The Bhopal Gas Tragedy; An Ethical Perspective PDF

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An ethical perspective on one of the most notorious industrial disasters in the world, known as the Bhopal Gas Tragedy (India)....

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NUST Business School MGT-403 Business Ethics & CSR Final Project Report

Submitted to: Ms. Tauheed Sohail

Submitted by: Faizan Hayat Khan Mohammad Mustafa Hasan Rameen Asghar Sana Saud Syed Hayiam Muhammad

BBA 2K16 A Date: 11th May 2020

Statement of Objective In pursuance of this project, the group aims to analyze the notorious Bhopal Gas Tragedy and explore its long-term repercussions under the purviews of law and general business ethics, for India as well as internationally. Further, it is intended to incorporate perspectives of the different stakeholders involved and generally understand the issue in light of the ethical theories discussed in class. Lastly, recommendations will be given regarding what similar businesses can do to avoid such issues in the future. Company Introduction Union Carbide India Limited (UCIL) was a diversified manufacturing company established in India in 1934 by virtue of foreign investment (from the United States). It was a public listed company with its shares publicly traded on the Calcutta Stock Exchange. The majority ownership resided with the US-based parent company i.e. Union Carbide Corporation (UCC) and the rest of the shares belonged to Indian investors including the Government of India and government-controlled banks. UCIL operated 14 plants in five divisions and employed 9,000 people; their manufacturing portfolio consisted of chemical and related industry products, such as pesticides, welding equipment, plastics, batteries, and marine products. The pesticide plant in Bhopal was built in the 1970s and a production facility was subsequently added which took eight years to complete. This plant was primarily aimed to support the agricultural sector of India. Analysis of the Issue Brief Description of the Incident The Bhopal Gas Tragedy was a MIC (methyl isocyanate) gas leak incident on December 2 nd, 1984 at a pesticide plant of Union Carbide India Limited (UCIL) in Bhopal, Madhya Pradesh, India. The plant was situated adjacent to hutments on the southern side, populated by impoverished squatters. Although the city administrator suggested shifting the unit outside the city, the government paid no heed and granted

UCIL the license to manufacture pesticides in the existing premises. On the night of December 2 nd, MIC leaked from the plant in substantial quantities, and the situation intensified when the prevailing winds blew the toxic gas not only into the overpopulated hutments but also into other more densely occupied areas of the city, including the railway station some two kilometers away. The massive escape of the gas into the atmosphere resulted in a lethal accident that shook the city of Bhopal claiming the lives of thousands. Due to the death toll, combined with over 500,000 temporary and permanently disabling injuries, this incident is regarded as the world’s worst industrial disaster. In addition, the environment was heavily polluted, livestock was killed, crops were damaged, and business operations were interrupted. The US-based parent company intervened with economic and medical aid for the victims, and a number of legal actions proceeded in India which finally resulted in the Bhopal Gas Leak Disaster Act passed in 1985 (Broughton, 2005). Causes and Responsible Stakeholders The various causes of the accident, along with the part played by each stakeholder can be explained through the 3 E’s: Engineering, Enforcement, and Environmentalism. The details can be found in the paragraphs below. An aggressive investigation into the issue revealed the major engineering cause of the leak; a chemical reaction resulted from the direct entry of a large amount of water into the MIC tank 610, which forced open the pressure release valve causing the gas to leak. Ideally, the process safety systems are designed in such a way that water entry is impossible unless it is deliberately switched and water flow is allowed forcefully. The outcome can be attributed to two factors; the act was undeniably sabotaged by an employee with appropriate skills and considerable knowledge of the plant and its operations, and such a high-magnitude chemical reaction was definitely not taken into account when the safety systems were designed. The government of India is largely to be blamed for the fact that the actual people responsible for the incident are still unknown because it decided not to pursue an investigation into the charge of employee sabotage. According to Browning (1993), it further prevented any access to the victims and records, which reflects an attitude of indifference towards the victims’ plight.

