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Case study: How Honda reduces logistics emissions

Ever since the 1960s, Honda has actively endeavoured to address environmental problems  Tweet This!, seeking to reduce environmental impacts at every stage in the life cycle of its products, from product procurement to the design, development, production, transportation, sale, use and disposal stages.

This case study is based on the 2018 Sustainability Report by Honda published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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Due to the extremely large volume of transportation that takes place throughout the manufacturing process at Honda, increasing efficiency, reducing environmental burden, compliance and risk management in logistics, are all critical issues for Honda. In order to reduce logistics emissions Honda took action to:

  • identify global CO2 emissions
  • expand modal shifts
  • increase the ratio of longer carriers

What are the material issues the company has identified?

In its 2018 Sustainability Report Honda identified a range of material issues, such as responding to climate change and energy issues, reducing traffic fatalities, assuring outstanding product quality, respecting human rights. Among these, reducing logistics emissions stands out as a key material issue for Honda.

Stakeholder engagement in accordance with the GRI Standards              

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Honda engages with:

Stakeholder Group                Method of engagement
Customers ·      Customer satisfaction surveys

·      Enjoy Honda

Shareholders

and Investors

·      Shareholder meeting and briefings for institutional investors
National/Local

government

 

·      Dialogues concerning local government policies and available technologies

·      Feasibility studies

Economic and Industry organisations ·      Participation in councils
International organisations ·      Participation in international initiatives

 

NGOs ·      Regular communication

·      Response to surveys and questionnaires

Research institutes

 

·      Merchantability verification for products

·      Co-development of technologies

Media

 

·      Communication with journalists

·      New model launch events

Suppliers ·      Supplier networking events

·      Supplier risk assessments

Dealers ·      Dealer Conferences/briefings
Local communities

 

·      Plant tours

·      Social activities by associates

Associates ·      Associate satisfaction surveys

·      Dialogue between executives and associates

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Honda engaged in dialogue with leading environmental, social and corporate governance (ESG) rating agencies and NGOs in Europe and the United States.

What actions were taken by Honda to reduce logistics emissions?

In its 2018 Sustainability Report Honda reports that it took the following actions for reducing logistics emissions:

  • Identifying global CO2 emissions
  • Honda is working to improve transportation efficiency in the shipping of vehicles and equipment, parts shipped between plants, parts for services and repairs, and parts collected from suppliers. Additionally, in FY2017 Honda started managing CO2 emissions in the transportation of automobile production parts, which make up the majority of international marine transport. In FY2018, Honda continued its efforts to identify CO2 emissions for all products around the world, by steadily expanding the scope to other product domains.
  • Expanding modal shifts
  • Honda tries to expand its modal shift, i.e. switching means of transportation from trucks to ship and rail transportation, with a focus on transportation to distant regions. For example, in Vietnam, the distance between Honda’s production facility on the outskirts of Hanoi in the north and the major market of Ho Chi Minh City in the south is over 1,700 km. For this reason, Honda is replacing conventional trucks with ship and rail transport for long-distance shipments between north and south. As a result, Honda will achieve reductions in CO2 of 27% with rail transport and 65% with ship transport, compared with conventional truck transport. In addition, Honda is working to increase efficiency in each transport mode and is introducing, in rail transport, freight cars specially designed for shipping automobiles with high load efficiency.
  • Increasing the ratio of longer carriers
  • In India, Honda reduced CO2 emissions by approximately 6,226t per year by improving the transport efficiency of completed vehicles from its factory to dealers. Honda India implemented this initiative in collaboration with logistics service providers and dealers, in which longer carriers transport two or more dealers’ clubbed orders on the same route, if one dealer order is less than six cars. Previously, Honda India used small carriers with four car capacity for small quantity dealer orders.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standard addressed in this case is: Disclosure 302-2 Energy consumption outside of the organization

Disclosure 302-2 Energy consumption outside of the organization corresponds to:

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



FBRH GRI Standards Certified and IEMA approved Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI-Standards Certified and IEMA approved Course you will be taking the first step in gaining the many benefits of sustainability reporting.

 

References:

1) This case study is based on published information by Honda, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Honda: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.

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