toyota csr case study

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Toyota Stakeholders, Corporate Social Responsibility (CSR) & ESG

Toyota corporate social responsibility strategy CSR, ESG, stakeholders, corporate citizenship, sustainability, automotive business case study analysis

Toyota’s corporate social responsibility (CSR) and environmental, social, and corporate governance (ESG) strategy covers a wide variety of concerns among stakeholders. These stakeholders influence the company’s brand image, human resource capabilities, and financial soundness. Stakeholder management and corporate citizenship affect business development and the realization of Toyota’s mission and vision . The automotive company recognizes the importance of these stakeholders. As such, the firm maintains corporate social responsibility measures that directly address stakeholders’ interests, like fuel or energy efficiency, business sustainability, and green operations. While maintaining emphasis on business strength in the global automobile market, Toyota continues as one of the best firms in terms of CSR programs that satisfy the relevant interests of stakeholders.

Toyota’s corporate social responsibility efforts are comprehensive in addressing all its major stakeholder groups. Different programs and initiatives are included in these efforts for the corporate citizenship of the automotive business. Successful corporate citizenship improves brand image and strengthens the business against the aggressive competition illustrated in the Five Forces analysis of Toyota . The company’s CSR and ESG programs and sustainability status support competitiveness against other automakers, such as Tesla , General Motors , Ford , and BMW .

Toyota’s Stakeholder Groups, CSR & ESG Initiatives

As a global firm in the automotive industry, Toyota’s corporate social responsibility activity deals with various stakeholders with disparate interests and demands. However, the following are the most relevant groups among Toyota’s stakeholders, arranged according to significance in affecting the company:

The natural environment
Communities

Employees . Toyota considers employees as its most significant stakeholders. This stakeholder group aims for job security, career development, and fair employment practices. The automaker’s CSR and ESG strategies address the interests of these stakeholders through competitive salaries and wages and a career development program for advancing employees in the organization. For example, the business has an On-the-Job Development (OJD) program, as well as training courses specific to career paths in the automotive firm. These training courses address The Toyota Way development, technical development, and management development. Also, in support of its corporate citizenship, the company offers financial assistance for employees’ continuing formal education. Moreover, Toyota’s business culture (work culture) helps enhance job satisfaction. Thus, the automotive company’s corporate social responsibility strategy satisfies the interests of employees as stakeholders.

Customers . Customers are the second-priority stakeholders in Toyota’s strategies for CSR and ESG. The interests of this stakeholder group are high-quality automobiles and service, along with reasonable pricing. Many customers also prefer to buy vehicles from sustainable and green businesses with a good corporate citizenship standing. The company addresses these interests through rapid innovation based on The Toyota Way and the Toyota Production System (TPS), which aim to maximize efficiency, quality, and innovation. Toyota’s marketing mix (4P) also involves competitive pricing that satisfies this stakeholder group. Thus, the firm’s corporate social responsibility programs properly cover the interests of customers as stakeholders.

Investors . Toyota’s CSR and ESG strategy considers investors as another major stakeholder group. These stakeholders are interested in business profitability. The automotive company addresses these interests through emphasis on global business strength. Toyota’s competitive strategy and growth strategies continue to prioritize improved business resilience over rapid expansion, although growth and expansion are also among the strategic objectives. This prioritization ensures a stronger business organization that can continue its long-term growth. This corporate citizenship strategy is also geared toward sustainability, higher energy efficiency, and the business opportunities shown in the SWOT analysis of Toyota . Thus, the automaker’s corporate social responsibility strategies address the interests of investors as stakeholders.

Environment . Toyota has CSR and ESG initiatives targeting environmental goals. The main interests regarding the natural environment as a stakeholder include environmental conservation and business sustainability, which is an opportunity considered in the external analysis of Toyota . The company addresses these interests through the Toyota Environmental Activities Grant Program. Through this CSR program, the firm donates automobiles and funds for environmental conservation. For example, the company donates hybrid cars and funds to support parks. In addition, the automotive company’s corporate citizenship programs support a network of environmental advocates and initiatives throughout the United States and other countries. Thus, Toyota’s corporate social responsibility programs effectively fulfill interests regarding the natural environment.

Communities . As stakeholders, communities are interested in their socioeconomic development, with consideration for social trends, like the ones shown in the PESTLE/PESTEL analysis of Toyota . The automaker’s strategy for CSR and ESG addresses this stakeholder group through community development and support programs. For example, the company has education programs to promote literacy. Also, the company’s initiatives provide safe driving education and tools for families. Moreover, the automotive firm’s corporate citizenship programs work with other organizations, like the American Red Cross, to support community development. Thus, Toyota’s corporate social responsibility strategies satisfy the interests of the stakeholder group of communities.

Toyota’s CSR & ESG Performance in Addressing Stakeholders’ Interests

Toyota is a role model for using corporate social responsibility strategies to fulfill the interests of its stakeholders. The automaker has a comprehensive CSR and ESG approach that addresses all its stakeholder groups. The CSR programs address community development, sustainability and green business practices, human resource development, customer satisfaction, and other concerns relevant to the automotive business. Toyota is on the right track in maintaining its successful efforts to satisfy stakeholders for high corporate social responsibility performance and successful corporate citizenship.

Fatima, T., & Elbanna, S. (2023). Corporate social responsibility (CSR) implementation: A review and a research agenda towards an integrative framework. Journal of Business Ethics, 183 (1), 105-121.
Homer, S. T., Yee, K. V., & Khor, K. S. (2023). Developing a measurement instrument for perceived corporate citizenship using multi-stakeholder, multi-industry and cross-country validations. Quality & Quantity, 57 (1), 277-300.
Toyota Motor Corporation – Form 20-F .
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U.S. Department of Commerce – International Trade Administration – Automotive Industry .
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Esg case study – toyota motor corporation.

This article was originally published on ETFTrends.com.

By Sara Rodriguez, Sage ESG Research Analyst

About Toyota Motor Corporation

Toyota Motor Corporation is a Japanese multinational automotive company that designs, manufacturers, and sells passenger and commercial vehicles. The company also has a financial services branch that offers financing to vehicle dealers and customers. Toyota is the second-largest car manufacturer in the world and ranked the 11th largest company by Forbes — and produces vehicles under five brands: Toyota, Hino, Lexus, Ranz, and Daihatsu. Toyota also partners with Subaru, Isuzu, and Mazda.

Environmental

Motor vehicles are one of the largest contributors to greenhouse gas (GHG) emissions and, as a result, climate change, with the transportation sector accounting for a third of U.S. GHG emissions in 2018. Although most emissions come from vehicle usage rather than the process of manufacturing vehicles, government regulations place the burden on auto companies to improve fuel efficiency and reduce overall emissions. While climate change regulations present financial risk to automakers, they also offer opportunities; increased fuel efficiency requirements are likely to lead to more sales of electric vehicles and hybrid systems. Toyota pioneered the first popular hybrid vehicle with the 1997 release of the Prius, the world’s first mass-produced hybrid. Since then, Toyota has sold 15 million hybrids worldwide . In 2018, hybrids accounted for 58% of Toyota’s sales, contributing to Toyota reaching substantially better carbon dioxide (CO2) emissions from new vehicles than regulatory standards and the best levels in the industry (102.1g/km compared to U.S. regulation of 119g/km). In 2020, Toyota reduced global average CO2 emissions from new vehicles by 22% compared to 2010 levels by improving vehicle performance and expanding its lineup. Toyota’s goal is to increase that number to 30% by 2025, with the goal of 90% total reduction by 2050. The company aims to offer an electric version of all Toyota and Lexus models worldwide by 2025. (Toyota does not yet sell any all-electric vehicles to the U.S., but it does outside the U.S.)

In addition to greenhouse gases, cars emit smog-forming pollutants that contribute to poor air quality and trigger negative health effects. Recently, a London court ruled that air pollution significantly contributed to the death of a nine-year-old girl with asthma who had been exposed to excessive nitrogen dioxide (NO2) levels. NO2 is a toxic gas emitted by cars that use diesel fuel, and although European Union laws set regulatory levels for NO2 in the air, Britain has missed its targets for a decade due to a lack of enforcement. As Toyota expands into European markets, the smog rating of its cars will be financially material and an important aspect of risk management.

Compared to industry peers, Toyota excels in addressing emissions and fuel efficiency. In 2014 Toyota Motor Credit Corporation, the financial arm of Toyota Motor Corporation, introduced the auto industry’s first-ever asset-backed green bond and has since issued five total green bonds. The newest $750 million bond will go toward developing new Toyota and Lexus vehicles to possess a hybrid or alternative fuel powertrain, achieve a minimum of 40 highway and city miles per gallon, and receive an EPA Smog Rating of 7/10 or better. The bond program was reviewed by Sustainalytics, which found that Toyota leads its competitors in supporting its carbon transition through green bond investments.

