CSR Critical Evaluation of Toyota: Sustainability and Financial Performance

This report provides a critical evaluation of the sustainability and corporate social responsibility (CSR) practices of Toyota, a Japanese automotive manufacturer. It discusses the company's efforts in environmental conservation, social impact, and financial performance. The report also includes an analysis of Toyota's financial ratios. Overall, the report highlights the importance of CSR and sustainability for business success.

CSR critical evaluation
of an organization

INTRODUCTION
Corporate social responsibility is type of the international private business that aim is to
contribute towards societal objectives of activist and charitable nature. It is related to how the
firms manage business process and positively impact on society. This covers sustainability and
social impact which should be regarding business (Elayan and et. al., 2016). This present report
is based on Toyota company. It is Japanese automotive manufacturer and its headquartered in
Japan. It produces more than 10 million vehicles each year. Present report is going to discuss
about organization sustainability and Corporate social responsibility. The financial performance
of Toyota will be discuss here.
MAIN BODY
Critical evaluation of sustainability of company and Corporate social responsibility
Organisational sustainability is principle of increasing environmental, economic and
societal system within which business operates. The main focus of sustainability is on meeting
requirements of present without compromising ability of the future generations. Toyota is
multinational automotive company and it conduct its business operations at large scale. On the
other hand, sustainability reporting of company helps in manage the environmental and social
affects and make improvement in operating efficiency. The vision of Toyota is to be number one
in world and makes consumers happy through selling best quality products. The sustainability
report mainly prepare through company to neglect social and environmental risks which might
have the material financial impact in business while providing the better environmental and
social value to development virtuous circle (Garbelli, 2016). In relation to business sustainability,
Toyota considers the social and environment problems of paramount importance to make
improvement of future society and increase governance to develop positive relationship with
stakeholders. This company is working on the initiatives which help in contribute towards
sustainable development of the society through conducting the business activities in relation
with the global society.
Corporate social responsibility is evolving business practice that incorporate the
sustainable development in business model of an organisation. This has positive impact on
environmental, social and economic impacts. It is practice of integrating environmental and
social objectives in to operations of business. The CSR activities are necessary in assuring that
firm can attain customer loyalty and credibility (Isaksson and Mitra, 2019). In relation to this,
global experience shows that the regulatory frameworks are required to assure that activities of
business are responsible socially. In this present time, CSR is used through stakeholders as
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way of promoting the culture of respect for the standards and legal compliance. The main
objective of CSR is to control cost, improve brand of firm and also facilitate the financial success
for long term. The Corporate Social Responsibility is practical and thoughtful way to provide
back to the society. When firms are conscious of environmental and social impact of world that
can be benefit the society through give back and also helping to search effective solutions
related to every day problems (Kaskeen, 2017). In addition to Toyota, Corporate social
responsibility is implementing principles at the Toyota company and its focus on relationship
with the stakeholders. The CSR policy of this company is contribute towards the sustainable
development. The Toyota company is engaged in the diverse activities of business and
contribute towards business sustainability. It has poured more effort in order to protecting
environment. In regards to sustainable development, company is taking the initiatives to create
process of production by using the greener way. This can not be avoid that Toyota company is
polluting the environment at the time of process of manufacturing and also producing car
batteries and vehicles. This firm is manufacturing vehicles according to three R's concepts like
recycle, reduce and reuse. It has been making the vehicles with using recyclable materials and
the cars are build through plastics which are complex to be recycled. In relation to this, Toyota
company has developed the Toyota Super Olefin Polymer. It is recyclable plastics for making
the bumpers of car and some other parts. Toyota has encouraged deals and consumers
indirectly to included in the recycling program ( Visser, 2016).
In relation to contribute towards society, Toyota organisation has includes the different
activities of environment. One is shown through Toyota’s support of Planet Ark’s National Tree
Day. Company has incontestable its care and concern for environment through the joining
event. On the other hand, Toyota has been at forefront in assuring that this produces the
environment friendly vehicles. With the help of using this approach, it managed to minimize gas
emissions to level that reach can deal with assure sustainability of environment and human
activities (Lee, Graves and Waddock, 2018).
Toyota organisation has the strategies related to corporate social responsibility to
targeting the environmental objectives. Major interest is related to environment as stakeholders
consists environmental conservation and sustainability. Firm identify these interests by Toyota
Environmental Activities Grant Program. With the help of this, Toyota can donated funds and
automobiles for conservation of environment. For an example, In year 2008, Toyota company
donated more than $1 million and also its hybrid cars in order to support Everglades National
Park. Toyota TogetherGreen program supports the environmental initiatives initiatives and
advocated by United States. The CSR programs of Toyota fulfil interest related to natural
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environment as stakeholders. On the other hand, Toyota company has initiated number of the
road safety education programs that consists issuing around 134 million traffic safety copies and
1.5 million copies related to the traffic safety picture card (Pinto, 2018). Company organised the
education programs and CSR workshops for suppliers in Japan.
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Financial performance of Toyota
Financial performance is a degree to which financial objectives has been attained. It is
procedure of measuring outcomes of operations and policies of company in monetary context. It
is subjective measure of how better company can use the assets from primary business mode
and also generate revenues. It is related to measure overall performance of company over
given period of time (Saidi, 2018).
In this, financial service segment of Toyota company provides financing to the dealers
and consumers for buy Toyota vehicles. Segment gives the leading and retail instalment credit
by purchase of the instalment and also lease contracts which originated through dealers of
Toyota. Segment reported enhancement in revenue of 7% from US$15,316.8m in FY2015 to
US$16,395.3m in FY2016. Increase in the expenses related with residual value losses and
credit in the sales finance subsidiaries that impacted profitability of segment (Tedjobuwono,
2017). To analyse Toyota financial performance, there are Financial Ratios for Analysis mention
below:
Current ratio
The current ratio demonstrates the short-term recapitalization position of a company
(Camin and et. al., 2016). The most suitable is usually the present ratio 2 or greater than 2. This
is the most substantial proportion across a fixed period of time of current assets and short-term
obligations or liabilities. In 2018 the ratio was 1.02 which increase in the present year that
describe that company have better position of liquidity. It also define that Toyota in present time
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Illustration 1: Toyota Financial Ratios for Analysis 2018-2019

is more capable of paying off its current liabilities and elimination any possible issue of
increasing debts.
Net Profit Margin Ratio
The calculation demonstrates how well the company follows the net income requirements
(Erasmus and et. al., 2016). The overall productivity condition of a company throughout the
given financial cycle is clearly stated. In 2018 net profit margin was 8.5 as Toyota is able to
maintain higher profit and control its additional expenses. But in present time the proportion of
Net profit is decreasing as company expand huge amount on increasing sales but results are not
favourable.
Debt to equity ratio
This ratio simply clarify total holding of equity by a company to write off its total debt at
an specific time period to maintain profitable business (Trivedi and et. al., 2016). In the context
of respective company the ratio of debt to equity in year 2018 was 0.9958 which increasing by
favourable percent in present year. The main reason reason for higher figure is because of more
reserve and funds that can be issued in order to compensate total debt of Toyota.
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CONCLUSION
It has been concluded from above mention report that Corporate Social Responsibility
and business sustainability both are profitable for business. In this, company focus is on making
the business sustainable by performing the Corporate Social Responsibility towards all the
stakeholders. Financial performance of Toyota has been discussed in this report by consider the
ration analysis.
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REFERENCES
Books & Journals
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Sustainability Policy. 2020. [Online]. Available through:
<https://global.toyota/en/sustainability/csr/>.
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