Interview: Naveen Soni, CSR Head, Toyota, Aug 2016

“R is for Responsibility”

In this interview, Naveen Soni, VP of External Affairs, CSR & PR, Toyota Kirloskar Motors Private Limited, speaks about why the CSR programme in India goes beyond business into social domains unconnected with Toyota’s core business. We also explore the values underlying the company’s approach, its work ethic, its way of working with stakeholders and the governance structure it operates for CSR.

Q. Toyota (TKM) seems to have a range of programmes under its CSR portfolio, including education, sanitation, etc. How do you justify your CSR portfolio to your business heads?

A. In Toyota, CSR is a responsibility, a voluntary activity, not driven by laws. TKM set up a manufacturing plant in India back on 1997-98, and the CSR programme began right at that time. It was not an after-thought, nor did it begin after the government policy was enacted. 

We may say in some sense that manufacturing is fundamentally anti-thetical to ‘nature’ -- because it involves removal of natural objects and creation of man-made objects. Toyota, being a manufacturing company, addresses this fundamental issue in its core value of Monozukuri, which refers to sustainable growth, in harmony with nature. All our activities are to be conducted with balance and harmony. This is a fundamental premise.

Therefore we seek growth with environmental sustainability and social harmony. CSR is a platform to share the wealth created. Our projects are not linked to the business cycle.

Q. Can you help us understand how the global sustainability focus of Toyota translates into your local sustainability and CSR programme?

A. CSR at TKM is two-pronged. We have a global sustainability focus, which we embed in our local CSR. Specifically, our global focus on Traffic Safety as a theme that is close and dear to our business is also rolled out locally. In addition, we undertake developmental work benefiting the local community, some of which may be aligned with the local government mandate. However, we seek to make all our programmes sustainable.

In order to manage a well-defined programme, especially one that is run with third parties, it is essential to have clear thematic focus areas.  Our focus areas are: 1. Traffic Safety; 2. Education; 3. Environment; 4. Health and Hygiene. These are thematic filters, whereby we can select activities out of the many that are proposed by stakeholders. Such a focus is also mandated to us by our internal “Kyoto Protocol”, which gives the guidance that scope of our social contributions shall be confined rather than spread out.

Q. It appears then that you have two types of CSR programmes – one linked to your business domain and one that is un-related.

A. The Traffic Safety programme is indeed linked to our business domain, but it is not driven by our business needs. Under this programme, we reach out to school-children and educate them on road safety.

Our manufacturing plant is located at Bidadi, 30 km from Bangalore. Our road safety activities are focused mainly in the city of Bangalore. In the vicinity of the Bidadi plant, we undertake all the community development programmes. We work with 4 gram panchayats, across 20-25 villages, where we work on education, health & hygiene and environment.

The Bidadi Industry Association, of which we are an active member, is also involved in the rollout of our programmes.

Q. How do you leverage the industry association for CSR? Does the association have the requisite skills to support a CSR programme?

A. The role of the industry association in regard to CSR is to make the local interventions more effective. For example, we work with BIA to identify the villages in which to focus. BIA makes sure that the industries in the region distribute their efforts and cover all the villages equitably.

We operate through local NGOs as well, and the industry association can help identify such organizations and monitor them. TKM execs and others build capacity in BIA for these purposes. The PDCA (Plan-Do-Check-Act) model of continuous improvement in business is also applied to the CSR process.

Q. Do you also reach target customer segments with the Traffic Safety programme? How does the programme work and do you measure results?

A. The Traffic Safety Education Programme (TSEP) is a 3-layer model which includes, Coaching, Evaluation and Action-Learning, and it entirely targets middle-school learners. Of course, we indirectly impact their parents and other adult stakeholders, but it is not the focus.

We try to instil the idea of rules, need for rules, etc. through the programme. The practice component has been recently added. We work with Traffic Wardens and local authorities to roll out the practice component of the programme. The programme covers several metros.

