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At Honda, we believe in dreams.Dreams that bring joy to people.Driven by a challenging spirit,each of us at Honda seeks to create new value that brings dreams to life.The smile on people's faces gives us passionand courage to take on new challenges.Through "The Power of Dreams,"we will continue to share joywith our customers and society.Starting from this year, in addition to the Sustainability Report, Honda began publishing the Honda Report, an integrated report that is one value creation initiative for the future.Honda seeks to evolve to continue creating new value while upholding our desire to "help people and society" and "expand people's life's potential" since its founding.By issuing the Honda Report, we intend to facilitate an understanding among stakeholders of what Honda envisions and what we do to provide value. We will also use it as a communication tool to enhance our corporate value in a sustainable manner.Your continued understanding and support for our activities in the future are truly appreciated.Upon Publishing the Honda ReportDirector, President andRepresentative Executive Officer andChief Executive OfficerContents07 Honda Philosophy09 Handing Down Our Values11 Growth Trajectory13 Honda's Businesses15 Honda Brand32 Corporate Strategy39 Message from the CFO43 Automobile Business47 Motorcycle Business51 Power Products Business54 Approach to Sustainability and Management Structure55 Environment – Disclosure of Information Based on the TCFD Recommendations59 Initiatives Related to Human Resources63 Initiatives for Intellectual Capital65 Initiatives Related to Quality66 Supply Chain Management67 GovernanceCorporate sitehttps://global.honda/about/Sustainability sitehttps://global.honda/sustainability/Source of Value Creation19 Message from the President and CEO23 Value Creation Process25 Recognition of the External Environment and Critical Themes27 Resource Investment29 Honda's VisionValue Creation StoryValue Creation StrategyInitiatives to Support Value Creation82 Major Indicators83 10-Year Summary85 Company Overview86 Editorial PolicyData SectionDisclosure MaterialHonda believes that promoting constructive dialogue with shareholders and investors is essential for achieving its sustained growth and increasing corporate value over the mid- to long term.Honda strives to expand opportunities for dialogue and information disclosure with stakeholders such as institutional investors and analysts. We then appropriately feedback their opinions and requests to management in a timely manner for use in discussions to further raise corporate value.Medium- to long-term perspectiveNon-financialFinancialResultsSecurities ReportsForm 20-FFinancial StatementsSustainabilityReportsHonda Report(Integrated Reports)CorporateGovernance ReportsHonda Report 202203 Honda Report 2022 04Honda Report 2022https://global.honda/about/https://global.honda/sustainability/Source of Value Creation11 Honda Philosophy 07Handing Down Our Values 09Growth Trajectory 11Honda's Businesses 13Honda Brand 15Honda Report 202205 Honda Report 2022 06Honda Report 2022Chapter 1 Source of Value CreationThe joy of selling：Honda is a group of individuals who fulfill their respective roles toward realizing common goals. In the process of fulfilling these roles, each person is expected to utilize his or her unique attributes. Every achievement at Honda is the culmination of the hard work of each and every person. Therefore, each individual deserves respect for making these efforts. Respect for the Individual must also be applied not only to the members of the Honda Group but also to our business partners and all the people and companies we work with.Honda's businesses enhance personal mobility and provide products with value and create employment opportunities. At the same time, however, these businesses also have a negative impact on the environment and local communities. To win the trust of society, Honda must provide products, technologies and services demanded by society while minimizing negative impacts on society.We believe that sincerely responding to the changing demands of society based on the philosophy of "The Three Joys" will truly make Honda a company recognized and counted on by society.Honda's success is the result of all colleagues making their utmost efforts toward reaching common goals. The word "we" is used in recognition of the importance of each and every person making up our company. All Honda associates play their respective roles as they participate in corporate activities. The word "we" also expresses the idea that each person is an individual who thinks and acts independently toward the attainment of common goals. At the same time, it signifies that we are colleagues who mutually learn from and trust. "We are dedicated" will ultimately lead to the true joy of our work.The high-quality products we strive for are created through a series of corporate activities. They include carrying out the best design in terms of safety, the environment and performance; using the most appropriate raw materials; undertaking production utilizing the most productive manufacturing methods; and then carrying out sales and providing services that ensure the joy of our customers. At the same time, to realize reasonable prices, we must aim for maximum effectiveness and efficiency in all aspects of product design, manufacturing, sales and other business activities. Genuine improvements are created by discovering new ways to attain the dual imperatives of high-quality products and reasonable prices.Honda's business is assured only by the existence of customers who buy our products. With this in mind, all associates at Honda must make their utmost efforts at their respective jobs to meet and exceed the expectations of all our customers throughout the world.Besides just responding to the specific needs of our customers, we must also address changes in the times encompassing society, culture and lifestyles. We must be always ahead of the times and highly perceptive to quickly pinpoint latent customer needs.Honda's operations span the world. For this reason, all Honda associates must continuously improve the quality of their work with an eye toward attaining the world's highest levels while striving to provide products and services that exceed customer expectations in accordance with the different characteristics of each region of the world. The world is currently facing issues on a global scale such as environmental destruction, depletion of resources and energy, and food shortages. Honda recognizes that its own activities also have a significant negative impact on society and in response will tackle the challenge of addressing global issues.Company PrincipleMaintaining a global viewpoint (1), we are dedicated (4)to supplying products of the highest quality yet at a reasonable price (3)for worldwide customer satisfaction (2).(1) Maintaining a Global Viewpoint (2) For Worldwide Customer Satisfaction(3) Supplying Products of the Highest Quality Yet at a Reasonable Price(4) We Are DedicatedInitiative：The joy of buying：Fundamental BeliefsRespect for the IndividualInitiativeRespectfor theIndividualTrustEqualityThe joyof buyingTheThree JoysThe joyof creatingThe joyof sellingManagement Policies・Proceed always with ambition and youthfulness.・Respect sound theory, develop fresh ideas and make the most effective use of time.・Enjoy your work and encourage open communications.・Strive constantly for a harmonious flow of work.・Be ever mindful of the value of research and endeavor.The Honda Philosophy, imbued in the Company by its founders Soichiro Honda and Takeo Fujisawa, comprises Fundamental Beliefs (Respect forthe Individual and The Three Joys), the Company Principle and Management Policies. The Honda Philosophy is not only shared by all associates, but also forms the basis for all company activities and sets the standard for the conduct and decision-making of all associates throughout the Honda Group. Driven by its dreams and reflecting its values, Honda will continue taking on challenges to share joys and excitement with customers and communities around the world to strive to become a company society wants to exist.The Three JoysInitiative means not to be bound by preconceived ideas, but think creatively and act on your own initiative and judgment, while understanding that you must take responsibility for the results of those actions.The joy of buying is achieved through providing products and services that exceed the needs and expectations of each customer.The joy of selling occurs when those who are engaged in selling and servicing Honda products develop relationships with a customer based on mutual trust. Through this relationship, Honda associates, dealers and distributors experience pride and joy in satisfying the customer and in representing Honda to the customer.The joy of creating：The joy of creating occurs when Honda associates and suppliers involved in the design, development, engineering and manufacturing of Honda products recognize a sense of joy in our customers and dealers. The joy of creating occurs when quality products exceed expectations and we experience pride in a job well done.Equality：Equality means to recognize and respect individual differences in one another and treat each other fairly. Our company is committed to this principle and to creating equal opportunities for each individual. An individual's race, sex, age, religion, national origin, educational background, and social or economic status have no bearing on the individual's opportunities.Trust：The