The lack of monitoring and proper enforcement of safety laws is perhaps the biggest cause of the tragedy. First and foremost, the granting of a license by the Ministry of Industry to manufacture MIC in a central location is questioned (Reinhold, 1985). Setting up a plant at that location meant easy access to the transport infrastructure, but it also meant putting the lives of thousands of people living nearby at stake. Next, the Department of Labor only assigned two inspectors for monitoring the Bhopal plant. Although they did visit the plant following internal leaks and some casualties, they only recommended minor remedial recommendations to the company, and they had such little knowledge of chemical hazards that the severity of the issue was not comprehended to its core. UCIL’s weak emphasis on worker training, as well as negligence over safety precautions is also eminent. There was a lack of safety equipment such as helmets and masks, and the workers were not properly trained in hazards, safety protocols, and evacuation procedures, yet the plant was being operated. When the leak occurred, three safety devices installed at the plant did not work, but fortunately, the on-duty employees soon became aware of the situation and evacuated the factory. The real victims were the surrounding community members who were not timely informed through an effective emergency response issued by the company. Even before the incident happened, it was the responsibility of the management to make the public aware of the nature of the plant, and failure to do so serves as a classic example of immoral management displayed by UCIL. Absence of corporate environmentalism was also exhibited by the company, and equally responsible is the state Pollution Control Board that granted the “Environmental Clearance Certificate” to the factory a few weeks before the incident happened. They only put forward slight modifications in the plant’s emission controls, which were dismissed by UCIL (Eckerman, 2005). On similar grounds, the Madhya Pradesh Air and Water Control Board did not use any instrument to measure the air pollution and hence failed to comply with the air pollution law passed by the central government. It can also be inferred that the plant was built in India by UCC to avoid environmental regulations in the US, and economic exploitation of the market was given preference over

environmental protection in India, which proves “double standard operations” of multinational corporations in developing countries. Analysis through the lens of CSR The incident is a prime example of the company’s general apathy towards social responsibility in terms of the employees, the general public, and the environment. In fact, the government’s apparent indifference from day one and efforts to submerge the issue was primarily to avoid discussion on international forums regarding India’s inability to regulate the industry. The sabotage was likely committed by a disgruntled employee in response to an absence of safety culture and poor enforcement of laws, as well as a lack of a whistleblowing policy to give voice to the unethical practices. The parent company’s responsibility is also questioned; the culpability was entirely placed on UCIL, and following the disaster, the operation was discontinued at the Bhopal plant and the industrial site was not even cleaned. An incident of such a magnitude, however, could not be hidden from the world especially when it led to extreme health problems, and this, in turn, had a huge national and international impact discussed in the next section. Wider Implications The extent of the Bhopal disaster meant that the event had far-reaching ramifications, both on the national and international levels, and a number of key lessons were learned. First and foremost, widespread industrial expansion may be beneficial to the economy, but must be regulated, controlled, and be brought about in a planned fashion. Haphazard and unplanned industrial expansion endangers nearby communities as well as the environment. The disaster also brought into light how large multinational companies expanding in third or second world countries do not abide by international standards and regulations which, as the Bhopal gas tragedy showed, can cause widespread damage and death. National As a result, a number of changes came about in the national sphere in India. Most immediate was the passing of the Bhopal Gas Leak Disaster Act (1985) which conferred powers to the central government for being the sole representative of the victims in legal