In terms of impacts, even such a simple programme comes with challenges. Children receive contradictory signals from parents, society and the general environment, which the trainers have to deal with. We can easily measure the input- and output-side measures, in terms of training delivered. But in order to create safe roads, we are going beyond these measures, into societal impacts achieved. This is why we are now working with more stakeholders in the current phase of the programme.

Q. Is there a difference between the Asian and Western companies in terms of their approach towards CSR? Most Western companies would look for a direct connect between the business and the CSR programme, but you have no such requirement.

A. Our approach is to do good for the sake of doing good. Public perception in India demands the absence of a link between the business and CSR. If you make a link to the business objective, where does the emotional connect come from? For example, the programme of some FMCG companies, of giving share of the price of each product purchased, does not give the same feel!

Q. How do you allocate funds, in that case? Where do the business controls come from?

A. We make a list of the proposals coming from the target communities, i.e. from the gram panchayats. Some of these are ongoing activities which need to be carried forward or terminated. Some are new proposals, which need to be tested for a fit with our thematic filers and our ideas about sustainability. Where such a new activity is adopted, we provide adequate justification from the standpoint of working with the communities and fulfilling our responsibility.

Checking with the 2% profit share compliance is something we do afterwards. Even in our loss-making years, we have continued our CSR programme.

R is for Responsibility. It cannot be mandated.

Q. That is very well put, indeed. Is this something that comes from the Japanese values that Toyota is known to exemplify?

A. Toyota is an ethos-based company. I would say that it is not so much a company, as much as a culture, a way of being.

There are 10 values that are at the foundation of the Toyota culture and these are not compromised. Anywhere in the world, there is a uniformly distinct Toyota.

Some of the well-known ones are the spirit of Kaizen – which is about how individuals can pursue evolution via innovation; the Toyota Way; and PDCA.

Many companies have adopted the Toyota Production System (TPS) model, but there is really no meaning in adopting the model without the underlying values, which are a commitment to continuous improvement and respect for people.

Q. What about governance, the topic of greatest interest to the readers of The Directorial? How is corporate governance exercised in the domain of CSR?

A. We have a CSR Committee of Directors, which takes decisions. This is a de-risking and strengthening strategy. The Committee members have no direct executive role with regard to CSR. Proposals go up to the committee and are evaluated and thereafter modified and approved or rejected.

Independent Directors or external opinions may be sometimes sought, but the process of decision-making is driven internally by the Toyota value system. It is challenging to bring in meaningful external inputs, because outsiders may not know or be able to internalise the Toyota way of doing things and reflect them in their suggestions.

The India operations are a part of the top 10 global affiliates of Toyota. Knowledge-sharing with regional headquarters in Singapore, at the best-practices sessions, happens on a regular basis to ensure we are continuously learning and growing.

In the Health & Hygiene vertical, the water purifier and sanitation programme for girl-child, the sustainability model which ensures that infrastructure is maintained and schools adopt the systems – is a best practice from India. Incidentally, TKM has received awards from CII and IOD for CSR, Sustainability and Supply Chain.

Q. What sort of a CSR team do you have at TKM and what sort of skills does the team need to have, in order to work with these grass-roots level programmes and diverse stakeholders?

A. Our current team size is 6, but we aim to leverage the TKM team of 6000 for this cause!

All our staff wish to engage with the CSR programme and we are making plans to fulfil this aspiration.

The key skills in my view are: 1. A sense of ownership for the programme; and 2. A sense of giving to society. CSR is not a check-box activity. A degree in social work is helpful, although not mandatory. We have separate teams for CSR, PR and media, but there are overlapping stakeholders and areas, therefore our team has to be able to communicate well across stakeholders.

Q. How would you sum up the work culture at Toyota?

A. “Taking everybody together” is the key to decision-making in Toyota. All the decisions are made by consensus. One of the key requirements for successfully working in TKM is the ability to do team-work. It is team work rather than individual brilliance, and building consensus rather than having flashes of genius that is appreciated here. Thus, more efforts have to be put into planning and this may take time.

5500 parts go into each car we make. We are therefore not afraid to own up, and deal with with any customer complaint and we have done that. Yes, there is a hierarchy, a respect for seniority – all this protects against failure.

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