Identifying Legal Risk for a Large Organisation: Walmart - Essay Example

 Identifying Legal Risk for a Large Organisation Design the Problem Walmart is a renowned company in the retail industry. This industry has high growth opportunities, but at the same time there are also a couple of legal problems which surround firms operating in this sector. It can be stated that it becomes essential for firms to be aligned with legal norms in order to maintain their image and reputation in the consumer market. As a legal risk manager of this organization; I, had observed certain practices being followed in the system which ultimately disrupted the brand image to the extent that organization had to bear high penalty charges. The company was accused of dumping some hazardous waste in Missouri and California and had to pay a fine of $82 million. This was not only about violating a law but it eventually put across an image which stated that practices adopted by Walmart were not environmental friendly. A thorough investigation highlighted that employees were responsible for disposing hazardous wastes in the sewage systems and into trash. This ultimately polluted clean water in California. The major problem was that Walmart always tried to gain economic advantage and in doing so it was not able to invest much in training and development programmes. This made employees perform certain tasks which were not correct ethically or morally. In daily operations of the organization there were certain products which were returned by customers. These items were quite hazardous, and when the team members disposed waste they even unknowingly disposed these products too into the sewage system. The competition was growing and management did not show much concern in the areas of introducing a renewable system that would prevent such hazardous waste from being thrown into clean water of California. On the other hand it can also be stated that employees were not trained in the context of various laws which could have made them adopt some other methods for waste disposal. The other major problem was that legal advisors were present in the company, but there were no such advisors on the board to provide advice on environmental law and regulations. Identify the Legal Issue Walmart being the world’s largest retail hypermarket chain is subjected to various legal issues. However the problem which was being faced by the company was violating a major law in respect of environmental protection. This law is known as the Clean Water Act of California. The hazardous materials which were disposed off by the company in clean water bodies violated this particular law. It can be stated that the organization was not able to perform its operations appropriately by being aligned with environment protection laws. This in turn misguided the company to a great extent. For this reason, they continued the process of discharging waste into clean water bodies. The major legal issue was the organization did not follow any guidelines of executing their operations in an eco-friendly manner in California. Walmart focused on delivering the best to customers in terms of quality as well as cost. However it failed to obey the legal rules which were set forth by the government. It can be said that even after knowing that hazardous materials were being disposed on a continuous basis, the organization did not take any such initiatives to stop the practice or to incorporate a better mechanism which could prevent adverse effects on environment and society. There were complaints made by people as they observed water bodies of California getting highly polluted. A proper analysis of the problem revealed the fact that management did not take any effective measures to prevent such situation. On the contrary, there are some standard rules in the context of environment protection, and they states that hazardous or chemical waste coming from any organization needs to be treated well before disposing and cannot be directly disposed to water bodies (Ferrell & Fraedrich, 2006). This rule was violated by the organization as there were no such treatments done on the waste accumulated by employees and it got directly thrown into the sewage systems. However the legal issue still remains creating water pollution in California and not following guidelines or rules while operating in the region. Analyze the problem 1.1. Explaining the law Clean Water Act is one of the important Federal laws of USA. The law cares for the clean water supply within the country and protect this important natural resource from being polluted. The law was passed in 1972 for maintaining the wetlands of the country. The act looks after biological, chemical and physical integrity of the water areas of the nation. The law was enacted by the 92nd US Congress. This Act establishes the fundamental structure of pollution discharge in the waters of USA. It is a primary legislation of USA that takes care of clean water in the country. The Act prevents nonpoint and point sources of pollution and provides assistance to the waste water treatments. The law was earlier known as Federal Water Pollution Control Act of 1948. The law was introduced to prevent discharging of illegal wastages in the water areas of the country. According to the provision of this act, point sources are not allowed to emit or dump solid wastages in the surface of the waters (Hubbard, Thomas, &Varnham, 1999). According to this Act, it requires prior permission from National Pollutant Discharge Elimination System. The Act provides strategy to encounter four different environmental challenges. Those challenges are “Municipal Combined Sewer”, “Sanitary Sewer Overflows”, “Concentrated Animal Feeding Operations (CAFOs)” and “Storm Water”. Foresee ability of section 404 of Clean Water Act is to regulate or control the discharge of dredged material in the waters of USA. The main reasons behind the existence of this Act are to control the discharge of high volume toxic chemicals into the waters of the country and to maintain the quality of water. The jurisdiction of this law lies for the navigable waters of USA. With the help of this law the Federal Government has tried to protect the interests of human society, green water bodies and the overall environmental sustainability. The law standardizes level of waste water, discharged from the various industry or organizations. The law also takes care of different existing requirements to manage different levels of contaminants in the navigable