Director
Executive Vice President and
Representative Executive Officer
Chief Operating Officer
Shinji Aoyama
Honda aims to embody the values of “Transcend” and “Augment,” achieving “zero environmental impact” and “absolute safety,” thereby creating the joy and freedom of mobility in the era of electrification. Honda seeks to continuously be the “power” that supports people around the world who are trying to do things based on their own initiative.
While we recognize that achieving environmental and safety objectives is our duty as a mobility company, we must consciously sidestep any notion of trade-off where our pursuit of environmental and safety initiatives compromises economic value. Instead, we are committed to intensifying our endeavors guided by the principle of trade-on, aiming to enhance economic value through the pursuit of social value. This strategy paves the way for a fresh path of growth for the company, highlighting the importance of pursuing both societal and economic value.
In order to create the “joy and freedom of mobility” that we aspire to, it is essential for the entire organization to clearly define key challenges and targets to be prioritized. Each individual working at Honda should use these as guiding principles, driving together with full force towards the same direction. Taking this perspective into account, and acknowledging the swift changes in the environment, along with the enhanced clarity of our “vision” and “value proposition” achieved through the redefinition of our global brand slogan, we have opted to reassess the most critical challenges that we had previously identified, grounding them in the framework of the materiality matrix. We will strive to enhance the effectiveness and speed of initiatives by reorganizing the important themes, materiality, and associated goals that we will particularly focus on in the future.
We have selected the new key themes by systematically identifying and prioritizing societal issues extracted comprehensively from the perspective of sustainability, aligning them with Honda’s direction. Specifically, in addition to “environment” and “safety” which have long been highlighted as important themes in our management, we have chosen “people” and “technology,” which drive Honda’s growth, as well as “brand” that encompasses all corporate activities — as our five non-financial indicators. Lastly, we have added a financial indicator “further enhancement of economic value,” which now compose our six important themes. Furthermore, within the realm of non-financial indicators, we have defined the materiality that should be addressed for each theme. This approach helps us clarify the areas we need to focus on to achieve our vision.
To ensure we achieve our materiality, it is crucial to execute strategic planning and resource allocation with a medium to long-term perspective, even within a rapidly changing and highly uncertain environment, without being overly tied to short-term fluctuations. With this in mind, we have decided to discontinue the previous practice of setting three-year midterm goals and instead establish achievement targets on a 5-year and 10-year horizon. We will clearly define key goal indicators (KGIs) and key performance indicators (KPIs) for the milestones to be reached in each phase of 2025 and 2030, reinforcing management governance by regularly monitoring the progress of initiatives by the leadership team. This approach will enhance the effectiveness of initiatives and facilitate their rapid implementation towards the achievement of materiality.
Based on SDGs, disclosure standards like GRI standards and SASB, as well as external evaluation criteria such as S&P Global CSA, social issues are comprehensively extracted.
We prioritize and select areas to focus on, in alignment with Honda’s vision, “to create the joy and freedom of mobility,“ among the social issues extracted in Step 1.
For each important theme, we define specific challenges to focus on as materiality, and set indicators and target values to measure their achievement.
We formulate specific initiatives and actions toward achieving the target values set for each materiality.
| Important Themes | Materiality | Management Indicators （KGI*1） |
Target | Approach and Direction of Efforts | |||
|---|---|---|---|---|---|---|---|
| 2025 | 2030 | ||||||
| Financial Indicator |
Economic Value Enhancement |
•Improvement of capital efficiency • Sustainable growth of cash flows |
ROIC | Consolidated | ー | 10% or higher |
We have established ROIC target for 2030, complementing the previously disclosed ROS target for 2025. By fortifying our business structure, we intend to boost cash generation capabilities. Our objective is to uphold an optimal equilibrium between strategic resource allocation for transformation and shareholder returns, with the aim of achieving sustainable growth and enhanced capital efficiency. |
| ROS | 7% or higher |
ー | |||||
| Non- Financial Indicator |
Brand Value Enhancement |
• Enhancement of consistent brand management | Global Brand Value (Interbrand Research) |
Consolidated | (Unpublished) | By embodying Honda’s brand value through high-quality products and services, and through consistent brand management in all corporate activities, we aim to enhance brand value. | |
| Realization of Zero Environmental Impact Society |
• Challenging climate change issues • Challenging energy-related issues • Efficient use of resources • Biodiversity conservation |
Reduction rate of CO2 emissions from corporate activities |
Consolidated | ー | 46% | To remain a company people and society want to exist globally, we are committed to thorough efforts in environmental preservation. We aim for zero environmental impact in the lifecycle by 2050 through initiatives such as “carbon neutrality,” “clean energy” and “resource circulation.” | |
| Total CO2 emissions from products | Consolidated /Business |
(Unpublished) | |||||
| Waste reduction rate | Consolidated (compared to BAU*2) |
ー | 14.5% | ||||
| Water intake reduction rate | ー | 14.5% | |||||
| Realization of a society with Zero Traffic Accidents |
• Development of technology to capture and complement human intention • Safety education and awareness activities • Building a transportation ecosystem |
Traffic fatalities involving automobiles in Japan and the United States |
Consolidated | (Unpublished) | With the philosophy of pursuing the safety of all people in a mobility society, we aim to achieve zero traffic collision fatalities involving Honda’s motorcycles and automobiles worldwide by 2050 through the evolution of advanced safety technology and expanded safety education. |
||
| Evolution of Human Capital Management |
• Activating associates’ intrinsic motivations and fostering the integration of diverse individuals • Ensuring both quantitative and qualitative sufficiency of human resources in priority business areas |
Associate engagement score | Consolidated | 50% or higher |
60% or higher |
Under the belief that the integration of diverse individuals who take on challenges driven by their “dreams” leads to the creation of the value Honda aims to provide, we promote various initiatives. Additionally, we strive to ensure that human rights are not violated in any of our corporate activities. | |
| (Percentage of positive responses) |
|||||||
| Creation of Original Technologies |
• Establishing competitive advantage in focus areas |
Ability to create intellectual property |
Consolidated | (Unpublished) | define five key factors to focus on at present for the evolution of mobility and promote technological development. | ||
In our important theme of “Creating Innovative Technologies,” we have defined the following five key factors as the technological areas to focus on for the immediate future.
