CSR, Corporate Social Responsibility, is currently a fashion in the business world. Many corporations and/or organizations set up divisions of CSR and have been publishing reports of their CSR activities in the past decade. To explain and understand this concept further let me tell you about the most talked about organization in the past few years, Toyota Motors which has been facing certain criticism in its business operations on the social responsibility front. Toyota, a Japanese car manufacture whose name is derived from the founders family name – “Toyoda”, whose history dates back to 1933 with the company being a division of Toyoda Automatic Loom Works devoted to the production of automobiles under the direction of the founder's son, Kiichiro Toyoda.
Post World War II, the economic situation in Japan was bad and Toyota had almost become bankrupt but with the help of some finance from the consortium of banks they got a chance to bounce back. As the years passed by, they had become the largest and the most successful car manufacturers in the world with most of its concentration in the American and the Asian markets. In order to move fast to keep pace with other competitors and to maintain its position and reputation in the business, Toyota has practiced the Corporate Social Responsibility (CSR) policy which is “Contribution towards Sustainable Development”.
Today, where the consumers are highly educated and environmentally conscious, Toyota has to make sure that they can balance up the needs of the society and consumers. The model that the company follows focuses on Employees, Shareholders, Community, Business Partners and the Environment as a whole. Towards employees they ensure safe and healthy working environment, medical benefits, special discounts on purchase of Toyota vehicles, etc.
Toyota has been for long volunteering in the various activities directed towards the community and society, like the White Road Project – a campaign which educates people on safe driving skills with the ultimate goal of zero road accidents, hosting science-innovation competitions to encourage the students and the youth to contribute towards the development of technology and eventually giving opportunities to deserving talent. “By delivering always better cars to customers and contributing to the betterment of towns and communities, we aim to be a company whose growth is welcomed by as many
people as possible”. * President, Toyota Motor Corporation
As conveyed by their President, one of the most important achievements of Toyota Motors was the introduction and launch of the first Hybrid model of passenger car in 1997. Toyota “Prius” as it was called, was the first ever environment friendly passenger car and was the talk of the town at every market where it was launched specially in the US where consumers are more environmentally conscious. Toyota being the first ones to launch this type of a model had proclaimed that they had done good to the society.
But how far could they go? Fame always comes with a price. Many criticized and questioned about the green concept behind the Prius’s which uses the hybrid system. It was noted that the issue was with the batteries which contained nickel metal hydride and its production caused great harm to the environment. To give an example, to produce the content – nickel for a single battery would require to bring down a decent sized mountain. Not only were the contents in the battery under the eye of the critiques but also the supply chain of these batteries which required its shipping from Ontario in Canada to all the way in Japan for final production eventually contributing to the depletion of fossil fuels.
Few years later, Toyota was faced with one more issue in the global context and it was the manufacturing default with its car models leading to the recall of around 9 million vehicles over a couple of years. Toyota had been well known for its production quality and inspection of vehicles before it enters the market to ensure safety and for which they have won many Quality standards awards. This all started with one incident in one of the states of America where a car accident occurred due to failure of accelerator (gas pedal) and cost 4 lives. Investigation revealed that the car was out of control due to pedal being stuck at a constant speed and breaks not helping.
This controversy cost a lot to Toyota especially in the western markets where they were looked upon as an unsafe brand. While this was happening in America, the regulators were asked by the media that was this enacted under the administration of Obama’s presidency to allow the local American car manufacturers to bounce back as Toyota will be gone for some time. Such a show by media depicts that how they can make and break the image of a company as well as the government, as that statement could have affected trade affairs between Japan and USA.
But Toyota on the other hand being calm knew the game and were responsible enough to take quick action by recalling the cars in the market for getting it fixed. Toyota couldn’t have let this issue go as it would have hurt their brand image for life and which they felt was slowly happening around the world as the news was spreading.
As Toyota was dealing with this issue in the west, a similar case of defect came up in its home country Japan where they dealt with the issue in a different way. In USA, where they accepted that it was a fault in gas pedals and reworked on them, however, in Japan they claimed that the issue was with the placing of the floor mats in under the seat which caused the pedals to be stuck at a position. This justification by Toyota was accepted by the media in Japan and among the people and rework was done on the vehicles.
This could happen in Japan as Toyota has good support from the government and companies in Japan are not required to give full proof information on the reasons of default or any other issue to the public unlike the west. In doing this, Toyota was able to maintain its brand image by not creating a panic among customers that it is an electrical default. Thus, we see that how an organization can turn its way on responsibility towards society and consumers under different situations questioning the business ethics. After all, the end objective of every organization is profit maximization. “It takes years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently” – Winston Churchill
In spite of the criticism against nickel battery and the pedal default cases against Toyota, the company has poured a lot of effort in protecting the environment. In the R&D side, they have to be given praise for the development of their own flower species which have been derived from cherry sage and gardenia that helps to absorb nitrogen oxides and reduce heat of the atmosphere. This is a unique proposition which Toyota places it around their assembly and manufacturing units in order to reduce environmental impacts. And for its commitment towards sustainable development, they are focused on manufacturing in a greener way.
Recently, they started following the process of 3 R’s – reduce, reuse and recycle where Toyota has been manufacturing vehicles with recyclable materials, and have also waste collection systems. On the society front and service towards community, Toyota has been long contributing towards various environmental activities like Planet Ark’s National Tree Day, the Greenathon, etc. It has been tough and a long journey for Toyota to achieve what they have now because throughout its company’s history, they have been criticized and many comments have been given which is against their every action. In my opinion, it is not easy to be one of the largest companies.
Let’s take Toyota itself, who face pressures from the government, stakeholders and the society in their daily working environment in order to deliver the product with best quality and price. And let’s be practical, no any organization is 100% environment friendly, and especially when it comes to the manufacturing sector. However, it is very necessary for every organization to follow the path of sustainable development and reduce the harm to the environment as much as possible so that the future is secure. As our future depends on the actions that we take today.