A court in Bhopal, India sentenced seven people to two years each in jail on 7th June 2010, for their roles in the Bhopal gas plant leak that killed thousands of people in 1984. The convictions are the first since the disaster at the Union Carbide plant which has been termed as the world's worst industrial accident and leading example of bad Corporate Social Responsibility (CSR) at work.
Indian industrialist Keshub Mahindra, then head of Union Carbide India Limited, six colleagues and their company were convicted of negligence. The six colleagues included a managing director, vice president, works manager, production manager, plant superintendent and production assistant. The judge imposed a two-year prison term and a fine of about $2,000 each after convicting the men of negligence causing death, endangering public life and causing hurt. Furthermore, the CEO and US-based chairman of Union Carbide, Warren Anderson has been declared proclaimed offender by the court after repeated attempts to extradite him for conviction failed in the CSR fiasco.
Bhopal Gas Disaster and Corporate Social Responsibility
Survivors and rights groups expressed anger over the "light punishment" meted out by India's "slow and ineffective" judicial system and criticized the government for failing to extradite Warren Anderson to India to face trial for his efforts in the corporate social responsibility of Union Carbide. The lax prison terms point to conceptual problems that exist in the corporate social responsibility scenario, especially in India, emphasising the corporate commercial laws and the changes that are required for greater corporate social responsibility.
Dow Chemical and Corporate Social Responsibility
The meting out of lax prison terms also raises questions about corporate social responsibility of the companies involved, particularly for Dow Chemical.
Dow Chemical Co, which took over Union Carbide in 2001, maintains that all liabilities were settled and all corporate social responsibility obligations fulfilled when the company paid 470 million dollars in compensation in a settlement brokered by India's Supreme Court.
However, many believe that the compensation was not enough for tens of thousands affected in the socially irresponsible environmental catastrophe and suffering from illnesses including respiratory and psychiatric problems, cancer and tuberculosis. In the major CSR setback for Dow Chemical, thousands of people died too. The accident site, in the middle of Bhopal, was given back to the state government. It still has 425 tons of hazardous waste that have yet to be cleared. Furthermore, activists have long said there is a high incidence of children with birth defects in Bhopal and demanded that Dow Chemical perform a cleanup of toxic waste from the abandoned plant.
The compensation is a far cry compared to that being demanded for the Gulf of Mexico oil spill disaster in the CSR setback for BP. US President Barack Obama has pushed British Petroleum to pay for the environmental disaster, and the company is liable to pay a fine of up to $300 per barrel. The final compensation may be in billions of dollars.
Corporate Social Responsibility for Companies in Environmental Disasters
Corporate social responsibility (CSR) or corporate citizenship entails companies behaving in a socially responsible manner, and dealing with other business parties who do the same. With growing public awareness and demand for socially responsible businesses, it is little wonder that companies of today take corporate social responsibility into account when planning future socially responsible business operations.
However, when a CSR campaign goes awfully wrong and backfires on a company and the company’s actions are inconsistent with the company’s CSR policies – alone or in combination – it signals that the company is treading down the path of a failing corporate social responsibility campaign. The effects of bad corporate social responsibility can be substantially damaging to a company and include bad publicity, financial burden in fines and long-term effects on brand and reputation.
Jo Bilson - Jo Bilson is a management consultant with interests including venture capital and entrepreneurial finance.
