IMS 3310-002 Case #5 Group 5 The case of Bhopal

Background During 1970s, the Indian government introduced policies to encourage foreign investors to invest in local Indian industries. Union Carbide Corporation was inquired to build a plant for the accomplishment of Sevin, a pesticide broadly used throughout Asia. As included of the deal, Indian government claimed that a meaningful percent of the investment come from local investors. The government itself had a 22 percent in the company's subsidiary, Union Carbide India Limited. The Bhopal disaster, also known as the Bhopal gas tragedy which was the world's worst industrial disaster, took place in India with gas leaking problem. This tragedy occurred during the night of December, 1984 in the Union Carbide India Limited pesticide plant in Bhopal Company, Madhya Pradesh, India. The accident affected over 500,000 people with methylisocyanate and other toxic gases. During the disaster, India has undergone accelerated industrialization. During the time some positive changes in government policy and behavior of few industries, many outstanding threats to the environment from rapid and poorly adapted industrial growth continued. Extensive environmental abasement with cogent afflictive human health outcome of the action remained to occur throughout India. Main objectives and possible causes Main issue on this case is that they need to have a good policy control method when doing international business and the corporations need to take more responsibility and have accountability. Considering the community first they would not have had the accident but failure to fully plan ahead resulted in the disaster at Bhopal. If they had considered the community first they would actually have lost less profit and gained more- cost to repair reputation would be more than the cost to spend on

developing measures to protect the community. In recent years, Indias economy has steadily grown at about 8 percent according to the news; this attracts many foreign investments to open their business in there. Some commentators points out industrialization with poor environmental practices, dumping of pollutants, and cause a huge risk to the local community. These observers senses that business practices in those developing countries may create higher risk that allow another disaster on the scale of Bhopal. Nowadays, most of the western world operates their business under a capitalist system. The assumptions of those foreign companies are most focus on grant, benefits, what constitutes a fair return on their investment, however, they rarely consider who should be responsible for harms that result from their products after. The consequences of without one for responding will damage the local environment and bring the disaster. Furthermore, many of foreign companies will set the majority workers from the local work in a working condition without any protections, and ignore the safety and health of them. Some markets involve hazardous materials, and it is in the best interest and return of corporation that deal with these materials to avoid externalities, however, it will cause tons of negative effects to the local community. Therefore, corporation should be more responsible to their community from the competition; it will force companies to take a better care of their workers safety and health in order to maintain the whole business in other countries for a long term; they will start to realize the public image and better performance as well. In Bhopal case, the Indian government had made decisions about desirability of foreign investments, and tries to solve problems without harms to a realized profit for those foreign investments. Regulation is simply tool that government mandating a minimum level of safety, but the free market is more efficient at balancing the appetite for risk among the members of any given community. To that end, these companies are only responsible for telling stakeholders about the danger of their chemicals to the extent that they want to remain in business--if they don't warn people, by cultural norms in most of the world, they would earn a bad reputation and lose market position soon. Comparative approaches and examples In 1984, Union Carbide India Limited was celebrating its 50th anniversary. UCIL had a sale of about $200 million annually. However, the compensation predictably was much larger than its contribution to

revenue. (Bhopal disaster studies) In the wake of the release, Union Carbide Corporation provided immediate and continuing aid to the victims and set up a process to resolve their claims. Immediately provided approximately $2 million in aid to the Prime Ministers Relief Fund; Sent an international team of medical experts to Bhopal to provide expertise to assist, and provided medical supplies. Openly shared all its information on methylisocyanate (MIC) with the Government of India; Dispatched a team of technical MIC experts to Bhopal on the day after the tragedy; Funded the attendance by Indian medical experts at special meetings on research and treatment for victims; Provided an additional $5 million to the Indian Red Cross; Provided a $2.2 million grant to Arizona State University to establish a vocational-technical center in Bhopal, and offered $10 million to build a hospital in Bhopal after; Established an independent charitable trust for a Bhopal hospital with $20 million; Upon the sale of its interest in UCIL, it also provided $90 million to the charitable trust for the hospital. In February 1989, the Supreme Court of India decided a final settlement of all Bhopal litigation in the amount of $470 million. Ten days after the decision, UCC and UCIL made full payment of the $470 million to the Indian government. The settlement award was much larger than any previous damage award in India, and was $120 million more than plaintiffs lawyers had told U.S. courts. In its opinion, the Supreme Court of India said that compensation were far greater than would normally be payable under Indian law. To resolve continuing legal disputes, the Supreme Court of India in 1991 affirmed the settlement. Pursuant to the settlement, the Government of India assumed responsibility for disbursing funds. In addition, the Court required the Government of India to purchase a group medical insurance policy to cover 100,000 persons, who may be possible victims. Here is another example of environmental disaster. A United Kingdom Oil Company called