In addition to curbing emissions caused by Toyota’s vehicles, the company seeks to reduce plant emissions to zero by 2050 by utilizing renewable energy and equipment optimization. In automaking, water is used in painting and other manufacturing processes. Toyota has implemented initiatives to reduce the amount of water used in manufacturing and has developed technology that allows the painting process to require no water. In 2019, Toyota reduced water usage by 5% per vehicle, with the goal of 3% further reduction by 2025, for an overall reduction of 34% from 2001 levels. To reduce the environmental impact of materials purchased from suppliers, Toyota has launched Green Purchasing Guidelines to prioritize the purchase of parts and equipment with a low environmental footprint. We would like to see Toyota continue to develop its supply chain environmental policies.

As the global population grows, so does number of cars on the road, which creates waste when they’ve reached the end of their useful lives. Toyota’s Global 100 Dismantlers Project was created to establish systems for appropriate treatment of end-of-life vehicles through battery collection and car recycling. Toyota aims to have 15 vehicle recycling facilities by 2025. Toyota is also working to minimize waste by prolonging the useful life of its vehicles. Toyota has a strong reputation for producing quality, reliable vehicles. Consumer Reports lists Toyota’s overall reliability as superb, and Toyota and Lexus often take the top spots in Consumer Reports Annual Auto Reliability Survey. An Iseecars.com study found that Toyota full-size SUV models are the longest-lasting vehicles and most likely to reach over 200,000 miles.

Driving is an activity with inherent risk. The World Health Organization estimates that 1.35 million people die in car accidents each year. Accidents are worse in emerging nations where transportation infrastructure has not kept up with the increase in the number of cars on the road; without countermeasures, traffic fatalities are predicted to become the seventh-leading cause of death worldwide by 2030. Demand for personal vehicles will continue to increase as developing countries experience higher standards of living, and product safety will be paramount to automaker’s reputations and brand values. Toyota has put forth a goal of Zero Casualties from Traffic Accidents and adopted an Integrated Safety Management Concept to work toward eliminating traffic fatalities by providing driver support at each stage of driving: from parking to normal operation, the accident itself, and the post-crash. Toyota and Lexus models regularly earn top safety ratings by the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety. In addition to traditional safety features, Toyota actively invests in the development of autonomous vehicles, including a $500 million investment in Uber and autonomous ridesharing. If fully developed, autonomous driving can offer increased safety to passengers, lower accident rates, and provide mobility for the elderly and physically disabled.

Accidents caused by defective vehicles can have significant financial repercussions for auto manufacturers. Toyota experienced significant damage to its reputation and brand value in 2009 when unintended acceleration caused a major accident that killed four people riding in a dealer-loaned Lexus in San Diego. Toyota subsequently began recalling millions of vehicles, citing problems of pedal entrapment from unsecured floor mats and “sticky gas pedals.” Toyota’s failure to quickly respond resulted in a $1.2 billion settlement with the Justice Department and $50 million in fines from the NHTSA. The scandal generated an extraordinary amount of news coverage, and the Toyota recall story ranked among the top 10 news stories across all media in January and February 2010. Litigation costs, warranty costs, and increased marketing to counter the negative publicity of the event were estimated to cost Toyota over $5 billion (annual sales are about $275 billion). As a result of bad press, Toyota’s 2010 sales fell 16% from the previous year and its stock price fell 10% overall, while competitors like Ford benefitted and experienced stock price growth of 80% over the same period. Future recalls and quality issues are certain to prove costly for Toyota and may continue to negatively impact its consumer reputation.

Another social issue that can be financially material for automakers is human rights. Automobiles consist of about 30,000 parts, making their supply chain extensive and at high risk for human rights abuses. Toyota addresses human rights concerns in its Corporate Sustainability Report (CSR) and cites Migrant Workers and Responsible Sourcing of Cobalt as its priorities for 2020; however, Toyota does not have a clean labor record. A 2008 report published by the Institute for Global Labour and Human Rights accused Toyota of a catalog of human rights abuses, including stripping foreign workers of their passports and forcing them to work grueling hours without days off for less than half of the legal minimum wage. Toyota was also accused of involvement in the suppression of freedom of association at its plant in the Philippines. Toyota’s CSR lists a host of external nongovernmental organizations the company partners with to promote fair working conditions, however; due to the high-risk present in its supply chain and its past offenses, we would like to see the company further develop its labor and human rights policies.

Lastly, we would mention that Toyota has been accused of discriminatory practices. In 2016, Toyota Motor Credit Corporation, the financial arm of Toyota Motor Corporation, agreed to pay 21.9 million in restitution to thousands of African American, Asian, and Pacific Islander customers for charging them higher interest rates on auto loans than their white counterparts with comparable creditworthiness. Toyota has since taken measures to change its pricing and compensation system to reduce incentives to mark up interest rates.

Toyota shows strength in its transparency, and its Corporate Sustainability Report (CSR) is prepared in accordance with multiple sustainability reporting agencies, including the Global Reporting Initiative, Sustainable Accounting Standards Board, and the Task Force on Climate-Related Financial Disclosures; the CSR data is also verified by a third party. Starting in 2021, Toyota’s CSR will be updated whenever necessary to ensure timely disclosure, rather than annually. In 2019 Toyota created a Sustainability Management Department and added the role of Chief Sustainability Officer to its executive management team in 2020. Toyota’s CSR offers thorough information on its executive compensation policies, however; the composition of Toyota’s board of directors is an area of weakness for the company. There is a lack of independence among board members, and the chair of the board is not independent. In general, when compared to the U.S., Japanese companies have a smaller percentage of outside directors due to a history of corporate governance emphasizing incumbency and promotion from within. However, since the release of the Japanese Corporate Governance Code in 2015, companies have felt pressure to make meaningful board composition changes. We hope to see Toyota strengthen its board composition and adopt executive renumeration policies that are tied to sustainability performance.

Like other automakers, Toyota has lobbied aggressively to weaken Obama-era fuel economy standards. In 2017, the Environmental Protection Agency announced plans to work with Toyota to overhaul internal management practices at the agency. Inviting a company regulated by the agency to alter internal practices has been previously unprecedented and raises concerns over how Toyota could wield influence over EPA functions. Toyota is a member of the Alliance of Automobile Manufacturers, the most powerful automotive industry lobbying association, which has strongly opposed climate change motivated regulation since 2016, contradicting the company’s public stance on emissions.

Risk & Outlook

Sage believes Toyota to be well adapted to manage sustainability challenges, despite the high environmental and social risks in the automotive industry. We expect the auto industry to see an increase in regulatory risk surrounding vehicle emissions and fuel efficiency; however, we believe Toyota will continue to innovate to meet and exceed emission standards and the company is well positioned to benefit from future fuel efficiency regulations. We hope to see Toyota continue to improve its social performance and expand on its recently introduced human capital policies. In addition to regulation, the auto industry faces disruption caused by new areas of technology such as automated driving, electrification, and shared mobility, and these areas will be important to monitor. Toyota’s strong management of ESG issues makes the company a leader amongst its peers; however, due to risk present in the automotive industry we rank Toyota a 3/5 for its Sage ESG Leaf Score.

Sage ESG Leaf Score Methodology

No two companies are alike. This is exceptionally apparent from an ESG perspective, where the challenge lies not only in assessing the differences between companies, but also in the differences across industries. Although a company may be a leader among its peer group, the industry in which it operates may expose it to risks that cannot be mitigated through company management. By combining an ESG macro industry risk analysis with a company-level sustainability evaluation, the Sage Leaf Score bridges this gap, enabling investors to quickly assess companies across industries. Our Sage Leaf Score, which is based on a 1 to 5 scale (with 5 leaves representing ESG leaders), makes it easy for investors to compare a company in, for example, the energy industry to a company in the technology industry, and to understand that all 5-leaf companies are leaders based on their individual company management and the level of industry risk that they face.

For more information on Sage’s Leaf Score, click here.

Originally published by Sage Advisory

ISS ESG Corporate Rating Report on Toyota Motor Corporation.

Environmental Report 2020 Toyota Motor Corporation.

Sustainability Data Book 2020 Toyota Motor Corporation.

Lambert, Lisa. “Toyota Motor Credit settles with U.S. over racial bias in auto loans” February 2, 2016.

“Automobiles” Sustainability Accounting Standards Board. September, 2014.

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Toshihiko Hiura and Junya Ishikawa. "Corporate Governance in Japan: Board Membership and Beyond" Bain & Company. February 23, 2016.

Taylor, Lin. ”Landmark ruling links death of UK schoolgirl to pollution" December 16, 2020.

