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Toyota CEO Apologizes
The recent failures of Toyota in quality control, leading to massive recalls and closed assembly lines, have global implications, and make the point that, in today's world, ignoring intangible assets like risk to reputation carries real costs for business.
Yesterday, when we read the text of the testimony of Toyota President Akio Toyoda before the Committee on Oversight and Government Reform of the U.S. House of Representatives, we were struck first by the contrast in approach taken by a Japanese CEO compared with American CEOs of the great Wall Street financial houses after the recent collapse of credit markets.
Toyota President Toyoda said: "... in the past few months our customers have started to feel uncertain about the safety of Toyota's vehicles, and I take full responsibility for that."
Second, Mr. Akio Toyoda confirmed the value of adhering to a business approach similar to that recommended by the CRT in its Principles for Business. He continued: "First, I want to discuss the philosophy of Toyota's quality control. I, myself, as well as Toyota, am not perfect. At times, we do find defects. But in such situations, we always stop, strive to understand the problem, and make changes to improve further." By making continuous improvement, we aim to continue offering even better products for society. This is the core value we have kept closest to our hearts since the founding of the company."
Here is a commitment at the level of principle by the CEO of a major global company to a standard that resonates with the CRT Principles for Business, a recognition that business has an office to serve society.
Next, Mr. Toyoda affirms the importance of a key intangible moral asset for Toyota. He said: "At Toyota, we believe the key to making quality products is to develop quality people." "Each employee thinks about what he or she should do, continuously making improvements, and by doing so, makes even better cars."
So what went wrong at Toyota?
Here is the answer from Mr. Toyoda: "I would like to point out that Toyota's priority has traditionally been the following: First, safety; second, quality; third, volume. These priorities became confused, and we were not able to stop, think, and make improvements as much as we were able to before, and our basic stance to listen to customers' voices to make better products has weakened somewhat. We pursued growth over the speed at which we were able to develop our people and our organization, and we should be sincerely mindful of that."
In short, he admits that Toyota fell off from alignment with the core vision of the CRT Principles for Business. Short-term focus on revenue from sales diverted attention away from more important strategic requirements.
A common failing of business owners and managers, yes?
Caux Round Table's Global Executive Director Honored in Ban Chiang, Thailand
 On February 9th, 2010, CRT Global Executive Director Steve Young attended the opening of new museum buildings at Ban Chiang, Thailand. HRH Princess MahaChakri Sirindhorn, Crown Princess of Thailand, seen to the right of Steve Young, officiated at the opening. Young received from the Princess her personal Anurak monogram for his work in discovering the bronze age site of Ban Chiang in 1966. Ban Chiang is today a UNESCO World Heritage Site for its importance in Asian pre-history. Young's 1966 field work in Ban Chiang is on display at the museum. Click to view larger photo.
Caux Round Table's Global Executive Director Makes Case for CRT Business Principles in Europe
 The Caux Round Table's Global Executive Director, Steve Young, recently visited several countries in Eastern and Southeastern Europe to discuss our organization and work, specifically our Principles for Business.
The financial crisis has focused many peoples' attention on the need for values and standards of behavior in business decision-making, even in places less hard hit by the crisis. In Belgrade, Steve spoke at a conference of managers associations from Serbia, Croatia, Slovenia and Montenegro held to discuss a new concept called the "Yugo-sphere" which has been suggested as a cultural means of promoting regional cooperation among the peoples of the former Yugoslavia around shared values and behaviors.
While in Zagreb, Steve spoke with the Croatian Managers Association about using the financial crisis as an opportunity to build support for, and commitment to, business ethics.
Perhaps the most significant development to come out of the trip was the translation into Romanian of our book, Moral Capitalism. The book, based on our Principles for Business, argues for a code of ethics that sets consistent and attainable worldwide guidelines for how business can behave responsibly and ethically.
Caux Round Table Elects New Officers
The Global Governing Board of the Caux Round Table on January 20th, 2010, elected Dr. Noel Purcell of Sydney, Australia, as the next Chair of the Caux Round Table for a 2 year term.
