4 DOHC 5AT 16-valve i-VTEC Tier 2 Bin 5 PZEV 21 31 (Double Overhead Cam) Honda Accord Crosstour 3.5L V6 SOHC 5AT 24-valve i-VTEC Tier 2 Bin 5 ULEV-2 18 27 CR-V (4WD) 2.4L I4 DOHC 5AT 16-valve i-VTEC Tier 2 Bin 5 ULEV-2 21 27 Element (4WD) 2.4L I4 DOHC 5AT 16-valve i-VTEC Tier 2 Bin 5 LEV-2 19 24 Odyssey 3.5L V6 SOHC 5AT 24-valve i-VTEC l Tier 2 Bin 5 ULEV-2 17 25 l ight Trucks Pilot (4WD) 3.5L V6 SOHC 5AT 24-valve i-VTEC Tier 2 Bin 5 ULEV-2 16 22 L Ridgeline 3.5L V6 SOHC 5AT 24-valve i-VTEC Tier 2 Bin 5 ULEV-2 15 20 TSX 2.4L I4 DOHC 5AT 16-valve i-VTEC l Tier 2 Bin 5 ULEV-2 21 30 TSX 3.5L V6 SOHC 5AT 16-valve VTEC l Tier 2 Bin 5 ULEV-2 18 27 TL (2WD) 3.5L V6 SOHC 5AT 24-valve VTEC l Tier 2 Bin 5 ULEV-2 18 26 Pass Cars RL (AWD) 3.7L V6 SOHC 5AT 24-valve VTEC Tier 2 Bin 5 ULEV-2 16 22

Acura MDX (AWD) 3.7L V6 SOHC 6AT 24-valve VTEC Tier 2 Bin 5 ULEV-2 16 21 RDX 2.3L I4 DOHC Turbo 5AT 16-valve i-VTEC Tier 2 Bin 5 ULEV-2 19 24

1 ight Trucks ZDX (AWD) 3.7L V6 SOHC 6AT 24-valve VTEC Tier 2 Bin 5 ULEV-2 16 23 Gasoline Gallon Equivalent L 30

2010 North American Environmental Report

ACEEE 2010 Environmental Performance Ratings

The American Council for an Energy-Efficient Economy (ACEEE) joined on the ACEEE’s list of America’s top-12 greenest vehicles performs an annual analysis of automakers’ U.S. light-duty vehicle of 2010 by the Civic Hybrid, Insight, and Fit. Below are scores fleets. The independent rating is based on a single “green score” for representative models in each vehicle class in which Honda that takes into account a vehicle’s exhaust emissions and its competes, as well as each model’s class ranking and the highest greenhouse gas emissions over the full product life cycle. Honda and lowest scores recorded in each class. Product earned its 10th consecutive top rating in the rankings in 2010 with (Visit www.greenercars.org for more information on the the natural gas-powered Civic GX, which earned the ACEEE’s ACEEE rankings.) Development highest rating for the seventh straight year. The Civic GX was Automobiles Environmental ACEEE 2010 Green Scores for Honda and Acura Performance Ratings ACEEE Class Model Ranking Green Score Best-in-Class Score Worst-in-Class Score Small Wagon Fit Superior 45 45 32 Accord Crosstour Below Average 35 45 32 Compact Car Insight Superior 50 57 18 Civic GX Superior 57 57 18 Civic Hybrid Superior 51 57 18 Civic Above Average 44 57 18 Midsize Car Accord Sedan (I4) Average 39 52 20

Honda Accord V6 Coupe Average 36 52 20 Compact SUV CR-V Above Average 37 42 28 Element Average 34 42 28 Midsize SUV Pilot Average 31 39 20 Minivan Odyssey Above Average 31 37 29 Compact Pickup Ridgeline Below Average 28 36 25 Compact Car TSX Average 39 45 18 Midsize Car TL Average 34 52 20 RL Below Average 30 52 20 Acura Compact SUV RDX Below Average 32 42 28 Midsize SUV MDX (model year 2009) Average 28 39 20 31

2010 North American Environmental Report

U.S. EPA SmartWay Ratings

In 2004, the U.S. EPA launched SmartWay to help consumers vehicle tailpipe emissions that contribute to local and regional identify cleaner, more fuel-efficient transportation options. air pollution, creating problems such as smog, haze, and health Each vehicle listed in EPA’s Green Vehicle Guide receives an issues. The major pollutants analyzed are nonmethane organic Air Pollution Score and a Greenhouse Gas Score, on a scale gases (NMOG), nonmethane hydrocarbons (NMHC), total of 1 to 10. To earn the SmartWay designation, a vehicle must hydrocarbons (THC), nitrogen oxide (NOx), particulate matter Product receive a 6 or better in both categories and have a combined (PM), carbon monoxide (CO) and formaldehyde (HCHO). The score of at least 13. The SmartWay Elite designation is given to Greenhouse Gas Score measures emissions of carbon dioxide Development the best environmental performers — those vehicles that score (CO2) and other greenhouse gases. Automobiles 9 or better in both categories. The Air Pollution Score reflects Environmental Performance Ratings MY2010 Honda Vehicles with an EPA SmartWay Elite Rating

(continued) Model Engine Fuel Transmissions Greenhouse Gas Score Air Pollution Score Fuel Economy Honda Insight 1.3L I4 SOHC Gasoline 5MT 10 9.5 40/43 Honda Insight 1.3L I4 SOHC Gasoline CVT 10 9.5 40/43 (Continuously Variable Transmission) Honda Civic Hybrid 1.3L I4 SOHC Gasoline CVT 10 9.5 40/45 Honda Civic GX I4 SOHC CNG 5AT 9 9.5 24/36 32

2010 North American Environmental Report

Honda Debuts New CR-Z Sport Hybrid

Honda debuted the production version of its CR-Z hybrid coupe Honda CR-Z in January 2010 at the North American International Auto Show The CR-Z is equipped with either a in Detroit. A sporty, two-seater 6-speed manual or a continuously hybrid car, the CR-Z joins the Civic variable automatic transmission. It Product is rated as an Advanced Technology Hybrid and Insight as the third Partial Zero Emissions Vehicle Development hybrid model in Honda’s North (AT-PZEV) in states that adhere to Automobiles American lineup. The CR-Z is California Air Resource Board ZEV powered by a 4-cylinder engine standards, and achieves an EPA New Products fuel economy rating of 31 city and with i-VTEC variable valve control and Technology 37 highway miles per gallon with a and Honda’s Integrated Motor 6-speed manual transmission, or 35 Assist (IMA) hybrid system, mpg and 39 mpg with a continuously packaged in a lightweight and variable transmission (CVT). aerodynamic three-door coupe body, to provide high fuel economy in combination with a sporty driving experience.

New Honda and Acura Crossover Models Launched in FY2010

In FY2010, the company launched two all-new “crossover” vehicles — the 2010 Honda Accord Honda Accord Acura ZDX Crosstour and the 2010 Acura Crosstour ZDX — produced at plants in North America. Crossover vehicles combine the functionality of • All-aluminum engine with i-VTEC variable • All-aluminum engine with VTEC variable larger sport-utility vehicles with valve control valve control the superior fuel-efficiency and • 5-speed electronically controlled transmission • Electronic drive-by-wire driving dynamics of a passenger • 3-stage Variable Cylinder Management • 6-speed electronically controlled car. Both the Accord Crosstour with 3-, 4- and 6-cylinder operations automatic transmission and Acura ZDX utilize a number of • Body composed of 46% high-strength steel • Body composed of 48% high-strength steel engineering and design features (for reduced weight) and 5% aluminum (for reduced weight) aimed at reducing emissions and • Aerodynamic design features including underbody • Mercury-free navigation system increasing fuel efficiency. covers and underbody deflectors that improve display screen the flow of air across the vehicle’s undercarriage 33

2010 North American Environmental Report

Advancing Fuel-Cell Electric Vehicle and Hydrogen Refueling Technology

Honda views fuel cell technology as the most promising long-term a new prototype solar-powered hydrogen station in Torrance, solution to reducing greenhouse gas emissions from automobiles California. This next-generation system — drawing power from and achieving greater energy sustainability. Unlike some alternative- a 6-kilowatt array of Honda-developed and manufactured, thin- fuel vehicles, the hydrogen-powered fuel cell electric vehicle (FCEV) film solar cells — produces enough hydrogen to fuel an FCEV for has the potential to be a full-function replacement for the gasoline- everyday use (10,000 miles per year). Compatible with a “smart Product powered automobile. FCEVs can deliver two to three times the grid” energy system, the Honda Solar Hydrogen Station would tank-to-wheel energy of conventional gasoline-powered vehicles, enable users to refuel their vehicle during off-peak hours using Development reducing well-to-wheel GHGs by as much as 62%1 when using electricity from the grid, which would result in lower costs for Automobiles hydrogen reformed from natural gas, or as much as 100% when the consumer. During daytime, peak power periods, electricity using hydrogen produced using renewable energy. produced by the station’s solar panels can be sold back to the grid, New Products Accordingly, in 2008 Honda launched the FCX Clarity fuel further reducing operating cost and CO emissions. and Technology 2 cell electric vehicle as the first FCEV to achieve performance, functionality and comfort on par with a gasoline-powered sedan. The FCX Clarity is also the first U.S. EPA- and CARB-certified and FCX Clarity fuel cell FVMSS-compliant2 FCEV built from the ground up as a fuel cell electric car in front of Honda’s solar- vehicle, and the first to be produced on a dedicated assembly powered hydrogen line. Honda began leasing the FCX Clarity to individual customers refueling station in Torrance, California. 1 Based on steam methane reforming in Southern California in July 2008. At the end of FY2010, Honda (SMR) and a component of electricity had 15 FCX Clarity customers in the United States, who are each that is based on the average U.S. grid. leasing the vehicle for a period of three years. 2 In compliance with all applicable To help advance the real-world potential of fuel cell vehicles, portions of U.S. Federal Motor Vehicle Safety Standards (FVMSS) motor Honda is also researching technologies for hydrogen fuel production vehicle safety regulations. and distribution. In January 2010, Honda R&D began to operate 34

2010 North American Environmental Report

Product Development Powersports Products

Product Development Strategies, Goals and Results Powersports Category STRATEGIES GOALS Actions taken in FY2010 link

Products CO2 Emissions Improve fuel economy Voluntarily provide fuel economy Average fuel economy of U.S. motorcycle fleet improved of powersports estimates on powersports products an estimated 12.0% from 2001 baseline Overview products

Criteria Maintain or improve Meet or exceed all applicable All model year 2009 Honda motorcycles Air Pollutants the exhaust emissions regulatory requirements for exhaust and all-terrain vehicles, excluding competition models, performance of new emissions performance meet or exceed EPA and CARB emissions requirements Honda products

The Powersports Products segment includes Honda motorcycles for street, off-road and dual-sport use; four-wheeled utility and recreational ATVs; Multipurpose Utility Vehicles; and Personal Water Craft. 35

2010 North American Environmental Report

Motorcycle Fuel Economy

The fleet average fuel economy of Honda’s motorcycle fleet in To help consumers make comparisons among different models North America in CY2010 was improved 12.0% from the CY2001 and competing products, American Honda began voluntarily baseline, but was down 7.0% from the CY2009 result. providing fuel economy estimates for selected powersports products in model year 2009. While there is no prescribed industry standard for the measurement of motorcycle fuel economy, Average Fuel Economy Improvement for North American Market (baseline:CY2001)1 Honda and many of its competitors are using the U.S. EPA’s Product exhaust emissions measurement test procedure to provide Development 120 119 110 110 109 112 fuel economy estimates that are consistent across different product lines and marketing groups. Powersports 100 Products 100 80 100% Baseline in CY2001 Motorcycle Fuel Economy Estimates 2 60 Fuel Economy Model Description MPG 40 Metropolitan CHF50/S 49cc scooter 114 20 Ruckus NPS50/S 49cc scooter 114

