Toyota Corporation Corporate Social Responsibility And Ethics

In the past two decades, corporate social responsibility (CSR) initiatives have become increasingly visible within most large corporations. Consequently, many large organisations have implemented new policies and practises geared toward improving their impact on environmental, social, and governance externalities (Nave and Ferreira, 2019). According to Al-Shammari et al. (2022), corporate social responsibility refers to an organisation’s efforts to improve society in some way. The efforts range from donating money to worthy causes to implementing environmentally friendly policies in the workplace. The purpose of corporate social responsibility is to take part in philanthropic causes, give back to society, and provide positive social value. Corporations are increasingly embracing CSR to make a positive difference and build a positive brand (Tamvada, 2020) (Fatima and Elbanna, 2022).

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This report explores Toyota Company’s corporate social responsibility and ethics. Specifically, the report describes the organisation’s CSR approach and code of conduct, describes a megatrend that is affecting Toyota and how the company has responded and applies theories to make sense of Toyota’s actions. In addition, the report critically evaluates Toyota’s ethical performance and proposes recommendations for the organisation to improve how it could be more socially responsible.

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Toyota Company’s Overview, Corporate Social Responsibility Approach, and Code of Conduct

Toyota Motor Corporation is one of the world’s largest automobile makers. The company was founded on August 28, 1937, and is headquartered in Toyota, Japan. Toyota engages in the manufacturing and sale of motor vehicles and parts. The corporation operates through various segments including automotive, financial services, and many others. Its main business activity is the automotive segment, which designs, manufactures, assembles and sells trucks, passenger cars, minivans, and related vehicle parts and accessories. The company manufactures and sells various car models including SUVs, saloon cars, pickups, and trucks (Toyota Motor Corporation, 2023).

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The company aims to create a prosperous society via its business activities, underpinned by “the Guiding Principles at Toyota.”  Based on the principles, in 2020, Toyota Corp. compiled the “Toyota Philosophy.” Subsequently, the company set the mission of “Producing Happiness for All.” Toyota Corp. aims to be the best company globally in terms of corporate social responsibility (Toyota Motor Corporation, 2022). The company actively promotes social responsibility activities geared toward contributing to sustainable social vitality through working with stakeholders and utilising its resources effectively. In addition, the company focuses on initiatives that address real social issues, including the need to foster human resources (Toyota Motor Corporation, 2023). Toyota Corp.’s CSR policy considers the interest of customers, employees, business partners, shareholders, and the global community as well as local communities. The company aims for growth that is in harmony with the environment by striving to minimise the environmental impact of its business operations. Also, Toyota Corp. emphasises a philosophy of respect for people by honouring the customs, culture, history, and laws of each nation and region (Toyota Motor Corporation, 2023).

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Toyota Corp.’s code of conduct incorporates several guiding principles geared toward promoting corporate social responsibility. Firstly, the company seeks to honour the spirit and language of every country and carry out open and fair corporate activities. Secondly, the company emphasises the need to respect the culture and customs of every country as well as contribute to economic and social development activities in communities. Thirdly, Toyota seeks to dedicate itself to providing clean and safe products and enhancing the quality of life everywhere through all its activities. Fourthly, the company emphasises pursuing growth that is in harmony with the global community (Toyota Motor Corporation, 2018). The principles are aimed to guide Toyota Corp. to remain socially responsible.

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Climate Change – Global Warming and Toyota Corporation

            Since the Industrial Revolution (1760 – 1840), the global annual temperature has been increasingly rising. Between 1880 (the year that accurate recordkeeping began) and 1980, the global annual temperature rose on average by 0.07 degrees Celsius every ten years. Since 1981, the rate of global annual temperature has more than doubled. Moreover, for the last 40 years, the global annual temperature has risen by 0.18 degrees Celsius per decade (Natural Resources Defence Council, 2021). Notably, global warming occurs when carbon dioxide and other greenhouse gases and air pollutants collect in the atmosphere. The pollutants absorb sunlight and solar radiation bouncing off the earth’s surface (Zandalinas et al., 2021). Without the pollutants, the radiation would escape into space. Since the pollutants can last in the atmosphere for years to centuries, they trap the heat causing the planet to get hotter (Al‐Ghussain, 2019) (Kweku et al., 2018). Thus, carbon dioxide is the leading cause of global warming.