water surface of USA. 1.2. Applying the law According to the provision of Clean Water Act, the organization was supposed to take prior permission from the National Pollutant Discharge Elimination System (NPDES). The employees of the company were dumping hazardous waste into the local sewage system without any required permission. They were dumping their products like nontoxic and less hazardous waste. But actually the nature of those wastes was significantly toxic. It was totally the violation of Clean Water Act. Attorney general of Justice Department’s Environment and Natural Resources Division has categorically stated that for the sake of unfair economic gains the organization has violated the basics of the Clean Water Act. Global retail giant Walmart has intentionally violated the standards of the Clean Water Act. They tried to evade the section 404 of the Clean Water Act. According to the section, the organization should have maintained the discharge of their wastages up to a certain limit but unfortunately they ignored the law. Workers of the store used to dump the products like fertilizer and bleach which are highly toxic in nature and can create significant water pollution. At any stretch of imagination this kind of products are not allowed or permitted by this US Federal law. One of the main reasons of this Federal law is to control the quantity of toxic materials in the surface of the navigable water of the country. Through this illegal and unethical practice of waste disposal from the store of Walmart California, the employees totally violated the Federal law of the land. This practice was a six count violation of Clean Water Act. The problem has become more severe because the organization did not care for the prior information. It was an intentional attempt to breach the Act from the side of the global retail giant. Apart from the control of toxic discharge, the law also look after the various interests of human society, safety of green water bodies and overall environmental sustainability. In this aspect also employees of the organization ignored the law. The way employees dumped their wastages were not at all safe for society and green water bodies. Providing legal opinion All the above factors are clearly indicating that, because of the ignorance of the legality, the company has been penalized with such a huge amount of fine. It might not be too much significant for the company but it must be prepared and comply with the law to avoid any future disturbances. The legal wing of the organization should be more proactive and must communicate all the legalities of the company to the management. In future the legal wing of the company should seek for prior permissions from the National Pollutant Discharge Elimination System. This will help the organization to mitigate any problem related with the waste disposal. Employees of the organization must be well trained about the different legal implications that can take place in case of intentional breach of legalities. The legal wing must research that, according to the provision of Clean water Act up to what level and what kind of wastages they can discharge in the common sewage system. The legal risk team must conduct a comparative study between the toxic levels of the organizational wastage and standardize toxic levels permitted by the law. In future Walmart should maintain all the legal formalities in case of waste discharge to avoid any further fines. The legal risk team has to ensure an altered practice in the case of waste discharge. The waste discharging should be done in such a way that it should not violate any section of the Clean Water Act. Being a large retail giant, Walmart discharges substantial amount of waste consistently and continuously. The legal risk manager has to make sure that due to such large scale of business operations no legal compliances should be overlooked or ignored. If the organization does not alter their practices and keep on ignoring the Act then the consequences might be more serious in future. Minimizing risk The risk is high in relation to legal issues as it creates a bad impression on the brand image. Walmart has been able to sustain its market share majorly because of its smooth flow of operations. However the risk associated with paying large amount of fine and violating legal norms can only be minimized if the organization is ready to restructure its system. Firstly management needs to communicate well with the employees in context of working in such a manner which would not exploit any environmental laws. It can be stated that risks can be minimized if the organization takes prior steps to prevent any such activities which causes harm to the surroundings. Legal advisory board helps to protect an organization and analyses all the pros and cons of a situation. It would even enable to reduce the level of risk which is associated with filing a law suit against the company. However, the legal opinion that would be given by the advisory board is helpful as it can eliminate the wrong decisions which were taken by the team members in terms of disposing hazardous waste into clean water. Risk is even linked to handling waste and this to some extent can be minimized through incorporating better waste treatment methods (Cross & Miller, 2008). The management can avoid this new mechanism by taking prior permission from the authority in relation to disposing waste into water bodies. This would facilitate the organization to avoid any overhead expenses and to continue with the traditional practice. However the limitations on amount of toxic wastage to be disposed is an effective procedure as it would minimize risk associated with polluting environment or rather water bodies and would even eliminate risk of accumulating wastage in the storage. On the contrary if new practice is not incorporated in the system then level of risk cannot be minimized. The other tool to decrease risk is setting up an open forum within the organization where all the employees would be given training on adopting practices which are well aligned with such environmental protection law. References Cross, F., & Miller, R. (2008). The legal environment of business: Text and cases. USA: Cengage Learning. Ferrell, O.C., & Fraedrich, J. (2006). Business ethics: Ethical decision making and cases. USA: Cengage Learning. Hubbard, J. J. E., Thomas, C. M. & Varnham, S. (1999). Principles of law for New Zealand business. Auckland: Pearson Education New Zealand Limited. Read More