relationship among associates at Honda should be based on mutual trust. Trust is created by recognizing each other as individuals, helping out where others are deficient, accepting help where we are deficient, sharing our knowledge, and making a sincere effort to fulfill our responsibilities.Honda PhilosophyChapter 1 Source of Value CreationHonda Report 202207 Honda Report 2022 08Honda Report 2022Since its founding, Honda has continuously been a company which has "carried the torch with our own hands." In other words, Honda will walk its own path while exploring new paths where no person has yet set foot, opening unexplored lands overgrown with thorns, brightly burning "the torch of great ambition" and holding the torch on its own.Let's Think,"What Can I Do for Society and for Others?"Honda founder Soichiro Honda urged us to think, "What can I do for society and for others?" In other words, this strong determination asks how we can keep our aspirations high and maintain a burning passion for realizing these aspirations. To be useful to society and share joy with many stakeholders, we will continue anticipating the needs of the times and contribute to advancing a mobility society leveraging our unique technologies.Honda believes “there is no difference among people, there is only uniqueness, in the abilities of each individual." Put simply, it is more important to demonstrate the capabilities of each person than comparing the superiority of his or her strengths with those of others. To maximize capabilities as an organization, we believe that it is crucial to recognize each person's individuality and make efforts to bring out such special qualities to the fullest.We have continued to take on challenges, no matter how difficult they may seem, to fulfill our aspirations, thinking outside the box and making the "impossible" happen.Utilize Uniqueness Not DifferenceTaｋe the Hardest RoadValues That Have Been Handed Down throughout Honda's History.Carry Our Own TorchHanding Down Our ValuesChapter 1 Source of Value CreationHonda Report 202209 Honda Report 2022 10Honda Report 2022– History of Challenges Honda Has Taken On to Fulfill Dreams and Respond to the Needs of the Times –Honda Motor Co., Ltd. is founded1948 1960 1970 1980 1990 2000 2010 20221960Over 5,000 associates1966Over 10,000 associates1996Over 100,000 associates2006年Over 150,000 associates2014Over 200,000 associatesAs a nation defeated prior to the conclusion of the San Francisco Peace Treaty, Japan was still under the occupation of the Allied Forces, suffering from food shortages and starvation. Amid the traffic situation that has worsened from before the war, bicycles were a daily means of transportation for people and an instrument to carry a large amount of goods.【Historical background】Upon encountering the former Imperial Army's generator engines for powering wireless radios, Soichiro Honda converted them into auxiliary engines for bicycles and then launched sales. He subsequently developed and commercialized an original engine. He then pushed ahead with his ambition of giving shape to his unique ideas and creating world-first products with bold and original designs. These efforts culminated in the creation of the Super Cub motorcycle, which became a huge hit.【Honda's initiatives】1948–1960Founding– "How easy would riding a bicycle be if it had an engine?"–2000–PresentToward becoming a company society wants to exist– Serve people worldwide with the "joy of expanding their life's potential"–The world became connected through the Internet while digitalization and mobilization continue to advance. Meanwhile, globalization progressed both politically and socially. There was a relative rise of emerging countries following the U.S. 9-11 terrorist attacks, the Iraq War and the collapse of Lehman Brothers. Expectations are being placed on companies to resolve environmental and social issues, including making efforts toward the SDGs.【Historical background】To meet the needs of customers worldwide, Honda undertook its business with the global Six Region Structure, which includes the Regional Operations in China and South America. As a frontrunner in terms of the environment and safety, Honda has offered customers worldwide products with technologies that realize low pollution, low fuel consumption and superior safety. Honda aims to further create new value during the current transformation period that occurs only once in 100 years.【Honda's initiatives】As motorization picked up speed across the globe, the Ministry of International Trade and Industry announced the National Car Concept in 1955, which also accelerated motorization in Japan. Nonetheless, from the standpoint of protecting industries, the country announced the Specified Industry Promotion Bill in 1961 (to limit the entry of new companies, which was defeated later). Pollution from automobile exhaust gas also emerged as a major problem. In response, the Muskie Act was passed in the United States in 1970.【Historical background】Under the belief that there should be free competition, Honda prepared for the enforcement of the bill by accelerating its entry into the automobile business. In 1972, Honda released the world's first low-pollution CVCC engine to fully comply with the Muskie Act, which was said to be the most stringent emission regulations at the time.Also, driven by its conviction that Honda can become No. 1 in Japan only when it becomes the best in the world, Honda bolstered its international competitiveness by establishing sales networks and production bases worldwide to create products that offer the world's top levels of performance from the customer's perspective.【Honda's initiatives】1960–1980Aim to be the No. 1 in the world– Provide joy to customers throughout the world –Electronics technologies were developed rapidly in the automobile industry from the 1970s with the worldwide advancein improvements and spread of IT and other technologies. However, this technological progress also had a downside, as underscored by such social issues as the degradation of the natural environment, traffic congestion, frequent traffic accidents and issues involving defective vehicles.【Historical background】Honda focused on sketching an image of automobiles that evolve in step with advances in electronics technologies, formulated an electric component strategy that anticipates the future and created new value (navigation system, etc.). While providing products equipped with features that consider social issues, such as the Franz System, Honda also actively developed products that appeal to customers by utilizing its involvement in Formula One racing, high performance and design.【Honda's initiatives】1980–2000Taking on challenges toward new technologies– Dreams and technologies, rolling out appealing products –People and societyMajor eventsMonozukuri1984Over 50,000 associatesConsolidated net salesConsolidated number of associates 1960 Establishes Suzuka Factory 1960 Establishes Honda R&D Co., Ltd. 1951 The Three Joys 1960 Launches My Record project 1953 Starts power products business 1954 Declares entry into the Isle of Man TT Races 1959 Expands into North America 1962 Completes construction of Suzuka Circuit 1963 Makes a foray into automobile business 1972 Releases low-pollution CVCC engine 1970 Establishes Driving Safety Promotion Center 1970 Establishes Pollution Control Headquarters 1976 Honda TechmaticSystem (driving assist devices) 1982 Japan's first Franz System vehicle 1978 Launches Community Forest program 1981 Establishes Honda Sun Co., Ltd. 1978 Establishes Honda of America Mfg., Inc. 1989 VTEC engine 1976 Establishes Kumamoto Factory 1975 Establishes Moto Honda da Amazônia Ltda. 1990 Introduces flex-time/childcare leave systems 1992 Establishes Honda Cars Manufacturing (Thailand) Co., Ltd. 1992 Honda's Environment Statement 1997 Completes construction of Twin Ring Motegi (currently Mobility Resort Motegi) 1999 Launches Insight 2003 World's first Collision Mitigation Braking System 2004 Sets up global Six Region Structure 2006 Launches beach cleanup project 2022 Formulates Honda Human Rights Policy1947 Auxiliary bicycle engines1958Super Cub C1001963T3601964 Starts participating in Formula One racing1973Civic and CVCC engine1981Navigation system1987Airbag system1990 All-aluminum monocoque structure2015Honda Jet2020Honda e2000ASIMO2002 FCX (fuel cell vehicle) 1952 Adopts white coveralls1948Initially with 34 associatesUsing dreams as a driving force, Honda has created products that make the daily lives of people more convenient across the world by responding to the needs of each era and continuing to take on challenges in the fields of automobiles, motorcycles, power products, aircraft and robotics through innovative technologies and ideas.Growth TrajectoryFY1997Consolidated net sales of over ¥5 trillionFY2007Consolidated net sales of over ¥10 trillionFY2018Consolidated net sales of over ¥15 trillionFY1979Consolidated net sales of over ¥1 trillion 1953 "Aim for 120% product quality"Representative technologies and products1953 H-Type engineWEB Historyhttps://global.honda/about/history.htmlPlease see the following website to learn more about Honda’s history. 