Disclosures

Sage Advisory Services, Ltd. Co. is a registered investment adviser that provides investment management services for a variety of institutions and high net worth individuals. The information included in this report constitute Sage’s opinions as of the date of this report and are subject to change without notice due to various factors, such as market conditions. This report is for informational purposes only and is not intended as investment advice or an offer or solicitation with respect to the purchase or sale of any security, strategy or investment product. Investors should make their own decisions on investment strategies based on their specific investment objectives and financial circumstances. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Sustainable investing limits the types and number of investment opportunities available, this may result in the Fund investing in securities or industry sectors that underperform the market as a whole or underperform other strategies screened for sustainable investing standards. No part of this Material may be produced in any form, or referred to in any other publication, without our express written permission. For additional information on Sage and its investment management services, please view our web site at www.sageadvisory.com, or refer to our Form ADV, which is available upon request by calling 512.327.5530.

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News & Insights

ESG Case Study – Toyota Motor Corporation

February 24, 2021 — 02:59 pm EST

Written by [email protected] (ETF Trends) for ETF Trends ->

By Sara Rodriguez, Sage ESG Research Analyst

About Toyota Motor Corporation

Environmental

Risk & Outlook

Sage ESG Leaf Score Methodology

For more information on Sage’s Leaf Score, click here.

Originally published by Sage Advisory

ISS ESG Corporate Rating Report on Toyota Motor Corporation.
Environmental Report 2020 Toyota Motor Corporation.
Sustainability Data Book 2020 Toyota Motor Corporation.
Lambert, Lisa. “Toyota Motor Credit settles with U.S. over racial bias in auto loans” February 2, 2016.
“Automobiles” Sustainability Accounting Standards Board. September, 2014.
Kaufman, Alexander. “Scott Pruitt’s Plan to Outsource Part Of EPA Overhaul to Automaker Raises Concerns” December 12, 2017.
“How the US auto industry accelerated lobbying under President Trump” November, 2017.
Charles Kernaghan, Barbara Briggs, Xiaomin Zhang, et al. “The Toyota You Don’t Know” Institute for Global Labour and Human Rights. 2008.
Road Safety World Health Organization.
Toyota Motor Credit Corporation Green Bond Framework Second-Party Opinion January 21, 2020.
Toshihiko Hiura and Junya Ishikawa. "Corporate Governance in Japan: Board Membership and Beyond" Bain & Company. February 23, 2016.
Taylor, Lin. ”Landmark ruling links death of UK schoolgirl to pollution" December 16, 2020.

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Managing Sustainability to Be First: The Toyota Case

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Maria Garbelli 7

Part of the book series: Eurasian Studies in Business and Economics ((EBES,volume 2/2))

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Sustainability matters along with attention to a company’s social and environmental commitment and the related (complex) performance is far from new in the literature, but the last years have pressed both academics and managers by urgent issues such as climate changes and disasters, poverty, economic and social crisis in many countries, human rights violations, health concerns and so on. Also, the end of twentieth century saw unprecedented changes in corporate strategy and management towards sustainable thinking—the emergence of sustainability as corporate strategy, and making sustainability an integral part of a company’s business strategy in order to gain bottom-line benefits and to accomplish new law requirements. In such a global, unstable, market, sustainability becomes an investable concept, crucial in driving interest and investments to the mutual benefit of companies and investors. Toyota’s commitment for a sustainable management has been developed since decades ago and continues nowadays, representing a perfect example for the whole market, and witnessing the urgency of an integrated approach along the supply chain, in order to gain competitive advantage through ‘sustainability’.

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Garbelli, M. (2016). Managing Sustainability to Be First: The Toyota Case. In: Bilgin, M., Danis, H., Demir, E., Can, U. (eds) Business Challenges in the Changing Economic Landscape - Vol. 2. Eurasian Studies in Business and Economics, vol 2/2. Springer, Cham. https://doi.org/10.1007/978-3-319-22593-7_4

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July 24 2019

Posted on July 24 2019

Toyota Kirloskar Motor’s [TKM] unique CSR Initiative ‘Project ABCD’ makes it way to Harvard Case Study List

TKM case study on Project ABCD was accepted for publication by Ivey Publishing and then made its way to Harvard Business Review case collection
TKM has been successful in ensuring 100% sanitation in 92 villages
Over 12517 toilets are constructed by individuals across villages in Ramanagara District, post implementation of ABCD - a motivational initiative on sanitation at schools
ABCD has covered 44773 school children and 2,93,023 community members creating awareness on the importance of sanitation and basic hygiene, which has resulted in 407 schools being Open Defecation Free
TKM’s girl child sanitation initiatives have effectively contributed in reduction of girl child school missing hours to zero in Ramanagara district

Bangalore, 24 July 2019: Toyota Kirloskar Motor’s [TKM] CSR case study titled “Toyota Kirloskar Motors: Evaluating A CSR Project” and authored by Prof. Utkarsh Majumdar and Namrata Rana on the unique CSR initiative, Project ABCD (A Behavioral Change through Demonstration), has been accepted for publication by the prestigious Ivey Publishing and is made available on Harvard Business Review and Harvard Business School Publishing case collections. Project ABCD, in support of Government of India’s “Swachh Bharat Mission”, was rolled out in the year 2015 being implemented in 527 schools covering 44,773 children at Ramanagara district (Karnataka) to improve public health and sanitation in villages.

India is the second most populous country in the world, with more than 1 billion citizens, and as per records, roughly half of its population, a staggering 522 million, practice open defecation. The World Bank estimates that 21 percent of communicable diseases in India are linked to unsafe water and the lack of hygiene practices, with more than 500 children under the age of five dying each day from diarrhea.

Lack of Sanitation facilities causes serious health hazards in the local communities especially affecting safety of women and adolescent children. To achieve sustainable sanitation practices in the local communities, TKM incorporated a two-pronged approach: firstly, working on building the sanitation facilities in schools and household, and then sustaining the impact with the introduction of ‘A Behavioural Change through Demonstration’ program.

Toyota ABCD program has been significantly contributing to the Government’s Sustainable Development Goal of ending open defecation in India. In the local villages of Karnataka, children hesitated to attend or would drop out from schools because of lack of toilets and hygiene issues. Sanitation was a serious issue for girl children who had to face safety and health risks due to open defecation. TKM partnered with an NGO called SNEHA, to carry out the activities and spread the awareness at the grass-root level. Students, teachers and villagers were educated about the unhygienic impact of open defecation, the necessity of washing hands, maintaining cleanliness of toilets and precautionary measures against infections.

TKM believes that the children would act as catalyst and using ABCD they could create a bigger impact in the community. As a result of the ABCD program, and motivated by TKM’s participation and children’s determination, individual families have started championing community sanitation. With government scheme linkages for toilet construction, residents have built their own sanitation units, with no monetary support from TKM.

Owing to TKM’s girl child sanitation initiatives and ABCD project implementation, school missing hours have also drastically reduced to zero (Earlier, an adult girl child used to go to their home for toilet usage and miss the school for over one-two hours). By the year 2018-19, TKM has further set a target to cover 100% sanitation in 1000 schools in Ramanagara to make Open Defecation Free across the state of Karnataka. Until now, more than 2,70,000 village population have been trained on sanitation through this uniquely-designed CSR program while motivating the community to initiate and construct household toilets.

Additionally, Project ABCD was taken as the case study by two IIM professors and have been published by Ivey Publishing, a leader in providing business case studies with a global perspective.

Speaking on this recognition, Mr. Masakazu Yoshimura, Managing Director, Toyota Kirloskar Motor said, “We are happy that our unique CSR initiative, Project ABCD, that began in the villages of Karnataka has been globally recognized now. It gives us great motivation that our dedicated efforts towards improving sanitation facilities and changing the mindset of local community has earned us the acknowledgement in a case available on Harvard Business Review case collection. TKM had adopted Toyota Business Practices Methodology to manage this project. Problem’s point of occurrence was identified, root cause analysis done, targets were set by further breaking it down into activities and then outcomes were measured periodically to maximize the impact and achieve the objective of 100% sanitation in target villages, by this year.

We have been witnessing a rising awareness about the sanitation levels in the villages and it’s heartening to see the project’s impact on the behavioral changes among the school children and their families. Consistent awareness created by Project ABCD amongst children on better sanitation has helped to achieve 407 school children using toilets at home. As a result of the behavioral change training, 12,517 toilets have been built across villages in Ramanagara District. This is a further testament of our belief that instilling behavioral change is the key to sustain Health and Hygiene practices.”

One of the beneficiary, Indiramma, Mother of Monisha – a class VIII student at Government High school, Billagumba, Ramnagara said, “We never had sanitation facility at home, so we never knew the advantages of having one. But, my daughter was very determined to get a sanitation facility constructed at our home. I could experience the real difference only when I started using it. I was not educated, I couldn’t teach my daughter anything. Now that my daughter is educated, she is not only following the right practices, but educating me as well. And, all the credit goes to TKM’s Project ABCD initiative.”

Till date, TKM has constructed more than 795 units of sanitation facilities in 237 government schools across India, including: 124 units in Varanasi (UP), 497 units in Ramnagara district, 80 unit in Bangalore (Karnataka) and 94 units in Vaishali (Bihar).

