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

Trillium Asset Management, along with Domini Social Investments and the Interfaith Center on Corporate Responsibility, issued a press release today commending Toyota Motors for influencing their affiliate Toyota Tsusho (TTC) on the divestment of their ownership stake in Myanmar Suzuki Motor.  The vehicle assembly plant was jointly controlled by the Burmese military regime.  Trillium has been in dialogue with  Toyota since 2007 on this issue.

Click here to read the press release.
Click here to read a news article from Reuters.

Relief Donations for Burma

Our friend and former Trillium Asset Management Corporation co-worker Simon Billenness sent us this appeal in early May regarding the need for immediate relief for Burmese victims of Cyclone Nargis. Please give what you can.

Dear Friends:
I can barely read the news from Burma any more.

In today’s Reuters’ story, the United Nations estimates that up to nearly 2 million people have had their lives ripped apart by Cyclone Nargis. The UN reports that “the number of deaths could range from 63,290 to 101,682, and 220,000 people are reported to be missing.”

The cyclone was the first disaster. The second – and worse – disaster is the Burmese military junta’s playing power politics with the aid provided by the international community. That why when I hear that 220,000 are missing, I fully expect that the junta will just let them die.

And you are still not seeing the full extent of the destruction and death. Why? Because the military regime is working hard to keep journalists – and even humanitarian aid workers – out of the country.

That is not even the worst of it. Incredibly, the junta used its troops and security personnel – this very weekend – to hold a rigged “referendum” on its constitution that would perpetuate its military rule. Any other government would have had the compassion to delay a vote and deploy its forces to help the victims of the disaster.

There comes a time when you have to draw a line in the sand. We must not let Burma’s generals cross the line this time.

Many friends have asked me how they can help the victims of Cyclone Nargis in Burma. I urge you to contribute through the U.S. Campaign for Burma.

The U.S. Campaign for Burma is accepting donations that will be passed through 100% to organizations working effectively in Burma.
First of all, the U.S Campaign for Burma is providing monetary assistance for a number of exceptional Burmese organizations working inside the country. I cannot be more specific for risk of jeopardizing their work and their lives. They are providing assistance directly to those people who have lost their homes and livelihoods.

Secondly, the U.S. Campaign for Burma is helping to organize effective pressure to force the Burmese junta to allow aid into the country without conditions. We have already helped organized demonstrations and set up an email campaign to put pressure on UN Secretary-General Ban Ki-moon and the UN Security Council to take effective action. You can take part through our website action.

Please give generously to the U.S. Campaign for Burma. You can specify exactly how much you donate to Cyclone Nargis relief work and how much you donate to fuel our crucial campaign of pressure on the Burma’s generals. We need to do both to help the Burmese people.
Please go to our website now. Give money, take action, and sign up for news and action alerts at: http://uscampaignforburma.org

And please do not hesitate to circulate this letter to all your friends.

I cannot put into words how sad and angry I am personally. Hundreds of thousands of people in Burma are running out of water, food, and medicine. But the junta will not allow the international community to help.
I appreciate all of your support and please keep the people of Burma in your hearts and minds.

Simon Billenness
Co-chair of the Board of Directors
U.S. Campaign for Burma
simon@uscampaignforburma.org

Toyota Backpedals on Burma

If the Prius left you with a warm and fuzzy feeling for Toyota, you’re not alone. Noting that Toyota “has been a leader in both developing and promoting hybrid power-trains, the new industry standard, and is well advanced in overall R&D programs for future vehicle types,” the corporate responsibility research firm Innovest chose the company as the sole automotive representative in its top 100 most sustainable global companies in August 2007. We’re in agreement that Toyota deserves accolades for implementing sustainable business strategies that have led to the successful launch of hybrid fuel technology. But – and you sensed this “but” coming, didn’t you? – sustainability reaches beyond environmental practices.

After pledging it would not operate in Burma in 2001, it turns out that Toyota is still involved there.