2013 Establishes Saitama Factory's Yorii assembly plantChapter 1 Source of Value CreationHonda Report 202211 Honda Report 2022 12Honda Report 2022https://global.honda/about/history.htmlHRX476XBAs a total mobility company that realizes the joy and freedom of mobility Honda undertakes creative (the art of manufacturing) in the respective fields of automobiles, motorcycles, power products, aircraft, aircraft engines and robotics technology. By linking our technologies and know-how, Honda will continue to produce products beneficial to next-generation mobility that opens up future possibilities and to people's lives.Based on the concept that "important matters lie beyond the road of globalization," Honda has expanded overseas since commencing the export of motorcycles in the 1950s. Currently, we operate Regional Operations in the six regions of Japan, North America, South America, Asia/Oceania, Europe/Africa/Middle East and China and provide products and services to customers throughout the world.Honda's Businesses Global DevelopmentClick160 (Thailand)[Regional Headquarters]Honda Motor Europe Ltd.Motorcycles Automobiles PowerProducts1,249127435Europe, Africa andMiddle East[Regional Headquarters] Honda Motor (China) Investment Co., Ltd.Motorcycles Automobiles PowerProducts6481,5271,142(Thousands)China[Regional Headquarters] Honda Motor Co., Ltd.Motorcycles Automobiles PowerProducts352572200Japan(Thousands)(Thousands)[Regional Headquarters] Asian Honda Motor Co., Ltd.* Major countries: Thailand, Indonesia, India, Vietnam, etc.Motorcycles Automobiles PowerProducts1,07846113,490Asia andOceania(Thousands)[Regional Headquarters] Honda South America Ltda.Motorcycles Automobiles PowerProducts131861,284SouthAmerica(Thousands)CIVIC[Regional Headquarters] American Honda Motor Co., Inc.Motorcycles Automobiles PowerProducts2,7391,587428NorthAmerica(Thousands)monozukuri27.3 millionunits(April 1, 2021 to March 31, 2022)Global sales in FY2022Number of associates (consolidated)Number of Honda Group companies204,035(as of March 31, 2022)406(as of March 31, 2022)e:NP1 e:NS1CG160 TITANCR-VHonda's BusinessesHonda Report 202213 Honda Report 2022 14Honda Report 2022Chapter 1 Source of Value CreationSince its founding in 1948, it has been Honda's desire to"help people and society" and "expand the potential of people's lives." By offering a broad range of mobility and power units that leverage our own technologies, ideas and designs, we have been providing people with power to take action and value that contributes to the evolution of mobility and livelihoods. Our "2030 Vision" makes the statement that Honda will"Serve people worldwide with the 'joy of expanding their life's potential'." While sharing this feeling, each and every associate has been makingindividual efforts to create the Honda Brand. At the core is the Honda Philosophy. Honda regards the basic principles of "Respect for the Individual" and "The Three Joys" as not mere words but also as something shared as the values of each person and the standards of behavior and judgment. The accumulation of these principles is nothing less than a brand asset.By becoming a force that supports people who are determined to take a step forward, Honda will continue striving to expand the potential of people's lives.As a banner for leading these activities, we aim to strengthen the Honda Brand.Honda BrandChapter 1 Source of Value CreationHonda Report 202215 Honda Report 2022 16Honda Report 2022Value Creation Story22 Message from the President and CEOValue Creation ProcessRecognition of the External Environment and Critical ThemesResource InvestmentHonda's Vision1923252729Honda Report 202217 Honda Report 2022 18Honda Report 2022Chapter 2 Value Creation Story20Honda Report 2022Toshihiro MibeDirector, President and Representative Executive Officer and Chief Executive OfficerTaking on the Challenge of Creating New Value with the Same Commitment as Our Founding PeriodLeveraging Honda's Strengths to Lead the WorldA Commitment Passed Down from Our Founding PeriodHonda's origins lie in a desire to help people. Honda is a company that was established soon after the end of World War II, and even at that time,Honda had high aspirations with the world in its sights. Convinced that Honda can become No. 1 in Japan only when it becomes the best in the world, Honda competed in a field of over 2,000 motorcycle manufacturers that were larger in both capital and size at the time. With faith in our own wisdom and passion, however, we continued to grow on the strength of our unique technologies, ideas and designs. In order to be original but never self-righteous, Honda humbly researched state-of-the-art technology and management practices from that time, incorporating what was good and combining its own ideas and turning that into innovation with overwhelming speed. I think what truly reflects that attitude is accomplishments, such as being the first Japanese company to take part in the Isle of Man TT Races, then the world's most prestigious motorcycle race, soon after our founding. I think these achievements have been Honda's strength since its founding.An internal speech given by our founder, Soichiro Honda, has been upheld from the time when more stringent environmental regulations were to soon take effect in California. He said that it was precisely at such a time with regulations changing significantly where opportunities lie, and that if we worked together with high aspirations and diligence, a path forward would surely open up.From society to technology and Honda's presence in the world, the surrounding environment has significantly changed; however, Honda's founding philosophy has not. In view of the advance of digital technologies, the automobile industry is in the midst of a transformation period that occurs only once in 100 years, but I believe that if we remain passionate and resolute in our efforts, the road is always open. With this belief, we have been making concerted efforts under the internal term "second foundation phase."The Environment and Safety̶Contributing to a Better SocietyHonda seeks to contribute to society as a company that places a priority on mobility. While mobility products and power units that drive them represent Honda's core domains, in an effort to continue doing so, I think we have to tackle the challenges of eliminating our environmental impact and achieving absolute safety. To date, Honda has taken the lead in developing environmental and safety technologies and promoting the span of safe driving to address the negative aspects of motorization, but there is still much to be done.Achieving carbon neutrality and realizing a society with zero traffic collision fatalities are crucial social issues and must not to be judged in terms of business feasibility. Moreover, there are limits to what Honda can do alone. It is critical to involve other companies and organizations and have initiatives permeate society as a whole, like the "SDGs Domino Effect." Instilling this awareness in all associates, we want to achieve Honda's aims of realizing the joy and freedom of mobility and serving people worldwide with the joy of expanding their life's potential together with the value of eliminating our environmental impact and achieving absolute safety. This is how we wish to contribute to the development of a better society.The New Value Honda ProvidesWe recognize that a major challenge is how we should incorporate digital technologies from the perspective of enhancing the value of mobility. Conventional hardware-centric thinking is based on the idea that the value of a motorcycle or automobile is the highest when purchasing and subsequently decreases over time. In the software domain, however, the reverse can be said, where its value is expanded through version updates. By combining hardware with software, we can continue to provide value to customers over an extended product life cycle. In addition, the utilization of digital technologies holds huge hidden potential for expanding value not only by connecting mobility units with one another but also by linking them with all of society through the effects of networks, direct to consumer (D2C), matching and more. Although we have cultivated expertise as a hardware manufacturer, just like Honda in its founding period we will never be self-righteous. Instead, we will learn about the world's cutting-edge technologies and management practices, leveraging our skill in combining this insight with our own ideas to reach implementation ahead of the competition.I am confident that Honda is a company and corporate group capable of this evolution. I think our growth story in the world of Formula One racing represents such a step. When Honda first returned to F1 racing in 2015, we got off to a rough start. The first thing I did when I took on the helm of Honda R&D Co., Ltd. was gain an accurate understanding of all the cutting-edge technologies used in F1 the same as an engineer. From there, the task was to create opportunities for members from not only the F1 team but also the aircraft and basic research teams to combine different knowledge, hold frank discussions and find solutions. The ideas that emerged from that process were put to the test very quickly, with adjustments made based on the results, speeding up the plan-do-check-act (PDCA) cycle. As a result, we ultimately managed to win the Drivers' Championship.I believe this culture represents Honda's strength. We will take on the challenge of improving the value of mobility through advances in digital technologies in concert with the challenge of eliminating our environmental impact and achieving absolute safety, and do so in the spirit of Honda's second foundation phase.What are our aims in this second foundation phase? Honda seeks to be a company that contributes to advances in mobility. Humanity has expanded its spheres of living through migration, and it is said that mobility is a fundamental desire etched into our DNA. Through automobiles, motorcycles, power products, aircraft and