About the Author of Case Study:

Utkarsh majmudar.

Utkarsh is a professional with nearly two decades of experience encompassing teaching, research and administration at premier business schools in India and working with large corporations in India at GE Capital, iGATE and HSBC. He has a Fellow Title (Doctorate) from the Indian Institute of Management Ahmedabad, where his thesis proposal won the outstanding thesis proposal award instituted by the Industrial Finance Corporation of India. His interest areas include corporate finance, CSR and sustainability.

Namrata Rana

Director-Strategy and Brand, at Futurescape and India Ambassador of University of Cambridge Institute for Sustainability Leadership, Namrata Rana is the author of BALANCE – Responsible business for the digital age. She is Director-Strategy and Brand, at Futurescape and India Ambassador of University of Cambridge Institute for Sustainability Leadership.

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Toyota Kirloskar Motors: Evaluating a CSR Project

By: Utkarsh Majmudar, Namrata Rana

Length: 12 page(s)
Publication Date: May 27, 2019
Discipline: Strategy
Product #: W19228-PDF-ENG

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Toyota Kirloskar Motor Company Private Limited (TKM) was a leading car manufacturer in India, one engaged in a significant level of corporate social responsibility activities. TKM focused on health and hygiene issues in rural and semi-urban districts in India, as sanitation was a significant concern there. TKM's efforts to facilitate the improvement of health and hygiene among its program beneficiaries had met with considerable success. The company was now looking to expand the project to increase its coverage. The ambitious multi-year program plan raised several questions: Could the number of targeted beneficiaries be achieved? What challenges were likely to arise? How should the company select an implementation partner?

Utkarsh Majmudar is affiliated with Indian Institute of Management Udaipur. Namrata Rana is affiliated with Indian Institute of Management Udaipur.

Learning Objectives

The case is suitable for a module on corporate social responsibility (CSR) and strategy at the postgraduate level or for a module on CSR program implementation and evaluation. After working through the case, students will have gained an understanding of the links between the business strategy and the social responsibilities of a business; sanitation issues in a developing country; and a company's approach to solving a business or social problem.

May 27, 2019

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Ivey Publishing

W19228-PDF-ENG

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The Contradictions That Drive Toyota’s Success

Hirotaka Takeuchi,
Norihiko Shimizu

Stable and paranoid, systematic and experimental, formal and frank: The success of Toyota, a pathbreaking six-year study reveals, is due as much to its ability to embrace contradictions like these as to its manufacturing prowess.

Reprint: R0806F

Toyota has become one of the world’s greatest companies only because it developed the Toyota Production System, right? Wrong, say Takeuchi, Osono, and Shimizu of Hitotsubashi University in Tokyo. Another factor, overlooked until now, is just as important to the company’s success: Toyota’s culture of contradictions.

TPS is a “hard” innovation that allows the company to continuously improve the way it manufactures vehicles. Toyota has also mastered a “soft” innovation that relates to human resource practices and corporate culture. The company succeeds, say the authors, because it deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically.

The authors’ research reveals six forces that cause contradictions inside Toyota. Three forces of expansion lead the company to change and improve: impossible goals, local customization, and experimentation. Not surprisingly, these forces make the organization more diverse, complicate decision making, and threaten Toyota’s control systems. To prevent the winds of change from blowing down the organization, the company also harnesses three forces of integration: the founders’ values, “up-and-in” people management, and open communication. These forces stabilize the company, help employees make sense of the environment in which they operate, and perpetuate Toyota’s values and culture.

Emulating Toyota isn’t about copying any one practice; it’s about creating a culture. And because the company’s culture of contradictions is centered on humans, who are imperfect, there will always be room for improvement.

No executive needs convincing that Toyota Motor Corporation has become one of the world’s greatest companies because of the Toyota Production System (TPS). The unorthodox manufacturing system enables the Japanese giant to make the planet’s best automobiles at the lowest cost and to develop new products quickly. Not only have Toyota’s rivals such as Chrysler, Daimler, Ford, Honda, and General Motors developed TPS-like systems, organizations such as hospitals and postal services also have adopted its underlying rules, tools, and conventions to become more efficient. An industry of lean-manufacturing experts have extolled the virtues of TPS so often and with so much conviction that managers believe its role in Toyota’s success to be one of the few enduring truths in an otherwise murky world.

Hirotaka Takeuchi is a professor in the strategy unit of Harvard Business School.
EO Emi Osono ( [email protected] ) is an associate professor;
NS and Norihiko Shimizu ( [email protected] ) is a visiting professor at Hitotsubashi University’s Graduate School of International Corporate Strategy in Tokyo. This article is adapted from their book Extreme Toyota: Radical Contradictions That Drive Success at the World’s Best Manufacturer , forthcoming from John Wiley & Sons.

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At the base of Mount Fuji in Japan, the world’s largest automaker is currently building a prototype smart city which will feature digitally connected buildings and vehicles – all powered by hydrogen fuels cells. Known as the “Woven City,” the 175-acre site will act as a laboratory for Toyota in areas such as automated driving, personal mobility, robotics, and artificial intelligence, supporting Toyota’s shift from an automobile manufacturer to a mobility company.

Record Sustainability Bond for the Auto Sector

The Woven City project is the centerpiece of Toyota’s sustainability agenda, which recently received financing in a $4.85 billion deal including $2.75 billion dollar-dominated bonds led by J.P. Morgan. The firm served as a lead-left book runner and structuring agent in the client’s first sustainability bond offering.

The ‘Woven Planet Bonds’ issuance totaled USD2.75 billion in 3 ($1.25 billion), 5 ($1billion), and 10-year ($500 million) tenors, including JPY230billion in Yen-dominated bonds for domestic institutional investors and retail investors. To be directed towards projects that contribute to the U.N. Sustainable Development Goals, the issuance is the largest ever dollar-denominated sustainable bond in the automobile sector and attracted interest from global investors including ESG dedicated funds. Performance in the secondary market has been solid.

Aligning Financing With Corporate Values

The Woven Planet initiative represents Toyota’s determination of "doing things for someone other than ourselves," a credo they have safeguarded and nurtured since their founding in 1937.

“Toyota Motors’ advanced technology and strategies, backed by its financial strength, attracted international institutional interest. The company has steadily strengthened its ties with foreign capital markets by issuing dollar-denominated bonds in 2018 and 2019, and, I believe, this sustainable bond issuance will generate further support from global investors,” said Itaru Kato, J.P. Morgan lead coverage banker for Toyota.

Proceeds from the deal will be used across Toyota’s social projects, such as the development and manufacturing of advanced safety and driving support technologies, including ‘Toyota Safety Sense’, and green projects to accelerate the reduction of CO2 emissions in vehicles, plants and offices.

Driving Sustainable Change in the Industry

"J.P. Morgan has served as lead bookrunner in three consecutive deals for Toyota – a large-scale dollar-denominated issuance, its first sustainable bond and the largest Yankee ESG related USD bond offering. We are proud of the important role our team played in this deal,” commented Steve Rinoie, J.P. Morgan senior country officer in Japan.

“The strong response from global investors shows that Toyota's sustainable development goals addressing environmental and social issues with safety technology progress has gained the understanding and support of the market,“ stated Masanori Kato, J.P. Morgan head of Debt Capital Markets for Japan.

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Toyota Corporate Social Responsibility

CSR programs and initiatives are launched as a part of Toyota Global Vision that was formulated in March 2011. Toyota Global Vision is represented in the form of a tree where Toyota values represent the roots of the tree, stable base of the business is the trunk of the tree. The concepts of ‘Always Better Cars’ and ‘Enriching Lives of Communities’ are positioned as fruits of the tree. In other words, Toyota Global Vision places an equal emphasis on the primary objective of profit maximization (Always Better Cars) and CSR (Enriching Lives of Communities).

Overview of Toyota’s CSR activities [1]

The company releases Global Responsibility Report annually and it includes the details of Toyota CSR programs and initiatives engaged by the company. Table 3 below illustrates highlights from the latest report for 2014:

Toyota CSR performance

Figures taken from Toyota Annual Report (2014) and Sustainability Report (2015)

Discussion of Toyota Corporate Social Responsibility and Criticism of Toyota’s CSR programs and initiatives is given in Toyota Motor Corporation Report . The report also contains an application of SWOT, PESTEL, Porter’s Five Forces and Value Chain Analyses on Toyota. Moreover, Toyota’s marketing strategy is analyzed in this report in a detailed manner.