Last summer, Domini Social Investments uncovered evidence linking Toyota to an auto and truck manufacturer in Burma (also known as Myanmar since the 1988 suppression of the democracy movement by the current military regime led by generals Than Shwe and Ne Win). Toyota Motors is not assembling vehicles in Burma, but its parts supplier, Toyota Tsusho, does so through a joint venture with Suzuki Motor and the military government-controlled Myanmar Auto & Diesel Engine Industries (MADI). Suppliers, often called trading companies, are more important than ever in global auto assembly. The widely admired pillars of Japanese manufacturing, “intelligent automation” and “just in time management,” are dependent on close relationships with suppliers. It’s no surprise then that Toyota owns the largest chunk of Toyota Tsusho shares, with a 22 percent stake in this trading company responsible for sourcing parts, electronics and metals for auto assembly.

Toyota Tsusho profits from a joint venture that builds Japanese motorcycles, light trucks and cars. With Myanmar ranking among the 20 poorest countries in the world (most people live on less than $200 a year), these vehicles are destined for the elite and those connected to the military. The Burmese military enjoys close ties with and influence over auto manufacturing. In fact, the Burmese general behind the gruesome attack on the convoy carrying the nation’s democratically elected leader, Aung San Suu Kyi, was seen as an invited guest at a Suzuki Motor-sponsored party marking the opening of an auto plant.

Acting on behalf of clients who are shareholders in Toyota, Trillium Asset Management Corporation (“Trillium”), the General Board of Pension & Health Benefits of the United Methodist Church and Winslow Management Company sent a strong letter of concern to Toyota Chairman Fujio Cho before last September’s “saffron revolt” when monks and ordinary citizens peacefully demonstrated against the regime. We requested information about the company’s ties to the joint venture and its role in providing autos and vehicle parts to the repressive regime.

Toyota wrote a short letter in response stating “Toyota shares [our] concerns about the human rights situation in Myanmar and we are carefully monitoring its ongoing status…Toyota’s global Guiding Principles [are] to honor the language and spirit of the law of every nation…Toyota has no partnership or contractual relationship with the Burmese government.”

As we evaluated this unsatisfactory response, media reports poured in about the stunning and brutal suppression of dissent. Reports estimate between 31 and 200 people, including a Japanese journalist, were killed in the September crackdown, while hundreds more were dragged from their homes.

Trillium and Domini wrote back to management, this time conveying our message to Toyota through a different entry point. As chance would have it, in November, the Japan Society in New York City invited Toyota’s Chairman Cho and several senior executives to celebrate the Society’s 100th anniversary. Before Chairman Cho delivered a lecture on the importance of local interaction to global success, Domini’s Asia analyst Shin Furuya and I hand-delivered our letter to a colleague of the Chairman.

In our letter we reminded Chairman Cho that Toyota set a precedent among Japanese companies in 2001 by publicly announcing it could not operate in Burma as originally believed. The company was among dozens recognizing the economic and political risks of doing business with a backward regime short on transparency and long on committing gross human rights violations. Companies left “not only because the Burmese junta violates human rights, but also because the junta violates (its own!) investment laws.”¹ At the time, Toyota heeded Aung San Suu Kyi’s statement that “investment merely strengthens dictatorship” as well as the International Labor Organization’s call in June 2000 for governments to cease any relations with Burma. Some corporations publicly denounced the business climate. The CEO of Reebok said outright in 2005, “It’s impossible to conduct business in Burma without supporting this regime.”

Toyota dismissed its ties to Toyota Tsusho in an earlier correspondence, so our second letter detailed the relationship between the two companies. While Toyota claims no contractual relationship with the Burmese government, financial documents filed with Japanese regulators indicate Toyota exercises significant influence over Toyota Tsusho.

Toyota Motor owns 22 percent of Toyota Tsusho, and another 11 percent of Tsusho is held by Toyota Industries, one of the member companies of the Toyota Motor Group. Companies in the Toyota Motor Group are linked by complex crossholdings, very strong supplier/customer relationships and a shared leadership group. As a result, the various companies operate in close cooperation. The fact that Toyota Motor owns more than one-fifth, and the companies of the Toyota Motor Group collectively own more than one-third of Toyota Tsusho, suggest to us that Toyota Motor bears some responsibility for Toyota Tsusho’s actions.