more, it could be said that Honda is a company that has continued to enhance the value of that fundamental need to move through the evolution of mobility. More specifically, we want to help evolve mobility by providing individual people with the joy of freedom of mobility while enhancing its temporal and spatial value. Mobility also expands the potential of people's lives by forging interpersonal connections. Honda's mobility Honda's Second Foundation Phase ̶ Becoming the "Power" That Supports People around the World Who Are Trying to Do Things Based on Their Own Initiativeefforts will increase the number of people who enjoy expanded potential in their lives, and by connecting with one another, they will achieve greater power and lead to the creation of a better society. As president, I sincerely believe that Honda wants to become the "power" that supports people around the world who are trying to do things based on their own initiative.Message from the President and CEOHonda Report 202219 Honda Report 2022 20Honda Report 2022Chapter 2 Value Creation Story21 Honda Report 2022Qualities that make Honda unique should be safeguarded, and I believe these are what we need to continue being a one and only company in the world.A Period of Change Presenting Honda's Greatest OpportunityThis current period of change thought to come only once in a century is believed to be more advantageous to emerging forces not beholden to conventional approaches than existing automakers with past assets such as accumulated experience and expertise. Again, I regard this as a tremendous opportunity for Honda. That's because a time of change also presents a once-in-a-lifetime opportunity on a level playing field. Taking advantage of such a time to create new businesses and technologies is the path Honda followed in the past, such as when Honda produced the world's first low-pollution CVCC engine in the 1970s over major global competitors.I started out as an engineer who worked on enginedevelopment. Every time we faced a difficulty due to changes in regulations or technologies, the mood inside the company would shift to a positive one of "this might be a golden opportunity" or "we should take the lead in making changes," and I was there to witness many situations that led to great results. When the U.S. government was deliberating on emissions control standards, Honda lobbied to set even higher standards on the basis of its superior technologies.Taking on the challenge to bring about change leads to new opportunities to help society and enrich people's lives. I see that as a promising opportunity for us to evolve. A spirit of continually taking on challenges is the essence of Honda and is in our DNA that has been passed down to the present. This is known as the Honda Philosophy and a belief that all associates highly value, as well as truly represents a way of life and belief for Honda.Leveraging the Things That Make Honda UniqueAs a measure to control COVID-19 infections, we had placed restrictions on work attendance. We recently ended the practice and shifted to an in-person work style with associates coming to the office as a general rule. Honda's human resources create its technologies. Innovative technologies do not come about by simply relying on the individual ideas and expertise of associates. Honda's many hit products have originated from its unique waigaya brainstorming sessions, a construction of intersubjectivity generated from the resonance between strong personalities. At waigaya meetings, people possessing expertise gather to share their subjective views and ideas. During the product development process, I have also stayed over for several days locked in discussions. Having people with various knowledge debate with one another can arrive at the essence of an issue in depth and sometimes produces surprising ideas. As part of that process, bonds between people are forged, laying the groundwork for everyone to work toward the same goal with a sense of unity. This is a chemical reaction that occurs when people interact face-to-face. It is also one of Honda's strengths. Honda's corporate culture cannot be adequately conveyed through training and established systems alone. Rather, our associates learn firsthand about the attitude of taking on challenges through their day-to-day work, tackling issues and engaging in regular conversation. Of course, it is imperative that systems are in place to allow diverse work styles.The nature of a company or organization, or how it functions, may be very different from corporate management in Europe and the United States. But the qualities that make Honda unique should be carried on, and I believe these assets are what we need to continue being a one and only company in the world. As we promote reforms going forward, nurturing and acquiring human resources who exhibit those unique Honda qualities will become increasingly important. To attract and develop people from inside and outside the Company, we will clearly convey Honda's future vision.People as the Source of Value CreationHonda Is a Company Built on People, Not TechnologyI believe Honda's greatest strength lies in its people. I sometimes hear that outsiders' impression of Honda is associated with technology. Actually, we are a company founded not on our technologies but by the people who create them. I believe that the products brought to market by the people who possess Honda's qualities and put their passion and soul into ongoing challenges are accepted by customers as bearing the unique quality of Honda. When I hear comments like "this product must be good because it was created by a person exhibiting the qualities of Honda," it replaces the hard work experienced during development with a sense of fulfillment.While I believe this spirit of taking on challenges is the essence of Honda and in our DNA, in the process of long and steady growth and the organization swelling in size, I cannot deny that in some areas, our willingness to take on challenges has faded and we have become more defensive. Perhaps we may have been bound by past successes and held ourselves back in certain aspects. That is why I think the first order of business during this second foundation phase to newly transform is to change our mindset.Toward a Future in Which People Gain Freedom with Honda MobilityReaching for the DreamI can already see in my mind the world in 2050 in whichHonda's dreams have come true. It is a world where mobility units emblazoned with the Honda logo come and go over land and sea, in the air and in space. It is a future in which people have gained the freedom of mobility. I believe that a future imagined by humans will always come to fruition, and Honda's mobility offerings will create free space for people and provide value that expands the time and space in which people can flourish. I envisage that this value will further unleash human potential and become a driving force that changes society.Honda's Japanese corporate name does not include the word "automobile." Instead, it is suffixed with Giken-kogyo , meaning "technical research" and "industrial." This reflects founder Soichiro Honda's desire to create technologies that will benefit people and society. That commitment is carried forward to this day, with every Honda associate making possible the freedom of technological development full of dreams and hopes for the future, from our various automobiles, motorcycles and power products to ASIMO, the Honda Jet, Honda electric vertical takeoff and landing (eVTOL) aircraft and more. Our journey of taking on the challenge of developing new technologies will never end. Join us in realizing the future of free and enjoyable mobility that we at Honda will create.p. 59 Initiatives Related to Human Resourcesp. 07 Honda PhilosophyMessage from the President and CEOp. 29 Honda's VisionHonda Report 202221 Honda Report 2022 22Honda Report 2022Chapter 2 Value Creation StoryIncrease added value toward maximizing the joy for customersRaise brand value Overwhelming No. 1 in customer serviceQuality of associate workstylesAim to vitalize organizationsand peopleValue provided to societySophistication of sustainable managementImprove the quality of value Honda providesImprove the quality of value Honda providesCompany-wide management targetsCompany-wide management targetsImprove Quality of InitiativesImprove Quality of InitiativesGovernanceQuality of business (efficiency)Strengthen sources ofnew value creationPortfolio transformationGenerating resourcesby strengthening thebusiness structure●Combined solutions ●Expanding into new areasZero impact on the global environmentZero traffic collision fatalitiesNew value creationIntellectual capitalNumber of patents held in JapanResearch and development expenses/investmentsManufacturing capitalQuality management systemQuality management educationHuman capitalOrganizational culture that allows associates to demonstrate their creativityHuman resources with a strong willNumber of associatesHonda brand built to dateRelationships of trust with Honda fansPartnerships for new value creationNatural capitalEnergy inputResource inputFinancial capitalNet cashTotal capitalInterest-bearing debtResearch and development expensesShareholder returnDirection in the 21st centuryToward becoming a companysociety wants to existCreatingthe JoysExpanding the JoysEnsuring the Joys for the Next Generation2030 VisionServe people worldwide with the "joy of expanding their life's potential"Source of Value CreationContribution tostakeholdersDiversityInclusionCritical ThemesResource InvestmentClimate changeEnergyResourcecirculationImprovement