[1] Annual Report (2014) Toyota Motor Corporation

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Toyota Kirloskar Motor’s CSR Initiative ‘Project ABCD’ Makes It To Harvard Case Study List

Toyota kirloskar motor’s [tkm] csr case study titled “toyota kirloskar motors: evaluating a csr project” and authored by prof. utkarsh majumdar and namrata rana on the unique csr initiative, project abcd (a behavioral change through demonstration), has been accepted for publication by the prestigious ivey publishing and is made available on harvard business review and harvard business school publishing case collections. project abcd, in support of government of india’s “swachh bharat mission”, was rolled out in the year 2015 being implemented in 527 schools covering 44,773 children at ramanagara district (karnataka) to improve public health and sanitation in villages., india is the second most populous country in the world, with more than 1 billion citizens, and as per records, roughly half of its population, a staggering 522 million, practice open defecation. the world bank estimates that 21 percent of communicable diseases in india are linked to unsafe water and the lack of hygiene practices, with more than 500 children under the age of five dying each day from diarrhea., to achieve sustainable sanitation practices in the local communities, tkm incorporated a two-pronged approach: firstly, working on building the sanitation facilities in schools and household, and then sustaining the impact with the introduction of this program., in the local villages of karnataka, children hesitated to attend or would drop out from schools because of lack of toilets and hygiene issues. sanitation was a serious issue for girl children who had to face safety and health risks due to open defecation. tkm partnered with an ngo called sneha, to carry out the activities and spread the awareness at the grass-root level. students, teachers and villagers were educated about the unhygienic impact of open defecation, the necessity of washing hands, maintaining cleanliness of toilets and precautionary measures against infections., individual families have also started championing community sanitation. with government scheme linkages for toilet construction, residents have built their own sanitation units, with no monetary support from tkm., owing to tkm’s girl child sanitation initiatives and abcd project implementation, school missing hours have also drastically reduced to zero (earlier, an adult girl child used to go to their home for toilet usage and miss the school for over one-two hours). by the year 2018-19, tkm has further set a target to cover 100% sanitation in 1000 schools in ramanagara to make ‘open defecation free’ across the state of karnataka. until now, more than 2,70,000 village population have been trained on sanitation through this uniquely-designed csr program while motivating the community to initiate and construct household toilets., project abcd was taken as the case study by two iim professors and have been published by ivey publishing, a leader in providing business case studies with a global perspective., speaking on this recognition, mr. masakazu yoshimura, managing director, toyota kirloskar motor said, “we are happy that our unique csr initiative, project abcd, that began in the villages of karnataka has been globally recognized, and earned us the acknowledgement in a case available on harvard business review case collection. tkm had adopted toyota business practices methodology to manage this project. problem’s point of occurrence was identified, root cause analysis done, targets were set by further breaking it down into activities and then outcomes were measured periodically to maximize the impact and achieve the objective of 100% sanitation in target villages, by this year., we have been witnessing a rising awareness about the sanitation levels in the villages and it’s heartening to see the project’s impact on the behavioral changes among the school children and their families. consistent awareness created by project abcd amongst children on better sanitation has helped to achieve 407 school children using toilets at home. as a result of the behavioral change training, 12,517 toilets have been built across villages in ramanagara district. this is a further testament of our belief that instilling behavioral change is the key to sustain health and hygiene practices.”, one of the beneficiary, indiramma, mother of monisha – a class viii student at government high school, billagumba, ramnagara said, “we never had sanitation facility at home, so we never knew the advantages of having one. but, my daughter was very determined to get a sanitation facility constructed at our home. i could experience the real difference only when i started using it. i couldn’t teach my daughter anything. now that she is educated, she is not only following the right practices, but educating me as well. and, all the credit goes to tkm’s project abcd initiative.”, till date, tkm has constructed more than 795 units of sanitation facilities in 237 government schools across india, including: 124 units in varanasi (up), 497 units in ramnagara district, 80 unit in bangalore (karnataka) and 94 units in vaishali (bihar)., disclaimer: this media release is auto-generated. the csr journal is not responsible for the content, related articles more from author.

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ESG Case Study – Toyota Motor Corporation

By Sara Rodriguez, Sage ESG Research Analyst

About Toyota Motor Corporation

Environmental

Motor vehicles are one of the largest contributors to greenhouse gas ( GHG ) emissions and, as a result, climate change, with the transportation sector accounting for a third of U.S. GHG emissions in 2018. Although most emissions come from vehicle usage rather than the process of manufacturing vehicles, government regulations place the burden on auto companies to improve fuel efficiency and reduce overall emissions. While climate change regulations present financial risk to automakers, they also offer opportunities; increased fuel efficiency requirements are likely to lead to more sales of electric vehicles and hybrid systems. Toyota pioneered the first popular hybrid vehicle with the 1997 release of the Prius, the world’s first mass-produced hybrid. Since then, Toyota has sold 15 million hybrids worldwide . In 2018, hybrids accounted for 58% of Toyota’s sales, contributing to Toyota reaching substantially better carbon dioxide (CO2) emissions from new vehicles than regulatory standards and the best levels in the industry (102.1g/km compared to U.S. regulation of 119g/km). In 2020, Toyota reduced global average CO2 emissions from new vehicles by 22% compared to 2010 levels by improving vehicle performance and expanding its lineup. Toyota’s goal is to increase that number to 30% by 2025, with the goal of 90% total reduction by 2050. The company aims to offer an electric version of all Toyota and Lexus models worldwide by 2025. (Toyota does not yet sell any all-electric vehicles to the U.S., but it does outside the U.S.)

Driving is an activity with inherent risk. The World Health Organization estimates that 1.35 million people die in car accidents each year. Accidents are worse in emerging nations where transportation infrastructure has not kept up with the increase in the number of cars on the road; without countermeasures, traffic fatalities are predicted to become the seventh-leading cause of death worldwide by 2030. Demand for personal vehicles will continue to increase as developing countries experience higher standards of living, and product safety will be paramount to automaker’s reputations and brand values. Toyota has put forth a goal of Zero Casualties from Traffic Accidents and adopted an Integrated Safety Management Concept to work toward eliminating traffic fatalities by providing driver support at each stage of driving: from parking to normal operation, the accident itself, and the post-crash. Toyota and Lexus models regularly earn top safety ratings by the National Highway Traffic Safety Administration ( NHTSA ) and the Insurance Institute for Highway Safety. In addition to traditional safety features, Toyota actively invests in the development of autonomous vehicles, including a $500 million investment in Uber and autonomous ridesharing. If fully developed, autonomous driving can offer increased safety to passengers, lower accident rates, and provide mobility for the elderly and physically disabled.

Accidents caused by defective vehicles can have significant financial repercussions for auto manufacturers. Toyota experienced significant damage to its reputation and brand value in 2009 when unintended acceleration caused a major accident that killed four people riding in a dealer-loaned Lexus in San Diego. Toyota subsequently began recalling millions of vehicles, citing problems of pedal entrapment from unsecured floor mats and “sticky gas pedals.” Toyota’s failure to quickly respond resulted in a $1.2 billion settlement with the Justice Department and $50 million in fines from the NHTSA . The scandal generated an extraordinary amount of news coverage, and the Toyota recall story ranked among the top 10 news stories across all media in January and February 2010. Litigation costs, warranty costs, and increased marketing to counter the negative publicity of the event were estimated to cost Toyota over $5 billion (annual sales are about $275 billion). As a result of bad press, Toyota’s 2010 sales fell 16% from the previous year and its stock price fell 10% overall, while competitors like Ford benefitted and experienced stock price growth of 80% over the same period. Future recalls and quality issues are certain to prove costly for Toyota and may continue to negatively impact its consumer reputation.

Another social issue that can be financially material for automakers is human rights. Automobiles consist of about 30,000 parts, making their supply chain extensive and at high risk for human rights abuses. Toyota addresses human rights concerns in its Corporate Sustainability Report ( CSR ) and cites Migrant Workers and Responsible Sourcing of Cobalt as its priorities for 2020; however, Toyota does not have a clean labor record. A 2008 report published by the Institute for Global Labour and Human Rights accused Toyota of a catalog of human rights abuses, including stripping foreign workers of their passports and forcing them to work grueling hours without days off for less than half of the legal minimum wage. Toyota was also accused of involvement in the suppression of freedom of association at its plant in the Philippines. Toyota’s CSR lists a host of external nongovernmental organizations the company partners with to promote fair working conditions, however; due to the high-risk present in its supply chain and its past offenses, we would like to see the company further develop its labor and human rights policies.

Toyota shows strength in its transparency, and its Corporate Sustainability Report ( CSR ) is prepared in accordance with multiple sustainability reporting agencies, including the Global Reporting Initiative, Sustainable Accounting Standards Board, and the Task Force on Climate-Related Financial Disclosures; the CSR data is also verified by a third party. Starting in 2021, Toyota’s CSR will be updated whenever necessary to ensure timely disclosure, rather than annually. In 2019 Toyota created a Sustainability Management Department and added the role of Chief Sustainability Officer to its executive management team in 2020. Toyota’s CSR offers thorough information on its executive compensation policies, however; the composition of Toyota’s board of directors is an area of weakness for the company. There is a lack of independence among board members, and the chair of the board is not independent. In general, when compared to the U.S., Japanese companies have a smaller percentage of outside directors due to a history of corporate governance emphasizing incumbency and promotion from within. However, since the release of the Japanese Corporate Governance Code in 2015, companies have felt pressure to make meaningful board composition changes. We hope to see Toyota strengthen its board composition and adopt executive renumeration policies that are tied to sustainability performance.

