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October 06, 2010

Toyota Divests Stake in Joint Venture with Military Regime in Burma
    by Robert Kropp

Responding to investor pressure led by Domini Social Investments, Toyota announces divestiture, although it continues agricultural and apparel production in Burma.

SocialFunds.com -- A years-long investor engagement addressing human rights in Burma ended in success recently, when Toyota Motor North America informed the investor coalition that it had divested its ownership stake in Myanmar Suzuki Motor. Until the divestiture, Toyota's trading partner Toyota Tsusho had operated the vehicle assembly plant as a joint venture with the Burmese military regime.

The engagement began in December 2006, when Domini Social Investments discovered an equity partnership between Toyota and the Burmese military. Joined by Trillium Asset Management, Boston Common Asset Management, and the Interfaith Center on Corporate Responsibility (ICCR), Domini wrote to Toyota, raising concerns about the company's relationship with a military regime for which, according to Amnesty International, "torture has become an institution."

Among the human rights abuses of the Burmese military regime is forced labor, which the
International Labor Organization (ILO) described as "widespread and systematic." Burma's 500,000 military personnel—who make up one of Asia's largest armies, in an impoverished nation of 50 million people—includes as many as 70,000 child soldiers, the largest number in the world.

In a
letter to the investor coalition, James Wiseman, Group Vice President of Toyota Motor North America, wrote, "As of June 2010, TTC has sold all of its shares in its Myanmar Suzuki joint venture and received the government's formal approval of the transaction. That said, TTC is now fully divested from its joint venture operations in Burma."

According to Domini, Toyota continues to be involved in agricultural and apparel production in Burma, which could also have significant human rights impacts.

"Toyota Motor and its group need to continue to address these concerns whether the particular operations have direct business ties with the military regime or not," said Shin Furuya, a Lead Research Analyst for Domini. "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."

In August, Burma announced it would hold its first election in 20 years in November. However, as the UK foreign minister, Jeremy Browne, said, the election is "set to be held under deeply oppressive conditions designed to perpetuate military rule." The National League for Democracy (NLD), led by Nobel laureate Aung San Suu Kyi, has boycotted the election.

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