Luxury customers have moved beyond viewing environmental commitment as a “green trend.” They are looking to put their money into products that make less of an impact on the Earth. As the only luxury maker to offer four hybrid vehicles, Lexus is uniquely qualified to meet those customers’ demands. But Lexus’ dedication to the environment carries through all aspects of its operations, from vehicle engineering and manufacturing, to facilities, to dealerships, to marketing and philanthropy.

As part of Toyota, Lexus shares the goals of the Toyota Earth Charter, which outlines the key principles of providing safe, innovative and cleaner products while respecting the environment and the culture of the local communities in which we operate.

This commitment was responsible for driving Lexus to be the first luxury manufacturer to offer a hybrid vehicle, the RX 400h, in 2005. Since then, Lexus has announced a new hybrid vehicle nearly every year. The RX hybrid luxury utility vehicle is now called the RX 450h and is completely new for 2010. In April 2006, the GS 450h hybrid luxury sport sedan was introduced, followed by the LS 600h L flagship hybrid luxury sedan in July 2007. In 2008, the HS 250h entry luxury sedan was announced and joined the Lexus hybrid family in August 2009. Most recently the LF-Ch compact hybrid concept vehicle debuted at the Frankfurt Auto Show in September 2009.

Each model utilizes Lexus Hybrid Drive, a system that combines the output of a gasoline engine and electric motors. In all, Lexus has sold more than 85,000 luxury hybrids in the United States.

Vehicle Engineering, Manufacturing, and Technology
All gasoline-powered Lexus models except the SC 430 meet the ULEV II emissions standard, while the four Lexus hybrid models meet California’s more stringent SULEV standard and the Federal Tier 2/Bin 3 standard, as well. Lexus’ gas-powered models were among the first in their respective segments to achieve ULEV status, employing technologies such as Variable Valve Timing with intelligence (VVT-i) across the model line. Recently, Lexus began introducing direct fuel injection, and on some models, unique dual-mode fuel injection (direct fuel injection plus port injectors) to help increase fuel efficiency while reducing emissions.

Lexus is incorporating forward-thinking materials into its interiors and implemented bioplastic material in the HS 250h. Known more formally as Ecological Plastic, the material uses plant sources as raw material and is used for parts of the interior upholstery in the HS 250h. Ecological Plastic is also used in a number of injection-molded, foam and board components throughout the car, including trunk compartment trim, cowl side trip, door scuff plates, seat cushions and the package tray. Overall, approximately 30 percent of the interior and trunk are covered in Ecological Plastic.

Another unique interior product is the renewable resource, kenaf. A highly sustainable grass plant similar to bamboo, kenaf produces three harvestable crops per season and absorbs significantly more CO2 than timber as it grows. Once bonded with non-petroleum glue, kenaf is formed into compressed panels and used inside the doors and seatbacks. The low-beam headlamps on the LS600h L and the tail lamps of every Lexus hybrid model, and most gas-powered models, use light-emitting diodes (LED) rather than conventional bulbs. Not only does this type of bulb last significantly longer, it also uses less energy and contains no mercury.

Working closely with other companies, Lexus engineers developed a new water-based paint used for undercoating and modified the painting process to shorten the drying time. The result is that volatile organic compounds (VOC) emissions are reduced by nearly 70 percent compared to solvent-based undercoats, and CO2 emissions are reduced by nearly 15 percent.

Recycling and Reducing Waste from Vehicles
When seat cushions, floor mats and the roof liner are made, the leftover bits and trimmings are used as sound insulation in the doors, roof, floors and chassis. Even with strict efficiency measures in place, a small portion of material waste is inevitable. A specialized incinerator with 85 percent thermal efficiency is used to burn the waste, generating electricity and steam that is redirected back into the manufacturing process.

Company engineers developed a plastic called TSOP that does not deteriorate. Used in the bumpers, interior panels, trim and parts of the dash and console, it can be recycled indefinitely rather than discarded as waste after a single use. It is such a significant breakthrough that the formula has been made available to every car manufacturer.

