How Domini Research Helped End Toyota Affiliate's Joint Venture with Burmese Government

When your investment dollars buy shares in one company and avoid another, does it really make a difference?

After three years of dialogue with investors, Toyota Motor, the world’s largest automaker, took an important step to distance itself from the brutal military regime in Burma. That step was the direct result of investors who care about how they make money.

To serve responsible investors, Domini uses a comprehensive set of social and environmental standards to select its investments. To apply these standards, our analysts must dig deeply to uncover information many companies would prefer remained in the dark. While researching Toyota Motor in 2006, Shin Furuya, one of Domini’s lead research analysts, discovered that Toyota Tsusho, the company’s major trading partner, was in partnership with the Burmese regime to sell motorcycles, light trucks and cars. The regime tightly restricts the domestic market for these vehicles to its wealthiest citizens, and those with military connections. This information was uncovered in Japanese, and was apparently unknown to both human rights activists and investors.

Based on these factors, and several other concerns, Domini determined that Toyota Motor did not meet our standards for investment. We didn’t buy their stock, but we didn’t let them off the hook. We shared our findings and, together with other investors, expressed our concerns to the company. At a 2007 meeting of the Japan Society, Shin and a colleague from Trillium Asset Management hand-delivered a letter to the chairman of Toyota Motor (Our letter is posted to the website of the Business and Human Rights Resource Centre)

At first, Toyota Motor said that it did not control its trading partner and was not responsible for its actions. Our research, however, showed otherwise. Toyota Motor, Shin found, owned more than 20% of Toyota Tsusho, was Toyota Tsusho’s biggest customer, and had several representatives on its board of directors.

Working with Trillium, Boston Common Asset Management and the Interfaith Center on Corporate Responsibility, we continued to pursue dialogue with the company. Gradually, Toyota’s position changed.

In March 2008, a Toyota official wrote: “I would like to reassure you that Toyota shares your concerns about the human rights situation in Burma.” That August, after three years of dialogue, Toyota Motor revealed that its trading partner had ended its joint venture with the government of Burma.

In November 2010, the Burmese regime intends to hold its first national elections in 20 years. Aung San Suu Kyi, the winner of the 1990 elections, remains under house arrest, and will not appear on the ballot. The regime holds about 2,100 other political prisoners.

Domini’s research process, grounded in our Global Investment Standards, is based on protection of the environment and fundamental human dignity. Toyota Motor’s action, prompted by our concerns, sends an important message that the violent suppression of democracy in Burma is unacceptable.

Read more below:

Social Impact Update (Second Quarter 2008)
Read press release issued by investor coalition
Read coverage in Reuters and
Our original letter to Toyota Motor
Learn more about why we exclude Toyota from our funds

Toyota Motor is not currently approved for investment by the Domini Funds. The composition of the Funds’ portfolios is subject to change. View the most current list of the Domini Social Equity Fund and Domini International Social Equity Fund's holdings.

The Domini Funds are not insured and are subject to market risks, such as sector concentration and style risk. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. You may lose money.

This information is provided for educational purposes only, and should not be considered investment advice with respect to any of the companies listed.

Check the background of DSIL Investment Services LLC and its investment professionals on FINRA's BrokerCheck. Before investing, consider the Domini Funds’ investment objectives, risks, charges, and expenses. View or order a prospectus. Read it carefully.

DSIL Investment Services LLC (DSILD) distributor, Member FINRA.

Domini Impact Investments LLC (Domini) is the Funds’ investment manager. The Funds are subadvised by unaffiliated entities.

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