0 Elite NHX110WH 108cc scooter 107 CY01 CY06 CY07 CY08 CY09 CY10 SH150i 153cc scooter 91 CRF230L 223cc 1-cyl dual-sport 85 CRF230M 223cc 1-cyl dual-sport 84 VT750C 745cc V-twin custom 56 Shadow VT750C2 745cc V-twin custom 56 Shadow RS VT750RS 745cc V-twin custom 56 NT700V/VA 680cc V-twin sport touring 50 Interstate/Stateline VT1300CR/CT 1312cc V-twin custom 47 Sabre VT1300CS 1312cc V-twin custom 47 Fury VT1300CX 1312cc V-twin custom 46 Silver Wing FSC600D/A 582cc scooter 46 CBR600RR 599cc I-4 sport bike 41 1 Fleet-average fuel economy are Honda calculations based on CBR1000RR 999cc I-4 sport bike 37 the sales-weighted average of estimated fuel economy based on Gold Wing GL1800 1832cc Flat-6 touring bike 36 emissions measurements. ST1300/A 1261cc V-4 sport touring 36

2 Based on U.S. EPA VFR1200F 1237cc V-4 sport bike 31 emissions data 2009 Honda Metropolitan 36

2010 North American Environmental Report

Exceeding Regulatory Emissions Requirements

Honda has consistently met or exceeded U.S. EPA and CARB both EPA and CARB requirements for evaporative emissions emissions requirements for on-road and off-road motorcycles. and fuel permeation. Globally, Honda is expanding the use In model year 2009, Honda substantially exceeded both EPA of programmed electronic fuel injection (PGM-FI), catalytic and CARB Tier 2 requirements for hydrocarbon (HC), nitrogen converters, and other advanced engine technologies that provide oxides (NOx) and carbon monoxide (CO) exhaust emissions, additional opportunities for further reductions in motorcycle Product in part through the broad application of 4-stroke engine and exhaust emissions and improvements in fuel efficiency. electronic fuel-injection technologies. Honda also exceeded Development Powersports Honda U.S. Motorcycle Emissions in MY2009 and Regulatory Standards Products HC (g/kWh) HC + NOx (g/kWh) CO (g/kWh) Criteria Air Pollutants Class Honda EPA CARB Honda EPA CARB Honda EPA CARB I (50-169cc) 0.6 1.0 1.0 n/a n/a n/a 8.1 12.0 12.0 II (170- 0.7 1.0 1.0 n/a n/a n/a 6.3 12.0 12.0 279cc) III (>279cc) n/a n/a n/a 0.6 1.4 0.8 4.7 12.0 12.0 Off-road (all) 0.7 n/a 1.2 0.9 2.0 n/a 8.8 25.0 15.0

Honda U.S. ATV Emissions in MY2009 and Regulatory Standards

HC + NOx (g/kWh) CO (g/kWh) Class Honda EPA CARB Honda EPA CARB I (≤225cc) 13.4 16.1 16.1 192 400 400 II (>225cc) 9.6 13.4 13.4 293 400 400

Honda U.S. Off-Road Utility Vehicle Emissions in MY2009 and Regulatory Standards

HC + NOx (g/kWh) CO (g/kWh) Class Honda EPA CARB Honda EPA CARB All 9.3 13.4 12.0 290 400 400 37

2010 North American Environmental Report

Product Development Power Equipment

Product Development Strategies, Goals and Results Power Category STRATEGIES GOALS Actions taken in FY2010 link

Equipment CO2 Emissions Maintain or improve Implement technologies for Introduced new GX Series general-purpose engines with fuel efficiency of improved fuel efficiency 12% higher fuel efficiency than the models they replaced Overview new Honda and Acura products Introduced new BF115 and BF60 marine outboard engines with 20% higher fuel efficiency than the models they replaced

Air Pollutants Maintain or improve Meet or exceed all applicable Honda power equipment and marine engines met the the exhaust emissions regulatory requirements for EPA’s more stringent Phase 3 exhaust and evaporative performance of new exhaust emissions performance emissions standards beginning in January 2010 Honda and Acura products

The Power Equipment segment consists of Honda lawnmowers, snowblowers, tillers, string trimmers and generators, as well as outboard marine engines, and general-purpose engines used in hundreds of applications for commercial, rental, and residential use. 38

2010 North American Environmental Report

Meeting and Exceeding U.S. Emissions Requirements

All Honda power equipment products and marine engines sold in New BF60 and BF115 Marine Outboard Engines the U.S. CY2010 comply with the EPA’s more stringent Phase 3 Honda redesigned exhaust and evaporative emissions standards that went into effect its BF115 outboard in January 2010. Further, as part of Honda’s “One Engine for All” marine engine and initiative, Honda general-purpose engines sold in all 50 states are introduced an all- Product developed to meet emissions standards set forth by California’s new BF60 engine Air Resource Board (CARB), significantly exceeding national to incorporate Development emissions requirements. programmed Power electronic fuel Equipment New Honda GX Series General Purpose Engines injection (PGM- Honda offers a complete FI). The new Fuel Economy and line of small, general purpose BF60 and BF115 Exhaust Emissions engines for commercial models reduce

and residential applications. Honda Marine BF60 fuel consumption Honda engines power by 20% compared more than 3,000 different to the previous model. The BF60 offers a reduction in fuel kinds of power products consumption of nearly 50% over competing models, while including pressure washers, offering consumers the low-noise operation of Honda four- lawnmowers, and stroke outboard engine technology. Both the BF60 and BF115 Honda GX390 Engine emergency rescue and feature Honda’s Boosted Low Speed Torque™ (BLAST™) construction equipment. system and a high-performance gear case for strong operation. In FY2010, Honda launched its new GX and iGX series of Their Lean Burn Control provides best-in-class fuel efficiency general purpose engines in the United States. The GX Series at cruise. Both new outboard engines exceed the EPA’s 2006 engines emit 26% fewer exhaust emissions than the previous emissions standards and comply with the 2009 emissions engine series and meet the U.S. EPA’s 2011 emissions standards of the California Air Resources Board (CARB), the requirements based on engine performance alone (without the strictest in the world. need for a catalytic converter). Further, the large GX series delivers a 15% increase in fuel efficiency compared with the model it replaces, while reducing sound by as much as 3 decibels. A new reed-style breather valve, air cleaner, and a new muffler design contribute to the engine’s quiet performance. Management Strategies, Addressing Global Product Supplemental Table of Contents & Direction Goals & Actions Climate Change Life Cycle Information 39

2010 North American Environmental Report

Honda Micro-Combined Heat and Power (MCHP) Co-Generation Technology

Honda MCHP technology was introduced in Japan in 2003 and integrate Honda’s MCHP power module with a super-efficient in the US in 2007. Honda’s freewatt™ MCHP is a heat transfer residential boiler. This modulating condensing boiler captures and power generation device that provides home heating or 95 percent of the available energy. The advanced microprocessor water heating as well as electrical power for a variety of home control continuously adjusts the system’s output to match the applications. The ultra-quiet MCHP Deluxe unit produces 3.26 home’s heating load. The system offers an optional indirect hot Product kilowatts of heat and a maximum 1.8 kilowatts of electric power, water tank, which will satisfy the home owner’s hot water needs an improvement over Honda’s Standard MCHP system, which and allow for year-round electricity generation. This system can Development produces a maximum 1.2 kilowatts of power. Both models allow also provide space heating, water heating, electric power and Power homeowners to reduce their utility bills and curb carbon dioxide backup power. The Warm Air freewatt plus System employs a Equipment emissions by as much as 30% in colder climates compared with 95 percent efficient two-stage variable speed condensing furnace conventional home heating systems. combined with Honda’s MCHP power module to provide space Cogeneration Recently, the freewatt system has evolved to include both a heating and electric power, as well as backup power in the event Technology hydronic system and a warm-air system. The hydronic freewatt of a power failure. plus system uses a hydronic HI module and control module to

HEAT Surplus Flue Power to Grid Electric Power Loss

Fuel

Honda Complete MCHP System Climate EnergyTM Micro-CHP Schematic 40

2010 North American Environmental Report Purchasing

overview Our approach to environmental management focus We encourage OEM suppliers to adopt measures extends to approximately 600 original equipment to reduce the environmental impact of producing materials, manufacturers (OEMs) and parts logistics companies in parts and components for Honda and Acura products, North America, where environmental impacts include focusing on reducing energy use, emissions, and packaging material waste, consumption of natural resources and waste. At the same time, we continually work in close

greenhouse gas emissions, predominantly CO2 from the partnership with suppliers and logistics companies to reduce production of component parts and their transportation the environmental impact from parts transportation, through to Honda plants. initiatives that include route consolidation, use of on-site consolidation centers to minimize shuttle traffic, and optimizing the use of transport space.

Strategies, Goals and Results

Category STRATEGIES GOALS ACTIONS TAKEN IN FY2010 link

Environmental Promote ISO 14001 Maintain or increase the number of 88% of tier-one suppliers in Honda’s North American Management certification of tier-one ISO-certified tier-one suppliers in North supply chain had ISO 14001 certification in FY2010, the suppliers to Honda America same percentage as in FY2009

CO2 Emissions Promote more energy- Reduce CO2 emissions from the Launched Supply Chain Sustainability initiative, requiring efficient operations manufacture and transport of parts and suppliers to manage, collect and report on energy use within Honda’s North materials supplied to Honda plants in American supply chain North America Honda works with about 600 original equipment Adopt more Began operations at new parts consolidation centers in Ohio and South manufacturers in North America, efficient parts Carolina, reducing CO emissions associated with the distribution of who supply parts for new Honda and 2 logistics processes parts at these factories by an estimated 1,290 metric tons annually Acura vehicles. The company is advancing its efforts to promote Utilize EPA SmartWay- Increase use of Increased to 68% the proportion of SmartWay-certified more environmentally responsible certified trucks for Smartway-certified trucks trucking partners involved in movement of parts from manufacturing and shipping operations the shipment of parts North American suppliers to Honda plants in the region, through numerous initiatives with its from suppliers to up from 45% in FY2009 North American suppliers. Honda factories 41

2010 North American Environmental Report

Supplier Sustainability and Greenhouse Gas Initiative

Through its North American Purchasing Division, Honda has North American Purchasing is asking all Honda suppliers to: created a Supply Chain Sustainability business team to work with • raise the awareness of the GHG initiative within their its suppliers. The goal is to enhance communication, increase operations and involve their associates to support a awareness, and promote action to minimize the environmental reduction in CO emissions; impact of manufacturing and logistics operations. This sustainability 2 initiative emphasizes the reduction of CO emissions, and will • understand energy usage in their facilities, summarize Purchasing 2 help ensure a high level of commitment within Honda’s supply improvements already achieved and identify future chain to continually make strides in this area. energy-saving opportunities; and • establish management of these GHG reduction activities within their business processes.