The batteries in Lexus hybrid models are designed to last for the life of the vehicle. At the end of their life, or in the case of an accident or system malfunction, Lexus offers a bounty to reclaim the battery so it can be recycled or stored in an environmentally sensitive way.

Lexus also encourages its dealers to dispose of tires in a safe and environmentally appropriate way. The company introduced a program called “Tire Shark” to help improve scrap tire collection service, and it promotes the use of only authorized and licensed scrap tire haulers to help ensure compliance with environmental requirements. The Tire Shark device compresses a tire and puts four nails into it so that it cannot be resold or reused. “Sharked” tires are then recycled and converted to crumbs for playground surfaces and playing fields, as well as tire-derived aggregate and energy sources.

On a typical vehicle, the transmission fluid needs to be changed and disposed multiple times over its lifetime. On a Lexus hybrid, the fluid is designed to last the life of the vehicle, reducing the overall number of potential contaminants introduced into the environment.

Marketing and Philanthropy
Lexus is proactively involving customers and prospective customers in its environmental efforts. Several Lexus marketing initiatives demonstrate ever-increasing opportunities for customers to combine luxury and sustainable living.

Lexus Hybrid Living features a collection of people, products, services and companies that embrace both luxury and sustainability. It offers tours of cities across the country highlighting Lexus Hybrid Living Partners, as well as focusing on influential people in various industries who are incorporating sustainability in meaningful ways. Lexus Hybrid Living also holds events across the country introducing environmentally aware customers to other facets of sustainability.

Lexus has partnered with The Fairmont to create two Lexus Hybrid Living Suites designed for eco-savvy customers. The suites at The Fairmont San Francisco and The Fairmont Washington D.C. feature sustainable, organic and recycled materials. A third suite at The Fairmont Pittsburgh is being completed as part of that hotel’s bid to be a Platinum Leadership in Energy and Environmental Design (LEED®) Certified building. Travelers who book the suites also get the use of an LS 600h L hybrid luxury sedan during their stay.

To inspire the next generation to take action toward improving the environment, Lexus partnered with Scholastic for the Lexus Eco Challenge, an educational program and contest that inspires and empowers middle and high school students to learn about the environment and take a stand to improve it. Through this philanthropy program, more than 8,500 students have completed projects to improve the environment in their communities and the world at large, and have earned more than $2 million in scholarships and grants. This year, the students with the most innovative and comprehensive projects will be vying for $500,000 in scholarships and grants.

Zero Waste to Landfill
Every Lexus manufacturing site maintains near zero waste to landfill status, meaning that 98 percent of waste resulting from manufacturing is recycled, repurposed or used to generate additional energy. In addition, Toyota Motor Sales, USA, Inc. (TMS) maintained zero waste to landfill status at the U.S. sales and marketing headquarters campus for Toyota and Lexus.

In fiscal year 2009, the TMS headquarters campus recycled 71 percent of its waste, exceeding its initial target of 65 percent. Waste that was not recycled was sent to the Southeast Resource Recovery Facility (SERRF) in Long Beach to generate electricity. Resulting ash from the process is used as road base material. As a result of these and other efforts, the campus was able to maintain zero waste to landfill status.

Our parts distribution centers use reusable metal shipping containers instead of cardboard and wood pallets. The metal shipping containers can be returned to the nearest parts distribution center and reused. In fiscal year 2009, the returnable container program for Toyota and Lexus saved 6.5 million pounds of cardboard and 16.5 million pounds of wood, resulting in a savings of over $13 million in packaging costs. Environmental coordinators at our various operations share best practices and coordinate cross-division waste reduction efforts, as well as find recycling vendors for the waste they are unable to prevent.

Our vehicle distribution centers in the U.S. set a target of recycling 90 percent of their waste by fiscal year 2011, and achieved that target ahead of schedule in fiscal year 2008. The facilities are maintaining the 90 percent recycling rate while continually reducing waste generation throughout the facilities.