“Clearly, any link to providing vehicles to aid the military government’s brutal suppression in this impoverished state calls into question our company’s respect for the Principles of the United Nations Universal Declaration of Human Rights,” our letter stated. “Any link has a detrimental effect on the value of our investment in Toyota Motor Corporation.”

In a stroke of irony, in Burma, the “Toyota” name is linked to a ceremonial bureaucracy devised by the military. The military wanted to include an element of moral authority in their rule, so they created an elite order comprising 47 monks subservient to the military. To recognize their faithful service to the state, the junta awards these monks with dozens of prestigious ceremonial titles. The most well known title, Bhaddanta, is given to old monks loyal to the regime. The Burmese people mockingly nickname these prelates Bhaddanta Toyota or Bhaddanta Toshiba in reference to the lavish gifts of cars, TVs and big houses they receive in exchange for giving speeches of obedience and holding silent on issues of repression. Cars manufactured by the Suzuki/Toyota Tsusho/Myanmar joint venture may not display the Toyota brand but it’s readily on display in the nickname for the select monks known for aiding the grip of dictatorship.

As the owner of the largest block of Toyota Tsusho shares, Toyota must send a strong signal to the regime that responsible corporations in Burma cannot remain silent in the face of widespread abuses of human rights. Just before we went to press, Toyota wrote back that “Toyota has carefully considered the current environment in Burma, has conveyed to Toyota Tsusho Corporation its concerns about that environment, and has asked Toyota Tsusho to reconsider its business activities in the country.”

Toyota says its shares our concerns about the human rights situation in Myanmar. We believe they do. We look forward to learning of the results of Toyota’s letter, and what further options it is willing.

Notes
1. Legal Issues on Burma Journal, August 2001, No. 9.

Support the Burma Freedom Act in Congress

Background

Last November, the International Labor Organization (ILO) called on all of its members – which include governments, labor unions, and employers – to review their relationship with Burma to ensure that they are not contributing to forced labor in Burma.

This is the first time in its history that the ILO has taken such an extraordinary step. This is largely because the scale of forced labor in Burma is horrifying and widespread.

Several U.S. Senators and U.S. Representatives have co-sponsored new legislation in Congress – the Burma Freedom Act – to help stop forced labor in Burma. Since the military junta uses forced labor in all aspects of the Burmese economy, this bill seeks to ban U.S. imports from Burma.

For the text and current co-sponsors of the U.S. Senate bill (S.926) click here.

For the text and current co-sponsors of the U.S. House of Representatives bill (H.R.2211) click here.

Please write your U.S. Senators and U.S. House Representative to urge them to co-sponsor these key bills.

^{Not Sure Who Are Your Members of Congress?}

^{Use Thomas to help identify your Members of Congress. Or call (800) 393-1082 to use the AFL-CIO’s Congressional help-line.}

^{How Should You Contact Your Member of Congress?}

^{The more time you spend to lobby an elected official, the more impact it will have. A personal one-page letter followed up with a phone call is better than an email or a postcard. Do the most that you can.}

^{Let us know the effectiveness of this action alert. Please email Shelley Alpern when you send your letters and when you receive a reply.}

Support the Massachusetts Free Burma Bill

Background and Update

Sponsored by state rep. Byron Rushing, the new Massachusetts Free Burma Bill (H.2252) would effectively bar the Massachusetts state pension funds from investing in companies that do business in Burma. The bill is modeled after similar South Africa divestment laws that were enacted during the anti-apartheid campaign. It is believed that this kind of divestment bill would withstand constitutional challenge in federal court.

The Free Burma Bill (H.2252) has been referred to the Committee on Public Service, whose co-chairs are Rep. Brian Dempsey of Haverhill and Sen. Brian Joyce of Milton. (For the bill history click here.) This committee held hearings on the bill on June 12th but put the bill on hold by placing it “in study.”