Prior to retiring from executive life, Dr. Purcell was Westpac Banking Corporation’s Group General Manager, Stakeholder Communications, with responsibility for all media, government, investor and community relations, as well as the Westpac Group corporate reputation and internal communication. In this role, Dr. Purcell led Westpac’s corporate responsibility initiatives, which have resulted in Westpac being widely recognised as a global leader in sustainable business practices. His leadership in CSR was globally recognized when he was included in Ethical Corporation’s Best of the Best as one of the top 15 ethical leaders globally in 2007.
Noel joined Westpac in February 1986, and has served in senior executive institutional banking, marketing, communications, retail financial services, and group planning roles, including as General Manager for Japan and North Asia from 1992 to 1996. Prior to Westpac, Noel served at the senior executive level within the Federal Public Service, including the Department of Prime Minister and Cabinet, the Office of National Assessments, and the Australian Bureau of Statistics.
Noel gained his Ph.D. from the University of Michigan in 1979. Earlier tertiary qualifications included an M.Sc. from the University of Michigan, a B.Ec. from the Australian National University, and a B.Sc. (Hons.) from the University of New England. Noel also completed the Advanced Management Program at Harvard University in 1992.
Immediate past Chair, Lord Daniel Brennan of London, England, will become Chair Emeritus of the Caux Round Table.
Mr. Douglas Hepper, CEO of Vision Ease, was elected Vice-Chair for the Americas; Ms Claire Chiang, Senior Vice President of Banyan Tree Holdings, Singapore, was elected Vice-Chair for Asia; and Mr. Frank Straub, Chairman of BLANCO in Germany, was elected Vice-Chair for Europe.
Members of the Global Governing Board for 2010 are: Dr. Noel Purcell, Doug Hepper, Claire Chiang, Frank Straub, Hironori Yano, Simon Sproule, Karel Noordzy, and Steve Young.
Wise Recommendations for Better Corporate Governance
The Committee for Economic Development in Washington, DC, has released a set of recommendations for better corporate governance proposed by Ben Heineman, former Senior Vice President-General Counsel of GE, and now a scholar in residence at the Harvard Law School. This statement is a high cut above recent recommendations coming in the wake of the 2008 collapse of credit markets.
Many talk about the need for American business to regain public trust, but this set of recommendations is an actual plan. It can work. It’s based on values – stewardship and responsibility – and knows how the right values can be grown inside a corporation.
The CED has given us an action agenda to improve American capitalism. The Caux Round Table fully supports the proposal.
To read the recommendations, please click here.
Proceedings of the Caux Round Table's First Southeast Asia Dialogue.
The proceedings of our first Southeast Asia Dialogue are now complete. The Round Table was held in Bangkok last August. We are most grateful to Foreign Minister Kasit Piromya for hosting the round table at the Ministry, Khun Nick Pisalyaput, Director of CRT Thailand, for his thorough and thoughtful arrangements making the Round Table a success, to the Tunku Abdul Aziz, our CRT Coordinator for Southeast Asia, for chairing the meeting, and to Professor Ian Fenwick of the SASIN Graduate School for drafting the proceedings.
Attached to the proceedings are some very instructive documents which are most difficult to locate: a discussion of the Rajadhamma, or 10 ethical principles for leadership derived from Theravada Buddhist ethics, and presentations of the Sufficiency Economy concept. This concept, suggested in Thailand by His Majesty, is an approach to CSR based on Theravada approaches to living a sustainable and balanced life within the many faceted karmic cycles of good and bad actions.
The Sufficiency Economy approach deserves special attention in our mind because so much of the thinking around CSR has grown out of Euro-American moral and intellectual constructs and traditions. A set of Theravada recommendations deserves consideration as a contribution to the emergence of a truly global approach to CSR.
The Round Table also presented to Thai opinion leaders prior CRT work on understanding Qur'anic guidance for good governance. Leading Muslim theologians from South Thailand participated in a path-opening discussion of really quite similar Theravada and Qur'anic approaches to responsibility and justice. This dialogue between Theravada and Qur'anic ethical approaches was of particular constructive relevance given the continuing unrest and violence in the Muslim populated provinces in southernmost Thailand.
To view the proceedings, please click here (160 pages, 11MBytes).
Caux Round Table 2009 Global Dialogue Proceedings
We are very pleased to announce that the proceedings of our 2009 Global Dialogue are now complete. We are very grateful for the thoroughness and care which Dr. Lester Myers brought to his task as our Rapporteur. He not only organized the discussions, but provided reference links to other books and sources of importance to most helpfully connect our comments and concerns to the wider world of reporting and analysis. It is these references that give this set of proceedings important "shelf life."
