Corporate Social Responsibility and Ethics - Essay Example

A failure of Corporate Social responsibility (CSR The instance of Bhopal Gas Tragedy Introduction: The corporate houses are no longer business bodies with local presence. Liberalization that ultimately followed with globalisation turned them into global bodies with immense power that often not only restricted to financial indicators. As the corporate kept on spreading like an inferno it was realised that apart from market based financial success a corporate now also has to look after the associated social and moral values of each particular place that they might venture in. Courting this situation the concept of Corporate Social Responsibilities emerged that was later maintained by some and earned them good reputation while refuted by others and marked them in human history as profit mongers, ethics less business tycoons who valued individual benefit much above the optimum social solution. In its effort to ensure the entrusted corporate social responsibility a modern day corporate must ensure fulfilment of its duties towards the social, moral and environmental aspects of its surroundings. Bhopal Gas Disaster in a Nutshell: The chances of a possible gas disaster at Bhopal that ultimately broke out during December the 2nd and 3rd 1984 were rooted long back in the early half of 1970s. In those eras India was a country dying for foreign investment as with its infrastructure of that time it managed little of it and that mostly owing to Soviet Friendship. To attain this much-awaited foreign investment goal the Indian government approached Union Carbide to set a plant at Bhopal, Madhya Pradesh that will be producing pesticides such as Sevin. Sevin was certainly to have an intermediate product Methyl Isocyanide (MIC) that was immensely toxic. The possibility of a disaster owing to the production of such a toxic material was over looked. The Union Carbide considered two potentials of the place, cheap labour and lands the most helpful input a chemical company can hope for to start with. What the eminent strategists of the concerned company overlooked was whether the place is ready enough for such a plant. The answer to this question was a certain no and that owing to a couple of factors. First of all cheap labour does not always translate to skilled labour rather mostly stands for the opposite and Madhya Pradesh was one of the backward states of India in terms of technical know how. Both of these together had sown a seed that eventually became a poisonous tree; swallowing millions of lives. In simple terms corporate balance sheet emerged victorious over the social accounts and that one-day yielded poisonous gas in huge amount that chocked millions of innocent inhabitants of Bhopal and almost no one was held accountable for that. 1) Mr. Warren Anderson: the puppet master When a business body unleashes a catastrophe then the topmost officials or authorities are bound to be held responsible. This was no exception for Union Carbide as well. Once that chilled night of December, swallowed thousands of lives amidst its fogs, as if they were never existed; the Chairman of the so reputed company Mr. Anderson was straight away arrested on the charge of immense laxity of corporate duties. However the bars of Indian Jails were not strong enough to hold such a powerful business tycoon for long and soon he was granted a personal bail in exchange of a few thousand dollars that if valued against the thousands of lives lost would not even come to one’s attention with the most powerful of microscopes. Anderson quickly realised after coming out of the custody that considering the level of disaster that Union Carbide plant at Bhopal had unleashed, an immediate investigation must be initiated at least to mock the anger coming out of the different fields of the society. Here Mr. Anderson came out with two most interesting findings that he had claimed were directly followed from the investigation. At first he blamed the total management for their carelessness that preceded the disaster and on another occasion that followed almost immediately singled out a local operation manager of the plant whom he accused to be responsible for this grave disaster. This twin version exposes Mr. Anderson more than anything else and clearly portrays the efforts that he was making to cover up his own faults that came out of his wrong planning and efforts related with strategic management. (Galanter & Wilson, 1985; Bhopal, Industrial Genocide? 1985) However these fallacies on behalf of Mr. Anderson did not prevent him from flying back to USA and that at that time was considered as a blessing for some other reason coming out of no other than Rajiv Gandhi (He was the Prime Minister of India at the mentioned time and no doubt would be held responsible if such a white collared criminal flees under his very nose to abscond the Indian legal body thereafter till date) The Bhopal gas disaster took place more than twenty six years back. In this nearly three decades millions of cries and shoutings got swallowed amidst the abyss of the black hole of time that never allows anything to escape out of its gravitational pull (Rao, 2010). In 2010 when the Congress party governed Madhya Pradesh then after long a voice raised against the Bhopal catastrophe. The voice was of the Chief Minister Arjun Singh who though kept silence over the involvement of Rajiv Gandhi and rather denied every allegation rose against the