Meanwhile, the Massachusetts State Treasurer Shannon O’Brien has written constituents regarding the Free Burma Bill (H.252). In her letters, she has expressed reservations about stock divestment by the state pension funds. However, she has stated her interest in a new initiative by the funds to use their voting power to support shareholder resolutions that address issues of human rights and the environment.

^{The strategy to enact this bill is two-fold.}

^{First, urge your state legislators to write the co-chairs of the Public Service Committee to request that they take the bill out of study and send it to the floor of the House.}

^{(Already, state reps. Liz Malia and Alice Wolf have written the House Co-chair, Rep. Brian Dempsey. But we need more state legislators to do this.)}

^{Second, write the State Treasurer Shannon O’Brien to urge her not only to support the bill but also to urge its implementation by the state pension fund board (PRIM). Since she is running for Governor, she is particularly attentive to letters from residents of Massachusetts.}

^{Not Sure Who Are Your Massachusetts State Legislators?}

^{If you enter your address on this webpage, you can find out who is your state representative and state senator.}

^{Or you can call the House Clerk at (617) 727-2356 and the Senate Clerk at (617) 727-1276.}

^{How Should You Contact Your State Legislators}

^{The more time you spend to lobby an elected official, the more impact it will have. That’s why visiting your state legislator in Boston and leaving a letter is the best method. A personal one-page letter followed up with a phone call is better than an email or a postcard. For the best impact, do the most that you can.}

^{So that we can gauge the effectiveness of this action alert, email Shelley Alpern, when you send your letters and when you receive a reply.}

Sample Letter to State Treasurer Shannon O’Brien

Dear Treasurer O’Brien:

I am writing to in regard to H. 2252, the Free Burma Bill. I am specifically asking that you support the goals of the bill. Moreover, I request that you help ensure that the state pension funds use their power as investors to end corporate support for the Burmese military junta.

[Include a paragraph describing yourself and your roots in the local community. Describe your interest in Burma. Please write as much as you can.]

The bill (H.2252), sponsored by Rep. Byron Rushing, would effectively bar the Commonwealth of Massachusetts from investing state pension funds in companies that do business with the military junta of Burma. It is modeled on similar South Africa divestment laws that were enacted during the anti-apartheid campaign.

Although the pressure of sanctions has helped recently to bring the military junta to the negotiating table, the situation remains grave. The International Labor Organization has, for the first time in its history, called for sanctions on a member country because of the Burmese military regime’s pervasive use of forced labor. The U.S. State Department has chronicled the junta’s complicity in the drug trade that brings heroin to the streets of Massachusetts.

Nobel Peace Prize laureate Aung San Suu Kyi has called on the international community to put greater pressure on Burma’s ruling junta. As leader of the National League for Democracy, which won 82% of the seats in the 1990 Burmese elections that were annulled by the military, she has specifically called for economic sanctions on the junta.

As State Treasurer, you can use your powers to help ensure that the state pension funds divest from companies that do business in Burma. Alternatively, you could help ensure that the funds vote in favor of shareholder resolutions that put pressure on companies that support Burma’s ruling junta. Either option would be an effective and appropriate way to support the Burmese democracy movement.

In recent letters, you have stated that the PRIM Board is clarifying a proxy voting policy addressing such issues as support for democracy and human rights in Burma. You have also stated that you plan to work with Representative Byron Rushing to this end.

Please write and tell me exactly what action by the PRIM Board would you will support as Treasurer to help promote a free Burma.

Sincerely,

Burma

An Issue for Investors

Before Tiananmen Square, there was Burma. In 1988, the Burmese army declared martial law and brutally cracked down on peaceful pro-democracy demonstrators. Troops killed, injured and imprisoned thousands of civilians.

In the 1990 Burmese elections, the National League for Democracy, led by Nobel Peace Prize Laureate Aung San Suu Kyi, won more than 80% of the seats. However, the ruling Burmese military junta effectively annulled the elections and refused to allow the elected representatives to form a government.