Reducing Energy and Water Usage
Lexus, as part of its parent company TMS, is involved in company-wide efforts to reduce energy and water usage in all operations. In fiscal year 2007, TMS set a goal to reduce energy consumption in U.S. facilities by 18 percent by fiscal year 2011 (compared to the fiscal year 2001 baseline). This reduction goal was achieved within a year. TMS is now targeting a 35 percent reduction in energy consumption by fiscal year 2011 (compared to fiscal year 2001 baseline).

Water conservation initiatives have been implemented across all TMS facilities and water consumption was reduced by over 13 percent from calendar year 2007 to 2008. The installation of water saving fixtures, reductions in landscape irrigation and increased use of recycled water all contributed to the conservation efforts.

At the Portland, Ore., vehicle distribution center, rainwater is being harvested to flush toilets, and natural rainfall is used for all landscaping rather than relying on a landscape irrigation system. The Portland vehicle distribution center filters storm water draining into the Willamette River and serves as a protected wildlife habitat for eagles, geese, ducks, rabbits and coyotes. It is also one of many environmental innovations that earned this facility gold certification in the LEED rating system by the U.S. Green Building Council.

In water-limited southern California, recycled water is used for landscape irrigation at the Ontario parts center, the Los Angeles regional sales office, and TMS headquarters’ South Campus. In addition, the South Campus complex uses recycled water for toilet flushing and building cooling. The West Basin Municipal Water District has described South Campus as the most diverse user of recycled water in Los Angeles County.

Working with Lexus Dealers
Lexus Vision USA Design Team is committed to helping its dealer body develop a greater understanding of sustainable design and to make the most environmentally effective choices. For example, Lexus provides a list of strategies that can help reduce water usage by 30 percent, and it suggests roofing materials that can significantly reduce solar heat gain to reduce the load on air conditioning systems.

Benefits of building a sustainable dealership are realized in the cost savings derived from a reduction in energy, lower water usage, and diverting waste from landfills. There are also lower costs associated with operations and maintenance, and the enhancement of occupant productivity and health associated with indoor air quality. Lexus’ facilities department began working with its dealerships in late 2004 to promote greener building practices at Lexus dealerships. We assist in building the business case for applying for LEED certification, research support and consulting during remodeling or new construction. There are several LEED projects under development at dealerships across the U.S.

Lexus of Las Vegas, which is being evaluated to be a LEED EB “Gold” facility, retrofit its dealership to be more energy efficient and to improve its maintenance requirements. For example, by implementing an HVAC management system, potable water usage was lowered by 42 percent. For car washes, instead of using 45 gallons of fresh water, it developed a reclamation system so only nine gallons of fresh water, and 36 gallons of reclaimed water, are used. Interior lighting was replaced with energy-efficient fluorescent bulbs and motion sensors were installed. Exterior lighting is controlled by an astronomical time clock to maximize available daylight. And the recycling system was expanded from 5 percent to 75 percent of the waste stream by including more items, such as car batteries, oil, scrap metal, plastics and glass.

Lexus uses the internet to provide our dealers a number of tools, including the Environmental Assistance Network (EAN) and an online HazMat compliance training course, HazMat U. The EAN provides dealers with up-to-the minute information on regulatory requirements, waste stream management best practices, self-audit tools, and federal and state regulatory agency contacts. The HazMat U training course was developed through a partnership of the North American Automotive HazMat Action Committee (NAAHAC) – of which TMS is a member – and the Coordinating Committee for Automotive Repair®. HazMat U helps dealers comply with federal and state regulatory and training requirements. By working with regulatory agencies, a HazMat U training module was developed for airbags, seat belt pretensioners and lithium ion batteries – auto parts subject to new regulation.

Electronic Waste Recycling
The company launched the “Keep IT Green” program in 1999 to recycle all sales and logistics IT electronic equipment throughout the U.S. and Puerto Rico. To date, the Keep IT Green program has diverted over three million pounds of equipment from landfills. Complementing the Keep IT Green efforts, some Lexus and Toyota locations have organized “E-Waste Roundups” on Earth Day for Toyota employees to bring electronic waste from home to be recycled. At the 2009 Earth Day event, Toyota and Lexus employees recycled more than 15,000 pounds of equipment, including computers, consumer electronics, microwaves, monitors, printers and televisions.