late Prime Minister on the Bhopal issue; strongly criticized Mr. Anderson of his crimes committed in India. Moving a step forward he also requested the present Prime Minister of India Mr. Manmohan Singh to initiate a conversation with the USA president Barrack Obama on the returning of Mr. Anderson to India. Mr. Singh strongly opined a criminal to Indian population should be impeached in an Indian court and should be convicted according to Indian law. (Not hiding anything on Bhopal disaster, 2010) Without any grain of doubt the claim that Mr. Singh has made is worth of millions of praise and applauds, yet it still leaves a question mark on the actual change in events that this sort of voice might at end manage to initiate. This question has substantial reason for its life that long. Over the past twenty-six years Anderson has managed to ignore those cases that are open against him in Indian courts. He has even managed to ignore the premier investigating agency of the country CBI, considering the fact that his name has its prominent presence in CBI charge sheet that was presented against Bhopal Disaster. After years of silence however in last couple of years some movements have been initiated to prosecute the involved personnel in Bhopal catastrophe. Prosecution of Keshub Mahindra who is one of the big bullies of the company as far as its Indian operations are concerned together with six others for a period of two years jail time might be considered as the step towards the ultimate goal of serving justice to the Bhopal sufferers. (Keshub Mahindra convicted in Bhopal case, 2010) However, in recent news bite (11th May, 2011) The Supreme Court of India denied the claim of CBI to restart the Bhopal Gas disaster investigation once again. This verdict came out of the failure of CBI that it has failed to reproduce anything substantial in last 16 years (Indian Supreme Court rejects plea to review Bhopal disaster sentences, 2011). The premier legal body of the country opined that lack of new and fresh proves against the already convicted seven people hurts the merit of the case to be re opened and might result in empty vessels at the end. Irrespective of the latest decision that Supreme Court of India has given on Bhopal Disaster; the role of Mr. Anderson behind this disaster is beyond any question. The incident claimed twenty thousand lives and resulted in uncountable injuries that required immediate medical attention and fatal by any definitions. These followed from nothing but unprecedented level of corporate greed that valued cheap labour and lands but not the infrastructure, environment and technical know how of the surrounding area while considering the place for one of the most complex plant of that time. Mr. Anderson was the final person waving the green flag for the project and that marks his faulty planning and lack of strategic management capabilities. This is not the end, once the disaster occurred after some initial efforts of make ups that were mostly mockery with the sufferers the person fled to his country to save his skin rather than anything else. This on one hand portrays the inhuman nature the concerned man possessed but above all personal analysis; portrays the fact that how single handed a man could have pave the way for one of the greatest disaster of modern times that eventually would be classified as the failure of Corporate Social Responsibility on behalf of an organization. Considering the aforementioned analysis Anderson on every single account is responsible for the disaster and should be prosecuted immediately for his inherent role in this catastrophe. 2) Bhopal Disaster at the wake of Corporate Citizenship and Stakeholder’s theory Detailed researches on the Bhopal disaster were initiated in much later years and yielded several facts that multiply the initial traces of lack of corporate social responsibilities by many folds. The first of this kind of investigation questions the building blocks of this plant and the associated safety that was expected to safe guard lives of thousands either working in the plant or living by. The proof of cut in investment while building the plant that led to building of an unstable plant that was expected to produce Sevin, an insecticide that has MIC a toxic substance as an intermediary has been severely criticised. This cut in investment at the end lead to the last breathes of thousands of innocent people (Gupta, 2006). Furthermore the plant also lacked in safety measures. In USA such a plant would have obviously followed a series of safety measures that might come into action at the time of emergency. The mix of water and MIC owing to the presence of a faulty valve is considered to have started the chain reaction resulting into the disaster. However, the Bhopal Plant was without any Knockdown tank that might have worked as a depository body for the chemical while the water and MIC was mixing owing to that faulty valve. The only flare tower the plant was equipped with had malfunctioned on that day and since there was no other back ups left; the result can be well grasped. No doubt the company had taken advantage of the poor administrative capabilities, rules and regulations and official monitoring of a country that was yet to be considered as the forerunners in the global economy unlike today and this in every aspect lack of corporate social responsibility on behalf of Union Carbide. Adding to the agony and most ironically the plant even before the