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            One of the corporate social responsibility megatrends across the world is global warming. According to PricewaterhouseCoopers, consumers are becoming increasingly insistent that the organisations they do business with must act responsibly toward the environment (PwC UK, 2023). The world is facing unprecedented challenges stemming from climate change. Businesses, government, and other stakeholders agree that the 2020s must be the decade for action, with commitments to achieve Net Zero emissions (Letcher, 2021). PricewaterhouseCoopers insist that organisations can contribute positively to the fight against global warming by putting sustainability and environmental impact at the heart of their strategies. In addition, businesses must move to a low-carbon and climate-resilient future (PwC UK, 2023). Hence, organisations need to look at the bigger picture by striking a balance between driving innovation, staying competitive, and preserving the environment.

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            PricewaterhouseCoopers elucidate that the world is in the middle of climate change. Across the world, businesses, industries, societies, and the natural environment is under threat from the impacts of the rising global temperatures resulting from record levels of greenhouse gas emissions. PricewaterhouseCoopers explain that to prevent a catastrophic impact on health, economic growth, livelihoods, food, water, human security, and vital ecosystems, global greenhouse gas emissions must at least halve by 2030 and reach net zero by 2050. The current global efforts by investors, businesses, cities, and countries to reduce greenhouse gas emissions are not sufficient (PwC UK, 2023). Urgent action is, therefore, necessary to reduce the emission gap as well as build resilience to the accelerating impacts of climate change.

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            Toyota Corp. aims for growth that is in harmony with the environment by emphasizing minimizing the environmental impact of their business operations. This includes working to reduce the effect of their operations and vehicles on climate change and biodiversity. The company strives to develop, establish, and promote technologies that allow the economy and the environment to coexist harmoniously (De Pasquale, 2021). In addition, Toyota Corp. is dedicated to building close and collaborative relations with a wide range of individuals and organisations committed to environmental preservation (Toyota Motor Corporation, 2023). Toyota Corp.’s Guiding Principle 3 of its Code of Conduct asserts the company’s dedication to providing clean and safe products as well as enhancing the quality of life everywhere across the world through all its activities. Moreover, Toyota Corp. has developed a proactive policy to assure continual improvements in its environmental performance in its “Toyota Environmental Action Plan” and “Toyota Earth Charter” (Toyota Motor Corporation, 2018).

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            Toyota Corp. concurs with PricewaterhouseCoopers regarding the world working towards reaching net zero emission by 2050. In an effort to create a net positive impact on the planet, in 2015 Toyota Corp. launched the Toyota Environmental Challenge 2050 initiative (Rouault, 2021). The initiative comprises a set of six visionary challenges aimed to serve as the company’s guiding its efforts to build a better, smarter, and relatively more sustainable future. The six challenges include, first, the new vehicle carbon dioxide emission challenge. The aim is to reduce carbon dioxide emissions from new vehicles by 90 percent. Second, the operations’ carbon dioxide emissions challenge. The goal is to eliminate carbon dioxide emissions from emissions. Third, the life cycle carbon dioxide emissions challenge. The objective is to eliminate carbon dioxide emissions from suppliers and dealers. Fourth, is the water conservative challenge. The goal is to conserve water and protect water resources. Fifth, the recycling-based society challenge. The objective is to support a recycling-based society. Last but equally important, is the harmony with nature challenge. The challenge aims to conserve biodiversity, protect species, and restore habitats (Toyota Motor Corporation, 2023). Toyota Environmental Challenge 2050 is, therefore, how the company is working toward combating global warming as its commitment to CSR.

Ethical Theory – The Triple Bottom Line Theory (TBL)

            The Triple Bottom Line theory incorporates three dimensions of performance namely economic, social, and environmental. Sustainability is the concept of this theory. The theory emphasises that the three dimensions must obtain sustainable results (Staniškis et al., 2022). Companies must apply a triple bottom line to achieve continuous profits coupled with long-term social and environmental impacts. At the intersection of economics and ethics sustainability means the long-term maintenance of balance between economic sustainability, social sustainability, and environmental sustainability (Brin and Nehme, 2019).

Economic Sustainability. According to the Triple Bottom Line theory, corporations have a responsibility to formulate business plans that allow stable and prolonged action. Corporations should, therefore, value long-term financial solidity as opposed to volatile, short-term profits, regardless of how high (Brin and Nehme, 2019). Hence, businesses should need to enrol in the TBL model framework by drawing strategic plans by calculating expenditures and taxes, evaluating market benchmarks, forecasting business climate factors, and avoiding maximum risk threats (Hedblom et al., 2019). Thus, the most important for a corporation is to achieve continuous profits for the long term as opposed to making high profits.