of customer valueZero traffic collision fatalitiesHonda's Vision Chapter 4 Governance (⇒p. 67)Chapter 4Initiatives to Support Value Creation (⇒ p. 53)Chapter 2 Honda's Vision (⇒ p. 29)Chapter 1 Honda Philosophy (⇒ p. 07)Chapter 2Recognition of the External Environment and Critical Themes(⇒ p. 25)Chapter 2Resource Investment(⇒ p. 27)Business ModelRecognitionof the ExternalEnvironmentClimate changeEnergyResource circulationRatio of electrified productsCO2 emissions (company-wide)Zero traffic collision fatalitiesNumber of traffic collision fatalitiesCorporate strengthsSRI indexesAssociate engagementROS Chapter 3 Message from the CFO (⇒ p. 39)Chapter 3 Corporate Strategy (⇒ p. 32)Social and relationship capital24Honda Report 2022Honda Report 202223 Honda Report 2022Chapter 2 Value Creation StoryValue Creation ProcessWe specify critical themes after discussions by management upon evaluating importance based on what Honda envisions, such as the Honda Philosophy and the 2030 Vision, as well as the opinions and expectations obtained through dialogue with external stakeholders. Such critical themes are reflected in corporate strategy and incorporated in strategy for each Business Operation. At the same time, the progress and results of initiatives are shared with management, which leads to further improvements and new initiatives.MacroenvironmentAutomobile industryStronger international response is demanded, as exemplified by the agreement to aim for the 1.5ºC target at the 26th Conference of the Parties (COP26).Environmental issuesAs expectations rise for realizing a sustainable society, it is required to resolve various social issues such as diversity and inclusion in addition to environmental issues.SDGs/ESGProactive relationship building with all stakeholders involved in corporate activities is essential not only in terms of financial interest but also for addressing long-term social issues.Stakeholder capitalismPeople's sense of values is diversifying in step with changes in lifestyles triggered by accelerating digitization.Diversification of valuesSociety is dramatically changing, such as widening inequity brought by changes in the daily living environment and customs as well as a combination of real and online environments to live in a world with COVID-19.COVID-19With the world increasingly divided, there is a rising need for countermeasures to various risks throughout the supply chain such as an impact on the procurement of energy and raw materials.GeopoliticsThrough innovations in connected, autonomous, shared & services and electric (CASE) technologies, the automobile industry has entered a transformation period that occurs only once in a century. Following changes in the existing value chain structure, new non-asset-type players and players from different industries are entering the market at an accelerated pace, and it is expected to provide new added value such as products and services that combine hardware and software.CASE revolutionHonda has established as "critical themes" issues we should address toward realizing what we envision and has been working to address these issues. Upon recognizing the external environment, we have identified "critical themes" from the dual perspectives of Honda and our stakeholders. Such critical themes are reflected in corporate strategy and incorporated in strategy for each Business Operation. Also, Honda has specified company-wide priority risks that may have an impact on our business activities and is taking measures to prepare for these risks.Recognitionof the external environment⇒ Company-wide priority risks (Chapter 4 Governance ⇒ p. 75)Preparation for risks that may have an impact on business activitiesHonda's critical themes for value creationRecognition of the External EnvironmentProcess for Determining Critical ThemesCritical themes Directions of approaches and initiatives Contribution to SDGs Related sectionImprovement of customervalueAiming to the "power" that supports people around the world who are trying to do things based on their own initiative and the company to help people reach out to achieve their potential, Honda will provide a variety of new services and value to customers through products that combine hardware with software.Chapter 2 "Message from the President and CEO" (⇒ p. 19)Chapter 3 "Corporate Strategy" (⇒ p. 32)Chapter 3 "Automobiles Business" (⇒ p. 43)Chapter 3 "Motorcycles Business" (⇒ p. 47)Chapter 3 "Power Products Business" (⇒ p. 51)Climate changeEnergyResource circulationTo continue to be a company society wants to exist globally, Honda works comprehensively to preserve the global environment. We aim to realize Zero impact on the global environment throughout the product life cycle by 2050 through expanding the sales of electrified products based on the three pillars "carbon neutrality," "clean energy" and "resource circulation."Chapter 3 "Corporate Strategy" (⇒ p. 32)Chapter 3 "Automobiles Business" (⇒ p. 43)Chapter 3 "Motorcycles Business" (⇒ p. 47)Chapter 3 "Power Products Business" (⇒ p. 51)Chapter 4 "Environment – Disclosure of Information Based on the TCFD Recommendations" (⇒ p. 55)Zero traffic collision fatalitiesBased on the mission to ensure the safety of all people living in a mobility society, Honda will strive for zero traffic collision fatalities involving Honda motorcycles and automobiles globally by 2050 by advancing future safety technologies and expanding safety education.Chapter 3 "Corporate Strategy" (⇒ p. 32)Chapter 3 "Automobiles Business" (⇒ p. 43)Chapter 3 "Motorcycles Business" (⇒ p. 47)Contribution to stakeholdersBased on the belief that "contributing to the world through resolving social issues will ultimately lead to the creation of economic value," Honda will provide solutions matched to diverse social characteristics and individual needs to enrich lives.Chapter 3 "Corporate Strategy" (⇒ p. 32)Chapter 3 "Automobiles Business" (⇒ p. 43)Chapter 3 "Motorcycles Business" (⇒ p. 47)Chapter 3 "Power Products Business" (⇒ p. 51)DiversityInclusionUpholding the Honda philosophy of the Fundamental Beliefs of "Respect for the Individual," Honda will strive to prevent human rights infringement. We will also strengthen efforts toward expanding the roles of women while instilling an understanding of LGBT issues based on the concept that the fusion of diverse values will inspire new innovations.Chapter 4 "Initiatives Related to Human Resources"(⇒ p. 59)Honda's Initiatives and Critical Themes toward Value CreationRecognition of the External Environment and Critical ThemesHonda Report 202225 Honda Report 2022 26Honda Report 2022Chapter 2 Value Creation StoryImprove Quality of InitiativesHonda aims to realize its 2030 Vision and leverage the unique strengths it has built to date while investing capital as follows to further raise corporate value.Chapter 4 "Initiatives to Support Value Creation" (⇒ p. 53)Honda's Strengths Resource Investmentsfor Long-Term Value Creation Initiatives for Realizing the VisionFinancial Capital Honda has a solid profit structure and a strong financial foundation built through efforts to strengthen the business structure that include automobiles, motorcycles and power products. Moreover, Honda is able to efficiently and effectively invest resources by utilizing diverse types of fundraising.Strong Financial BaseHonda carries out resource management that supports the transformation of its business portfolio to raise future corporate value. To this end, we strive to strengthen management that gives consideration to capital cost utilizing return on invested capital (ROIC).Additionally, Honda believes it is important to ensure a correct understanding of the direction of management and gain the empathy of stakeholders. As such, we continuouslypromote constructive dialogue with stakeholders.Sustained improvements in corporate valueChapter 3 "Message from the CFO" (⇒ p. 39)Financial foundation at the end of FY2022● Net cash (excluding financial business) ………………………………Approx. ¥2.4 trillion● Total capital……………………Approx. ¥11 trillion● Interest-bearing debt (excluding financial business)………………………………………Approx. ¥0.8 trillion ＊Includes US$2.75 billion in Green Bond issuance● Research and development expenses for the next 10 years………………………………Approx. ¥8 trillionIntellectual CapitalWe strive to create unique intellectual property and intangible assets by taking on the challenge of expanding the joys of our customers.We leverage intellectual property and intangible assets created through the process of utilizing intellectual capital in our business activities.Unique Intellectual Property and Intangible AssetsThrough the intellectual capital investment cycle, we will strengthen our competitiveness in new value creation by realizing carbon neutrality, achieving zero traffic collision fatalities and expanding our patent portfolio in new growth areas.Strengthen competitiveness in new value creationChapter 4 "Initiatives for Intellectual Capital" (⇒ p. 63)● Number of patents held worldwide (as of March 31, 2022)…………Over 43,000 patents●Research and development expenses / investments for the next 10 years: Area of electrification/software technologies …………………………………Approx. ¥5 trillion Preparations for new growth……Approx. ¥1 trillionManufacturing Capital We have established and globally deployed the Honda Quality Cycle, which is Honda's proprietary know-how for continuously improving quality at each stage from planning and development to production, sales and services.A System That Achieves Unparalleled High QualityUtilizing the know-how cultivated through the Honda Quality Cycle, we