Investor Pressure Moves Toyota Affiliate to Divest from Joint Venture with Burmese Regime


Susan Baker, Trillium Asset Management Corporation, 617-292-8026 x 252
Shin Furuya, Domini Social Investments, 212-217-1095

In a letter to a group of investors, Toyota Motor North America confirmed that its major trading partner Toyota Tsusho (TTC) has divested its ownership stake in Myanmar Suzuki Motor. TTC jointly controlled the vehicle assembly plant with the Burmese military regime and Suzuki Motor Corp. Toyota's announcement followed three years of dialogue with a coalition of investors, including Trillium Asset Management Corporation ("Trillium"), Domini Social Investments ("Domini"), Boston Common Asset Management and the Interfaith Center on Corporate Responsibility.

In December 2006, research by Domini Social Investments uncovered an equity partnership between Toyota Tsusho and the Burmese military regime. Investors delivered a letter shortly thereafter to Toyota Motor's Chairman, Fujio Cho, raising concerns about the company's business ties to the repressive regime. Toyota Motor responded by confirming it had asked Toyota Tsusho to reconsider its business activities out of concern for the current environment in Burma.

In an August 12, 2010 letter to the investors, Group Vice President James Wiseman of Toyota Motor North America wrote, "[W]e are pleased to report to you that as of June 2010, TTC had sold all of its shares in its Myanmar Suzuki joint venture... TTC is now fully divested from its joint venture operations in Burma."

Holding over 20 percent of Toyota Tsusho's shares, Toyota Motor is Toyota Tsusho's largest shareholder. Toyota Tsusho partnered with the Burmese government to sell motorcycles, light trucks and cars. The Burmese government, which stands accused of systematic violations of human rights and crimes against humanity, tightly restricts the domestic market for these vehicles to its wealthiest citizens and those with military connections. Burma ranks among the poorest countries in the world, with the majority of the Burmese population living in poverty.

"We commend Toyota and the role it played in persuading its affiliate to reconsider its ties to the Burmese military rulers. As long as human suffering persists in Burma at the hands of the junta, companies cannot ignore their responsibility to insure their or their affiliate operations do not aid the regime's offenses," commented Susan Baker, a research analyst at Trillium who studies the impact of environmental, social and governance (ESG) factors upon investment performance. "Any link to building vehicles to aid the military government's misrule and brutal suppression of its own people raises moral and reputational issues that present risks to the long term value of the Toyota brand," she continued.

"Toyota Motor has taken an important step to acknowledge and address human rights concerns within its sphere of influence," said Shin Furuya, Lead Research Analyst, Global, for Domini. Although Toyota Tsusho has ended its only known direct joint venture with the Burmese government, it continues involvement in other operations in Burma including agricultural and apparel production, which could have significant human rights impacts.

"Toyota Motor and its group needs to continue to address these concerns whether the particular operations have direct business ties with the military regime or not. All companies operating in Burma need to review their relationships with their trading partners and carefully consider whether their company's operations could directly or indirectly contribute to human rights violations," he continued. Domini has consistently excluded Toyota Motor from its mutual fund portfolios, partially due to its involvement in Burma.

"The corporate responsibility to respect human rights is becoming the international norm," commented Rev. David M. Schilling, director of human rights, Interfaith Center on Corporate Responsibility. "The UN Human Rights Council adopted recommendations of the UN Special Representative for Business and Human Rights in June 2008, including the commitment that companies need to demonstrate respect for human rights, not just adopt statements. Toyota's action to influence its affiliate to divest from Myanmar Suzuki Motor is a good example of its human rights commitment."

Toyota's formal acknowledgement of divestment came a day before the Burmese government announced its first elections in 20 years. News of the election drew widespread criticism as it imposes many restrictions, including barring Aung San Suu Kyi, imprisoned leader of the National League for Democracy and winner of the 1990 elections, from participating.

The investor group will continue to encourage Toyota Motor to address these issues and to develop human rights risk and impact assessment tools, particularly in countries considered to have substantial human rights risks such as Burma and Sudan.

Trillium Asset Management Corporation is a Boston-based, independent investment management firm devoted exclusively to sustainable and responsible investing.

Domini Social Investments is a New York City-based investment firm specializing exclusively in socially responsible investing. Domini manages funds for individual and institutional investors who wish to integrate social and environmental standards into their investment decisions.

Interfaith Center for Corporate Responsibility (ICCR)has been a leader of the corporate social responsibility movement for nearly 40 years. ICCR's membership is an association of 275 faith-based institutional investors, including national denominations, religious communities, pension funds, foundations, hospital corporations, economic development funds, asset management companies, colleges, and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues.

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