On-Site Parts Consolidation Centers

Honda began operations at two new on-site parts consolidation consumption of diesel fuel by approximately 100,000 gallons centers in North America in FY2010. These new facilities — in annually. In addition, reduced use of forklifts to load and unload Marysville, Ohio, and Timmonsville, South Carolina — are a parts saves approximately 160,000 pounds of liquid petroleum gas further extension of Honda’s effort to improve the efficiency of (LPG) each year. Overall, the consolidation center is estimated to

parts logistics through on-site consolidation of parts and materials reduce CO2 emissions by more than 1,200 metric tons per year. at its plants in the region. Honda established an on-site parts consolidation operation at its auto and engine plant in Lincoln, Honda of South Carolina Alabama, in 2007, and at its newest auto plant, in Greensburg, The on-site parts Indiana, at the outset of production in 2008. Additionally, both consolidation center in the Ohio and South Carolina centers began operations as Timmonsville, South Carolina, zero waste-to-landfill facilities. began delivering parts for the production of Honda Marysville Material all-terrain vehicles in the Management Center adjacent Power Sports Plant Operations at the new on- in April 2010. Operations site consolidation center at the new center are in Marysville, Ohio, are Honda of South Carolina eliminating the use of shuttle eliminating the use of shuttle trucks for transporting trucks to transport parts parts by 25 loads per day, reducing diesel fuel consumption by

to the adjacent Marysville approximately 9,700 gallons annually and cutting CO2 emissions Auto Plant. The new center by about 90 metric tons per year. Marysville Material eliminated 130 truck Management Center loads per day, reducing the 42

2010 North American Environmental Report

Parts Logistics Initiatives Reduce Fuel Consumption and CO2 Emissions

Since the start of Honda’s North American manufacturing operations in Ohio more than 30 years ago, the company has pioneered many advancements in parts logistics. Innovations include the sequencing of parts for just-in- time delivery to assembly lines, the use of returnable parts containers, and initiatives aimed at maximizing space utilization in trucks carrying parts and minimizing transport distances from suppliers to Honda factories. Purchasing Shared Transportation Network Optimizing Parts Delivery For Saturday Production Honda manufacturing facilities across North America share many As part of a shared network, Honda optimizes parts transportation of the same suppliers. Honda employs a shared transportation when single or multiple plants run Saturday shifts. Parts network for less-than-full truckload transport. Within this shared shipments are often made prior to required delivery dates to transportation network, regional cross-dock operations enable avoid partial truckload shipments. In FY2010, this practice reduced

collection of supplied parts from shared collection routes, where truck parts transport by 2 million miles and CO2 emissions by they are transferred into efficiently cubed plant- and dock-based more than 2,700 metric tons. full-line hauls. Since implementation in FY2008, this shared transportation network has reduced truck transports by more Dynamic Load Planning

than 6.8 million miles and CO2 emissions by 9,000 metric tons. Honda has the ability to produce a variety of passenger cars and light trucks on its assembly lines, allowing the company to respond quickly and efficiently to changing market conditions. As a result, the transportation network must manage a wide variety of parts logistics requirements that result in multiple truckloads that vary daily. Honda has implemented a dynamic load-planning process to optimize parts shipments into full or almost full truckloads. In FY2010, this new process reduced truck

transport by more than 2.5 million miles and CO2 emissions by 3,800 metric tons.

Cross dock operations at Marysville Auto Plant 43

2010 North American Environmental Report

SmartWay Transport Partnership

Honda has made a strong providers were certified SmartWay Transport Partners, up from commitment to the U.S. EPA 45% in the previous fiscal year. Additionally, 62% received SmartWay Transport Partnership an “outstanding” score for using the latest technology and by encouraging its transportation fuel-saving processes to achieve superior fuel efficiency and providers to participate in this program. The SmartWay Transport environmental performance. Furthermore, all six of Honda’s Purchasing program is an innovative collaboration between the EPA and the rail transport providers were SmartWay-certified, and all had freight sector designed to improve energy efficiency, reduce outstanding scores. greenhouse gas emissions and improve energy security through With the support of Honda’s SmartWay truck transport providers,

the application of SmartWay-certified technologies. Companies Honda’s Ohio operations are projecting a 5% reduction in CO2 that provide or hire freight delivery and logistics services can emissions per mile traveled by trucks over the next three years, 1 become SmartWay Transport partners by committing to improve with total CO2 savings of more than 18,000 metric tons. the environmental performance of their freight delivery operations. (Click here for more information on Honda’s SmartWay At the end of FY2010, 68% of Honda’s manufacturing trucking initiatives in the Sales and Service area)

Promoting Improved Environmental Practices Among Honda SuppliersNorth American OEM Suppliers ISO 14001-Certified (pg 36)

Third-party ISO 14001 Certification of Suppliers ISO 14001-Certified North American OEM Suppliers to Honda Honda’s efforts to promote environmental improvements with its North American suppliers began in 1998, when the company FY05 50 asked OEM suppliers to its Ohio and Ontario, Canada, auto FY06 58 plants to implement environmental management systems and to FY07 80 obtain third-party ISO 14001 certification. In FY2010, 88% of all FY08 85 companies in Honda’s North American tier-one supply chain, were FY09 88 third-party ISO 14001-certified, the same proportion as during the FY10 88 previous fiscal year. 0 25 50 75 100 Percent Supplier Symposiums In each of the past 17 years, Honda has held symposiums to share best environmental ideas and practices with its almost 600 North American original equipment parts suppliers. In November 2009, 60 North American parts suppliers participating in the symposium submitted 14 applications for recognition of 1 Estimate assumes truck miles traveled will remain constant. their environmental achievements. 44

2010 North American Environmental Report Manufacturing

overview Honda operates 14 manufacturing facilities in natural resource consumption, and emissions of GHGs,

North America, producing a wide range of products including predominantly CO2, and other air pollutants. Honda and Acura automobiles, engines and automatic trans- missions, Honda all-terrain vehicles, and numerous power focus Our work to reduce the environmental impact of equipment products such as lawn mowers, mini-tillers, and our manufacturing operations in North America includes small displacement general-purpose engines for commercial efforts to reduce the energy intensity of production, as well and residential use. Environmental impacts from manu­ as initiatives to conserve water and other natural resources, facturing operations include waste generation, energy and and to reduce air emissions and waste generation.

Strategies, Goals and Results

Category STRATEGIES GOALS Actions taken in FY2010 link

Environmental Third-party certification Achieve third-party certification to ISO Honda Precision Parts Georgia certified as the thirteenth Management of Honda manufacturing 14001:2004 environmental management of 14 Honda plants in North America to achieve facilities to ISO 14001:2004 standards for all major Honda manufacturing ISO 14001:2004 certification certification standards facilities in North America

CO2 Emissions Improve energy efficiency Reduce the energy intensity of Automobiles Energy efficiency improvement initiatives were of manufacturing manufacturing operations (kg/unit) implemented to offset the negative impact of reduced

operations production. Despite these efforts, the CO2 emissions intensity of auto production rose 1% in FY2009

Powersports The CO2 emissions intensity of powersports product Products production rose 64.8% from the previous fiscal year, as Honda completed the phaseout of motorcycle production in the U.S., which negatively affected per-unit energy efficiency

Power The CO2 emissions intensity of power equipment Equipment production fell 12.9% from the previous fiscal year

Waste Reduce generation Reduce landfill waste (excluding mineral waste) Waste sent to landfills (excluding mineral waste) was reduced 22% in of waste material and 70% from FY2001 levels by FY2010 FY2010 from the previous fiscal year and 87% from the FY2001 baseline Honda operates 14 plants in increase recycling North America, along with Make progress toward target: to achieve North American manufacturing plants made progress toward their target by two new plants still under construc- zero waste to landfill at all North American implementing numerous waste reduction, reuse and recycling initiatives. manufacturing facilities by April 1, 2011 tion. In 2009, 84 percent of the new Honda and Acura automobiles pur- Water Use Reduce the generation Reduce the water use intensity of automobile Water use intensity in automobile production decreased 2.5% from the chased in the U.S. were produced by of waste water where manufacturing operations previous year, to 780 gallons/unit economically practical and Honda factories in North America. technically feasible 45

2010 North American Environmental Report

Production Activity

Severe economic conditions caused a significant reduction in Managing product inventories under these conditions 0.5 customer demand for automobiles, motorcycles and power required a significant reduction in production volumes at Honda’s equipment products in FY2010. Further, in FY2010 Honda North America plants during the fiscal year. Due to the fact completed the phaseout of motorcycle production in the United that manufacturing systems must remain in operation whenever States, as large motorcycle production was consolidated at a production is taking place, these reduced production levels 0.4 Manufacturing new plant in Kumamoto, Japan, and the Marysville Motorcycle had a negative affect on per-unit measures of energy use, Plant was converted to a parts consolidation center servicing the CO2 emissions, waste, and water use. Production Activity adjacent Marysville Auto Plant.

Honda Product Manufacturing Results in North America 0.3

N Automobile Production Totals powersports Production Totals N

0.4 0.41 0.2 0.38 0.38 Units (millions) Automobile 0.36 0.36 0.36 1.5 Automobile Engine 0.3 1.44 0.32 Transmission 1.43 1.40 0.26

1.41 0.2 0.1

1.39 Units (million) 1.37 0.16 1.28 1.25 1.25 0.1

0.05 1.19 1.2 1.23 1.24 0.0 1.15 0.0 MY01 MY02 MY03 MY04 MY05 MY06 MY07 MY08 MY09 MY10 1.18 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 1.08 2.0 1.14 1.99 1.04 1.10 power equipment Production Totals N 1.07 1.82 2.0 1.04 1.04 1.71 1.02 1.01 1.01 SHORTER VERSION 1.01 1.99 1.5

Units (million) 1.55 1.82 0.9 .94 .93 1.71 1.5 1.34 1.55 .87 .84

1.34 Units (millions) 1.15 1.0 1.08 1.06

.78 Units (million) 1.0 1.15 1.08 1.06 0.87 0.87 0.56 0.56 0.6 0.5 0.0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 MY01 MY02 MY03 MY04 MY05 MY06 MY07 MY08 MY09 MY10

SHORTENED VERSION 46

2010 North American Environmental Report

Responsible Local Manufacturing

Honda’s long-held global strategy of manufacturing its products North American parts suppliers, produced almost 84% of the in the markets where they are purchased helps mitigate the Honda and Acura automobiles sold in the United States, the environmental impact of producing and distributing Honda highest percentage of any international automaker. Honda products in North America. Manufacturing in this region, along continued to localize its manufacturing capabilities in North with the local sourcing of component parts, can significantly America, adding production of two all-new crossover vehicles — Manufacturing reduce the energy, emissions, and waste associated with the the Honda Accord Crosstour and the Acura ZDX — in FY2010. shipping of parts from suppliers to Honda factories, and the In the motorcycle sector, the need to realize greater Production Activity transportation of finished products from the factory to the dealer. manufacturing efficiencies led Honda to consolidate all large (continued) In the automobile sector in calendar year 2009, Honda’s motorcycle manufacturing in a new factory in Kumamoto, Japan. North American factories, in partnership with nearly 600

ISO 14001 Certification

Honda implemented the central element for environmental oversight • Honda Precision Parts of Georgia, LLC, manufacturer of automobile and management of its North American manufacturing operations in transmissions since 2006, achieved certification in FY2010. 1998 by making a commitment to achieve and maintain third-party • Honda Manufacturing of Indiana, LLC, which started automobile ISO 14001 certification for environmental management at Honda production in the fall of 2008, is scheduled to achieve certification manufacturing operations throughout the region. Thirteen of the 14 by 2014. Honda plants operating at the end of FY2010 were certified to the ISO 14001:2004 standard.

Environmental Stewardship Recognition from Ohio EPA

The state of Ohio’s Environmental Protection Agency In recognizing Honda’s efforts, the Ohio EPA took note of the (Ohio EPA) in 2009 recognized the efforts of Honda of America following achievements: Mfg., Inc., and Honda Transmission Mfg., Inc., along with • Honda has reduced waste sent for disposal in landfills by 34%; reduced five other companies operating in the state, for their efforts electricity use by 62.5 million kWh or enough to supply more than to reduce their environmental impact with its Environmental 5,500 typical households in one year; reduced natural gas usage by Stewardship Award. According to the Ohio EPA, the award more than 417 million cubic feet in one year; and reduced ground water winners were selected based on “a sound track record of use by 43 million gallons per year. environmental compliance and a commitment to go above and • By using two ponds covering seven acres to capture rain water, the beyond regulations to improve environmental performance; company avoided using more than 95 million gallons of ground water aggressive environmental performance goals; and a process for over two years. communicating with the local community about program activities • At the company’s East Liberty Plant, a spinning operation was and progress on performance goals.” added to remove oil and solvents from used rags. The rags are then remanufactured into auto parts. • At the Anna Engine Plant, the company reused 7.7 million pounds of sand castings in soil and mulch products. 47

2010 North American Environmental Report

CO2 Emissions

Sources of Honda North American Manufacturing CO2 Emissions from N.A. Manufacturing Facilities

CO2 Emissions (from purchased electricity and natural gas)

3% 1.2 1.2

Manufacturing 1.0 1.05 1.06 1.06 1.0 1.01 0.99 Electricity 0.96 0.94 72% Electricity 0.8 0.90 CO Emissions Natural Gas 0.84 0.8 2 25% 0.78 Other Fuels: 25% Natural Gas 0.6 • propane 0.6 • fuel oil 3% Other Fuels 0.4 72% • gasoline (propane, fuel oil, 0.4 • coke gasoline, coke, kerosene) • kerosene Metric Tons x 1 Million 0.2 0.2 0.0 0.0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

Approximately 96% of CO2 emissions from manufacturing Reduced production levels in FY2010 significantly affected operations in North America fall into two categories: indirect operating efficiencies. Although total CO emissions decreased, FY05 50 2 FY06 58 emissions from the production of electricity purchased and lower production levels resulted in a slight increase in per-unit FY07 80 consumed by Honda factories, and direct emissions from their CO2 emissions. Much of the loss of efficiency from production FY08 85 consumption of natural gas. Honda plants use electricity for reduction was offset by strong efforts to ensure that production FY09 88 automation, lighting, motors and compressors, and cooling. equipment was shut down when the plants were not operating. FY10 ?