Risk & Outlook

Sage ESG Leaf Score Methodology

For more information on Sage’s Leaf Score, click here.

Originally published by Sage Advisory

ISS ESG Corporate Rating Report on Toyota Motor Corporation.
Environmental Report 2020 Toyota Motor Corporation.
Sustainability Data Book 2020 Toyota Motor Corporation.
Lambert, Lisa. “Toyota Motor Credit settles with U.S. over racial bias in auto loans” February 2, 2016.
“Automobiles” Sustainability Accounting Standards Board. September, 2014.
Kaufman, Alexander. “Scott Pruitt’s Plan to Outsource Part Of EPA Overhaul to Automaker Raises Concerns” December 12, 2017.
“How the US auto industry accelerated lobbying under President Trump” November, 2017.
Charles Kernaghan, Barbara Briggs, Xiaomin Zhang, et al. “The Toyota You Don’t Know” Institute for Global Labour and Human Rights. 2008.
Road Safety World Health Organization.
Toyota Motor Credit Corporation Green Bond Framework Second-Party Opinion January 21, 2020.
Toshihiko Hiura and Junya Ishikawa. “Corporate Governance in Japan: Board Membership and Beyond” Bain & Company. February 23, 2016.
Taylor, Lin. ”Landmark ruling links death of UK schoolgirl to pollution" December 16, 2020.

Disclosures

Sage Advisory Services, Ltd. Co. is a registered investment adviser that provides investment management services for a variety of institutions and high net worth individuals. The information included in this report constitute Sage’s opinions as of the date of this report and are subject to change without notice due to various factors, such as market conditions. This report is for informational purposes only and is not intended as investment advice or an offer or solicitation with respect to the purchase or sale of any security, strategy or investment product. Investors should make their own decisions on investment strategies based on their specific investment objectives and financial circumstances. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Sustainable investing limits the types and number of investment opportunities available, this may result in the Fund investing in securities or industry sectors that underperform the market as a whole or underperform other strategies screened for sustainable investing standards. No part of this Material may be produced in any form, or referred to in any other publication, without our express written permission. For additional information on Sage and its investment management services, please view our web site at www.sageadvisory.com, or refer to our Form ADV , which is available upon request by calling 512.327.5530.

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The CSR Models for Toyota, Nissan, and Honda Case Study

Introduction, pyramid of corporate social responsibility, main stakeholders in the industry, csr approaches for toyota, nissan, and honda, similarities and differences in csr projects, critical issues for executing the csr initiatives.

Corporate success greatly depends on the success of corporate social responsibility (CSR) initiatives. Implicit in the CSR discipline is the acknowledgement that most companies have to fulfil their corporate responsibilities to all stakeholders to succeed.

CSR falls firmly within this stretch of corporate responsibilities, and it manifests as an implicit social contract that different companies share with their stakeholders.

Despite the acknowledgement of CSR as a key corporate responsibility, many companies do not have a standard criterion for executing CSR in business.

More specifically, there is a lack of uniform criterion for measuring the benefits of CSR in business, and the alignment of CSR success with company profitability.

Companies that operate in the Malaysian automotive industry experience the above complexities when introducing their CSR initiatives.

The intense competition and the challenging market landscape of the Malaysian automotive industry complicate the implementation of the CSR initiatives.

For example, the Malaysian government has consistently intervened in the industry to protect the local car brands (Proton and Perodua) from foreign competition (Augustine 2013).

This government intervention has consequently led to the segregation of the car market into national and foreign brands.

Japanese and Koran car manufacturers control a significant part of the Malaysian foreign car market. Competition from new car manufacturers like Honda has offered more competition to traditional car brands like Toyota and Nissan.

For example, Honda offers a car warranty of 3000,000 kilometres on its cars, while traditional brands like Toyota offer only about 50,000 kilometres of warranty (Augustine 2013).

Other car manufacturers like Nissan have also joined the fray of competitive marketing by offering competitive prices of their products and enviable performance features of their cars.

The dominance of foreign car manufacturers in the Malaysian car market has attracted a lot of attention from governments and the local community regarding the improved profitability that such companies continue to enjoy in the Malaysian market.

Consequently, there has been an increased scrutiny of such companies on their CSR responsibilities, and their commitment to “give back” to the community.

The influence that western car manufacturers have on car manufacturing companies in the East has further fuelled this curiosity (Augustine 2013). Consequently, most car manufacturers that operate in the Malaysian automotive market have developed unique CSR models.

This paper compares the CSR models for Toyota, Nissan, and Honda. The emphasis of this paper is on their areas of similarity and differences (in CSR approaches).

This paper also explores the main issues that challenge the execution of CSR projects in Malaysia and how Nissan, Honda, and Toyota are managing these issues. Finally, this paper outlines the future direction of CSR projects in the Malaysian automotive industry.

Companies have always realised the importance of corporate social responsibility since the 1950s. However, complex industry dynamics have made it difficult to understand the complex application of CSR in today’s fast-paced business environment.

From this complexity, many researchers have explored the structure and nature of CSR; however, Carroll’s depiction of CSR is the widely accepted model of CSR analysis (Sachs 2005).

Carroll’s CSR model suggests that most companies share different types of responsibilities (economic, legal, ethical, and philanthropic responsibilities), which define their CSR initiatives. The economic responsibility is the main CSR because it supports other forms of CSR initiatives.

The legal responsibility however shares the same level of importance as the economic responsibility. Since the law cannot regulate all business practices, ethical responsibility suggests that the companies should “do right” by the society, even without laws that regulate such activities.

The last responsibility, as outlined by Carroll, is the philanthropic responsibility. This responsibility requires companies to participate in the educational, social, recreational, and cultural well-being of the society (Sachs 2005). Carroll’s CSR model manifests below

Some analysts have criticised Carroll’s pyramid model as being too simplistic and theoretical, but other people have supported the model for showing the fundamental framework that informs CSR initiatives (Sachs 2005).

This is why people have used the model in CSR understanding for more than two decades now. Nonetheless, the success of the model does not depend on its theoretical understanding, but rather, on its practical application.

Direct pressures from regulators always affect the automotive industry. These regulators are usually comprised of automobile associations and government bodies.

The government is especially a key stakeholder in the Malaysian automotive industry because the government protects the public interest in the business (Augustine 2013). These interests may span through economic, political, environmental, and social interests.

For example, it is in the interest of the government for car automakers to adhere to environmental regulations to prevent pollution and environmental degradation.

The government may control the activities of such companies through taxation, environmental law, and similar legislative approaches.

A close look at the Malaysian automobile industry shows that there is a very close link between the financial market and the industry. Investment funds, insurance companies, and advertising agencies are a few examples of the main types of investors in the Malaysian automobile market.

Many parties would be highly interested in seeing the growth of the Malaysian automobile market. A large group of shareholders would also like to see the growth of the Malaysian automobile industry curtailed.

Such stakeholder groups may include environmental bodies and non-governmental organisations. These shareholder groups may introduce significant changes in the industry.

The Malaysian community is an important stakeholder of the country’s automobile industry. Indeed, car automobile businesses work within the community.

The community therefore supports the activities of such companies because without their support, it would be difficult to sustain the activities of these companies.

It is therefore important for companies to work together with the community because their relationship is often beneficial for both parties.

Some of the benefits associated with community-corporate partnerships include better decision-making and legitimacy for the activities undertaken by the car automakers.

Automobile consumers outline a very important stakeholder group for the Malaysian automobile industry. Their importance exemplifies through the fact that the consumers are the main users of the products (cars).

Their safety, approvals, and decisions to buy the products create a motivating industry factor that defines industry standards (Augustine 2013). For example, an increased appetite for safety features would force car manufacturers to supply car models that have a high safety standard.

Similarly, if the consumers show a high propensity to spend, the car manufacturers would probably be motivated to supply high-end luxurious car models to the market.

These issues are bound to define the characteristics of the industry. Consequently, customers are important stakeholders in the Malaysian automobile market.

CSR projects undertaken by Toyota only outline part of the CSR project undertaken by many Japanese companies in Malaysia. Toyota’s CSR projects have mainly focused on preserving the environment.

For example, Toyota introduced the Toyota Eco-Youth Program, in 2009, to empower Malaysian consumers to protect the environment by recycling, re-using, and reducing their energy consumption (Toyota-Global 2013).

Toyota launched this initiative by collaborating with Malaysian education institutions to inculcate the values of environmental conservation to young Malaysian students at an early age.