final disaster was putting the surrounding environment in grave danger considering the fact that its toxic wastes were directly thrown away in nearby lagoons. Though the Indian authorities that were put in charge to taste the water and soil surrounding the plant in case a contamination had happened reported of no contamination, much to the disbelief of Union Carbide itself as reflected through the company documents. (Debora, 2002) The discrimination against the mankind based on his country of origin is once again gets reflected through this action of Union Carbide, what was beyond even the wildest of imagination in USA became a harsh reality in India. These facts even tires the writer through repeated mentioning of sheer lack of negligence on behalf of Union Carbide in terms of corporate social responsibility that mainly manifested through no other than the Chairman of the company, Mr. Anderson. The disaster as an internal affair of Union Carbide A bad soul seldom resorts to any mean that might help it to cover up. Bhopal Gas Disaster often been portrayed as an action led by an employee who might well be an internal part of the organization. Interpersonal relation among management and the employees often goes through many upheavals. Courting the grave disaster the company was responsible for a theory of sabotage had been floated in the air. A theory of sabotage considers that an internal employee in order to take revenge on the management intentionally let the water mix with MIC that produced huge poisonous gas killing thousands in Bhopal. However this theory has little evidence in reality and the chain of events that followed the mix up seems to be beyond the control of any single individual (Conrad, 1994). However the management once smelled this opportunity of passing this event as an intentional sabotage tried their level best to wipe their hands through that, but with little effect. The role of Corporate Social Responsibility in explaining the disaster The Bhopal gas disaster immediately claimed 8000 lives and left another 150000 critically injured (Debora, 2002) but the long run affect that it left on the area was perhaps most concerning. Even years after the actual disaster, birth of babies with some forms of deformities is very natural in this area (Reddy, n.d). A scientific study had revealed that probability of miscarriage after two years of the disaster was about 44% in the population living here. The disaster has also led to substantial contamination in soil and water of this area. High presence of cancer generating element around the plant is a big worry to the authorities and might remain so unless substantial efforts are directed towards the all-together de-contamination of the area. (Galanter & Wilson, 1985) Here another lack of corporate social responsibility emerges; the company had devoted only a few million dollars to the process of de-contamination that is far less than required. Unless the share holders together with the stake holders of the company organise a collective bargaining process that would compel Union Carbide to extend its helping hands towards them whom it made to suffer twenty six years back; corporate social responsibility in Bhopal Disaster case would remain as a theoretical concept far from being implemented as a real process delivering social, moral and environmental good to the people living there. As the business houses and the corporate firms are extending their spread across the world, and also in India, corporate social responsibility is a concept, which needs to be incorporated in the policy of the company (Cuizon, 2009). The term Corporate Social Responsibility may be defined as “the responsibility of the business towards the society that it takes from”. The essence of the term also refers to “the management of the business in a manner such that it produces a positive impact on society”(Corporate Social Responsibility – An Essential Part of Business? 2009). According to the critics of CSR, the essential criterion to be maintained by a business is to make profit without and extra obligations provided the company follows the rules and regulations. However if a company does not do anything, which might have, negative impact on its stakeholders (including government, employees, consumers, NGO’s, the local community and shareholders) it might show the results in the long or short run. Hence the corporate houses have realized that maintenance of CSR could help them in sustaining their business achievement in the long term. This would also ensure a socially optimum consequence. The basic ethical and social problems posed by the profit seeking organisations are listed as follows: 1. If a firm view maximizing the returns to its the share holders as their major concern then maximizing the interest of any other individual besides the shareholders is considered to be unethical. The management of the Union Carbide Company was guilty of this perspective of making profit and maximizing shareholder’s values. 2. Illegal and unethical practices by the managers to maximize the firm’s benefit. 3. The moral hazards and the environmental degradation caused by the firms and institutions. The Bhopal gas tragedy can exemplfy this aspect. 4. The indiscriminate exploitation of scarce resources. 