Natural gas is needed for heating and conditioning fresh air, CO2 emissions from electricity and natural gas consumed 0 25 50 75 100 and for manufacturing processes such as paint booth air supples, at Honda’s North American manufacturing operations totaled Percent paint curing ovens and melt furnaces. 0.90 million metric tons in FY2010, a decrease of 12.0% from the previous fiscal year. 48

2010 North American Environmental Report

(continued) CO2 Emissions

Automobile Production Powersports Product Production Power Equipment Production

CO2 emissions per unit of automobile CO2 emissions per unit of powersports CO2 emissions per unit of power equipment production rose 6.4% from the FY2001 product produced rose 293.7% from the production fell 21.3% from the FY2001 baseline and 1.0% from the previous fiscal FY2001 baseline and 64.8% from the previous baseline and 12.9% from the previous fiscal year, to 755 kg. Production of automobiles fiscal year to 476 kg, as Honda completed year, as production of power equipment Manufacturing in FY2010 was down 8%, to 1.15 million the phaseout of motorcycle production products was down 1.9%, to 1.06 million units, from the previous fiscal year, which in the region. Production of powersports units, from the previous fiscal year.

CO2 Emissions was down 13.2% from FY2008. products was down 68.4% to about 50,000 (continued) units, from the previous fiscal year.

1 1 1 Per Unit CO2 Emissions from Per Unit CO2 Emissions from Per Unit CO2 Emissions from Automobile Production* Powersports Product Production* Power Equipment Production

800

500 15 761 756 755 476 747 400 13.2 13.2 kg/Unit kg/Unit kg/Unit

727 11.9 12.0 300 12 714 715 11.5 700 709 289 705 10.8 11.1 200 687 208 151 148 10.4 10.2 121 119 117 110 114 9.8 100 9 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

* Does not include emissions data for motorcycles * CO2 emissions data for automobile production prior to FY2006 includes production of both motorcycles and automobiles produced in Mexico prior to FY2006 in Honda’s plants in Mexico. FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

1 Honda’s North American manufacturing operations track CO2 emissions from fuel combustion and process uses (electric and natural gas only) in accordance with guidelines published in The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition. 49

2010 North American Environmental Report

Energy Use

Improving the energy efficiency of Honda factories is the single biggest focus of the company’s efforts to reduce the environmental impact of its manufacturing operations in North America.

Total energy consumed in all production activity in North America Ohio, and Alliston, Ontario, auto plants and slowing production Manufacturing rose 7.9% from the FY2001 baseline but decreased 8.0% from the lines at some other plants. previous fiscal year, to 8.21 million gigajoules, primarily as a result While cutting production days and shifts reduced energy Energy Use of lower production volume and energy-saving initiatives. consumption, the reduction was off-set by training and Energy use per unit of automobile production in North America maintenance activities taking place on those days. Slowing decreased about 0.2% from the FY2001 baseline and was up production lines significantly reduced energy efficiency because 2.4% from the previous fiscal year, to 6.9 gigajoules, as a result the entire plant and its processes must be operating even of lower production volumes. For 2010, the North America though fewer units are being produced. Honda’s manufacturing region cut production volume primarily by reducing the number plants were able to offset a significant portion of the impact of production days (while offering associates the opportunity to through efforts to ensure that all equipment was shut down work), eliminating one shift of operations at both the Marysville, when not needed.

Energy Use at Manufacturing Facilities in North America 8

Total Energy Use1 7.2 7.1 Average Energy Used 2 6.9 6.9 Per Auto Produced 6.8 7 6.7 6.7 6.7 7

12 6.5 1 Total energy use (from 6.2

GJ/Auto consumption of electricity 10 and natural10 gas) includes 9.43 9.73 9.63 9.56 all North American 9.09 6 8 8.82 8.93 manufacturing6 operations. 8.21 8 GJ x 1 Million 7.61 7.76 2 Energy per auto includes all 6 auto-related 6manufacturing operations, including 4 automobile engine and 5 transmission4 production; it does not include power 2 equipment and2 powersports products. 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

1.2 50

2010 North American Environmental Report

“ Intelligent” Paint Booth Technology Ohio Auto Plants Earn Energy Star from EPA Implemented Throughout North America Honda’s Marysville and East Liberty auto plants in Ohio received Energy Star awards from the U.S. Environmental Protection Agency (EPA) in 2009 for operating energy-efficient plants. Despite decreased production volumes, the Marysville and East Liberty auto plants were able to reduce energy use during nonproduction periods Manufacturing enough to maintain an Energy Star rating. The EPA bases the award points on the amount of energy needed to produce an Energy Use automobile, and takes into account factors such as vehicle size (continued) and production volume.

Note: Plants in Canada and Mexico are not eligible for U.S. EPA Energy Star recognition.

Reduced Use of Coke in Engine Production Reduces Truck Travel Honda’s Anna Engine plant uses the carbon from coke to produce iron for casting steel Energy consumed in automobile body painting operations — engine and drivetrain to control air temperature and humidity levels — consumes the parts. By transitioning largest amount of energy in Honda auto plants. Since Honda from 4x6-inch chunks first deployed its “Intelligent” Paint Booth technology at the of coke to slightly Marysville Auto Plant in FY2008, the company has steadily larger 4x9-inch chunks, engineers in the implemented the new control system at all of Honda’s major Coke is used as both a fuel and reducing agent automobile paint operations in North America. The technology in the sintering process of producing steel from plant’s ferrous casting iron ore. Shown above at Anna Engine Plant. department discovered can reduce CO2 emissions by as much as 25%, depending on the operating efficiencies of different paint booth systems. that they could get Honda completed the implementation of “Intelligent” Paint more carbon from a given quantity of coke. As a result, the volume Booth technology at all of its auto plants in North America of coke shipped to the plant has decreased on average from 11 to eight truckloads each week. CO emissions associated with in FY2010. 2 coke processing have been reduced about 25%, and annual CO2 emissions from the shipment and use of coke have been reduced by an estimated 2,700 metric tons. 51

2010 North American Environmental Report

Waste

Honda’s efforts to reduce or eliminate waste in its North American production facilities is entering a new phase. The company has set a new target — to achieve zero waste to landfill, including mineral waste, at all 14 of its North American manufacturing facilities by April 1, 2011.

Honda views solid waste generated in its factories as an inefficient its voluntary target — to cut waste to landfills (excluding mineral Manufacturing use of raw material. From this perspective, Honda has established waste) 70% from the FY2001 baseline by FY2010. In FY2010, Waste a waste management hierarchy (below left) for its North American waste to landfills (excluding mineral waste) was reduced 86% manufacturing operations and encourages all operations to from FY2001 levels, while total waste to landfills was reduced improve overall waste management by moving waste up the 87% from the baseline, and 65% from the previous fiscal year. hierarchy toward the ideal of no downstream waste from The large reductions achieved over the previous fiscal year were manufacturing operations. Honda has focused on reducing waste accomplished primarily by moving mineral waste streams from through elimination and recycling initiatives and has exceeded beneficial reuse or disposal in landfills to non-landfill recycling uses.

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

29.7 30 21 Zero 25 24.4 Waste 18 21.1 21.0 14.9 20 19.1 15 0 18.2 17.7 0 0 16.1 12 kg/Auto 15 9.8 Reuse 11.5 6.8 9 10 6.4 Metric Tons x 1 5.2 Recycling 4.2 6 3.7 4.2 5 2.4 2.3 2.0 3 Energy Recovery 17.9 13.8 11.0 10.4 8.3 6.7 5.8 3.8 3.1 2.4

Landfill – FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 Alternate Daily Cover 1Total landfill waste includes all North American Landfill waste excluding manufacturing operations. mineral waste

Landfill 2 Total Landfill Waste1 Landfill waste per auto includes all auto-related manufacturing operations; it does not include Average Waste to Landfills powersports products and power equipment Per Auto Produced2 production. 52

2010 North American Environmental Report

Zero Waste-To-Landfill Plants

At the end of FY2010, eight of 14 North American plants Honda Transmission Mfg. of America, Inc., both in Ohio, had achieved zero waste-to-landfill (including mineral waste). along with Honda’s all-terrain vehicle (ATV) plant in This includes Honda Manufacturing of Alabama, LLC, which South Carolina, plan to eliminate their remaining landfill was the first automobile plant in North America to achieve wastestreams by April 1, 2011. Honda’s transmission plant zero waste-to-landfill, at the outset of production in 2001. in Georgia has one waste stream that is currently beneficially Manufacturing With its larger wastestreams already diverted from landfills reused at a local landfill. It will be moved to non-landfill to reuse and recycling, Honda of America Mfg., Inc., and recycling during FY2011. Waste (continued) Honda Zero Waste-To-Landfill Plants in North America

Plant Production Capacity Near Zero Waste-To-Landfill Achieved

Lincoln, Alabama, auto and engine plant 300,000 autos FY2002 (since startup) 300,000 V6 engines Swepsonville, North Carolina, 340,000 power equipment products FY2007 U .S. power equipment plant 2 million engines Greensburg, Indiana, auto plant 200,000 autos FY2009 (since startup) Alliston, Ontario, auto plant (Plant 1) 195,000 autos FY2008

Current Alliston, Ontario, auto plant (Plant 2) 195,000 autos FY2008

Canada Alliston, Ontario, engine Plant 200,000 4-cylinder engines FY2009 (since startup) El Salto, Jalisco, auto plant 50,000 autos FY2003 50,000 engines exico

M El Salto, Jalisco, motorcycle plant 30,000 motorcycles FY2003

Marysville, Ohio, auto plant 440,000 autos Planned for April 1, 2011 East Liberty, Ohio, auto plant 240,000 autos Anna, Ohio, engine plant 1.18 million engines Russells Point, Ohio, transmission plant 610,000 transmissions 271,000 gear sets U .S.

Future 73,200 4WD systems Tallapoosa, Georgia, transmission plant 300,000 transmissions Timmonsville, South Carolina, ATV plant 266,000 ATVs 310,000 engines

Total landfill waste does not include sludge generated from the treatment of wastewater from the pre-treatment process for vehicles with aluminum body panels at the Marysville, Ohio, auto plant. Regulations require that Honda dispose of the sludge at landfills as non-hazardous waste or by incineration as a hazardous waste. Until an alternative management method can be approved, Honda has elected to dispose of the waste by landfill. In FY2010, the Marysville plant generated 318 metric tons of sludge that was sent to landfills. 53

2010 North American Environmental Report

Zero Waste-To-Landfill Plants (continued)

Reduced-Waste Cafeteria Operations Reducing Steel Scrap At Honda of America Mfg., Honda recycles all of its steel scrap from stamping operations. Inc’s three plants in Ohio, Some of the material is used in the production of drivetrain cafeteria waste, totaling more components and the balance is shipped to steel recycling facilities. than 500 metric tons each Manufacturing year, was one of the final frontiers of waste reduction. Waste In March 2010, four cafeterias (continued) began to capture organic waste for composting and to use washable dishware to help eliminate use of disposable food service items that cannot be recycled. Once fully implemented, in early 2011, waste from the cafeterias will be separated for composting, recycling, and energy recovery. The remaining cafeterias will separate waste for recycling and energy recovery. No cafeteria waste will go to landfills.