To read the proceedings, please click here.
Lord Skidelsky's Important Remarks at the July Caux Round Table 2009 Global Dialogue.
Our keynote speaker at the July Global Dialogue at Mountain House in Caux, Switzerland, was Lord Robert Skidelsky, author of a three volume biography of John Maynard Keynes, and just recently, a well-received new book entitled Keynes: Return of the Master.
Of Lord Skidelsky's new book, Dwight Garner for the New York Times wrote: "Mr. Skidelsky surveys the vast body of Keynes’s work. But he boils the thinking down to a few essential points. Central among them is that market economies are fundamentally uncertain; large shocks like the recent meltdown are not anomalies but normal if unpredictable events. Government should intervene in a crisis - as the Obama administration has since the fall of Lehman Brothers last year - supplying a judicious but firm hand on the tiller.
Mr. Skidelsky is righteous in his thunder about how Keynes’s ideas have been spurned in recent decades. He scolds the free-market ethos of the Reagan and Thatcher eras as well as the thinking of anti-Keynesian New Classical economists. He does not entirely blame the usual suspects (banks, hedge funds, credit-rating agencies, the Fed) for the current crisis. He indicts laissez-faire philosophy.
“The root cause of the present crisis lies in the intellectual failure of economics,” Mr. Skidelsky writes. “It was the wrong ideas of economists which legitimized the deregulation of finance, and it was the deregulation of finance which led to the credit explosion which collapsed into the credit crunch. It is hard to convey the harm done by the recent dominant school of New Classical economics. Rarely in history can such powerful minds have devoted themselves to such strange ideas.”
To read Lord Skidelsky's remarks, please click here.
The Ethics of Food
We at the Caux Round Table are continually surprised how often and in how many places our Principles for Business turn up. Fundamental ethics seem to be needed everywhere people are in power or make decisions. The field is not a narrow silo but a broad plain or vast ocean, spreading its concern and its guidance far and wide. Recently, we organized a small conference in Minnesota to look at the intersection of ethics and food - the production and distribution of food and the impact of the consumption of food. So many issues turned up but so few are already under the microscope of business ethics advocates and CSR professionals. We very recently submitted commentary with our thoughts on this issue to the Minneapolis Star Tribune. The more we thought about it, the ethical issues around food and its impact on our wellbeing and the wellbeing of our planet are of first importance and global in scope. To read the article, please click here.
Caux Round Table Guidelines for Executive Compensation
Aligning executive compensation with long-term value creation and with responsible concern for stakeholders is an essential requirement of a more moral capitalism. The Caux Round Table advocates a set of guidelines for Boards of Directors to follow in setting compensation for senior company officers. To review these guidelines, please click here.
Caux Round Table Fellows Call for New Foundation for Professional Education
The CRT hosted its second annual Academic Retreat for CRT Fellows and other scholars earlier this year in Caux, Switzerland. The concern that emerged in retreat discussions was over the intellectual limitations that seem to have overcome professional education in modern society and turned potential stewards of virtue and values into mere technocrats who sell their skills for whatever they can get. Technocracy, it seems, is not about just ends, but means only and the application of formal logics, data sets, theoretically constrained relationships, and assumption-based algorithms.
Several of our CRT colleagues and Fellows have called for the grounding of professional education in ethical and intellectual fundamentals. Fortunately, as our colleagues point out, humanity has a rich tradition of wisdom literatures on which to draw for such education. Click here to read summary statement.
Global Asset Recovery Initiative to Target Proceeds of Corruption
Caux Round Table Chair Lord Daniel Brennan, QC, proposed in 2006 the flight of wealth from poor and developing countries, money usually obtained immorally or illicitly or sent abroad illegally (so-called "dirty money") retards not only the economic growth of such countries but also their development of more just and accountable political regimes respectful of human rights and democratic norms.
Under CRT leadership, a Steering Committee was formed last year to study and propose the formation of a private-sector organization to seek out, recover and repatriate the proceeds of grand corruption which are "stashed" in wealthy countries, often with the use of secrecy or tax-haven jurisdictions. Tentatively called the Global Asset Recovery Initiative, the entity aims at empowering citizens of developing nations to institute civil asset forfeiture proceedings and other legal measures in order to return stolen wealth to their countries.