British Petroleum, their explosion and sinking of the Deepwater Horizon oil rig caused oil spill to the Gulf of Mexico in 2010. They had about 25.70 billion net income during year 2010. But they had a long way to recover from the Deepwater Horizon explosion and oil spill. The total loss of the Deepwater Horizon is $401 million dollars. The trial concerning payouts and fines under the Clean Water Act and the Natural Resources Damage Assessment and payouts to impacted states started on 25 February 2013 in the United States. The trial's first phase is to determine the liability of BP, Transocean, and other related companies. The second phase will focus on the flow rate of the oil and the third phase will consider damages. The major cause of an explosion was the mishandling of a rig safety test, while inadequate training of the staff, poor maintenance of the equipment and substandard cement were also mentioned as things leading to the disaster. According to The Wall Street Journal the U.S. government and Gulf Coast states have prepared an offer to BP for $16 billion settlement. However, it is not clear if this deal has been officially proposed to BP and if BP has accepted it. The settlement resulting in the $1.4 billion to compare with Union Carbide, the BP didnt do more to prevent for another accident to happen. They just start to using the correct equipment which they should have done in the first place, but not doing anything new. They should think about more ways of possible cause for the incident, for example human errors. So that in the future it will have fewer incidents. Recommendations There is a best alternative example, Union Carbide; because they did a better job after the incident. They spend more effort on how to protect and try to stop the same thing to happen again. For British Petroleum, they try to cut down expenses by using old supply, and that caused oil leaking. After the incident they should have done more on updating for how to protect their equipment. When these disasters occurs, international company must be able to respond quickly and act positive and continuously in order for a best effort. An example would be Union Carbides response. They responded promptly in dealing with Bhopal disaster. They worked diligently to provide immediate and continuing aid to the victims and set up a process to resolve their claims. For example, some vital decisions were made in just

first day. A Union Carbide facility in West Virginia was quickly closed because it manufactured methylisocyanate (MIC). It remained closed until safety measures were reexamined and more light shed on the cause of the Bhopal tragedy. Furthermore, a medical and technical team was dispatched to Bhopal within 24 hours of the disaster to aid the people of Bhopal and help dispose of the remaining methylisocyanate at the plant. Union Carbides reaction to the crisis was fast but also continuous. In the months and years after Bhopal, Union Carbide focused a microscope on every operation and discovered that there was still more that they could accomplish in maintaining safer operations. And money and staff were committed to those objectives. Also, they funded the attendance by Indian medical experts at special meetings on research and treatment for victims. Like this, company should actively engage in recovering this environmental disaster. In addition to this, international corporations tried to have the responsibility of bringing awareness to the people who lack adequate knowledge about the negative effect of such business operation. In Bhopal case, even though Union Carbide did not have a great deal of information to report, they actively conducted some scheduled news conferences and met with the media in briefings and interviews. Those scheduled news conferences helped them deal with the hundreds of inquiries that poured in from around the world and Union Carbide demonstrated how the company would deal with the crisis, integrity and competence. It shows they would not hide or crumble in the face of adversity and brought awareness to the people about the toxic substance which might be related with the companys business operation. Meanwhile, companies should often ask themselves when disasters comes, like what are the possible causes? It could be in many ways, such as poor environmental practice, human errors that the labors lack of good working skills or poor working trainings or companies did not update the technology system regularly, and also natural disaster. As we all known on March 2011, the Tohoku earthquake and tsunami brought a huge nuclear damage for the local residents in Japan. Two years after the incident in 2013, World Health Organization indicated that the residents of the polluted area were exposed to

radiation that probably will not be detectable, and the cause will affect the newborn Japanese babies have a high rate chance to get cancer by increasing about 1% per year (Journal of Clinical biochemistry). Moreover, companies need to have varied plans for what steps can be the most efficient way to avoid the disaster. Company should set up different plans to control from before disaster occurs and after disaster occurs. They could also make an emergency fund using for disaster recovery. And the last, companies need to consider and determine which main objective is worth more between ethics or profits? For possible way, companies need to try making them in balance. Aldo Leopold, a philosopher pointed that humans have an ethical duty to respect nature and must live with it in a harmonious community. Thus, if firms ignore all the ethical issues such as how to purify the environment but only focus on making profit, then sooner or later it will fail in the market. Alternatively, the Environmental Kuznets Curve (see following graph as Figure 1) suggests that economic growth is actually a solution to environmental damage. When GDP increase and as per capita gross increase too, people will start realize more ethical question about how important to protect the environment. There is also a changing environmental ethic being compared from the old ethics to the emerging ethic as the following table display (Figure 2)

(Figure 1)

Environmental Kuznets Curve (Figure 2)

Conclusion In conclusion, to having a safe environment in this world is more important than improve chemical science. When the chemical waste is going to the nature environment it can be harmful in many ways, such as to plants, trees, water and animals. All the chemical companies need to be careful with their products, especially when it relate to toxic. Companies should spend more money on protecting the environment and avoid any possible disaster. Also more people should be aware about this issue, because its important and it has a lot of negative consequences. The Bhopal incident was one of the biggest industrial disasters; it caused a lot of damages. After the incident all the international chemical companies started to focus on the safety part. The location of the company should also move to the area where fewer neighbors are live by, that way less people will get hurt when incident happens. Its the companys responsibility to prove a safety work environment for the employee, to have them work under a good condition. At the same time its the employees job to follow the companys rule and not too messed up anything that can cause trouble for others. Hopefully the similar type of incident wont happen again.

Citations
Bhopal gas disaster. Chemical Industry and Public Health. Retrieved March 17, 2013, from http://www.lakareformiljon.org/images/stories/dokument/2009/bhopal_gas_disaster.pdf Bhopal disaster. Bhopal. Retrieved March 17, 2013, from http://www.bhopal.com/~/media/Files/Bhopal/browning.pdf Incident response and summary. Bhopal. Retrieved March 17, 2013, from http://www.bhopal.com/incident-response-and-settlement Textbook and environment report.(2010) The UNEP Global Environment Outlook . Retrieved March 17, 2013, from http://www.ecoglobe.ch/unep/e/geo10712.htm Fukushima Daiichi Nuclear Power Plant accident.(2011).Journal of clinical biochemistry and nutrition. Retrieved March 17, 2013, from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3246178/