CONTENTSIntroductionToward an Environmentally Advanced Company

In order to deal with global warming, the subject of growing debate all over the world since the 1990s, the Japanese government formulated a plan to achieve the targets set by the Kyoto Protocol in April 2005. Henceforth, various measures will be implemented toward the achievement of these targets in an accelerated manner.
In developed countries, various environmental problems, including adverse effects on human health and waste problems, are becoming increasingly obvious.
Honda, as a company conducting business on a global scale, believes one of its important corporate responsibilities is to tackle environmental issues.

Honda has long been involved in environmental conservation activities. In 1992, we created the Honda Environment Statement, which clarifies our view on environmental conservation. Based on this statement, we conduct various activities to solve environmental problems.
Honda wants to consistently be advanced in environmental activities. Specifically, in order to be an environmentally advanced company, we think it necessary to meet the following requirements:

• To set high targets and to achieve them earlier than planned
• To conduct environmental activities in all our business categories without exception and without fail
• To implement autonomous activities in every region where we conduct business operations
• To properly communicate our environmental plans and achievements to society at large

As a specific example of its environmental activities, in 1999 Honda released numerical targets to lower the exhaust emissions and improve the fuel economy of its products as along with the year in which these figures were to be attained. Since then, we have reported the level of achievement every year. All these targets will be achieved in this fiscal year.
In the product domain, in view of the fact that society will continue to rely on fossil fuels at least for the near future, in the automobile segment we introduced the Accord equipped with a clean diesel engine in Europe. In addition, we released the Accord Hybrid in North America, featuring a V6 engine equipped with the Variable Cylinder Management (VCM) system. In the area of motorcycles, we expanded the use of the fuel injection system to smaller models. In the area of power equipment, we will soon release next-generation engines that adopt the world’s first technology to electronically control the engine revolutions and will begin marketing small cogeneration systems for household use in overseas regions. For the introduction of fuel cell vehicles to promote the use of next-generation energy, we have delivered 19 such vehicles worldwide. We are also promoting the in-house development of the fuel cell stack to further improve their performance.

As a company that pursues better mobility, Honda will steadily meet the aforementioned four requirements.
Especially for the reduction of CO2 emissions, this issue will not be solved by simply clearing one obstacle. Honda is therefore committed to taking dramatic steps to solve this problem in every area of its business operations. In other words, we will reduce CO2 emissions in the production and transportation of our products and even during their use by our customers. We want to be a company that manufactures products with the highest environmental performance, based on a production system with the smallest environmental impact in the world. For local environmental problems, we will implement additional measures, beyond the expectations of the local community.
I believe that we can achieve what people say is difficult through human intelligence. Honda, centering on “value creation,” will take on more challenges working toward the reduction of its environmental impacts.

This annual report summarizes our activities in each fiscal year and is published to keep the public informed of our efforts.
From this fiscal year, the report newly includes a section to introduce our next-generation technologies, and an effort was made to make it more understandable for readers.
Once you have read this report we would greatly appreciate your frank comments in order to help us continue to improve our efforts in the future.