Still focusing on the partnership between Toyota and Malaysian educational institutions, Toyota has also embarked on a spirited campaign to educate young Malaysian children about the hazards of the road.

Toyota’s CSR initiatives manifest the mutual relationship that Malaysia has shared with Japan since the former Malaysian Prime Minister, Mahadhir Tun, announced that Malaysia should look east and borrow the Japanese culture of giving and philanthropy (Toyota-Global 2013).

The good relationship between Malaysia and Japan has fostered further diplomatic ties between both countries.

Therefore, many stakeholders in the Malaysian corporate market should benefit from the enviable work ethics and moral conduct of the Japanese people, which informs their CSR activities in many parts of the world, including Malaysia.

Like Toyota, the CSR initiatives for Honda gear towards supporting the education sector. Honda’s initiatives in the education sector aim to provide scholarships to underprivileged children.

The fund was set up in 2007 to provide a full and non-binding scholarship program for underprivileged children in Malaysia who are determined to pursue their education careers (Honda-Malaysia 2013).

For example, in 2010, Honda provided 20 scholarship programs for underprivileged children (Honda-Malaysia 2013).

The United Nations Development Program, through an open initiative ( Honda Dream Fund ), supported this scholarship program. Honda chose its participants from a group of about 1,700 applicants (Honda-Malaysia 2013).

Honda’s CSR initiatives stem from the dreams of the company’s founder who said, people should have an opportunity to pursue their dreams, regardless of their background (Honda-Malaysia 2013). Honda’s philosophy is therefore enshrined in pursuing the “power of dreams.”

By helping underprivileged Malaysian children to pursue a good education, Honda believes that it “gives back” to the community by improving the quality of human capital in the country. Today, Honda is proud of five graduate students who have benefitted from the program.

These graduates hold admirable jobs, which enable them to help their families as well (Honda-Malaysia 2013).

Through the ripple effect that the Honda scholarship program has on the families of the young graduate students, Honda believes that its CSR initiatives are not only concentrated on helping the youth, but their families as well.

Therefore, Honda’s CSR initiative spans wide within the community.

The CSR projects for Honda Malaysia not only confine to the provision of education scholarships to needy students in Malaysia, but also stretch into supporting conservation efforts in the country. For example, Honda is involved in a popular initiative dubbed the “Rhino Rescue” project.

This project aims to provide financial resources to the World Wildlife Fund (Malaysia) to protect endangered Rhinos in Malaysia.

For example, in 2006 Honda pledged more than RM5 million to WWF in support of its conservation efforts in Peninsular Malaysia and Sabah (WWF-Malaysia 2013). Honda expected this funding to sustain a five-year project on the protection of endangered rhinos.

The main activities that use the funds are patrolling, surveillance, publishing reports and papers on conservation efforts, and supporting consultative efforts (for developing workable plans for the conservation of these rhinos) (WWF-Malaysia 2013).

Comprehensively, Honda aims to create awareness regarding the importance of conservation efforts not only to protect the endangered rhinos in Malaysia, but also to protect other endangered species in the country too.

Honda‘s efforts in this initiative divide into several programs such as the rhino rescue school program , which aims to impart knowledge to young Malaysian students about the importance of conservation (WWF-Malaysia 2013).

Teaching biodiversity and the importance of understanding how human activities threaten environmental sustainability outlines some of the topics covered in the above program. Through such interactive sessions, the pupils learn how to contribute to conservation efforts.

The “Sumatran rhino discover road show” has also achieved the same outcome as the rhino rescue school program by introducing environmental road shows throughout Malaysia to sensitise the population regarding the importance of conserving the environment (WWF-Malaysia 2013).

The road show creates awareness and understanding regarding the importance of conservation. The show also communicates the importance of protecting endangered rhinos in Malaysia.

The involvement of children in conservation efforts also emerges in these road shows because there are several fun events for children that equally characterise the road shows.

Lastly, Honda’s conservation efforts channel through an annual “environment and I” essay and photo contest. The contest is normally an annual event that supports creativity in essay and photo creations.

For example, in 2008 most primary schools in Malaysia participated in the essay and photo creations by developing the best essays and photos that communicate the importance of environmental conservation (WWF-Malaysia 2013).

The competition required the participants to write a 400-800 word essay that included a photograph that shows the participants and their family members participating in a conservation effort. This program has so far received tremendous support from most Malaysian institutions.

Its user-base has always grown over the years. Now, Honda receives more than 600 entries from students across Malaysia to participate in the competition (WWF-Malaysia 2013).

The CSR initiatives for Nissan are mainly enshrined in the principles of mutual respect and ethical values for the community. Like Toyota and Honda, Nissan also believes in the importance of “giving back” to the community.

However, unlike Toyota and Honda, Nissan believes that its CSR initiatives should not confine within one social or economic aspect, like education. The company believes in expanding its CSR initiatives in other aspects of community development, like the environment.

Nonetheless, the focus of Nissan’s CSR project is community, environment, and employees.

Through these social and economic aspects of community development, Nissan believes that it may easily connect with the community and receive immense community support in the same regard (DMC 2013).

Since Nissan’s CSR initiatives are diverse, part of the company’s CSR project has been the direct delivery of food and other essential commodities to underprivileged communities. Similar to this initiative is the Nissan treasure hunt event, which has existed since 1990.

The event has happened in several parts of Malaysia, including Kuala Lumpur, Johor Bahru, and Penang (DMC 2013). The most recent treasure hunt occurred in Penang, where more than 30 Malaysian teams participated.

The teams delivered food and other basic commodities to several underprivileged communities in rural Malaysia as they participated in the hunt.

For example, in the 2011 hunt, all the 32 teams that participated in the event delivered food and other essential commodities at Ruma Sejahtera Permatang before they proceeded to the next stage of their treasure hunt (DMC 2013). Nissan considers its treasure hunts as successful CSR initiatives.

However, the company’s management realises that much of this success mainly depends on the loyalty of its customers. Therefore, through the treasure hunts, Nissan believes that it rewards its most loyal customers.

Nissan’s CSR initiatives have also focused on empowering young Malaysian students who aim to specialise in design to perfect their skills in the same discipline.

For example, since 2007, Nissan Malaysia has held an imagination factory project to help Malaysian students to learn the intrigues of vehicle design.

This initiative has created a platform for the company to share its experience in vehicle design and manufacturing with young Malaysian students, to improve their skills in automotive design.

This forum includes several interactive workshops and clay modelling demonstrations that some of the most experienced designers and modellers supervise. In the workshops, the students have a rare opportunity for translating their automotive design ideas into real products.

Nissan is among the first companies to have such an initiative in Asia. However, the company has undertaken the same CSR initiatives in other Asian countries such as Taiwan, China, and Indonesia.

Nissan, Toyota, and Honda seem to share many similarities in the contents of their CSR projects. The CSR projects for the three companies manifest the principles of “giving back” to the community.

However, all the three companies have adopted a sharp focus on improving the education standards of young Malaysian students. Nonetheless, the three companies seem to adopt different methodologies in improving the well-being of Malaysian students.

Nissan, for example, adopts a very focused approach of supporting the educational goals of design students, while Honda adopts a more general approach of providing an opportunity for a selected group of young underprivileged students to pursue their education.

Therefore, even though the companies adopt different methodologies to boost the education sector, they are very committed to contribute to the development of the country’s education system.

Another area of key focus for Nissan, Honda, and Toyota is environmental conservation. Again, the companies adopt different methodologies for supporting conservation efforts, but all the companies show a strong commitment to support conservation efforts.

For example, Honda has shown an immense commitment to protecting Malaysia’s rhinos, while Toyota has demonstrated the same level of commitment to reduce the country’s carbon footprint, by introducing eco-development programs.

Nissan’s CSR approach however differs with the Honda and Toyota’s CSR approaches because it adopts a direct CSR approach, unlike its competitors. For example, part of the company’s treasure hunt initiative includes providing food donations to needy communities.

Toyota and Honda do not pursue this strategy because their CSR approaches mainly aim to empower communities. Toyota’s CSR approach also differs from Honda and Nissan’s CSR approaches because it is mainly one-sided.

In other words, Toyota’s CSR projects aim to reduce environmental pollution. It accomplishes this goal by pursuing the CSR initiatives that align with the company’s main business focus – car manufacturing.

Nissan and Honda’s CSR initiatives are dual in nature because they strive to improve education standards and environmental conservation. Comprehensively, the above dynamics show the main areas of similarities and differences among Nissan, Honda, and Toyota’s CSR projects.

Failure to Achieve Desired Results

Among the main challenges of supporting CSR initiatives in Malaysia is the failure of the CSR projects to achieve their intended goals. For example, the donations made by Honda to WWF and the protection of Rhinos may not achieve the desired results if the money is poorly managed.

Several projects have failed to achieve their intended results in this manner. Nissan, Toyota, and Honda realise that the failure to achieve desired results may be because of several procedural issues that are specific to the companies.