Sand Recycling and Reuse

Body-side stampings being produced at Marysville Auto Plant

In FY2009, the company started a new initiative at its Marysville Auto Plant to reduce the size of steel sheets (blanks) used to form new body parts. Minimizing the generation of steel scrap reduces the environmental impact of material recycling, and moves the generation of scrap steel up Honda’s waste hierarchy closer to Brake disc sand castings Engine manifold sand castings zero waste. The initiative has been so successful at the Marysville plant that Honda is implementing it throughout North America Honda engine plants in Ohio, Alabama, and Canada have found and rolling it out to other Honda plants around the world. ways to reuse virtually all sand left over from aluminum and ferrous casting operations. In FY2010, the three engine plants recycled a total of more than 9,300 tons of sand as mulch and topsoil in local gardens, and as an ingredient in concrete products. The Anna, Ohio, engine and Russells Point, Ohio transmission plants are moving from the recycling of sand as mulch or as daily cover for landfills to the use of sand in concrete. Recycling the material moved the spent sand up Honda’s waste hierarchy. 54

2010 North American Environmental Report

Water Use

The minimization of water use and the reduced generation of wastewater have continued at all of Honda’s North American plants. Total water used for manufacturing in FY2010 was reduced 12.2%, or 128 million gallons, from the previous fiscal year, to 925 million gallons. Average water use per unit of automobile production was reduced 2.5%, or 20 gallons, to 780 gallons. Manufacturing Natural Resources Water Use in North American Manufacturing Facilities By Source Water Use in North America Manufacturing Facilities Water Use 1% .80 .79 .79 1200 .78 0.8 1200 0.8 Gallons x 1000/Auto 1000 .75 1000 48% Direct groundwater withdrawal 800 800 51% Purchased water from .70 .73 48% local utility 600 .71 0.7 600 0.7 .70

51% Gallons x 1 Million 1% Rainwater capture 400 and reuse .67 400 200 200 769 766 931 923 1,018 1,112 1,078 1,054 1,053 925 0.6 0 0.6 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

1Total water use includes all North American Total Use1 manufacturing operations.

Average Water Use 2Water used per auto produced includes all Per Auto Produced2 auto-related manufacturing operations; it does not include powersports products and power equipment production. 55

2010 North American Environmental Report

Wastewater Management

Industrial wastewater is generated primarily from painting, New Wastewater Treatment System at Canada Engine Plant surface treatment, and machining operations. Plants that Honda’s engine plant in Alliston, Ontario, implemented a system generate industrial wastewater pretreat it on-site to reduce that integrates a membrane bioreactor with ultrafiltration to treat the contaminants below regulated levels before the water is industrial waste water. The system uses dissolved air flotation in discharged to local municipal wastewater treatment plants. pretreatment to remove free oils. Microorganisms in the bioreactor Manufacturing The pretreated wastewater must meet regulatory requirements consume organic waste, converting it into carbon dioxide, established at municipal, state, and federal levels. Less than 2% water and chemical intermediaries. Heavy metals are removed Natural Resources of wastewater is trucked off-site for treatment. through sorption of the biomass. After ultrafiltration, the water is Wastewater Management Some manufacturing plants also discharge wastewater directly discharged to local waste water treatment plants. In addition to to local waterways. Several plants have National Pollutant Discharge eliminating wastewater, this system reduces the amount of sludge Elimination Systems (NPDES) permits, which allow the discharge by up to 80% compared with a conventional treatment system. of stormwater associated with industrial activities, including The system is so efficient that it is used also to treat used coolant cooling tower blowdown and air-conditioning condensate. The from machining operations, which was previously shipped offsite Marysville and East Liberty auto plants operate potable water for treatment. plants on-site and discharge overflow from lime settling in ponds though an NPDES permit. The NPDES permits set contaminant limits and mandate periodic sampling and reporting.

Total Wastewater Discharged from Waste Water Discharged from N.A. Manufacturing Facilities North American Manufacturing Facilities

2% .50 53% Industrial Wastewater 800 0.5 45% Sanitary Wastewater 700 .48 Gallons x 1000/Auto Wastewater .47 2% Trucked off-site 600 Industrial Wastewater

500 45% 53% 400

300 Gallons x 1 Million 200 1 Total wastewater discharged 100 includes all North American 702 624 590 manufacturing operations. 0 0.4 FY08 FY09 FY10 2 Total wastewater discharged used per auto produced includes all auto-related Total Wastewater Discharged1 manufacturing operations; it does not include Average Wastewater Discharged powersports products Per Auto Produced2 and power equipment production. 56

2010 North American Environmental Report

Air Emissions

Honda plants release various air contaminants, primarily volatile organic compounds (VOCs), particulate matter (PM), oxides of nitrogen (NOx), and carbon monoxide (CO). VOC emissions typically come from painting operations. PM emissions usually result from metal casting and finishing processes, and from painting operations. NOx and CO emissions typically result from the combustion of natural gas and other fuels for heating and process needs, Manufacturing and from the use of engine and full-vehicle testing dynamometers. Air emissions are controlled in accordance with Air Emissions applicable laws and regulations. The company routinely monitors, tracks, and reports emissions levels to regulatory agencies in accordance with federal, provincial, and state requirements. Honda factories are routinely inspected for compliance with legal requirements.

VOC Emissions VOC Emissions from Auto Body Painting in North America* 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 30 30 0.8 been Honda’s policy to minimize the release of VOCs by adopting 28.7 28.6 less-polluting processes whenever possible. VOC emissions 25 25 24.5 23.6 from auto body painting operations in FY2010 were down 9.8% 20 22.0 20 2 20.8 from the previous fiscal year and 52% from the FY2001 baseline. 2 g/m 15 15 0.7 At 13.8 g/m , VOC emissions in FY2010 were well below the 15.6 15.7 15.3 13.8 company’s target of 20 g/m2. 10 10

5 5 0 0 0.6 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10

*FY2001 – FY2007 results do not include operations in Mexico

14.9 15

12 9.8

6.8 9 6.4 5.2 4.2 6 57

2010 North American Environmental Report

Chemical Releases

Reducing Chemical Releases — TRI/NPRI Reporting Ohio Tox-Minus Program Honda has reduced its total Toxic Release Inventory (TRI) and As part of a voluntary commitment to reduce TRI emissions, Ohio- National Pollutant Release (NPRI) emissions more than 51% since based Honda of America Mfg. is participating in the Ohio EPA’s calendar year 2000, despite significant expansions in production Tox-Minus Program. Honda’s two automobile plants and one engine capacity. Automobile-specific TRI/NPRI emissions per unit of plant in Ohio have committed to reducing total TRI emissions by 25% Manufacturing production were reduced about 56% in the United States and by 2011 from a 2005 baseline. Through 2009, Honda has reduced TRI Canada in the same time period.1 Honda operations in the United emissions by 51%, primarily through the innovation of Line 2 painting Chemical Releases States and Canada report total chemical releases annually in operations at the Marysville Auto Plant. The decline in production accordance with regulatory requirements. In calendar year 2009, volumes also contributed to the overall reduction. total TRI/NPRI emissions were lower primarily because of reduced production. In CY2009, TRI/NPRI emissions per unit of automobile New Purge Solvent Reduces Chemical Emissions production decreased by 19% from CY2008 levels. Honda’s automobile body and plastic parts painting operations in Honda In the United States, TRI data are submitted to both state and factories periodically use a cleaning solvent called “purge solvent” to federal environmental protection agencies. They are available clean paint booth piping systems and paint application equipment. The for public review at www.epa.gov. In Canada, NPRI data are Marysville Auto Plant completed a project in FY2010 to change the submitted to Environment Canada and to the Ontario Ministry chemical makeup of the purge solvents. Using solubility theory, Honda of the Environment, and are available for public review at associates developed a new proprietary solvent that contains lower www.ec.gc.ca/inrp-npri. levels of TRI chemicals while helping Honda achieve better overall paint quality. The new purge solvent used for body painting reduces Total and Per-Auto TRI/NPRI Releases by U.S. and Canada Plants TRI releases by about 47,000 pounds annually. Honda was also able to reformulate purge used for plastic painting operations. The new purge used for plastics painting operations reduces TRI releases by about 400 pounds annually. The East Liberty Auto Plant plastic part painting 2.0 1.5 1.36 operation1.5 reduced TRI releases by about 1% annually.

0 1.24 1.24 0 1.24 0

1.5 1.2 kg/Auto 1.00 Accidental1.2 Spill and Release Prevention, Tracking, and Reporting Prevention of environmental spills and releases is a key design .87 1.0 0.9 consideration0.9 for all Honda manufacturing facilities. Exterior chemical

Metric Tons x 1 .68 .57 and wastewater storage tanks and transfer systems are constructed .55 .55 0.5 0.6 with0.6 materials and designs that minimize the risks of leaks and spills. Most exterior tanks and piping systems have backup containment 1.314 1.497 1.509 1.556 1.260 1.200 .948 .828 .858 .639 0.0 0.3 capabilities0.3 to recover any leaked or spilled material. Additionally, CY00 CY01 CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 storage tanks are equipped with alarms to give advance warning of overfilling. Virtually all materials with the potential for release are handled within enclosed buildings. Learning from accidental releases Total Releases is critical to preventing future occurrences. Therefore, Honda tracks Releases Per Auto 1 Mexico has no similar all significant incidents. Major incidents undergo root-cause analysis, regulatory requirements. and Honda uses the information to improve operations. 58

2010 North American Environmental Report Sales and Service

overview focus The sale and service of Honda and Acura Reducing waste and CO2 emissions associated products require the movement of both finished products with the packaging and distribution of service parts for and service parts by trucks and trains that travel millions Honda and Acura automobile, powersports, and power

of miles each year, resulting in the emissions of CO2 and equipment products continues to be a focus of the other byproducts of fuel consumption, as well as waste company’s U.S. distribution, service parts and packaging associated with the packaging of products and parts departments. for shipment.

Strategies, Goals and Results

Category STRATEGIES GOALS Actions taken in FY2010 link

CO2 Emissions Shift to more Reduce CO2 emissions associated Opened new West Coast port facility,

fuel-efficient modes with the shipment of finished reducing CO2 emissions from truck transport of distributing products and service parts finished products Increased the use of SmartWay-certified truck carriers by 50% and service parts Began use of LNG-powered trucks for shipment of service parts

Continued utilization of Class-8 hybrid diesel-electric truck technology

Reduce vehicle miles Continued use of Route Tracker technology to traveled through more improve fuel economy efficient logistics and Honda is responsible for driving methods supporting its dealers and customers in the marketplace, includ- Improved utilization Reduced CO2 emissions associated with the shipment of service by ing the shipment of new products, of shipping capacity an estimated 2,500 metric tons through improved cube utilization as well as the supply of high-quality service parts for the tens of millions Waste Reduce packaging Reduce the volume of packaging and Eliminated 4,500 wood pallets; reduced wood waste sent to of Honda and Acura automobiles, and utilize more shipping materials being sent to landfills landfills by 6.5 million pounds; and eliminated 513,800 pounds of motorcycles, and power equipment returnable dunnage corrugated material products in the hands of its in the shipment customers in North America. of service parts 59

2010 North American Environmental Report

Increasing Parts Packing Efficiency Reduces CO2 Emissions

Honda spends about $50 million each year in the U.S. on the shipment of parts via trucks between manufacturing and warehouse facilities. The primary shipments are from three hub facilities — in Chino, California, Troy, Ohio, and Loudon, Tennessee — to nine parts distribution centers around the Sales and Service country. The company aims to maximize the volume of parts on each transfer truck by tracking the usage of the shipping cubes More efficient used to transport parts. Honda in FY2010 was able to establish shipping logistics benchmarks and identify areas for improvement, leading to reductions in truck mileage by 1.3 million miles, fuel consumption

by about 236,000 gallons, and CO2 emissions by an estimated 2,500 metric tons. Full volume returnable crate in transfer truck

New West Coast Port Facility Reduces Truck Travel

In April 2010, Honda opened its third West Coast port facility in Richmond, California. The company plans to shift a substantial portion of its current vehicle import operations from the port of San Diego to this 80-acre facility. The expansion of Honda’s U.S. port operations will reduce the average highway miles traveled per truckload of cars delivered to California and other Western dealers from 491 to 87 miles, a direct savings of 404 miles per truckload. This will result in a savings of more than 2.7 million highway miles and will decrease the diesel fuel consumed in the delivery of Honda and Acura vehicles by about 450,000 gallons per year,

reducing emissions of air pollutants and cutting CO2 emissions from diesel trucks by an estimated 4,500 metric tons annually.

