The Bhopal gas leak was a terrible tragedy in which thousands of helpless civilians were killed and hundreds of thousands were injured as they slept. Determining who was at fault and, consequently, who should compensate the victims and clean up the site are questions that have plagued the affected parties, my Rotman classmates and the world at large for over 25 years. The analysis to follow, in attempting to present the roles and responsibilities of each major player, will demonstrate the incredible difficulty involved in assigning conclusive responsibility for the tragedy.
This will be followed by my personal reflections on the incident in which I present an additional culprit to those discussed in class. Union Carbide Corporation (US): In seeking to assign responsibility for the incident, there are two clear opportunities to point the finger at Union Carbide Corporation. Firstly, pressure from the corporate office to stop losses backed Union Carbide India into a corner that led to the cost-cutting proposal that ultimately produced the disaster.
If, as Milton Friedman said, the social responsibility of a business is to increase profits, then Union Carbide Corporation is under a purely fiduciary, and not a moral or ethical, responsibility to the company’s shareholders and their decision to approve the cost-cutting plan seems appropriate. Friedman’s view, however, is far from universally accepted. Many believe that corporations’ responsibilities to their shareholders, employees, customers and communities extend past fiduciary and enter the realms of ethics and CSR.
These people will lay blame for the incident at Union Carbide Corporation for putting profits before people. A second criticism often leveled at Union Carbide Corporation is the fact that their inspectors had visited the Bhopal plant a year before the incident and noted sixty-one safety issues. A grand total of zero of these recommendations had been implemented by the time of the incident. While responsibility for implementation certainly rests with Union Carbide India, the parent company cannot escape blameless as they bear responsibility for following up and ensuring their plants are meeting their own safety guidance.
This negligence led to disaster. Union Carbide India Limited: The Indian subsidiary of Union Carbide’s level of responsibility for the Bhopal tragedy is also difficult to determine. It clearly bears responsibility for non-functioning safety and emergency equipment that greatly exacerbated the scope of the tragedy. It is simply unacceptable that the cooling unit had been disabled for over one year. Union Carbide India also failed its responsibilities by hiring under-qualified and illiterate employees, and then failing to train them appropriately.
These employees did not understand the dangers and worked in a world where minor leaks were commonplace and corroded instruments could not be trusted. As well, the subsidiary surely deserves blame for not correcting any of the safety violations identified before the incident. Defendants of the Indian subsidiary, however, will remind their critics that cutting these corners were required to keep their plant open and preserve their jobs and important pesticides. Without pressure from their US parent to eliminate losses, they argue, such drastic measures would not have been necessary.
Here again we see how easily complications arise when attempting to assign responsibility for ethical lapses. Government of India: The government of India was the strongest proponent in bringing a Union Carbide plant to Bhopal as the prospect of jobs and much needed pesticides led to an offer Union Carbide could not refuse: cheap labour, tax breaks, few workplace safety restrictions and a guaranteed market for 100% of their output. The Government of India, in addition to economic growth, also bears responsibility for the safety and well-being of its citizens; here, they failed to live up to their full mandate.
Firstly, the decision to favour economic growth over safety was questionable ethically and ended up costing them dearly. Secondly, the Government neglected the densely-populated shanty town that had grown up near the plant on land deeded from local officials. Its residents were the first and main victims of the poisonous gas. Still, many will argue that a cost-benefit analysis made creating jobs and accessible pesticide for a poor and hungry region the proper priority.
While many were ultimately harmed by the leak, how many more had benefitted from the poverty-alleviating jobs and hunger-alleviating crops? Here again we find valid points and counter-points, leaving us no closer to assigning conclusive blame and responsibility for the tragedy. Dow Chemical: While Dow certainly protected itself in the purchase agreement from a legal standpoint, there are those that suggest the proper ethical action is for Dow to assume responsibility for any outstanding clean up and compensation.
While this may innately feel like the right thing to do, the counterpoint that Dow had nothing to do with the incident and should not be punished after paying fair market value for Union Carbide is also valid. Personal Reflection: Analyzing the conduct of the major parties has not produced any conclusive allocation of responsibility. It is clear that each party deserves significant blame but no party deserves total blame.
There is, however, an overlooked culprit that I believe deserves the bulk of the blame: the expectations market that has hijacked the decision making of US corporations(1). Ever-increasing emphasis on the expectations market (stock prices) instead of the real market (products/services, relationships with customers and communities) has left businesses making short-term, profit-chasing decisions at the expense of their reputation, ethics and long-term viability. Approving cost cuts that jeopardized safety in Bhopal is just one of all too many such instances. This juxtaposition of ethics vs. eeting financial expectations, however, is fatally flawed – there are many examples where ethical decisions produce long term financial success (Tylenol and Maple Leaf Foods recalls, for example). Queens University took the ethical route vis a vis the Radler donation and the class poll revealed that only a very small percentage of us had heard of that incident. I believe that if Queens had taken the easier, unethical decision and never offered to return the donation, this story would have been much more widely publicized and Queens would have suffered in the long run.
Moreover, there is no shortage of examples where short-term unethical decisions destroy companies and make them miss their projections forever! (Enron, Bre-X, Nortel, etc – sadly this is a very long list indeed). In short, I disagree with Friedman and lay the bulk of Bhopal blame at the financial system in which Union Carbide operated. Fear of getting hammered by the expectations market led to corporate’s threat to close the Bhopal plant which set off the chain reaction that ultimately ended in tragedy.
Fear of incurring further losses after the tragedy than focused Union Carbide’s efforts on avoiding liability, rather than taking the ethical high-ground and assuming fair responsibility for compensation and clean up. Corporate promotion of hypernorms such as integrity, compassion and responsibility will ultimately benefit all stakeholders and provide corporations with the enduring financial rewards that accrue to those that are respected and well-liked by the real market (ie. onsumers and communities, not analysts and speculators). We need to usher in a new era where businesses chase solid reputations and community longevity instead of quarterly earnings expectations. The default corporate reaction to adversity must shift towards upholding these hypernorms, rather than hiding behind lawyers and waiting until the blame has been transferred elsewhere. Realizing that employing the ethical strategy does not compromise, but actually enhances long term financial viability is a crucial first step.
Courtney from Study Moose
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