Therefore, every company ensures that it properly manages its CSR project. For example, lower level managers are usually actively involved in the development and execution of Nissan’s CSR initiatives (DMC 2013).

Through this framework, it is unsurprising that most CSR initiatives for Nissan are all-inclusive. This framework underscores the importance of CSR initiatives as an important part of the way Nissan does its business – through its planning, implementation, and execution of future strategies.

Insufficient Information about the benefits of CSR

While this paper appreciates the importance of CSR initiatives, many companies in Malaysia do not appreciate the importance of CSR to their bottom-line operations (Augustine 2013). Therefore, some companies participate in CSR initiatives as a “by-the-way.”

This attitude is dangerous for the attainment of CSR goals because companies fail to pay close attention to their CSR initiatives. In other words, some companies may fail to follow up on the progress of their CSR initiatives, thereby leading to their collapse or mismanagement.

For example, Honda’s scholarship program may fail to empower deserving students if it the company does not follow the progress of the students in their academic pursuits.

Nonetheless, the lack of insufficient information about CSR initiatives does not seem to affect Nissan, Toyota, or Honda. The three companies seem to have a proper understanding of CSR initiatives.

This is why they have all associated themselves with big CSR projects in Malaysia. Their commitment to their CSR projects also seems to be unrivalled by other companies that have a similar status in Malaysia.

Lack of Measurable Targets

All CSR goals should be measurable. The lack of measurable targets for CSR initiatives create potential problems for the implementation of CSR initiatives because it is difficult to quantify if a CSR initiative has been successful or not (without measurable targets) (Augustine 2013).

The lack of an accepted criterion for measuring CSR goals create room for mediocrity, as some CSR programs receive immense resources without equal results.

Honda, Nissan, and Toyota have addressed this issue by assessing the outcomes of their CSR initiatives through a comparison with other CSR initiatives in other parts of the world.

Therefore, the successes of their CSR initiatives are often comparable to other CSR initiatives in China, Taiwan and other Asian countries.

Nissan, Toyota, and Honda seem to have a firm grasp on the importance of CSR in sustaining their corporate operations. All the companies have especially focused on environmental sustainability and the promotion of education as their main areas of focus.

From this background, the future of CSR shows that community emphasis may bring more benefits for companies.

Supply chain issues may also emerge as important areas of concern for future companies as they become more responsible about the safety and impact of their products on the community.

Considering the educational focus of the above-mentioned companies, more companies (especially in the automobile market) are soon going to pay a closer attention to poverty alleviation as a key CSR area. Broadly, these issues define the future of CSR in Malaysia.

Augustine, D. 2013, Overview of the Malaysian Automotive Industry – 2013 and Beyond . Web.

DMC 2013, Nissan Malaysia Continues Engaging Customers with Exciting Events . Web.

Honda-Malaysia 2013, Honda Dreams Fund Announcement. Web.

Sachs, S. 2005, ‘A CSR framework due to multiculturalism: the Swiss Re case,’ Corporate Governance , vol. 5 no. 3, pp. 52 – 60.

Toyota-Global 2013, Toyota Eco Youth (Malaysia / Indonesia) . Web.

WWF-Malaysia 2013, Honda Malaysia . Web.

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IvyPanda. (2024, March 2). The CSR Models for Toyota, Nissan, and Honda. https://ivypanda.com/essays/the-csr-models-for-toyota-nissan-and-honda/

"The CSR Models for Toyota, Nissan, and Honda." IvyPanda , 2 Mar. 2024, ivypanda.com/essays/the-csr-models-for-toyota-nissan-and-honda/.

IvyPanda . (2024) 'The CSR Models for Toyota, Nissan, and Honda'. 2 March.

IvyPanda . 2024. "The CSR Models for Toyota, Nissan, and Honda." March 2, 2024. https://ivypanda.com/essays/the-csr-models-for-toyota-nissan-and-honda/.

1. IvyPanda . "The CSR Models for Toyota, Nissan, and Honda." March 2, 2024. https://ivypanda.com/essays/the-csr-models-for-toyota-nissan-and-honda/.

Bibliography

IvyPanda . "The CSR Models for Toyota, Nissan, and Honda." March 2, 2024. https://ivypanda.com/essays/the-csr-models-for-toyota-nissan-and-honda/.

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of Toyota reached 1 million units in 1969 which again in-creased to 5 million units in 1975 and to 10 million units in 1979. In 1982 Toyota Motor Corporation was established with the combination of Toyota Motor Co. Ltd. and Toyota Motor Sales Co. Ltd. In 1988, the annual domestic sales of Toyota reached to 2 million units. Toyota is strengthen-
Financing Toyota's Sustainability Vision of the Future
The Woven City project is the centerpiece of Toyota's sustainability agenda, which recently received financing in a $4.85 billion deal including $2.75 billion dollar-dominated bonds led by J.P. Morgan. The firm served as a lead-left book runner and structuring agent in the client's first sustainability bond offering. The 'Woven Planet ...
Environmental dimension of Corporate Social Responsibility (Case study
The study highlights the environmental dimension of corporate social responsibility with the case study of Toyota as one of the largest organizations in the world on the one hand and the nature of ...
PDF Analysis of Toyota Motor Corporation
Strong market position and brand recognition: Toyota has a strong market position in different geographies across the world. The company's market share for Toyota and Lexus brands, (excluding mini vehicles) in Japan was 45.5% in FY2012. Similarly, Toyota has a market share of 12.2% in North America, 13.4% market share in Asia (excluding Japan
Green Marketing and Green Brand
The main aim of this study is to contextualize sustainability and call for its consideration in firms' management, namely via green marketing and green brand. ... We present the case of Toyota, a brand with patent and acknowledged efforts in what regards sustainability. ... European Journal of Marketing, 37(5/6) (2003) 848-871. [20] X. Luo, C ...
Toyota Corporate Social Responsibility
CSR programs and initiatives are launched as a part of Toyota Global Vision that was formulated in March 2011. Toyota Global Vision is represented in the form of a tree where Toyota values represent the roots of the tree, stable base of the business is the trunk of the tree. The concepts of 'Always Better Cars' and 'Enriching Lives of Communities' are positioned as fruits of the tree.
Toyota Kirloskar Motor's CSR Initiative 'Project ABCD' Makes It To
TKM had adopted Toyota Business Practices Methodology to manage this project. Problem's point of occurrence was identified, root cause analysis done, targets were set by further breaking it down into activities and then outcomes were measured periodically to maximize the impact and achieve the objective of 100% sanitation in target villages ...
(PDF) GLOBAL CORPORATE STRATEGY-TOYOTA CASE STUDY
1 | P a g e. GLOBAL CORPORATE STRATEGIES: VOLKSWAGEN GROUP CASE STUDY: by Reason Chivaka. Executive Summary. The reputation of an organisation is one of its important assets (Gong, 2013). The ...
CSR (Corporate Social Responsibility)
a. GLOBAL CSR POLICY. Contributing to society through the manufacture of automobiles. "Toyota will respond to the needs of society and enrich people's lives through the manufacture of automobiles. And we will never lose sight of our gratitude toward our customers and other stakeholders. Based on that mindset, we will aim to contribute to the ...
ESG Case Study
ESG Case Study - Toyota Motor Corporation Sage Advisory Feb 24, 2021. 2021-02-24. By Sara Rodriguez, ... Toyota's CSR offers thorough information on its executive compensation policies, however; the composition of Toyota's board of directors is an area of weakness for the company. There is a lack of independence among board members, and ...
Case Study Analysis on Toyota Corporation
Case Study Analysis of Toyota Company Case Study Analysis of Toyota Company Course Code: MGT Course Title: Strategic Management Section- 05 Group- 05 Fall 2021 Prepared For Dr. Rumana Afroze Assistant Professor Department of Business Administration East West University Prepared By Name ID. Tanvir Ahmed 2017-1-10- MD. Ibrahim Khalid 2017-2-10 ...
The CSR Models for Toyota, Nissan, and Honda Case Study
Get custom essay. This paper compares the CSR models for Toyota, Nissan, and Honda. The emphasis of this paper is on their areas of similarity and differences (in CSR approaches). This paper also explores the main issues that challenge the execution of CSR projects in Malaysia and how Nissan, Honda, and Toyota are managing these issues.

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Managing Sustainability to Be First: The Toyota Case

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Toyota Kirloskar Motor’s [TKM] unique CSR Initiative ‘Project ABCD’ makes it way to Harvard Case Study List

About the Author of Case Study:

Namrata Rana

Toyota Kirloskar Motors: Evaluating a CSR Project

Learning Objectives

The Contradictions That Drive Toyota’s Success

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Record Sustainability Bond for the Auto Sector

Aligning Financing With Corporate Values

Driving Sustainable Change in the Industry

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Toyota Kirloskar Motor’s CSR Initiative ‘Project ABCD’ Makes It To Harvard Case Study List

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