・Carbon neutrality of power units (electrification/hydrogen)
・Resource circulation
・Energy management system
・AD/ADAS*1 ・IoT/Connected*2
By pursuing advanced and innovative technologies in each area, we aim to enhance the added value of mobility. Furthermore, through the synergy of the technologies developed in each domain, we strive to provide continuous value tailored to the mobility life of each individual customer.*2
With the global rise in environmental awareness, the electrification of power units, and the advancement of software, the nature of the value chain surrounding mobility is undergoing significant changes. Particularly in the realm of EVs (Electric Vehicles), it’s imperative to promptly address novel challenges, such as ensuring stable production and procurement of batteries, securing essential minerals used as raw materials, cost reduction, and the technological development of next-generation batteries. Moreover, initiatives centered on resource circulation such as the use of sustainable materials are crucial. These not only ensure the steady supply of vital minerals but also lead to reductions in CO2 emissions. We recognize that the importance of such endeavors will only continue to grow in the future. In an era where the surrounding business environment is rapidly diversifying and becoming more complex, while keeping Honda’s proprietary technology and know-how at the core, we believe it’s essential to form a robust value chain through collaborations with other companies that possess strengths distinct from Honda’s. This approach can generate synergistic benefits and further accelerate our efforts towards new value creation. We have already been advancing collaborations in areas like battery production, resource procurement, hydrogen projects, and energy services. Moving forward, by actively considering even more strategic partnerships, we aim to build a sustainable and competitive business foundation.
With the global rise in environmental awareness, the electrification of power units and the advancement of software, the nature of the value chain surrounding mobility is undergoing significant changes. Particularly in the realm of EVs (Electric Vehicles), it’s imperative to promptly address novel challenges, such as ensuring stable production and procurement of batteries, securing essential minerals used as raw materials, cost reduction and the technological development of next-generation batteries. Moreover, initiatives centered on resource circulation such as the use of sustainable materials are crucial. These not only ensure the steady supply of vital minerals but also lead to reductions in CO2 emissions. We recognize that the importance of such endeavors will only continue to grow in the future.
In an era where the surrounding business environment is rapidly diversifying and becoming more complex, while keeping Honda’s proprietary technology and know-how at the core, we believe it’s essential to form a robust value chain through collaborations with other companies that possess strengths distinct from Honda’s. This approach can generate synergistic benefits and further accelerate our efforts towards new value creation.
We have already been advancing collaborations in areas like battery production, resource procurement, hydrogen projects and energy services. Moving forward, by actively expanding even more strategic partnerships, we aim to build a sustainable and competitive business foundation.
With the rapid advancements in electrification and digitization, there’s a shifting paradigm in the value of mobility. Traditionally, under the “sell off the hardware” business model, a new vehicle’s value was at its peak at the time of purchase, declining over the years. However, as the demand for software areas, represented by automated driving, driver safety assistance systems and digital services, continues to grow, there’s an emerging perspective that the value of mobility can be enhanced post-purchase through software updates.
Through IoT and connected technologies, as mobility becomes interconnected with other mobility solutions and transportation infrastructure, it becomes possible not only to prevent accidents before they occur but also to provide personalized, up-to-date digital services. This means that future mobility will be able to “grow alongside the customer.”
Furthermore, mobility is expected to generate new value beyond merely being a means of transportation, serving as “energy storage.” Initiatives in the energy services sector, utilizing the power supply capabilities of electric mobility through home charging and public charging, will ensure that even when not in motion, mobility continues to evolve into an entity that benefits people in various aspects of their lives.
Through the fusion of hardware and software, we aim to continually deliver value to our customers over an extended lifecycle and grow alongside them as partners. Instead of focusing solely on “mobility,” we are committed to accompanying each individual in various aspects of their lives, providing personalized and diverse values consistently. By upholding these two principles, we strive to enhance the lifetime value from a long-term perspective.
As the surrounding environment undergoes significant changes, the key challenges in our management strategy have also become increasingly sophisticated and complex. While Honda is committed to focusing on the aforementioned five crucial themes to drive the evolution of mobility and the transformation of our business, it is essential to further advance our management operations themselves to dynamically and swiftly promote large-scale initiatives towards this significant transformation. From this perspective, we’ve decided to drive the company-wide key challenges set at the beginning of the term through a “crossdepartmental task force” led directly by the management members. We’ve established a system under direct management control that allows for a swift PDCA (Plan-Do-Check-Act) cycle.
In addition to establishing the “Electrification Business Development Operations” this fiscal year, we have also significantly reorganized the corporate functions and regional operations. This reorganization aims to optimize our management resources as a whole. Furthermore, we have abolished the operating officer system, consolidating the roles of officers in charge of each business and function into executive officers, thereby clarifying accountability and enabling swift execution. In addition, in line with the previously mentioned goal of constructing a robust value chain with Honda as the hub, we are steadily advancing the establishment of an internal system to strengthen alliances that supports smooth collaboration with other companies.
For Honda to remain a company people and society want to exist, we believe that two elements are paramount: the diverse “dreams” rooted in individual intrinsic motivations, and the “speed” to manifest them through technology and ideas. We aim to magnify the power of each individual’s dream and swiftly translate it into value. With this vision in mind, we are committed to continually elevating our management operations to greater heights.