Last week Mark and I were in New York for the February shareholder strategy meetings of the Interfaith Center on Corporate Responsibility (ICCR). While there, we also took part in several shareholder dialogues. I participated in a dialogue with Toyota - focusing on human rights - at the company’s North American headquarters in Manhattan.

Last summer, a scathing report surfaced detailing human rights abuses by Toyota and - mostly - its parts suppliers. The allegations included forced 80 hour work weeks, human trafficking, brutal working conditions and more. MMA and other concerned shareholders sent letters to Toyota asking for an explanation, as well as their plan to address human rights problems. After a slow start in which Toyota refused to acknowledge any human rights issues, the company admitted that they may have a few areas to improve on and agreed to talk with shareholders.

In attendance from Toyota were VP of Toyota North America Steve Sturm, VP of Communications and Investor Relations Steve Curtis and another person from communications. There were about ten shareholder advocates in attendance.

Toyota outlined its human rights policies and those it expects its vendors to follow. Its stated policies are good, but the problem we outlined was the way they are enforced. Currently, all auditing of supplier factories is done by Toyota’s procurement department, which has no expertise in the area. The procurement department is looking to get the lowest price out of suppliers, so if it’s also charged with identifying and correcting human rights abuses (that could lead to higher prices), then the situation is a conflict of interest. We encouraged Toyota to use 3rd party auditors to inspect at least the first few tiers of its suppliers, and build in enforceable human rights requirements for all the company’s suppliers.

Toyota is developing new ways for its policies to be clearer and more enforceable, and we are planning to meet again in September to discuss progress and next steps. MMA has not done much advocacy with international companies to date, in part because of difficulties with complicated foreign stock ownership rules. But this dialogue is very important because of its scale and impact on other companies. Since Toyota is now the largest auto company in the world, it must assume leadership responsibilities in all areas.