In a recent interview, Caux Round Table Global Executive Director Steve Young discussed this new project with Asset Forfeiture Watch. Read full article here ( PDF 124 KB).
2009 Social Capital Achievement Country Rankings
The Caux Round Table recognizes that economic development does not occur independently from social, cultural and political institutions. Wealth creation is not an isolated, autonomous, self-referential process within communities; it is a dependent variable, subordinate to the dictates of prior conditions. Markets are organic phenomena; they grow strong and vibrant only in facilitating environments. The Caux Round Table recognizes this dependence of wealth creation upon surrounding conditions as Kyosei, or dependent co-arising. Read the full 2009 Report here.
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The Social Ecosystem of CSR: Mediating Among Businesses, Government and Civil Society (Stephen B. Young, Global Executive Director, Caux Round Table). Corporate Social Responsibility (CSR) plays a vital, yet unheralded, role in mediation among the business sector, which creates the wealth of nations, government, which provides for public goods, and civil society, which fosters and sustains social capital. Thus, CSR theory and practice has become necessary for the smooth functioning of any sophisticated, post-modern social ecosystem. Read more ...
Moderation as a Fundamental Principle of Qur'anic Guidance (Dr. Mohammad Hashim Kamali, Founding Chairman & CEO, International Institute of Advanced Islamic Studies, Malaysia). Dr. Mohammad Hashim Kamali, Founding Chairman & CEO of the International Institute of Advanced Islamic Studies (IAIS) in Malaysia, has written a very important commentary on the use of moderation seeking the "middle-most" course as a fundamental principle of Qur'anic guidance in the seeking of justice. To read Dr. Kamali's article titled 'The Middle Grounds of Islamic Civilisation' (IAIS Journal of Civilization Studies, Vol. 1, No. 1 October 2008), please click here.
Adam Smith Reconciled (Stephen B. Young, Global Executive Director, Caux Round Table). One of the great issues in consideration of capitalism are the comments by Adam Smith that rest the system on individual self-interest. Smith has often been taken to task for this ego-centric approach to economic power and opportunity. But is this accusation fair? Read more . . .
Psychoanalysis - A Challenge to Business Ethics (Stephen B. Young, Global Executive Director, Caux Round Table). Advocacy of ethics in business and responsible business behavior that takes a long-term view of pricing and other immediate market circumstances presumes the possibility of having good individual character. A concern for consequences to others, along with acts of judgment and self-restraint, reflect a commitment to social values and communal needs. Persons with a low tolerance for the moral sense will often fall short in having such concern and so acting with thoughtful regard for the best interests of others. Ethics, therefore, presumes some degree of successful socialization in conventional norms offering a vision of the common good. Ethics rejects living by the proverbial law of the jungle where life is “red in tooth and claw”. Read more . . .
New Vatican Encyclical Aligned with the Caux Round Table's Vision and Mission (Stephen B. Young, Global Executive Director, Caux Round Table). Pope Benedict XVI issued this past July an encyclical on the teachings of the Roman Catholic Church on ethical truth as it applies to business, commerce, finance, and economic development - all as steps towards more just societies within our global human family. We at the Caux Round Table were delighted and so very pleased to read where, again and again, the Holy Father's Encyclical aligned with, endorsed, provided grounds for, or promoted some aspect of our Principles for Business or our various statements and initiatives. Since we believe that sound character and good conduct in business is very hard to divorce from our sources of religious faith and deeply personal understandings of life, it is an honor to read that a profound ethical tradition, developed by caring and thoughtful people over many years, provides reassurance that we are not on the wrong track. We've prepared a 5 page analysis of just how closely the Pope's Encyclical, Caritas in Veritate, aligns with our own perspectives. Click here to read the analysis.
Re-issuing a Social License to the Financial Services Industry (Stephen B. Young, Global Executive Director, Caux Round Table). A trite justification for business ethics and corporate social responsibility has been the assertion that business needs a “social license” from the community in order to prosper. The cost of such a license, it is said, is good behavior towards customers, employees and the community. Without such a license, it is also said, business will meet with obstacles and difficulties. Read more . . .
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