West Coast Port Facility in Richmond, California 60

2010 North American Environmental Report

Expanded Use of SmartWay-Certified Carriers

In FY2010, 99% of Honda and A survey of Honda carrier partners shows that about 90% of Acura automobiles delivered Honda and Acura automobiles are being delivered by trucks to U.S. dealers were moved that do not need the truck’s engine to power hydraulic systems, by carriers certified under the instead using either electric motors or onboard generators. U.S. EPA’s SmartWay Transport Based on units shipped in 2009 and information supplied by program, a 50% increase from the prior fiscal year. In addition, SmartStart on CO reductions, Honda’s CO savings for Sales and Service 2 2 Honda carriers installed alternative energy sources to operate FY2010 were estimated at 31,000 metric tons. Cleaner, more truck hydraulics (during loading and unloading operations). fuel-efficient trucks

Use of Liquid Natural Gas Trucks at Ports

In support of California’s “Clean Air Initiative” Honda’s U.S. Parts emissions that contribute to air pollution. The application of LNG Division began in FY2010 to use trucks powered by liquid natural trucks is expected to reduce particulate and NOx emissions.

gas (LNG) to deliver containers from the port of Los Angeles Further, the initiative is expected to reduce annual CO2 emissions to the company’s Chino, California, parts hub. The use of LNG- by an estimated 18 metric tons. In FY2011, Honda expects to powered trucks to deliver parts sourced overseas is aimed increase the number of containers delivered by LNG trucks by at reducing particulate matter (PM) and nitrous oxide (NOx) more than 50 percent.

Class-8 Hybrid Truck Technology

In FY2010, Honda partnered with Peterbilt Motors Company to become the first automobile company to use a Class-8 hybrid truck in its U.S. fleet. The SmartWay-certified truck is used to distribute Honda and Acura service parts throughout the United States. Use of the hybrid truck has improved fuel economy by 15% compared with a conventional Class-8 diesel truck,

reducing CO2 emissions by 19 tons, less than the 30 tons anticipated. Honda plans to purchase five Class-7 hybrid trucks for operations in the U.S. in FY2011. In addition, the company will work with various manufacturers to replace 45 trucks in the company’s U.S. fleet with EPA SmartWay-certified vehicles.

Class-8 Hybrid Truck 61

2010 North American Environmental Report

Tracking Driver Speed to Conserve Fuel

In FY2009, Honda initiated the use of Route Tracker technology for trucks moving parts from one its nine parts centers, in Alpharetta, FY2010 Route Tracker Results – Monthly MPG Georgia, to Honda and Acura dealers in the region. Route Tracker 7.19 technology utilizes an on-board electronic recorder that tracks 7.10 7.10 6.93 7.00 6.95 arrival and departure, engine diagnostics, speed, engine RPMs, 7 6.83 6.90 6.83 6.75 6.80 Sales and Service hard braking, and idle time. In addition, Honda initiated a driver 6.60 incentive program, establishing benchmarks for fuel reduction Reducing Fuel that are tracked monthly and used as the basis for driver rewards. 6.5 mpg Fleet Baseline in FY2009 Consumption Through monitoring and incentive programs, diesel fuel consumed 6 MPG Packaging in the shipment of parts in the region was reduced by 187,000 gallons in FY2010, cutting CO2 emissions by an estimated 1,900 Reduction metric tons. Honda is working with truck manufacturer Peterbilt Motors Company to determine if there are other routes in the 5 company’s network, in the Alpharetta area or elsewhere, where Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Honda could achieve even higher fuel efficiency.

Packaging Reduction and Recycling Improvements

Honda’s U.S. service parts packaging group has worked to reduce its environmental footprint by changing package designs, maximizing cubic space and increasing the use of returnable packing and shipping material. Honda’s Powersports Division also uses a returnable crate system for new products, which has saved 74,312 tons of landfill debris since its inception in 2002. Full-year savings in FY2010 totaled 3,604 tons.

Packaging Reduction Initiatives in FY2010

Initiative Reduction in FY2010 Packaging changes and 513,810 pounds of material reductions corrugated material Before After

Maximizing cubic space through 4,500 pallets (approximately The increased use of returnable crates to replace disposable increasing box and pallet quantities 207,500 pounds of wood) packaging reduces waste and allows for increased packing and

shipping density, reducing CO2 emissions and fuel consumption Recycling of pallets 136,350 pallets (6,544,752 pounds associated with the distribution of Honda and Acura service parts. of wood) diverted from landfills 62

2010 North American Environmental Report End-of-Life

overview The environmental impact of Honda products focus The first and most critical step is the design extends to the disposal or recycling of Honda and Acura of products that enable efficient dismantling for recycling products and service parts at the end of their useful life. and that reduce the use of harmful substances This includes service parts received by Honda and Acura (click here for more detail.) Additional efforts we have dealerships. made include projects aimed at increasing the quantity of recycled and remanufactured parts and materials, and more environmentally responsible means of disposing of unused parts and materials.

Strategies, Goals and Results

Category STRATEGIES GOALS Actions taken in FY2010 link

Waste Increase the supply Increase the number of remanufactured Introduced 106 new remanufactured parts offerings and variety of parts available for customer purchase remanufactured service parts

Reduce the flow of Reduce the quantity of parts Diverted an estimated 82,000 pounds of electronic waste and overstock and end- sent to landfills 188,000 pounds of materials from overstock parts from disposal of-life parts into the in landfills While Honda does not wastestream participate directly in the disposal of its products, the company is working to make its products easier to recycle, while also taking a direct role in the reduction of waste associated with the disposal of Honda and Acura service parts. 63

2010 North American Environmental Report

Regulated Materials

Rigorous overstock disposal procedures for electronic waste Overstock Service Parts reuse and disposal (e-waste) and other regulated materials were implemented in American Honda’s Service Parts division at the start of FY2009. Service parts are evaluated at the time of procurement to determine whether they qualify as e-waste, as OSHA hazards, or are regulated 30% Recycling (82,549 pounds) 70% Regulated Materials (188,799 pounds) End-of-Life by the U.S. Department of Transportation as “transportation 30% dangerous” goods. Codes are assigned and used as filtering criteria to create lists that identify which parts will be destroyed and in what 70% manner. Parts center personnel have been instructed to segregate items that require special handling and to deliver them to qualified regulated materials recycling vendors. Nearly 4% of service parts have been coded for this special handling. In FY2010, more than 82,000 pounds of regulated material were diverted from landfills.

Recycling of Overstock Service Parts

In FY2010, Honda’s successful program for recycling parts replaced for regulated materials, nearly 5% of American Honda’s service parts under warranty, which began in December 2006, was extended to have been identified for recycling. In FY2010, more than 188,000 overstock service parts. Utilizing the same procedures implemented pounds of this recyclable material was diverted from landfills.

Expansion of Remanufactured Parts Offerings

Honda exceeded its target — to add 86 new parts to its line of Additions to Honda’s Remanufactured Parts Line in the U.S. remanufactured components for FY2010 — with the addition of 106 new part numbers. Nearly half of these parts are driveshaft applications. The list also includes air conditioning compressors,

alternators, starters and power steering pumps, and steering racks. 400 372 Many activities are required before new remanufactured parts 350 357 can be brought to market, including core testing and evaluation, 300 drawing development, coordination of components supply, and 250 256 securing supplier remanufacturing capacity. American Honda has 200 made substantial progress over the past few years to improve New Part Numbers 150 164 the process by which it identifies and executes opportunities to 141 100 106 introduce new remanufactured parts. With these improvements 92 103 92 106 50 73 66 in place, the company expects that the increase in these new part 31 0 0 44 numbers will continue at a pace similar to the FY2010 result, until Pre-1995 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 the company has exhausted all remaining opportunities to expand its remanufacture parts line.

766 931 923 1,018 1,112 1,078 1,054 1,053 925 64

2010 North American Environmental Report

New Collection Initiative for Catalytic Converters

American Honda began recycling catalytic converters in to reduce the number of catalytic converters disposed of in December 2006. Since then, American Honda has seen a 26% landfills. The company found that the addition of a core charge increase in the annual volume of recycled converters, the majority to the dealer, recoverable when the parts are returned, would of these parts collected through warranty replacements. A recent significantly help to get used converters back into the system for study of this program showed that overall demand for catalytic appropriate disposal. American Honda expects to implement a End-of-Life converters far exceeds the volume of parts replaced under core charge program for catalytic converters, as well as for other warranty. In response, Honda began investigating opportunities product types, such as wheels, in late FY2011.

Tire-Derived Fuel (TDF) for Biomass Boilers

In FY2010, Honda Trading America, a Honda company responsible for supply chain management and the export and import of various products and materials, exported nearly 12,000 metric tons of shredded scrap tires from vehicles to its industrial customers in Japan to be used in biomass boilers, replacing coal and natural gas as an energy source. While the use of scrap tires for energy is not considered by the U.S. EPA as a beneficial use (compared to disposal in landfills), it does provide several advantages, including 35% greater energy production than coal, potentially reduced ash residue compared to some coals, and lower nitrous-oxide (NOx) emissions compared with high-sulfur coals. Further, scrap tires have presented an environmental challenge in the U.S. for many years. Improperly handled scrap tires present a risk for fire and toxic smoke and serve as a breeding ground for disease- carrying insects when exposed to water. According to the Rubber Manufacturer Association, more than 4.5 million tons of scrap tire material was generated in 2007, with only 12% going to landfills. Shredded tires being collected for overseas shipment, where the material is used as a cleaner and more energy-dense substitute for coal in energy production. 65

2010 North American Environmental Report

Airbag Recycling

At least four active safety system components are installed in seatbelt are recycled. Honda’s recycling partner receives every Honda and Acura automobile. Because proper performance airbags and pretensioners from Honda (and many other of airbags and pretension seatbelts is critical to ensuring occupant manufacturers), completely disassembles each unit, separates safety, Honda routinely disposes of thousands of parts damaged in individual pieces by material type (ferrous and non-ferrous transit or storage or returned from Honda dealers and body shops. metal, wire, plastic, polyester, and nylon) and safely deactivates End-of-Life Almost all of the parts that makeup an airbag or pretension the pyrotechnic components. Airbag Recycling Airbag Recycling

Used and salvaged airbags are sent to Cardboard containers Promontory Airbag are sent to cardboard Recovery Center (PARC) recycler for reuse

Receiving Sort Textile Bin Plastic parts are sent to plastic recycler for reuse Airbag modules are removed from Melted Aluminum Inflators shipping containers Textiles are sent to textile recycler for reuse Steel Inflators Deactivation Oven

Aluminum and steel Airbag modules are brackets, housings and other disassembled and sorted subcomponents are sent into component parts to metals recycler for reuse

Deactivated inflators are Recovered metals Airbag inflators containing sent to metals recycler are recycled Disassembly pyrotechnic materials are and melted to recover steel for reuse safely deactivated in oven and aluminum 66

2010 North American Environmental Report Administration

overview In addition to our manufacturing plants in focus Reducing the impact of administrative operations, North America, Honda operates numerous sales support, including reducing paper and cardboard waste, improving service training, and parts warehousing facilities – each a energy efficiency, and adopting green building standards source of energy use and waste generation. for both new and existing facilities.