will work to raise the quality of services, including in new areas.Further raise qualityChapter 4 "Initiatives Related to Quality" (⇒ p. 65)●Globally standardized quality management system● Thoroughgoing quality management educationHuman Capital Honda believes that humans are free and distinctive beings who can think and create to realize their dreams and hopes. Such strong individuals possessing an intrinsic desire will create authentic value by mutually resonating while sometimes facing differences in opinion to overcome difficulties. This is the essence of Honda's strength.Free and Distinctive Human ResourcesTo ensure that Honda continues to provide products and services that exceed the expectations of customers and society, we will implement a comprehensive human resources strategy to encourage, support and boost the growth of highly motivated associates. We will also promote comprehensive human resources and organizational strategies to encourage and support the growth of motivated associates and provide them with the incentive to thrive at Honda.Promotion of human resources strategyChapter 4 "Initiatives Related to Human Resources" (⇒ p. 59)● An organizational culture that allows associates to fully demonstrate their abilities, characteristics and creativity through independence, equality and trust● Human resources with a strong intrinsic will for what they want to be or do●Number of associates (consolidated) 204,035 (as of March 31, 2022)Social and Relationship CapitalThrough the Honda brand that embodies the ideas of "helping people and society" and "expanding the potential of people's lives," Honda strives to link the desire of each and every stakeholder to joy. This approach has enabled us to grow into a company trusted by customers and business partners the world over.Relationship of Trust with StakeholdersHonda will continue to increase the number of partners who share its commitments and work for new value creation through collaboration. We will also aim for additional joys by increasing the value we provide by expanding our business into new areas.New value creation through collaboration and taking on the challenge in new areasChapter 4 "Supply Chain Management" (⇒ p. 66)●Honda brand built to date●Relationships of trust with Honda fans●Partnerships for new value creationNatural CapitalSince its founding, Honda has been continuously committed to ensuring coexistence with the environment. Honda boasts a long history of developing environmentally conscious products and technologies. Honda has achieved growth while always striving for coexistence with the environment, as exemplified by such products as low-pollution CVCC engines.Coexistence and Co-Prosperity with the EnvironmentWe are committed to the Triple Action to ZERO concept and will proactively take on the challenge of creating new solutions to realize long-term coexistence and co-prosperity with society.Promotion of Triple Action to ZEROChapter 3 "Corporate Strategy – Environment" (⇒ p. 33)Chapter 4 "Environment – Disclosure of Information Based on the TCFD Recommendations" (⇒ p. 55)●Energy input Direct*1: 20,400 TJ Indirect*2: 24,100 TJ●Resource input Water intake: 32,500 k㎥*1 Amount of fuel consumed at Honda's own site and energy input from renewable energy generation at own site*2 Amount of energy input from electricity, heat and steam purchased from other companiesEnd of FY2022Resource InvestmentSophistication of sustainable managementValue provided to societyAim to vitalize organizations and peopleQuality of associate workstylesOverwhelming No. 1 in customer serviceRaise brand valueIncrease added value toward maximizing the joy for customersStrengthen sources of new value creationQuality of business (efficiency)Chapter 3 "Corporate Strategy" (⇒ p. 32)Zero impact on the global environmentZero traffic collision fatalitiesNew value creationStrengthening business structureImproving the Quality of Value Honda ProvidesHonda Report 202227 Honda Report 2022 28Honda Report 2022Chapter 2 Value Creation StoryHonda has formulated the 2030 Vision as its ideal image for the future. Even amid a rapidly changing business environment, Honda believes it must establish its next direction in the form of a vision for the society Honda aims to realize. The 2030 Vision embodies an ideal image of what Honda wants to be in the year 2030 so that it can continue being a company society wants to exist in 2050, when the Company will have marked more than 100 years since its founding. In formulating the vision, Honda considered two perspectives: forecasting, or looking ahead to the future from the present point in time, and backcasting, or looking back from 2050 to the present.The 2030 Vision makes the statement, "Serve people worldwide with the 'joy of expanding their life's potential'̶Lead the advancement of mobility and enable people everywhere in the world to improve their daily lives̶." To attain this Vision, Honda set the direction of its specifi c initiatives from three perspectives as action guidelines for the 21st century: "Creating the Joys," "Expanding the Joys" and "Ensuring the Joys for the Next Generation."From the fi rst perspective of "Creating the Joys," Honda will work on "creating value for'mobility'and'daily lives'." The Company will focus on three areas, namely mobility, robotics and energy, as it seeks to provide people with the" joy and freedom of mobility" and "joy of making their lives better."From the second perspective of "Expanding the Joys," Honda will strive to "accommodate the different characteristics of people and society." In this area, we will seek to further expand joy by offering products and services that are optimized for all people refl ecting different cultures and values and diverse societies, irrespective of whether they are in developed or developing nations.From the third perspective of"Ensuring the Joys for the Next Generation, "we will make progress" toward a clean and safe/secure society." Striving to become No. 1 in the areas of the environment and safety, Honda will invest more resources in these areas and will strive to become a company that leads efforts to realize a carbon-free and collision-free mobile society.In this Vision, Honda has returned to its universal passion and made a major shift in its direction from quantity to quality. This is how we have set our corporate attitude to realize "growth through the pursuit of quality." We will aim to expand the circle of joy and let the Honda brand shine even brighter through the steadfast pursuit of the "quality of value Honda provides" and "quality of its initiatives." To realize this Vision, we will make effective use of limited corporate resources to transform and evolve existing businesses and create new value.2030 VisionServe people worldwide with the "joy of expanding their life's potential"– Lead the advancement of mobility and enable people everywhere in the world to improve their daily lives –● Provide people with the joy and freedom of mobility● Provide people with the joy of making their lives betterCreating value for "mobility" and "daily lives"〈Creating the Joys〉● Provide the ideal products and services that fulfi ll societies' expectations and meet individual needsAccommodate the different characteristics of people and society〈Expanding the Joys〉● Lead efforts to realize a carbon-free society● Lead efforts to realize a collision-free mobile societyToward a clean and safe/secure society〈Ensuring the Joys for the Next Generation〉Business viewpoint to focus on: Effective utilization of corporate resources2030VisionForecastingBackcastingCritical themesfor value creationPresentHonda PhilosophyTimeGoal attainment pointApproach to Achieve What Honda EnvisionsDirection in the21st centuryWhat HondaEnvisionsWhat we aim for in the value creation processImportant issues that must be addressed for long-term value creationGrowth through the pursuit of qualityDirection for the 21st century "Company society wants to exist"Chapter 2 Recognition of the External Environment and Critical Themes (⇒ p. 25)Honda's Vision2050Continue to become the "power" that supports people around the world who are trying to do things based on their own initiativeHonda Report 202229 Honda Report 2022 30Honda Report 2022Chapter 2 Value Creation Story3Corporate Strategy 32Message from the CFO 39Automobile Business 43Motorcycle Business 47Power Products Business 51Value Creation StrategyHonda Report 202231 Honda Report 2022 32Honda Report 2022Chapter 3 Value Creation StrategyCreating new value●Providing combined solutions●Expanding into new areas -Honda electric vertical takeoff and landing (eVTOL) aircraft, avatar robot and making a foray into the space domain●Initiatives in open innovationResource management to transform business portfolio for enhanced corporate valueA company society wants to exist●Shifting from a business to sell products to a business to sell products and services●Future strategy for assembled power products and power units - Releasing electrified products and promoting solution services●Future strategy for the marine business - Reinforcing efforts in the environmental field while keeping in mind the words of Honda's founder "Moving across the surface without dirtying the water underneath"Zero trafficcollision fatalities●Realizing a society with zero traffic collision fatalities by advancing future safety technologies and expanding safety educationZero impact on the global environment●Realizing a recycling-based society having zero impact on the environment through Triple Action to ZERO(⇒ p. 33) (⇒ p. 35) (⇒ p. 37)(⇒ p. 43) (⇒ p. 47) (⇒ p. 