Social Sustainability. According to the TBL model, businesses must pay attention to their social affairs and paying attention to their financial affairs. In the Triple Bottom Line CSR framework, achieving social sustainability by businesses is crucial (Mosca and Civera, 2017). Every society differs from another and, therefore, corporations must have data from national authorities regarding social affairs, human rights, unemployment rates, health priorities, et cetera. After determining every community’s priorities, businesses must take decisions to satisfy social needs as much as possible (Brin and Nehme, 2019). Thus, for corporations to be stable over the long term, they must satisfy surrounding communities’ social needs as much as possible.

Environmental Sustainability. The TBL model emphasises that environmental sustainability is one of the ley concepts in a CSR framework. If corporations cannot respect the environment, future generations will not be able to enjoy a quality life (Isil and Hernke, 2017). As such, corporations must pay attention to climate change and adhere to the new environmental laws while being careful about the consumption of natural resources. Companies have to use alternative energy sources to minimise the consumption of traditional energy sources, use safe air and water sources, and dispose of solid waste and toxic in an environmentally conservative manner (Brin and Nehme, 2019). The mentioned factors maintain the environmental sustainability.

Toyota Company’s Ethical Performance

            The Triple Bottom Line theory emphasises environmental sustainability by paying attention to issues such as climate change. Toyota Corporation aims for growth that is in harmony with the environment by emphasizing minimizing the environmental impact of their business operations. The company is approaching the reduction of carbon dioxide emissions from various angles, including advanced technologies driven by artificial intelligence (AI) and the internet of things (IoT) and the use of renewable energy. In addition, the company is committed to more daily incremental improvements. The improvements encompass the use of mechanisms that use precise ingenuity to move objects without the use of electricity (karakuri) utilised at production sites (Toyota Motor Corporation, 2023). Thus, rather than solely relying on finding ways to reduce carbon dioxide emissions when vehicles are produced, the company is also focusing on achieving carbon neutrality in production facilities.

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            In addition, the Toyota Environmental Challenge 2050 initiative commits the company to reduce carbon dioxide emissions and achieve net zero globally by 2050 for its vehicles and operations. The commitment goes further by enhancing water usage, recycling technology, and working toward establishing a society that is in harmony with the environment (Toyota Motor Corporation, 2023). According to Fankhauser et al. (2022), organisations need to find creative initiatives for the global environment. Toyota Corporation has taken various creative measures geared toward minimizing carbon dioxide emissions from its cars and processes. Toyota Corporation has made plausible progress in its effort to achieve net zero carbon emissions.

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Recommendations

Whereas Toyota Corporation has made commendable progress in its efforts to achieve net zero carbon emission, there is still room for improvement. A component of corporate social responsibility that the company has overlooked is philanthropic responsibility. Corporate social responsibility is composed of four obligations: (1) economic responsibility, (2) legal responsibility, (3) ethical responsibility, and (4) philanthropic responsibility (Carroll, 2021), (Latapí et al., 2019). Toyota Corporation needs to embrace its philanthropic responsibility to protect forests. Forests nurture biodiversity and abundant ecosystems. According to Lewis et al. (2019), forestation and reforestation are essential to achieving net zero emissions. Forestation and reforestation help the environment in four ways: reduce emissions, increase carbon-capture capacity, increase biodiversity, and positively impact millions of people who make their living around forests (Rudel et al., 2020), (Popkin, 2019). Thus, Toyota Corporation needs to embrace its philanthropic responsibility by supporting forestation, reforestation, and forest protection initiatives across the globe.

Conclusion

            Therefore, Toyota Corporation has implemented various plausible Corporate Social Responsibility policies and best practises geared toward improving the company’s impact on the environment. A megatrend that Toyota Corporation’s Corporate Social Responsibility framework seeks to address is global warming. The company has implemented measures that aim to ensure the company achieves net zero emission by 2050 amongst the measures that Toyota has taken to ensure they achieve the goal include having a code of conduct that emphasises CSR and initiatives such as the Toyota Environmental Challenge 2050 amongst others. An ethical theory that explains Toyota Corporation’s response to the global warming megatrend is the Triple Bottom Line model. Generally, the company has done a commendable job regarding its response to the global warming megatrend. However, Toyota Corporation can be more responsible by focusing its philanthropic responsibilities on initiatives geared toward forestation, reforestation, and protecting forests across the globe.

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