Q 13) what ethical issues does the Bhopal case raise?

What ethical standards should be applied in making corporate policies regarding the case? Answer: Business ethics is the branch that discusses issues of morality. Morality deals with notions of good and bad, justice, fairness, right and wrong, and the way we develop and apply our values (Gibson, 2007). It is the behavior that a business obeys in its daily dealings with the world. Business ethics focuses on identifying the moral standards of right and wrong as they apply to behavior within and across business institutions and other related organizations (Newell, n.d). As perceived in the case union carbide was a key player in the pesticide industry for many years holding great reputation. However due to catastrophic incident at Bhopal, the company was in jeopardy as the accident not only affected the company but several thousands of human and animal life and also impacted the environment. Many issues at various instances have been raised in the case which is unethical and immoral. The first and the fore most issue being the ethical and moral duty of protecting and preserving human life. Union carbide and the government of India both failed to protect the life of the employees working within the organization, the communities residing near the plant and the environment from impairment while the plant was being operated. The fact that a lot of critical safety devices of the plant were either deactivated or had some technical problems, irrespective of the plant being extremely hazardous the safety procedures of the plant was of least concern for Union Carbide as well as the government of India. Now if we look at the root of the case, the government of India displayed unethical behavior by granting the permission to operate extremely hazardous facility and also allowing communities to

reside near such a perilous plant. Union Carbide played the unethical blame game and declared in its defense that the accident was caused by employee sabotage without any evidence. This defense was based on the evidence that the company gathered through its own internal investigation but never released it to the public or to the courts (Shrivastava, 1995). The company accepted its moral responsibility but rejected legal liability. It distanced itself from the Indian subsidiary company and blamed most of the failures on it in spite of holding 51% of the share (Shrivastava, 1995). Union carbides decision makers valued profits over human life. They were aware of the fact that the basic safety standards were not enforced by the Indian subsidiary company. Had Union Carbide taken upon them to set up the procedures they might have reduced the catastrophic event of the MIC gas being leaked and thus saving thousands of innocent peoples life and also safeguarded the environment. Being an American corporation and holding a maximum of 51% stake in the company, Union Carbide should have followed American safety standards irrespective of where the company is located. UCL quickly entered litigation over liability and fought aggressively to defend itself without accepting the accountability for the event (Shrivastava, 1995). There was a drastic reduction in the size of Union carbide in terms of sales revenue and shareholders equity without even a single penny paid in the compensation to victims of the disaster which depicts how unethical the companys policies were. The lawyers also exhibited immoral corrupt behavior since they wanted to solve the case early so that they do not lose their lucrative charges which would not have happened if the case would have been moved to India.

Now, in order to apply ethical practices in company policies the company must understand that the only responsibility of the business is not just to make profits but to also handle the factors responsible for all environmental problems rather than just leaving it on free markets to deal with (Shrivastava, 1995). Moreover the company exhibited little concern for the environment in its choice of product portfolio. It produced heavy chemicals, pesticides, batteries, carbon products, consumer products, and plastics. The hazardous and environment damaging products didnt not deter the company from producing and using them without appropriate safety measures. After making an initial commitment to establish a production facility, it did not back out even though it knew that the Bhopal plant could not be run profitably. The plant lacked emergency plans and crisis prevention and readiness measures. The plant personnel ignored early warning signals from an environmental/safety audit survey. (Shrivastava, 1995). The company failed to maintain ethical norms in its corporate policies. The corporation in todays scenarios has socioeconomic and competitive character which demands spirited and competitive choice of strategy surrounded by legal, social and ethical boundaries. Hence each and every corporation must be reasonable in terms of its memo and essence in which the society allows it to function and operate (Verma & Prakash, 2011). It is the duty of the company not only to be good citizens but also doing the right thing is prominent in the goal of business for social responsibility (Porter & Kramer, 2006). Companies should operate in a way so that it secures long term economic performance by avoiding short term behaviour which could be detrimental or environmentally wasteful (Porter & Kramer, 2006). Local governments should not allow industrial facilities to be situated within urban areas, regardless of the evolution of land use over time. Government and corporations need to bring proper financial support to local communities so they can provide medical and other necessary services to reduce morbidity, mortality and material loss in the case of an industrial accident (Verma & Prakash, 2011). Companies need to come clean and address various environmental and social

issues in their corporate policy and strategy. It is not sufficient for companies to create offices or corporate relations or even corporate responsibility, if public accountability is not written in their policy formulations and expressed through their strategic implementation (Guerrette, 1986). Modern technological progress has come with a price, in terms of environmental crises. Global warming, ozone depletion, air and water pollution, soil erosion, and deforestation are widely recognized as global environmental problems demanding immediate solutions (Shrivastava, 1995). Corporations are not responsible for all the worlds problems, nor do they have the resources to solve them all (Porter & Kramer, 2011). However each company can identify the particular set of societal problems that it is best equipped to help resolve and from which it can gain the greatest competitive benefit. Corporations should apply its vast resources, expertise management to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organisation (Porter & Kramer, 2011.p. 92). Hence if these ethical standards were maintained such a disastrous incident wouldnt have been inevitable or the case would have been settled in a legal, moral and ethical way and justice would be served to all the victims.

Gibson, K. (2007). Ethics and Business: An introduction (pp. 110). N.P.: Cambridge University Press. Retrieved October 24, 2011

Verma, S., & Prakash, U. M. (2011). Corporate Governance: Business Ethics and Social Responsibility. Corporate Governance, (November 2003). Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1802333

Guerrette, R. H. (1986, October). Environmental Integrity and Corporate Responsibility. Journal of Business Ethics, 5(5), 409415.