Pursuing the Honda Environmental
and Safety VisionDirection

In working toward the Honda Environmental and Safety Vision for the future, we objectively assess current environmental problems, analyze the kinds of risks and opportunities they represent, and respond in various ways. Honda is promoting environmental initiatives in both business activities and product development, with the aim of eventually becoming a company with zero environmental impact.

Honda's current recognition and response to environmental issues

■ Current assessment of environmental issues

● Climate change and energy issues are our greatest challenges

To continue doing business across the globe as a member of society and to make progress toward the Honda Environmental and Safety Vision, we must correctly assess the environmental issues that exist in the world today and the way in which Honda business activities relate to and influence them. Accordingly, Honda has organized various environmental issues and identified those that pose the greatest risk to our business and stakeholders. As a global corporation supplying mobility products, we see climate change and energy issues as the greatest challenges facing the company, followed by resource problems.

● Environmental management system

To organize and analyze in a timely manner the impacts of various environmental issues on our business, particularly climate change and energy, and to develop and execute specific measures for addressing them, we have constructed a comprehensive global management system. Based on this system, we have established our own CO2 emission reduction targets, considered to be the principal driver of climate change, and are carrying out various initiatives to realize the Honda Environmental and Safety Vision, such as stepping up efforts in each region across the globe to achieve these targets.

■ Assessment of business activity risks and opportunities

● Risks and opportunities relating to climate change and energy issues

Honda's response to the key challenges of climate change and energy issues does not just involve initiatives for environmental conservation. While these environmental issues pose risks to our business continuity, they also present opportunities to create and expand new businesses. Honda considers it essential to engage in business activities and decide and execute specific measures, having sufficiently assessed these risks and opportunities. Accordingly, we have compiled all of the major opportunities and risks we currently expect from climate change and energy issues, and have been taking measures in response.

Note: Smart communities: Communities that, through broad partnerships between governments and private entities in the fields of next-generation energy infrastructure, telecommunications, traffic systems, and various products and services, are engineered to be more efficient, self-sustaining, and dynamic.

● Measures based on risk and opportunity assessment

To minimize the regulatory risk our products face as emitters of GHGs, we set forth CO2 emission reduction targets for our automobiles, motorcycles, and power products for 2020. Major initiatives to reduce CO2 emissions include the introduction of the new Earth Dreams Technology hybrid systems for automobiles, and the marketing of electric vehicles.
In response to changes in consumer awareness and growing energy diversification needs, we are continuing demonstration testing of electric mobility products in Japan, the U.S., and China for the establishment of a future smart mobility society. We also are accelerating development projects, having completed the construction of a demonstration Honda Smart Home System house and a solar-powered hydrogen station in 2012.
We are working to reduce GHG emissions in each region and domain of our business in order to minimize regulatory risk relating to emissions from each business site. We compile the results of our efforts and make them known to the public once a year through this Environmental Annual Report.
We see the increasing scarcity of resources stemming from the response to climate change and energy issues as another major challenge. In recognition of the risk of resources becoming depleted, more difficult to obtain, and more expensive to dispose of, we are developing alternative technologies, technologies to reduce, reuse, and recycle these resources, and we are also diversifying our supply chain. In fiscal 2013, we actively engaged in measures such as establishing a scheme for the closed-loop recycling of rare earths1 extracted from nickel metal hydride batteries for hybrid vehicles.

1. Read more about the recycling of rare earths in CASE17 of "Environmental Documentary Honda Face." (http://world.honda.com/environment/face/2012/)

● Risk management led by the World Environment and Safety Committee

We clarify our understanding of such risks and opportunitiesties relating to climate change and energy issues by analyzing them from three different perspectives: by product categories (motorcycles, automobiles, and power products), with a focus on our business and product development operations; by region, which is based on our unique regional management structure; and by function, such as production and sales. The Honda World Environment and Safety Committee assesses these risks and opportunities from a global perspective, the findings of which are then used by our Regional Operations (regional environmental committees), Business Operations and Functional Operations in the formulation of various management policies and strategies, such as in formulating and updating our medium-term plans for environmental initiatives.
We conduct this risk management process every six months and as needed.

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