Strategies, Goals and Results

Category STRATEGIES GOALS Actions taken in FY2010 link

Green Building Certifying facilities to Certify new buildings to U.S. Green Two new facilities earned LEED certification: LEED green building Building Council LEED standards Honda R&D Americas’ Marine Engine Research Facility and standards American Honda Finance’s Mid-Atlantic Regional Facility

CO2 Emissions Adopt more energy Reduce energy consumption from Replaced single-purpose printer, copier and fax machines efficient processes administrative functions with more energy-efficient multifunction printers Honda operates dozens of and deploy more offices and warehouse energy efficient office Initiated automatic shutdown and/or hibernation of associates’ facilities in North America and is equipment PCs and PC monitors when not in use endeavoring to reduce its environmen- tal footprint though “green building” Eliminated 140 physical computer servers in the U.S. practices and other initiatives aimed at reducing energy and water use Energy use awareness activities at Honda Canada’s and the generation of waste. sales headquarters 67

2010 North American Environmental Report

Honda is incorporating sustainable concepts into facility construction and operation, including the use of locally harvested and manufactured construction materials, cool roofs, dual-paned glass, high-recycled-content materials, and energy-efficient lighting. In FY2010, Honda certified two new facilities under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system. Honda anticipates that three additional buildings will achieve LEED certification by 2011.

Administration Honda New, Existing and Future Green Buildings in North America

Green Building Facility CERTIFICATION DETAIL Initiatives Honda R&D Gold March Opened in December 2008, the 11,00-square-foot facility is located on 2.08 Marine Engine 2010 acres of land bordering the Intracoastal Waterway. In addition to earning LEED Research certification, the company has converted about 5% of the site to a permanent Facility conservation easement to help protect and preserve local wetlands and the wildlife Grant-Valkaria, they support. Honda has enhanced certain areas of the wetlands by reducing the Florida area covered by invasive/exotic species and replacing it with beneficial native vegetative species. The company constructed its dock with material that allows greater light penetration than conventional wood planks, for the benefit of the underlying sea grass and shallow water communities. Finally, Honda R&D is removing 915 cubic-yards of silt from the Indian River Lagoon bottom, resulting in a net reduction in suspended organics in the water column, which will in turn New improve water quality and directly benefit nearby sea grass beds. American CI Gold October This 26,000-square-foot facility achieved LEED-CI Gold Certification for Commercial Honda Finance 2009 Interiors in October 2009. The facility uses ultra-low-flow lavatory and kitchen Corporation fixtures, which account for a yearly savings of 190,000 gallons of water. The inside Mid-Atlantic lamps are high-efficiency fluorescent fixtures, and more than 90% of the office Facility appliances are Energy Star rated, reducing energy use by as much as 60%. In Wilmington, addition, 80% of the construction waste weight from this project was recycled, Delaware and the plant selections around its exterior are native or adapted species that require no permanent water irrigation system.

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

Acura Design Gold March Opened in May 2007, the Acura Design Studio uses reclaimed water for toilets and Existing Studio 2008 irrigation. It also has a highly efficient displacement ventilation system. Torrance, California 68

2010 North American Environmental Report

Honda New, Existing and Future Green Buildings in North America (continued)

facilitY certification DEtail

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

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

(continued) (continued) Northwest Platinum June Honda’s first LEED-certified facility was also the first new mixed-use industrial Regional Facility 2009 building in the United States to earn Gold certification. It has since become the Gresham, first LEED Platinum-certified existing building in the automobile industry. Existing Oregon The facility is 48% more energy efficient than is required by Oregon’s Energy Code.

Honda R&D Gold April The central plant at Honda R&D’s Ohio Center has rainwater-supplied toilets, a Central Plant 2008 biodiesel-powered emergency generator, and an ice chiller system that reduces Raymond, Ohio peak energy demand from air conditioning by as much as half.

Honda In Honda Manufacturing of Indiana‘s Welcome Center, including a lobby area, meetings Manufacturing process rooms, auditorium and locker facilities, is targeting LEED Gold certification in FY2011. of Indiana Greensburg, Indiana Honda In Honda Engineering Americas’ Powertrain Division is aiming for LEED 2.2 Silver Engineering process Certification for its 18,500-square-foot office expansion. Water conservation measures America include installation of low-flow toilets and urinals, which reduced the building’s water Powertrain usage by about 30%. Sustainable HVAC system features include enhanced equipment Division commissioning and refrigeration management. Other sustainable features are energy-

Future Anna, Ohio efficient lighting controls, use of locally manufactured materials, installation of cool roofing materials, and indoor air quality management.

Honda Canada In Honda Canada’s new four-story headquarters on its 53.3-acre campus is aiming for Headquarters process LEED Gold Certification in 2010. Water consumption is expected to be reduced by Markham, 40% over its previous headquarter facility. Landscape design provides on-site storm Ontario water treatment through the use of bioswales and water collection. There is an energy- efficient underfloor air distribution system in the office space. 69

2010 North American Environmental Report

Energy & Waste Reduction Within Offices

American Honda’s nationwide energy efficiency program shipping, packing, and storage. In addition, the company tracks, involves replacing existing warehouse light fixtures and lamps stores and reuses wood pallets wherever possible. with T5 fixtures, and adding motion sensors. T5s reduce power Honda Canada’s efforts to improve recycling and composting consumption and generate less heat. Light fixtures in the aisles awareness among its associates resulted in a 10% increase in are on at full strength only when there is activity; otherwise they recycling activity compared with the previous fiscal year. Honda Administration automatically dim by 50%. In FY2010, Honda’s Windsor Locks, Canada also has removed polystyrene products from its cafeteria. Connecticut, warehouse facility joined five other warehouse Energy Efficiency facilities — in Iowa, Ohio, Texas and California — that have Office Waste Recycling at American Honda’s U.S. Headquarters Initiatives completed the transition to T5 lamps. Office and warehouse recycling, material and waste reduction, and material reuse are encouraged and supported throughout 5 Honda’s North American facilities. American Honda’s headquarters 4 4.20 4.29 in Torrance, California, has earned recognition from the California 3.61 3.69 Waste Reduction Award Program for ten consecutive years, 3 3.36 beginning in 1999. During the past year, Honda placed an 2.89 2 3.61 increased emphasis on the reduction and reuse of recyclable CY04 4.2 3,612,854 materials. The result was an overall decrease in the amount CY05 1 4,200,000 of materials being processed for recycling, from a peak of 4.29 CY06 4,287,000 4,287,000 pounds in 2006 to 2,887,000 pounds of material in 0 3.69 CY07 Pounds of Recycled Material x Millions CY04 CY05 CY06 CY07 CY08 CY09 3,686,000 2009 — a 24% reduction. Rather than recycling cardboard boxes, CY08 3.36 3,362,343 the Torrance facility makes every attempt to reuse them for CY09 2.89 2,887,000

Reducing the environmental impact of computing

Virtualization of servers Honda of American Mfg. (HAM) in Ohio already converted most According to the EPA, data servers consume about 80% of servers to virtual servers in FY2009 during the migration to the America’s total information technology energy load and 40% of Honda Data Center. In FY2010, HAM converted an 50 additional total data center power consumption. Virtualization allows for the stand-alone servers to virtual machines. The company also worked consolidation of server resources, allowing Honda to run multiple with its computer supplier to create the first multipacks, which applications on a single server. From 10 to 40 workloads can be allow Honda to ship laptops in 6-packs and desktops in 3-packs, consolidated onto one virtual machine. Reducing the number of saving cardboard and packing material. The new shipping method physical servers through virtualization cuts power and cooling is also now being adopted by other non-Honda companies. HAM costs and provides more computing power in less space. As a will continue to virtualize its computing environment in FY2011 result, energy consumption is typically decreased by 80%. Every and has initiated a project to virtualize PCs, which is anticipated to server that is virtualized saves 7,000 kwh of electricity and 4 tons produce additional energy savings in the future. of carbon dioxide emissions each year. At American Honda, 140 physical servers were replaced through virtualization in FY2010, reducing power consumption by an estimated 854,000 kWh. 70

2010 North American Environmental Report

Reducing the environmental impact of computing (continued)

New U.S. Data Center1 Honda has also purchased wind power credits to offset A recent report by the U.S. EPA asserts that U.S. data centers energy use. Over the past year, American Honda has consume 4.5 billion kwh of electricity annually, or 1.5% of the seen a 24% efficiency gain2 from its energy-efficient data country’s total power consumption. This figure has more than center in comparison with older data centers of similar size doubled in the last several years. American Honda’s new Data and performance. Administration Center in Longmont, Colorado, uses a flat-plate heat exchanger to provide free cooling when the outside temperature allows, Energy Efficiency reducing the use of chillers for about six months of the year. Initiatives The center also saves energy through other means including: • The use of variable-speed air handling units that consume less energy than traditional Computer Room Air Conditioning (CRAC) units by allowing air-conditioning to intelligently ramp up and down to achieve the required under-floor air pressure • Air conditioning units with outside air economizers • Variable-frequency drives on fans and pumps American Honda’s data center in Longmont, Colorado, operates with 24% greater efficiency than older data centers of similar size and performance

Reducing Energy and Paper Use

Energy Use Reduction when not in use, reducing electricity use at its national offices

In FY2010, American Honda replaced 603 printers, 204 fax by an estimated 375,000 kilowatts and CO2 emissions by around machines, and 122 copiers at offices across the company with 70 metric tons in 2009. 247 more energy-efficient multifunction machines, reducing energy use by an estimated 41%, from approximately 597,000 Paper Use Reduction kwh in 2008 to 370,000 kwh in 2009. In addition, a new policy A pilot program developed by a group of Honda associates led was put in place for more than 7,000 desktop and laptop users — American Honda to a companywide mandate that all multifunction to power down their PCs during non-business hours. American printer devices default to double-sided, black-and-white printing, Honda also began forcing powered-on PCs into standby or resulting in an estimated 34% reduction in paper use in 2009. hibernate mode, which is anticipated to save over 2 million kwh Similarly, Honda Canada implemented an associate awareness of energy annually. Further, the company started forcing PC and printer-paper tracking initiative, leading to a 61% reduction monitors into a mandatory sleep mode after 15 minutes of nonuse, in paper use for the year. Further, Honda Canada transitioned to 1 U.S. EPA Report to Congress on Server and which is estimated to save an additional 1.4 million kwh annually. paperless pay stubs in October 2009; and for model year 2010, Data Center Energy Efficiency – August 2, 2007 A secondary benefit is reduced air conditioning requirements it discontinued the production of printed product brochures for all 2 Based on the power factor (Pf) of equipment for all locations across the U.S. new Honda automobiles, cutting paper use by an estimated 29.7 utilized and sampling over time of kilowatts- Honda Canada has also implemented energy reduction million pages, and reducing the use of ink as well as energy and in versus kilowatts-out, taking into account temperature differences and other variables. practices in its offices, including turning off personal computers packing material associated with brochure production and shipping. 71

2010 North American Environmental Report

Environmental Community Activities

overview Honda is always looking for ways to make focus The company supports a broad range of positive contributions to the communities where it does community-based environmental education, preservation, business, including helping preserve and protect the and restoration efforts, in the form of corporate charitable local environment. giving, foundation giving, in-kind contributions, and company support of volunteer work by Honda associates who take an active role in their communities.