Often described as the “Nelson Mandela of Asia,” Aung San Suu Kyi has repeatedly called for economic sanctions as a means to press the military junta to open talks with the democracy movement. She has called on the international community to act stating: “Please use your liberty to help us promote ours.”

Despite being under virtual house arrest for ten years, Aung San Suu Kyi’s example has helped energize people worldwide. The governments of the United States, European Union and Japan have enacted sanctions and limited aid to the junta.

It is at the grassroots level that Aung San Suu Kyi’s call to the international community has ignited a worldwide campaign similar in scope and tactics to the anti-apartheid movement of the 1970′s and 1980′s. Dozens of companies – including major multinationals such as Ericsson, PepsiCo, and Texaco – have withdrawn from Burma amid pressure from shareholder resolutions and boycotts by consumers, universities and local governments.

What We’re Doing About This Issue

Shareholder Pressure
Trillium Asset Management Corporation (“Trillium”) has led the campaign by shareholders to press companies to withdraw from Burma. In August 1993, we convened a strategy meeting of concerned investors and Free Burma activists to organize the filing of shareholder resolutions at companies doing business in Burma. Later that Fall, Trillium joined other shareholders – predominantly religious investors affiliated with the Interfaith Center on Corporate Responsibility – in filing resolutions at Amoco, PepsiCo, Texaco, and Unocal. Of those companies, only one – Unocal – still operates in Burma.

For four years, Trillium submitted resolutions at Atlantic Richfield Company (ARCO) that highlighted the company’s operations in Burma. ARCO withdrew from Burma in August 1998. Weeks later, we filed a new resolution at the oil company Baker Hughes, which in 2000 also withdrew from Burma.

Enacting Selective Purchasing Laws
In the 1980′s, action by U.S. cities and states set the stage for Congress to enact sanctions on South Africa over President Reagan’s veto. We have been active in adapting the tactics of the anti-apartheid campaign for use by the Free Burma movement.

Since 1994, Trillium has organized meetings of the New England Burma Roundtable. The New England Burma Roundtable advocated passage of the Massachusetts Burma Law, modeled on similar state and local selective purchasing laws aimed at companies that did business in South Africa during the anti-apartheid campaign. Signed into law in 1996, the Massachusetts Burma Law effectively barred Massachusetts state agencies from buying goods or services from companies that do business in Burma.

We have also assisted grassroots citizens groups in several countries to help enact similar Burma selective purchasing laws. As of December 1999, most major U.S. cities – including Los Angeles, New York and San Francisco – and several Australian cities enacted similar Burma selective purchasing laws. These laws affected state and local procurement budgets that totaled more than ten times the size of the Burmese economy.

Defending Against the Corporate Counter-Attack
In 1997, the European Union and Japan challenged the Massachusetts Burma Law at the World Trade Organization as a restraint on the trade practices of their companies. In 1998, an organization representing major U.S. multinational companies – the National Foreign Trade Council – sued Massachusetts in U.S. Federal Court claiming that the law was unconstitutional. In 1998 and 1999, the U.S. Federal District and Appeals Court struck down the Massachusetts Burma Law as unconstitutional.

The U.S. Supreme Court reviewed the lower courts’ decision. In June 2000, the Supreme Court upheld the decision striking down the law as unconstitutional. However, the Court simply ruled in narrow terms that existing federal sanctions on Burma pre-empt state and local Burma selective purchasing laws. This narrow ruling provides sufficient scope for cities and states new types of laws pertaining to Burma.

Trillium helped coordinate the legal and political defense of the Massachusetts Burma Law. We worked with citizens and grassroots groups across the country to persuade 78 Members of Congress and 22 state attorneys general to sign on to amicus – or “friend of the court” – briefs in support of the Massachusetts Burma Law.

Enacting New Free Burma Divestment Laws

In the wake of the Supreme Court’s decision, Trillium has worked to enact new state and local Burma laws. Already, Los Angeles, Minneapolis, Portland (OR) and San Francisco have eneacted laws that bar the city’s pension funds from investing in companies that do business in Burma. Similar legislation has also been introduced in the Massachusetts legislature.

For additional information, contact Shelley Alpern