While environmental issues pose risks that could seriously impact our business activities, they also present opportunities to create and expand new business--as long as we anticipate and appropriately respond to them.
We see climate change issue and energy issue as our greatest challenges.
To engage in business activities while sufficiently assessing the risks and opportunities these issues present, we have set degrees of priority for our response. As a result, we identified changing consumer values, diversification of energy, and tighter regulation of product-related greenhouse gas (GHG) emissions as three areas where our response is particularly important.
Changing consumer values
As climate change issue and energy issue escalate globally, consumers are becoming increasingly conscious of fuel efficiency, CO2 emissions, and other environmental performance indices as factors in fluencing their purchasing decisions.
We perceive such changes in consumer values and market needs as a risk and have created the Honda Environmental Performance Standards (HEPS) to respond and take advantage of opportunities for business expansion(see page G23). We are driving the development of fuel efficiency technologies, electromotive technologies, and other environmental technologies and expanding their application in our products, with the ultimate goal of realizing zero product CO2 emissions.
Global warming, resource depletion, and other issues will likely compel society to shift from its heavy dependence on fossil fuels toward a more diverse energy mix.
To seize new business opportunities and avert risks posed by a delayed response to energy diversification, we are advancing development of products that utilize alternative energy sources, such as EVs, FCEVs,2 and the Honda Smart Home System (HSHS).
We are also promoting energy diversification by actively introducing large-scale solar and wind power generation at our facilities, as we work toward ultimately reducing our energy risk to zero.
Tighter regulation of product-related GHG emissions
As regulations of product-related GHG emissions grow more stringent worldwide, Honda as a global corporation must provide products that meet local regulatory rules while also effectively meeting market needs.
We are seizing new business opportunities and responding to the risk posed by these tightening regulations by actively expanding our lineup of products powered by Earth Dreams Technology,3 among other initiatives.
Honda sees resource issue as the greatest environmental risk after climate change issue and energy issue.
The depletion and resulting difficulty of obtaining rare metals and other resources used in our products poses a huge risk to our business continuity.
In response, we are promoting stable procurement and effective utilization of resources by reducing our use of rare metals, developing alternative technologies, and developing material recycling technologies to extract rare earth metals from used products and reuse them as raw material. Through this effort, we are aiming for stable business operations and to create opportunities for business expansion. We are also aware of the various risks associated with collection, disposal, and recycling processes, and are building systems suited to each country.
We recognize the impacts our products and business activities can have on biodiversity, and believe that minimizing these impacts is the greatest contribution to biodiversity we can make. This awareness challenges us to develop more environmentally responsible technologies and make continuous improvements to the environmental performance of our operations (see page G26).
We have constructed a comprehensive global management system that allows us to continually collect information and update our understanding of these environmental issues and the risks and opportunities they present; to organize and analyze in a timely manner the impacts of these issues, particularly climate change and energy; and to develop and execute specific measures for addressing them (see page G45).
Our risk management process, which we conduct every six months and as needed, is as follows: The Honda World Environment and Safety Committee identifies risks and opportunities from a global perspective and analyzes 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. Our regional environmental committees, business operations, and functional operations then use the findings of this analysis to formulate various management policies and strategies, such as our mid-term plans for environmental initiatives.
1. 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.
2. EV: electric vehicle, FCEV: fuel cell electric vehicle
3. A next-generation powertrain series that greatly enhances both driving performance and fuel economy, building on advancements in environmental performance for internal combustion engines, transmission efficiency, and electromotive technologies to pursue a joy of driving unique to Honda.