proceedings both inside and outside India. Mediated by the Indian Supreme Court, a settlement of $470 million was reached whereby UCC accepted moral responsibility and paid the amount to be disbursed to the claimants (Broughton, 2005). The public infrastructure of the city also suffered; the groundwater became contaminated and the tap water supply was only available for a few hours a day. According to Broughton (2005), over time a greater emphasis was placed on health and safety regulations by companies in the chemical manufacturing business such as ICI and DuPont. ICI, a British company that manufactures chemicals, now utilizes 30 to 40 percent of its capital expenditure on environment-related projects, a change that was brought about especially after the events of 1984. DuPont, a US chemical giant wanted to set up plants in a number of different areas such as Goa and Chennai in India. However, increased protests by locals and demands for health and safety regulations meant that DuPont could not set up a plant unless it guaranteed safety for locals. This meant the company ultimately closed down business in those areas citing “financial concerns”. Increased awareness on the part of locals also meant that companies could not get away with unethical practices that were harming the environment or local community. Locals identified any such practices and started to report them, such as when Unilever was caught red-handed dumping toxic waste, a significant positive development. Following the Bhopal tragedy, a greater emphasis was also placed on protecting the environment in India. The country passed the environment protection act in 1986 and created the Ministry of Environment and Forests. The role of this ministry was to ensure that the environment is an important consideration whilst developing strategies for economic growth; however, despite this, industrial expansion took precedence over environmental concerns. It can well be said that Corporate Environmental Responsibility (CER) is most pertinent to chemical industries since their unique environmental hazards pose significant risk to the social, economic, and physical wellbeing of surrounding communities.

This callousness only breeds the inevitability of further disaster; recently on 7th May 2020, the LG Polymers plant in Andhra Pradesh was the source of a deadly leak of several tons of Styrene resulting in multiple casualties and hundreds hospitalized. To this day, the effects of the Bhopal gas leak are still manifest amongst the generation that was born after the tragedy in terms of disabilities as well as chronic and debilitating ailments for which treatment is largely ineffective. International Following the incident, there was a lot of hue and cry against the US parent company, Union Carbide Corporation. The government of India pursued litigation against UCC on US soil; however, it was of no avail. In India, there was considerable hatred and animosity being bred against the Chairman and CEO of UCC, Warren Anderson. When Anderson arrived in India to inspect the damage, he was arrested but later released in exchange for a $2000 bond and an assurance to return. However, Anderson did not return and both the U.S government and UCC claimed to have no knowledge of his whereabouts. Greenpeace actively protested against Union Carbide Corporation and later the Dow Chemical Company which acquired UCC. Amnesty International also took notice and conducted a comprehensive investigation into the different stakeholders including Government of India, UCC, and the victims. It detailed its findings in a 78-page report, in which a prefatory framework was suggested, interweaving human rights law, workplace safety, corporate responsibility, and UN norms (Amnesty International, 2004). Union Carbide was perceived as a leader in chemical industry safety in the United States; however, following the unfortunate event in Bhopal, their operational practices were called into question, and subsequent investigations uncovered violations of the Occupational Safety and Health Administration (OSHA) standards. UCC was therefore levied with its largest safety fine in the U.S of around $1.4 million. As a response to the Bhopal incident, the Chemical Manufacturers’ Association in the United States drafted a series of voluntary measures to be adopted for community awareness and emergency response programs. Furthermore, the Occupational Safety

and Health Administration’s emphasis on the safety of chemicals increased. The state of New Jersey also became cognizant of concerns related to acute chemical exposure and its unpredictable risks; therefore, the Toxic Catastrophe Prevention Act was passed in 1986 (Dhara, R. and Dhara, V.R., 1995). This act mandated community involvement in disaster planning and the community’s right to information about hazardous substances manufactured, used, or stored in facilities, as well as their potential for catastrophic release (right-to-know laws + right to health in the workplace). The American Public Health Association commissioned a study into this disaster in order to understand its relevance for the U.S in terms of its commitment to prevent similar disasters, and preserve the safety of its people (Levenstein et al., 1987). The article emphasized on the need for integrated data collection, and to avoid complacency. The article further touched upon multiple facets such as the need for more regulation, frameworks for inspection, community awareness, strengthening response capacity etc. This study served as a reality-check as there were multiple small-scale disasters occurring regularly in the United States calling into question the “double standards” of multinational corporations. Recommendations UCIL needs to widen the scope of its corporate public policy by taking into account reservations of the public and devising strategies accordingly. For example, locationbased decisions should include the input of other stakeholders as well rather than of just the internal stakeholders. The process of issues management was also flawed since the management, although being well aware of the prevalent issues, failed to prioritize them. In fact, even more so, chemical industries are prone to industrial accidents of such enormous proportions that having an effective and well laid-out crisis management process is necessary to be in place, in order to deal with such potential accidents. UCIL should also focus on eradicating the practice of immoral management that fails to recognize the importance of adhering to ethical and legal standards. Strict monitoring systems should be put in place to ensure the pursuance of company’s activities in a moral and fair manner. This also implies that the company needs to think along the lines

