Responsibilities of Corporations Term Paper

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Responsibilities of Corporations

Most people would agree that the purpose of business is to make a profit, but at what cost in human lives and suffering?

On December 3, 1984, a cloud of highly toxic gas rose above the city of Bhopal, India. When it settled, it instantly killed approximately 3,000 people, and left up to 600,000 people dying slowly or suffering various kinds of medical problems (Economist, par. 2). Union Carbide's pesticide plant was the culprit, yet the company denies any wrongdoing as well as any responsibility in the incident. According to the company's official statement, the explosion was the result of sabotage (Union Carbide, par. 4).

Even if we accept Union Carbide's claim that sabotage was the cause of the catastrophe, does this clear the company of any guilt in the matter? If sabotage really is to blame, doesn't it only shift the company culpability from one area to another; security procedures? Instead of the catastrophe being the direct result of intentionally mishandling dangerous materials, could we take a position that the dangerous materials were indirectly mishandled because Union Carbide failed to impose security measures that would have made it impossible for a saboteur to perpetrate such a crime?

According to the official statement, water was intentionally let into the tank full of methyl isocyanate, a chemical that reacts strongly with water. An explosion inevitably followed. It is not hard to imagine how something as simple as a computer-controlled valve would refuse to admit water into a tank it (the computer) knew was full of methyl isocyanate. Union Carbide says that such a system was in place but was thwarted by the saboteur. Perhaps so, but why couldn't the system have been designed to make it physically impossible to move any substance, even water, into the tank in the event the computer controls failed? In other words, if the computer controlling the contents of the tank becomes incapacitated for any reason, the valves that open to allow anything else into the tank are as good as welded shut. The system should be designed to always assume that something noxious is in the tank, unless it knows for sure that the contrary is not true.

Union Carbide's policy when handling hazardous materials should always be to include a failsafe system that would operate even in the event that some other controlling mechanism(s) were thwarted or otherwise incapacitated. It is also not hard to imagine how little such a failsafe system would add to the cost of plant operations.

I cannot be the only one who has ever thought of such a system, yet one was not in place in Bhopal. I can think of 600,000 reasons why it should have been.

Quite apart from the cost in human terms, Union Carbide faced a considerable cost at the expense of its brand image. Whatever it may have been before the incident, the company's brand image and brand equity could only have suffered afterward. Company execs evidently understood this at the time. While disavowing any culpability in the incident, they nevertheless paid out $470 million (about Rs. 7.5 billion) plus an additional Rs. 43 million to Indian government agencies that were supposed to distribute the cash to survivors of the incident and to families of those killed or who have since died as a result of injuries sustained at the time (Economist. Par. 4). Generally, big corporations don't pay out this kind of cash unless they are forced to, and certainly not just to be nice. It follows that Union Carbide paid this huge sum as part of an effort to preserve (or restore) its reputation.

Hundreds of millions of dollars were paid out to compensate victims of a tragedy that could have been avoided altogether for only a tiny fraction of the cost in cash and suffering. How ironic.

The people who live in and around Bhopal are certainly not satisfied with the state of things since the disaster. Many victims are still awaiting their share of the settlement, and the plant, though closed and cordoned off, remains highly contaminated to this day. Ground water in the vicinity has sometimes killed cattle that have drunk from it (Economist, par. 1).

Union Carbide is not the only company that has used questionable judgment in handling something dangerous. 3M, famous for adhesives and such indispensable products as "Post-It Notes," has lately come under fire for marketing a respiratory mask that it (allegedly) knew was not as safe to use as claimed.

3M introduced the 8710 respiratory mask to industry in 1972 (Schmitt, et al., p. 38). The mask was intended for use by workers in any industries in which hazardous airborne particulates were a problem. This ranged from coal miners to textile workers to shipyard workers, and so forth.

3M's marketing materials claimed that the mask was 100% effective, yet now, reports of respiratory ailments among former users of the mask are becoming overwhelming. Although, like Union Carbide, 3M refuses to acknowledge any culpability in the mask's failure to protect users, it has settled out of court with claimants to the tune of hundreds of millions of dollars (Schmitt, et al., p. 38). As early as twenty years ago, one OSHA inspector claimed that the mask was useless, and that upon inspecting used ones he found "nearly as much visible contaminant inside the mask as on the surface outside" (Schmitt, et al., p. 38).

From the very beginning, the mask did not meet federal standards for safety. 3M used its own standards for testing and ensuring the mask was safe to use. The company also failed to disclose that the mask was not up to federal standards. In fact, not only did the company tout the mask's safety in its advertising, it was only after the federal standards were tightened that the 8710 mask was removed from the 1998.

Why did it take 3M twenty six years to remove a product that, according to everyone except its own executives, failed to come anywhere near the claims made in the company's ads (Schmitt, et al., p. 39)? Even though government agencies such as OSHA and NIOSH knew the mask was unsatisfactory, they just allowed 3M to slip by (Schmitt, et al., p. 38).

OSHA has an annual budget of $450 million, out of which, among other things, a mere 1,000 workplace inspectors are kept on the payrolls to oversee practices at about 4 million workplaces in the states where OSHA has authority. In order for these workers to inspect all 4 million workplaces, given a 40-hour work week and 50-week working year, each inspector would have to visit (and inspect) a different workplace every 2 hours, and faster if any of them take sick leave or have lunch. It simply is not possible for 1,000 inspectors to catch every instance of some kind of violation (Multinational Monitor, p. 21).

Similarly for OSHA and NIOSH oversight of products intended, like 3M's 8710 mask, to protect workers. Clearly the mask was a problem, for OSHA identified it as such. Yet swamped with demands on scarce resources, the administrative machinery that would otherwise work toward pressuring 3M to remove the product was expended elsewhere.

In the first case, I have presented a company that, perhaps through dumb shortsightedness rather than willful negligence, caused the deaths of thousands of people as a consequence of its safety practices. In that case, no particular violations of government regulations appear to have been made. Yet the disaster has affected the lives of at least 600,000 people so far, and will doubtless continue to affect more people for generations to come. The disaster was avoidable, yet smart people who should have known better did nothing to avoid it.

In the second case, I have presented a company that has also…[continue]

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