Ethical Issues of Union Carbide Company - Case Study Example

Union Carbide: Case Study During the night of 3 December 1984, when most people around the Union carbide Plant in Bhopal were asleep, more than 40 tons of methyl isocyanate (MIC) gas escaped the storage into the air. As the gas spread in the area like a blanket, more than 2000 people died instantly. Even after three decades of the disaster, there is an arrest order for the then CEO of Union Carbide Warren Anderson. In addition to the immediate deaths, there are more serious consequences which are visible even now (Gibson, n.d.). Some such effects are compromised immune system, growth retardation, higher miscarriage rates, and rising levels of cancer (ibid). Admittedly, one can find a large number of people who can be held ethically responsible for the situation on various grounds. The first consideration goes to the Union Carbide Company that allowed a subsidiary in India. During 1970s, Indian government was eagerly trying to invite foreign investment, and it was this effort that gave birth to the Union Carbide Plant in Bhopal for the production of Sevrin, a common pesticide. However, a look into the company’s attitude towards the Indian subsidiary shows that the attitude towards that developing country was rather lukewarm in nature. To illustrate, while company is eager to stick to the guidelines of the Operational Safety Survey conducted by the company’s expert team in its Virginia plant, the same attitude was totally absent in the Indian context. As per reports, despite the expert team inspection in 1982 that pointed out that the plant was unsafe for production, the company continued its production (Beisinghoff, 2009, p. 146). In addition, one can see that the company adopted a laissez-faire attitude towards safety in India because being a developing country; India did not have strong rules and regulations regarding safety and environment. One can see a large number of issues when the matter is analysed through the ethical lens. Firstly, an intrinsic approach towards ethics will prove that everything the company did went wrong, and everything they did was for their own profit. According to the intrinsic approach, good should be done for its own sake. If this approach is adopted, one can see that whatever the company did went wrong and what the company failed to do was also wrong. First of all, for a multinational firm, it is unjustifiable to have different standards of safety set for different people despite the variations in the safety standard legislations in various territories. In the case of Union Carbide, the company went wrong by showing a laissez-faire attitude towards safety in India. It is found that the company’s West Virginia plant has high safety standards. Thus, the first mistake from the part of the company is setting different standards for different people. To illustrate, the company had computerised data loggers in its US plant, but the same was not adopted in India. Admittedly, the company has conducted Operational Safety Survey in its Indian subsidiary in 1982. Despite the observation that the plant was unsafe for operation, the company took no steps to immediately close the plant. Instead it went on with the production despite repeated warnings of danger. Here, the company was responsible to close the Indian subsidiary when it came to know about the safety and security breaches. By not doing so, the company proved that it was not value-driven, but profit-driven. As Mitchell (2009, p.9) points out, business ethics are based on broad concepts of integrity and fairness that take into consideration shareholder and stakeholder issues, local community and the environment. Even if the rule-based approach to ethics is adopted, the company would not be able to save its face. According to the rule-based approach, the moral responsibilities of a business are set by the law. That means the company was not bound to adopt the same standards of safety in India as it took in the US. This is so because the activities from the part of the company were against law. First of all, the company was operating in a thickly populated area with a huge population. Secondly, it did not follow up the Operational Safety Survey warnings. Records show that there were many incidences of gas leaks followed by reports of tearing and burning sensations (Muller, 1984). Still, nothing was done by the company in this connection. That means the company was not even adhering to the rules of safety standards. Here, one can see that what company was supposed to do to be ethical was to adopt uniform policy for its all plants across the globe. Secondly, it was supposed to conduct regular inspections and the subsidiaries that fail to adhere to the rules should have been disciplined or closed down. Even if the company claims that the ethical needs of a company are the ones set by the law of the land, it cannot evade answering for the lack of maintenance procedures noticed in its Bhopal plant. To illustrate, the gas tank was supposed to be refrigerated to zero degree centigrade. However, the refrigeration system was out of order leaving the gas at room temperature. Secondly, the pressure gauge was unreliable due to lack of proper maintenance. Thirdly, the plant’s supposed reserve storage tank was already full with MIC. In addition, the gas scrubber that neutralises any escaping gas and the flare tower that burns escaping gas were both out of order. Lastly, the number of technicians with adequate knowledge about the system was seriously deficient due to employee cutbacks as a result of reduced profitability. Here, it becomes evident that the company was supposed to ensure proper maintenance of the plant because it was putting the lives of its employees and the people in the near vicinity in danger for profit. Evidently, the employees in the Indian context were more ready to work in hazardous situations as compared to their American counterparts. However, for a business, it is highly unethical to intentionally put people in danger to raise profits. Here, the claim of the company is that a disgruntled employee had intentionally filled water in the MIC tank resulting in the gas leak. Though the company can claim that there was an effort to sabotage its image, it will not be able to answer the questions regarding the various serious security and safety lapses in the plant. Another ethical issue is the area regarding community information. As it is noted, the company was operating in a suburban area where a large number of poor and illiterate people lived. Most people in the area were unaware about the dangerous nature of the chemical stored in the plant, and the company took no steps to inform the people about the same. Admittedly, when the chemicals are of hazardous nature, it is highly necessary for a company to inform the people