5. One of most important ethical problem arises when the interest of two or more firms coincides and they collude illegally. Formation of cartels, thereby raising the price levels and cutting down the output levels immensely increases the firms’ profit but the common people have to bear the pain. (Namara, n.d) As history holds, there have been examples when the profit seeking business organization and institutions have actually adopted unfair means and unethical practices which left long lasting impact on the society as a whole. Even Adam Smith has highlighted the issue by saying “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices” (Jarvis, July 9 2005) These profit seeking enterprises often tend to raise the price, thereby maximizing their profit without actually thinking about the burden they put common people. Hence there should be some governing bodies to monitor and restrict such malpractices. The firms and business organization are part of society so it is their duty to take care that their activities should not adversely effect the environment and the society as a whole. The Union Carbide Company showed pure negligence in duty towards environmental conditions and the future sustenance of lives. Some case studies may bring up the individual concerns which emerged with the crisis. For instance, Sabra at the age of 26 years lost her mother in the accident. Her husband there after died due to the same reason in 1990. She herself is paralyzed. She did not get any form of compensation for her husband’s death due to the corrupt system, she could bribe the officials. A 42 year old woman, Zareena lost four of her family members due to the tragic accident. She cannot work because she has been disabled due the tragedy. She does not know how to claim for the compensation.(Mishra, June11 2010) Ever since the problem of ethics and corporate social responsibility came under light, there have been organizations along with the government who closely monitor the followng issues: 1. Any activity of the firms degrading the environment is restricted. Under such restrictions Union Carbide should have kept their technical set up on regular checks to prevent the occurrence of such disasters. Back up measures in case of emergency are nowadays are a must ot comply with for all corporates that Union Carbide was bereft of at that time. 2. Child labor has been prohibited. 3. Proper training should be provided to the workers. Investigations in the Bhopal disaster showed that the workers were not educated or well trained about the technical details of their surroundings apart form lacking technical expertise. 4. Any activity influencing common health has been prohibited. The dumping of waste into the nearby water bodies leading to chemical toxification through the daily operations of the Union Carbide (that was much before the actual disaster has taken place), would be severely penalised under this clause.(Sriramachari, 2004) 5. The workers should be given a proper ambience to work; any form of exploitation is strictly prohibited. It is the duty of the management to take adequate safety measures within the work environment of the employees. Investors are discouraged to invest in the fields like that of, arms and ammunitions, nuclear power, tobacco etc. (Ethical leadership, decision-making, and organisations, n.d) Any form of violation is a matter of jurisdiction, close scrutiny and careful monitoring by the government are the various methods used to combat these problems. Recently, environment sensitive industries like the chemcials and petrochemicals are not provided green signals in areas renowned for the fragile environment. The recent debate in West Bengal between the ruling and opposition party reagrding a chemcial and petrochemical hub at Nayachor might be considered as an exellent example of this issue (Bhabani 2009). The tools and the measures adopted by the government in this respect have partially succeeded. Still there are institutions which forego ethics to make more profit. As we know that the concept of ‘survival of the fittest’ holds true for the business organization, hence it is quite difficult for the managers to choose between ethics and profit. What they forget in the way is the ‘problem of commons’ - the century long batle between the individual and the social benefit. (Montgomery, & DeCaro, 2001) Lack of proper awareness of the managers on this issue or even a greed for better perquisites backed by hire salary compel them to kill their conscience and work in favor of their superiors. Environmental taxes and cost benefit analysis through ocntingent valuation method have been applied to determine the exact cost a corporate might be imposing on the society through its operations. People remember what happened in case of Exxon Valdez oil spill. However even if such draconian measures proved to be futile in providing the desired result then the government has no other options but resort to punishment that either or both takes criminals and civil form. The irony of any measure is that it might close one door and open another. Formation of a law is a matter of legislative debate. Implementation of the same is a bureaucratic action but the monitoring part that is perhaps most important is found neglected. If that continues there will be more Union Carbides, many Dow Chemicals and at the end millions of lifeless bodies grasping for air in chilled December nights. References 1. Bhabani, S. 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Ethical Principles Practiced in business, Businessmanagement, available at: http://businessmanagement.suite101.com/article.cfm/what_is_business_ethics Read More