Organizations Supported by Honda

Environmental Education

Alabama 4-H Center Cedar Bog Association Franklin Park Conservatory & Jane Goodall Institute of Canada Columbiana, Alabama, USA Urbana, Ohio, USA Botanical Gardens Toronto, Ontario, Canada www.aces.edu/4hcenter www.cedarbog.org Columbus, Ohio, USA www.janegoodall.ca www.fpconservatory.org Alabama PALS Clean Air Champions Liberty Hill Foundation (People Against a Littered State) Ottawa, Ontario, Canada Garden School Foundation Santa Monica, California, USA Montgomery, Alabama, USA www.cleanairchampions.ca Santa Monica, California, USA www.libertyhill.org www.alpals.org www.gardenschoolfoundation.org Clean Fuels Ohio Living Classrooms of the Appalachian Trail Conservancy Columbus, Ohio, USA Glen Helen Ecology Institute National Capital Region Harpers Ferry, West Virginia, USA www.cleanfuelsohio.com Yellow Springs, Ohio, USA Washington, D.C., USA www.appalachiantrail.org www.glenhelen.org www.livingclassroomsdc.org Community Haven for Adults and Aquarium of the Pacific Children with Disabilities, Inc. Greening of Detroit Los Angeles Conservation Corps Long Beach, California, USA Sarasota, Florida, USA Detroit, Michigan, USA Los Angeles, California, USA www.aquariumofpacific.org www.chachaven.com www.greeningofdetroit.com www.lacorps.org Aullwood Audubon Center Earth Rangers Groundwork Hudson Valley Mountains to Sound and Farm Woodbridge, Ontario, Canada Yonkers, New York, USA Greenway Trust Dayton, Ohio, USA www.earthrangers.org www.groundworkhv.org Seattle, Washington, USA http://aullwood.center.audubon.org www.mtsgreenway.org Environmental Charter High School Indianapolis Parks Foundation Auntie Litter, Inc. Lawndale, California, USA Indianapolis, Indiana, USA Nature Canada Birmingham, Alabama, USA www.echsonline.org www.indyparksfoundation.org Ottawa, Ontario, Canada www.auntielitter.org www.naturecanada.ca Fairchild Tropical Botanic Garden Irvine Nature Center Brukner Nature Center Miami, Florida, USA Owings Mills, Maryland, USA North Carolina Zoological Society Troy, Ohio, USA www.fairchildgarden.org www.explorenature.org Asheboro, North Carolina, USA www.bruknernaturecenter.com www.nczoo.org 72

2010 North American Environmental Report

Organizations Supported by Honda

Environmental Education (continued)

Ohio Area IV Envirothon Shelby Pee Dee Research and Education Science World Student Conservation Association Soil and Water Conservation District Center (Clemson University) Vancouver, British Columbia, Canada Ridgecrest, California, USA Sidney, Ohio, USA Pickens, South Carolina, USA www.scienceworld.ca www.thesca.org www.areaivenvirothon.org www.clemson.edu/public/rec/peedee South Carolina Aquarium The Otesha Project Operation Reach, Inc. Pro Peninsula Charleston, South Carolina, USA Ottawa, Ontario, Canada New Orleans, Louisiana, USA San Diego, California, USA www.scaquarium.org www.otesha.ca www.operationreach.org www.propeninsula.org

Environmental Preservation & Restoration

Gladys Porter Zoo Mojave Desert Resource Pollution Probe South Carolina Vocational Brownsville, Texas, USA Conservation District Toronto, Ontario, Canada Rehabilitation Department www.gpz.org/ridley.htm Victorville, California, USA www.pollutionprobe.org Bennettsville, South Carolina, USA www.mdrcd.ca.gov www.scvrd.net Heal the Bay (California Coastal Palos Verdes Peninsula Cleanup Day) Mote Marine Laboratory Land Conservancy South Carolina Wildlife Santa Monica, California, USA Sarasota, Florida, USA Rolling Hills Estates, California, USA Federation www.healthebay.org www.mote.org www.pvplc.org Columbia, South Carolina, USA www.scwf.org Indian Lake Watershed Project National Off-Highway Vehicle San Bernardino National Forest Bellefontaine, Ohio, USA Conservation Council Association (SBNFA) Trails Unlimited, www.co.logan.oh.us/ILWP/index.htm Great Falls, Montana, USA San Bernardino, California, USA USDA Forest Service www.nohvcc.org www.fs.fed.us/r5/business- Monrovia, California, USA Keep Logan County Beautiful plans/san-bernardino/financials/ www.fs.fed.us/trailsunlimited/ Bellefontaine, Ohio, USA Nature Conservancy Ohio Chapter success-sbnfa.html www.logancountyrecycles.com Dublin, Ohio, USA Tree Canada www.nature.org/wherewework/ South Carolina Department of Ottawa, Ontario, Canada Living Lands & Waters northamerica/states/ohio Parks, Recreation & Tourism www.treecanada.ca East Moline, Illinois, USA Columbia, South Carolina, USA www.livinglandsandwaters.org Upper Chattahoochee Padre Island Peregrine www.scprt.com Falcon Survey Riverkeepers Logan Martin Lake Bozeman, Montana, USA Gainesville, Georgia, USA Protection Association www.earthspan.org www.ucriverkeeper.org Pell City, Alabama, USA www.lmlpa.org 73

2010 North American Environmental Report

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 • First vehicle certified as an advanced Clean Air Act standards without the 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 Honda vehicle (AT-PZEV) by California’s Air 1973 the U.S. in the Acura NSX. Civic GX natural gas vehicle as the Resource Board (CARB): the 2001 cleanest internal combustion engine it • Honda introduces 4-stroke marine Civic GX. has ever tested. engines that are cleaner, more fuel- 1995 2001 efficient and quieter than the 2-stroke • First gasoline low-emission vehicle • Honda introduces ultra-quiet portable outboard motors standard at the time. (LEV) in the industry is introduced in inverter generators that achieve • First production motorcycle certified Honda has manufactured only 4-stroke California: the 1996 Honda Civic. substantially higher fuel economy and to meet CARB’s 2008 emission lower emissions than conventional standards, the Honda Gold Wing, outboard motors since 1973. • Fuel economy leadership puts four generators. is sold. Honda models on the U.S. EPA’s list 1974 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 vehicle to make the U.S. EPA’s 1977 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. • First CARB-certified gasoline the 2000 Honda Accord. 1986 • America’s first zero-waste-to-landfill ultra-low-emission vehicle (ULEV) is • Honda introduces FCX-V1 and auto plant opens in Lincoln, Alabama. • The Civic CRX-HF is the first mass- introduced: the 1998 Honda Accord. FCX-V2 prototype fuel cell electric produced 4-cylinder car to break • Honda introduces FCX-V3 prototype • Honda becomes the first automaker vehicles. the 50-mpg fuel economy mark. fuel cell electric vehicle. to introduce low-emission vehicle • First gas-electric hybrid vehicle is • Honda introduces first personal 1989 (LEV) technology voluntarily in introduced in North America: the 2000 watercraft to meet 2006 EPA mass-market vehicles (Honda Civic) Honda Insight. • Honda becomes the first automaker throughout the U.S. and Canada. emissions standards: 2002 AquaTrax in America to use waterborne 2000 F-12 and F-12X basecoat paint in mass production. • World’s first 360-degree inclinable mini 4-stroke engine for handheld • First 50-state ultra-low-emission power equipment is introduced vehicle (ULEV) is introduced: the by Honda. It is more fuel-efficient 2001 Civic. and virtually smoke-free, with ultra-low noise. 74

2010 North American Environmental Report

Environmental Technology Milestones 2002 – present

2002 2003 2004 2005 2006 2008 2009 2010

2002 • The 2005 FCX, Honda’s second- • The 2006 Civic hybrid introduced • Began testing of fourth-generation generation fuel cell vehicle, is certified 4th-generation Honda IMA technology experimental hydrogen Home Energy • First application of hybrid technology by the U.S. EPA as a Tier 2 Bin 1 (ZEV) with 50 mpg combined EPA city and Station. to an existing mass-market car: the vehicle and by the CARB as a zero- highway fuel economy. 2002 Civic Hybrid. emission vehicle (ZEV). 2008 • First hydrogen-powered fuel cell 2006 • First V-6 hybrid car is introduced: • 2008 Civic GX tops the American vehicle to receive both U.S. EPA and the 2005 model year Honda Accord. • Honda Soltec, LLC, established for Council for an Energy Efficient CARB certification for commercial use, production and sales of Honda- Economy’s “Green Car” list for the • FCX with cold-weather start and the first to meet applicable federal developed CIGS solar panels in Japan. fifth straight year. motor vehicle crash safety standards: capability is leased to state of New Honda FCX York, the first fuel cell customer in • Retail sales of natural-gas-powered • Honda begins delivery of its the northeastern U.S. Civic GX to retail consumers expanded next-generation zero-emissions • Honda is first with an entire lineup of from California to New York State. FCX Clarity fuel cell car to retail • Union of Concerned Scientists personal watercraft (PWC) powered customers in Southern California. by 4-stroke engine technology. gives Honda its “Greenest • Honda develops plant-based biofabric for use in automobile Automaker” award. 2009 • World’s first commercial interiors. application of a fuel cell electric • The 2010 Honda Insight is launched 2005 • Honda announces it will aim for a vehicle: a Honda FCX is leased to in the U.S. and Canada as North • World’s first fuel cell family, Jon 5% improvement in its U.S. corporate the city of Los Angeles. America’s most affordable and Sandy Spallino, take delivery of average fuel economy (CAFE) from mass-produced gas-electric the first fuel cell electric vehicle leased 2005 levels by 2010. 2003 hybrid automobile. to an individual customer. • First hybrid vehicle certified as • North American debut of Honda an advanced technology partial • First natural gas home refueling FCX Concept with more compact, 2010 zero-emission vehicle (AT-PZEV) device, Phill, is offered for lease in powerful and efficient V Flow stack • Began operation of next-generation by the CARB: 2002 Civic Hybrid. California with Honda Civic GX points toward an all-new Honda fuel prototype Honda Solar Hydrogen natural gas vehicle. cell electric vehicle to be introduced • Honda begins experiments with a Station at Honda R&D Americas’ in 2008. hydrogen Home Energy Station (HES). • Introduction of Honda Variable Torrance, California, facility Cylinder Management (VCM) • Honda develops breakthrough fuel 2007 • Honda earned the top ranking for the technology, the first cylinder cell stack that starts and operates at 10th consecutive year in the ACEEE’s deactivation system for an overhead • Union of Concerned Scientists temperatures below freezing while annual rating of America’s greenest cam (OHC) V6 engine: the 2006 names Honda the “greenest improving fuel economy, range, vehicles Odyssey minivan. automaker” for the fourth and performance with reduced consecutive time in its biennial • Honda introduces first affordable • Honda introduces the iGX, a complexity. report on automakers’ environmental sports hybrid: the two-seat CR-Z revolutionary, intelligent, computer- performance. 2004 controlled general-purpose engine. It • World debut of the FCX Clarity • FCX vehicles are leased to the cities sets an even higher standard for fuel next-generation fuel cell electric of San Francisco and Chula Vista, and efficiency and quiet operation. vehicle, powered by a more powerful, the South Coast California Air Quality efficient and compact new Honda Management District. V Flow fuel cell stack. 75

2010 North American Environmental Report

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

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

Capital Investment Key North American Locations $15.3 billion

Employment Approximately 30,000 associates

Parts Purchases More than $13.3 billion in parts and materials purchased from more than 580 North American Map Legend original equipment suppliers in the calendar year ended Major Manufacturing December 21, 2009. Facilities

Major Manufacturing Facilities (under development)

Research and Development Centers

Parts Centers

Sales and Marketing Headquarters 76

2010 North American Environmental Report

Additional Information United States Canada Mexico Additional information on Honda and Acura products can be found at:

www.honda.com www.honda.ca www.honda.com.mx

Honda companies covered in this report: American Honda Motor Co., Inc. Honda Canada, Inc. Honda de Mexico, S.A. de C.V. 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.

All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies. All images contained herein are either owned by American Honda Motor Co., Inc., or used under a valid license. It is a violation of federal law to reproduce these images without express written permission from American Honda Motor Co., Inc., or the individual copyright owner of such images. Specifications, features, illustrations and equipment shown in this report are based upon the latest information available at the time of document release. Although descriptions are believed to be correct, accuracy cannot be guaranteed.

©2010 American Honda Motor Co., Inc.

www.corporate.honda.com