about the potential dangers. In addition, for a company that operates in such a situation, it is necessary to have an emergency response plan. Admittedly, the Indian government cannot stay away from its responsibilities in this situation. To illustrate, the local authorities did nothing to move the plant out of the thickly populated area. Nor did it conduct inspections to ensure proper adherence to even reasonable standards of safety as set in the Indian context. Instead, the authorities were only concerned about profit and job opportunities, and it was this eagerness that resulted in the loss of thousands of lives. Though the Indian government actively blames the Union Carbide for the disaster, the government cannot deny its own active hands in the disaster. First of all, when the government started the subsidiary, it could be started away from the thickly populated area. Otherwise it was possible to move the people from the nearby areas away from the plant. Evidently, the plant was operating at that location for more than a decade. Thirdly, the government authorities were allowing the plant to operate despite its deteriorated state. Admittedly, the deteriorated state of the plant was known to the government. However, it did not direct the company to improve the safety standards. Not did the government make sure that the company followed the existing safety standards. Thus, from an ethical point of view, it is possible for the government of a developing nation to see that the company sticks to such safety standards as it does in developed nations. Also, it is possible to insist that the company should be located away from thickly populated areas. Thirdly, it is necessary to conduct regular inspections to see that the existing rules and regulations are properly followed. Lastly, in such a situation where dangerous chemicals are stored, it is for the government to educate the people around the plant about the possible hazards and also to see that proper emergency response measures are in place. However, a look into the Bhopal issue shows that all these elements were totally absent, and both the company and the Indian government are equally responsible for the disaster. Another point that deserves attention at this point is the ethical role of developed counties from where multinational firms usually originate. In the case of Union Carbide, the position of the American government was that as the UCIL was a subsidiary, the rules of America are no longer applicable to the Indian issue. Here, it becomes evident that the American government was taking a position that favored the UCC because if the legal proceedings took place in America, the allegations against the company could have been even worse. At this point, it becomes evident that ethically, America could insist that the multinational firms from that country should apply uniform standards in their operations worldwide. If such a legislation is in place, firms will not try to deviate from the standards in developing countries as the deviations will lead to legal proceedings in their own home country. Here, one can see that the international business arena is facing an ethical dilemma. On the one hand, there is the need to raise profits for stakeholders, and on the other hand, there is the responsibility towards society and environment. According to the tenets of liberalism, one can argue that companies possess the right to do their business without being hindered by ethical rules or that ethics has nothing to do with business. However, the problem here is to decide the meaning of liberty. As a matter of fact, ones liberty should not cause harm to others. That means a company’s efforts to make profits should not harm others. If this is so, Union Carbide is guilty of sabotaging the lives of people in Bhopal as it knowingly deviated from safety standards to raise profitability. In the business field, while some claim that businesses should aim profit, some believe that the practices adopted should be environmentally and socially sustainable as no tenable ethical concept is available to support the other side. It seems that such disasters can be averted if there is an international code of ethics for chemical manufactures. This international code should be applied to all the chemical manufactures and the violation should be dealt in accordance with this code. In addition, there can be groups of chemical manufactures like the Responsible Care Program where the members are peer reviewed by their industry competitors. Admittedly, the attitude of the UCC after the disaster was rather embarrassing for the whole chemical manufacturing industry. It settled the entire claims for nearly $ 450 million and then declared that the company has no long term responsibility towards the society. It declared that the feeling of long term responsibility means the acceptance of guilt. Also, the company closed its Bhopal plant down for good. The effort of the company is to present itself as a victim of the atrocities committed by the Indian government which was lagging far behind in technology. Evidently, this stance by the company shows an evident lack of ethics in the management. Admittedly, though the Indian government lacked resources to check safety measures at the plant and was in dire need of employment opportunities that made it turn a blind eye towards the issue, the government was certainly not against improving safety measures. That means had the company wanted to ensure safety for the Indian people, it could have done so on its own volition. In total, if the company had any interest in ethics, it would have set the same standards of safety in its both US and Indian plants. In addition, it would have ensured that the Indian subsidiary is well in accordance with the required safety standards despite the absence of regulations by the Indian authorities. Thirdly, the company would have provided adequate attention to the fact that the subsidiary was not implementing the Operational Safety Survey suggestions. On this ground alone, the company would have closed the plant down. Fourthly, the company would have ensured regular inspection to see that proper maintenance procedures are followed. Lastly, the company would have given adequate attention to the larger community and measures would have been taken to educate people about the potential hazards. References Beisinghoff, N 2009, Corporations and Human Rights, Peter Lang, Germany. Gibson, K n.d, ‘An overview of business ethics’, Ethics and Business: An Introduction, pp. 1-10, Viewed 29 February 2012, Mitchell, C 2009, A Short course in International Business Ethics: Combining Ethics and Profits in Global Business, World Trade Press, USA. Muller, R n.d, ‘A significant toxic event: The union carbide pesticide plant disaster in Bhopal, India, 1984’, Viewed 29 February 2012, Read More