51)(⇒ p. 39)●Reinforcing the business foundation - Strengthening business structure to flexibly respond to changes in the business environment●Initiatives for carbon neutrality - Multifaceted and multidimensional approach matched to the needs of each country and region - Initiatives to establish the foundation for the electrification business●Initiatives for safety●Strengthening business structure - Further strengthening product appeal and business structure●Electrification of automobiles - Procuring batteries stably and accelerating the development of next-generation batteries - Strengthening competitiveness of both the "Honda e: Architecture" and production structure - Tailoring product lineup to market changes ●Initiatives for safety - Implementing future safety technologies and strengthening developmentMotorcycle Business Power Products and Other BusinessesAutomobile BusinessBusiness StrategyFinancial StrategyCompany-Wide StrategyStrengthening business structure2030 VisionServe people worldwide with the "joy of expanding their life's potential"Toward Achieving Honda's VisionsWith a Focus on the Environment and Safety and Creating New ValueTo remain a company society wants to exist, Honda is undertaking corporate activities to "Serve people worldwide with the 'joy of expanding their life's potential'," as stated in its 2030 Vision. As the world's largest power unit manufacturer with annual sales of approximately 30 million units, Honda has been fully focusing on the environment and safety, and for the creation of new value, making company-wide efforts to expand its combined solutions business while taking on challenges in new areas. We will also strengthen our business structure further to generate the investment resources needed for the transformation of our business portfolio.Direction in the 21st centuryCorporate StrategyHonda Report 202233 Honda Report 2022 34Honda Report 2022Chapter 3 Value Creation StrategyToward Achieving Triple Action to ZEROTo address climate change issues, Honda will work toward a target of limiting the average global temperature rise to 1.5ºC above pre-industrial levels by reducing carbon emissions from corporate activities and throughout the product life cycle.Net zero CO2 emissionsTriple Action to ZEROTo address the effective utilization of resources, Honda will conduct research into the recycling of materials, including reuse and recycling of batteries. Going beyond its previous initiative aimed at reducing risks related to resources and waste disposal, Honda will take on an additional challenge of developing products that use sustainable materials having zero environmental impact.100% use of sustainable materialsTo address energy issues, Honda will go a step beyond its conventional initiative of reducing energy risk and aim to use clean energy both in corporate activities and during product use.100% utilization of carbon-free energyTo realize a recycling-based society with zero environmental impact, Honda aims to achieve carbon neutrality for all products and corporate activities Honda is involved in by 2050. In order to make steady progress toward that goal, Honda has defi ned phased targets for total CO2 emissions from corporate activities and for ratios of electrifi ed products in overall global product sales, will accelerate efforts accordingly.Targets 2021 results 2030 targetsState envisioned for 2050Total CO2 emissions from corporate activities (compared to 2019) -18% -46%Net zeroCO2emissionsSales ratio of electrifi ed productsMotorcycles 0.01% 15%Automobiles 0.37% 30%Power products 0.52% 36%As a response to climate change and energy issues, Honda will reduce total CO2 emissions from corporate activities. Specifi c efforts that will be promoted toward the 2030 target are improving production effi ciency,implementing energy-saving measures, shifting to low-carbon energy and using renewable energy. In particular, when building or renovating plants, we will aggressively introduce the latest energy-saving technologies and know-how to reduce both energy consumption and CO2 emissions. Additionally, we also plan to achieve 100% use of carbon-free electricity at our production bases. Honda intends to ultimately achieve net zero CO2 emissions by 2050 by proactively utilizing clean energy.Toward Reducing CO2 Emissions from Corporate ActivitiesAs for effi cient utilization of resources, Honda is proactively promoting 3R (reduce/reuse/recycle) activities while giving consideration to risks of resource depletion and environmental contamination caused by waste disposal.To reduce waste generated from corporate activities, Honda has set the goal of reducing the total waste generation by 14.5% as compared to business as usual (BAU*) in all corporate activities in FY2031. For water resources as well, Honda is giving consideration to water supply risk that affects its businesses and depletion risk that impacts local communities. Honda has thus established the target of reducing total industrial water intake by 14.5% as compared to BAU in all corporate activities in FY2031.As for resource circulation of products, Honda has been carrying out research on reuse schemes and technologies, as well as recycled materials (biomass materials), for all parts and materials used in each product. At the same time, we have set an internal milestone for achieving 100% use of sustainable materials by 2050 and already initiated related efforts toward that goal. We will also take on the challenge of building a new recycling-based value chain by setting up an appropriate schemes transcending industrial borders.*Business as usual: Production volume that varies depending on the production planEffi cient Utilization of Resources for Realizing a Circular Economy SocietyHonda recognizes that in order to achieve Triple Action to ZERO, it is essential to integrate efforts to reduce CO2 emissions and those to circulate resources from the viewpoint of the product life cycle. As such, we will promote life cycle assessment (LCA), which calculates total CO2 emissions from all domains of corporate activities and life cycle CO2 emissions spanning from the procurement of raw materials to product disposal and visualizes the effects of CO2 reduction efforts, and utilize the process broadly in reducing environmental impact.Establishing a Circular Economy Society by Utilizing Resources Even More Effi cientlyIn the area of products, Honda will reduce CO2 emissions from product use by adopting electrifi cation and other innovative environmental technologies, diversifying energy sources and conducting total energy management. In particular, we have been accelerating product electrifi cation while setting the 2030 target sales ratios of electrifi ed products for respective businesses and expanding and enhancing their lineup. By doing so, Honda has been helping to resolve social issues and striving to expand business opportunities. As for achieving net zero CO2 emissions, we will work to increase the ratio of electric vehicles (EVs) and fuel cell vehicles (FCVs) within overall unit sales to 100% globally by 2040. The goal is to make all new automobiles to be released in 2040 carbon-free and achieve carbon neutrality throughout the product life cycle by 2050. In addition to climate change issues, Honda believes product electrifi cation will also be helpful in dealing with air pollution and for preserving clean air, as electrifi ed products emit cleaner exhaust.Toward Reducing CO2 Emissions of ProductsTriple Action to ZEROHonda will strive for zero environmental impact of not only its products but the entire product life cycle, including its corporate activities, by 2050, focusing on the three-pillars of "carbon neutrality," "clean energy" and "resource circulation" (Triple Action to ZERO). Through this initiative, Honda aims to curb the consumption of natural resources to the extent possible and realize a recycling-based society having zero impact on the environment.Initiative toward Zero Impact on the Global EnvironmentCorporate Strategy – EnvironmentHonda Report 202235 Honda Report 2022 36Honda Report 2022Chapter 3 Value Creation StrategyScenario for Zero Traffi c Collision Fatalities by 2050Honda will apply the Honda SENSING 360 omni-directional safety and driver-assistance system and technologies for pedestrian protection, enhanced collision mitigation and advanced, automatic reporting system of collisions (including those involving pedestrians), which fully cover fatal collision situations, to all automobile models to be released in developed countries by 2030.For achieving zero traffic collisioｎ in developed countriesIn emerging countries, Honda will install safety technologies applicable to both motorcycles and automobiles in all models while simultaneously seeking to provide to all people opportunities to receive safe riding education. As for safety technologies for motorcycles, Honda will equip more models with its advanced braking system and headlights that provide better visibility to riders and make them more visible by other road users. Moreover, we installed Honda SENSING capable of detecting motorcycles to the VEZEL released in 2021 and will progressively expand its use in subsequent models. This is one of the Safety for Everyone technologies that make the most effective use of Honda's characteristics of manufacturing both motorcycles and automobiles.For achieving zero traffic collision fatalities in emerging countriesHonda will strive for achieving "zero traffi c collision fatalities involving Honda motorcycles and automobiles globally by 2050" by leveraging two technologies. One is the