of land ethics and adopt a post-conventional approach towards environmental protection, as well as embed it in their corporate strategy. The Bhopal incident is a case in point, showing how blatant disregard for human and wildlife can upset the balance of biodiversity (e.g. marine life, livestock, etc.) wielding far-reaching ramifications for socioeconomic life. In addition, what is extremely important is practical training of the workers according to international standards regarding such disastrous events. The staff should be given detailed briefing about evacuating the factory themselves as well as evacuating the nearby settlements. It is the management’s responsibility to ensure that people in surrounding areas are aware of such an accident so that they can escape timely. There is also a need to review the safety protocols and procedures; advanced equipment can better help companies deal with such situations, not just to save lives but to prevent financial damages as well. For instance, they should have annual safety drills to ensure that their security system is fully functioning or not; these mock drills should also be conducted in adjoining regions where local administration is involved so that they are also aware of dealing with such situations. Conducting regular quality checks and hiring qualified engineers through proper recruitment channels is another suggestion. Furthermore, conducting an annual external audit of their safety and security system can help detect possible loopholes in their plant which could risk the workers’ lives, tarnish the company's reputation, and result in heavy losses. Lastly, UCIL needs to give back something to the society and also in order to regain the confidence of their stakeholders, they should integrate CSR+CER with their overall strategic goals and strategy so that environmental and other problems can be dealt with from the very beginning of operations. This would not only help improve the company's image but will also reduce overheads in the long run. Total word count: 2,740 words

References Amnesty International, 2004. Clouds of Injustice: Bhopal Disaster 20 Years On. Amnesty International Publications. Bisarya, R.K. and Puri, S., 2005. The Bhopal gas tragedy—a perspective. Journal of Loss Prevention in the Process Industries, 18(4-6), pp.209-212. Bowonder, B., 1987. An analysis of the Bhopal accident. Project Appraisal, 2(3), pp.157168. Broughton, E., 2005. The Bhopal disaster and its aftermath: a review. Environmental Health, 4(1), p.6. Browning, J.B., 1993. Union carbide: disaster at Bhopal (p. 365). Union Carbide India. Dhara, R. and Dhara, V.R., 1995. Bhopal—A case study of international disaster. International journal of occupational and environmental health, 1(1), pp.58-69. Eckerman, I., 2005. The Bhopal gas leak: Analyses of causes and consequences by three different models. Journal of loss prevention in the process industries, 18(4-6), pp.213-217. Kok, T.L., Choong, Y.J., Looi, C.K. and Siow, J.H., 2019. Bhopal gas tragedy–the scar of process safety. Loss Prevention Bulletin, 269, p.11. Levenstein, C., Ozonoff, D., Boden, L., Eisen, E., Freudenberg, N., Greaves, I., Kleefield, S., Kotelchuck, D., Kriebel, D., Laird, F. and Lewis, S., 1987. Public health implications of the Bhopal disaster report to the Program Development Board, American Public Health Association. Am. J. Public Health;(United States), 77(2).

Reinhold, R., 1985. Disaster in Bhopal: Where Does Blame Lie? The New York Times. Available

from:

https://www.nytimes.com/1985/01/31/world/disaster-in-bhopal-where-doesblame-lie.html. [Accessed 6th May 2020].

Individual Contribution Statement of Objective: All group members Company Introduction: Syed Hayiam Muhammad Analysis of the Issue: Sana Saud Wider Implications: -

National: Mohammad Mustafa Hasan

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International: Syed Hayiam Muhammad

Recommendations: Faizan Hayat Khan and Rameen Asghar...