Intelligent Driver-Assistive Technology, which is the world's fi rst AI-based technology providing assistance that is suited to the ability and situation of each individual to reduce driving errors and risks, helping the driver achieve safe and sound driving. The other is the Safe and Sound Network Technology that connects all road users, both people and mobility products, through telecommunications, making it possible to predict potential risks and help people avoid such risks before collisions actually occur.For achieving zero traffi c collision fatalities globally by 2050Tra�c collision fatalities involving Honda vehicles (per 10,000 units) 50%reductionZero tra�ccollision fatalities50% of current tra�ccollision fatalitiesZerofatalities2020 2030 2040 2050Risk area informationYoung school childrenInformation detected by other vehiclesMotorcycle detected by other vehiclesRoadside cameraRoadside cameraPedestrian positionRisk areaRisk areaRisk areaRisk areaRisk areaPedestrian positionServerServerRunaway vehicleRisk area areaRisk areaRoadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Roadside Risk areaNotice to pedestrian's deviceNotice to pedestrian's deviceNotice to pedestrian's deviceDecreasedlevel ofalertnessPoor visibilityDecreased level of attentionSafe and Sound Network Technology(Human x AI x Connected Technology)Reducing Traffi c Collision Fatalities by Half by 2030 and to Zero by 2050In April 2021, Honda announced that it "will strive for zero traffi c collision fatalities involving Honda motorcycles and automobiles globally by 2050." In achieving this goal, Honda has also set a milestone of reducing global traffi c collision fatalities involving Honda motorcycles and automobiles by half globally by 2030. This applies not just to new models but also to Honda motorcycles and automobilesalready on the market.Initiatives for Zero Traffic Collision FatalitiesWith the goal to unravel the underlying causes of driving errors that make the driver feel anxious, Honda has been conducting research and development of "technologies to understand people" with an original method that utilizes fMRI*. In addition to technologies to understand human behavior and conditions, which Honda has amassed to date, the Intelligent Driver-Assistive Technology uses, for the fi rst time in the world, advanced driver-assistance system (ADAS) sensors and cameras to recognize potential risks in the vehicle's surroundings, which enables AI to detect driving risks. At the same time, AI will determine optimal driving behavior on a real-time basis and offer assistance suited to the cognitive state and traffi c situations of each individual driver.With the next-generation driver-assistive functions currently under research and development, Honda will strive to offer the new value of "error-free" safety and peace of mind which are suited to the driving behavior and situation of each individual driver and keep them away from any potential risks. Moving ahead, we will continue our development efforts to further evolve the Intelligent Driver-Assistive Technology, aiming to establish relevant elemental technologies in the fi rst half of the 2020s and put this into practical use in the second half.*Functional magnetic resonance imaging (one of the methods to obtain images of brain's functioning areas based on changes in blood fl ow)As an effort to realize a collision-free traffi c society for all road users, Honda is striving to create a "cooperative safety society" where utilization of telecommunication technologies will enable everyone sharing the road to be connected and coexist.With the Safe and Sound Network Technology, potential risks in the traffi c environment will be detected based on information obtained from roadside cameras, on-board cameras and mobile phones. The information will be aggregated in the server to reproduce that traffi c environment in the virtual space. In that virtual space, in consideration of the conditions and characteristics of each individual road user, the system predicts and simulates the behaviors of road users at high risk of a collision. Then, the system derives the most appropriate support information to help the road users avoid risks. Such support information will be communicated intuitively to automobile drivers, motorcycle riders and pedestrians through "cooperative risk human-machine interface (HMI)," which will make it possible for the system to encourage road users to take action to avoid a collision before it happens.Aiming for real-world implementation of this technology after 2030, Honda will build the system and complete verifi cation of its effectiveness in the fi rst half of the 2020s, then accelerate industry-wide and public-private collaboration with an aim to standardize the technology in the second half of the 2020s.Safe and Sound Network Technology Connecting All Road UsersNext-generation driver-assistive technologies (under R&D)Three values Honda will offer with its next-generation driver-assistive technologyIntelligent Driver-Assistive Technology (Human x AI)No driving operation errors– Operational assist –Vehicle offers AI-based assist to reduce drifting and prevent a delay in operations.– Attentiveness assist –Vehicle helps reduce driver fatigue/drowsiness.Vibration stimulusNo oversight/No prediction errors– Cognitive assist –Vehicle communicates risks with visual, tactile and auditory sensations.No errors due to daydreaming and careless drivingAI to recognize risks3D audioAI to understand driver's conditionsSeatbelt controlRisk indicatorIntelligent Driver-Assistive Technology Eliminating Human Errors When DrivingBio feedbackCorporate Strategy – SafetyHonda Report 202237 Honda Report 2022 38Honda Report 2022Chapter 3 Value Creation StrategyConnected platformHonda avatar robot Honda eVTOLExpanding into New AreasProviding Combined SolutionsHonda R&D Co., Ltd., a research and development subsidiary of Honda, established Honda Research Institute (HRI) in 2003. The purpose of the institute is to evolve cutting-edge intelligence research, which explores the fi elds of brain research and visual/aural recognition in addition to traditional mechanical engineering. With bases in Frankfurt in Germany, Silicon Valley and Columbus in the United States and Wako City in Saitama Prefecture, Japan, HRI has been working to develop and advance its research domains while establishing a global network of researchers in the areas of advanced sciences.Honda R&D Innovations, Inc., a Honda subsidiary in Silicon Valley, has been engaging in co-creation and open innovation with transformative startups. The company has been promoting the Honda Xcelerator program since 2015 primarily in Silicon Valley but also in Israel, Europe, China, Japan and other areas.Honda Xcelerator helps startups with innovative ideas through funding, access to a collaborative workspace, test vehicles and support from Honda mentors. Besides conducting the research and development of basic technologies, including personal mobility, automated vehicles, artifi cial intelligence, smart materials, robotics, energy, human machine interface and production technology, the program focuses on developing businesses, collaborating and forming alliances toward the realization of a carbon neutral society and establishing a sustainable business environment encompassing resource circulation and recycling.Initiatives in Open InnovationCreating New ValueCorporate Strategy – Creating New ValueSince 2020, Honda R&D Co., Ltd. has become specialized in the research of future technologies. In addition to its advanced technologies aimed at realizing a zero environmental impact society and a collision-free society, Honda R&D is making progress with research on technologies which will expand mobility into the 3rd and 4th dimensions, into the skies, the ocean, outer space and the area of robotics.Three specifi c research themes, namely Honda eVTOL, Honda Avatar Robot and taking on a challenge in the space domain, all derive technologies from Honda's existing businesses at their core. Thus, we are tackling these themes, believing they are an extension of Honda's core businesses as a mobility company. Looking ahead, we will steadily secure resources for conducting research on future and advanced technologies and strengthen our unique and original technology development.Ashirase, Inc. has developed "Ashirase," an in-shoe navigation system to support the visually impaired with walking, and plans to initiate its sales during FY2023. It is a navigation system consisting of a smartphone app and a three-dimensional vibration device with a motion sensor, which is attached inside the shoe. Based on the route set with the app, the device vibrates to provide navigation. The Ashirase device enables the user to intuitively understand the route, thereby eliminating the need to be constantly mindful of the direction and allowing the user to walk more safely and with a more relaxed state of mind.After a family member got involved in an accident, I started working with an aspiration to realize safer and freer mobility for the visually impaired. Even though we may face a number of diffi culties toward releasing Ashirase, we will overcome these diffi culties one by one and make our utmost efforts to provide the freedom of mobility to the visually impaired.Ashirase, Inc.I have developed Striemo based on my challenging spirit to create a means of transportation which lets anyone go out more spontaneously just like putting on our shoes to go out. My goal is to make Striemo one of the most commonly used mobility products in people's everyday lives around
