CAN A CORPORATION HAVEA CONSCIENCE OF ITS OWN??

Corporate conscience

Can a corporation have a conscience?

Who keeps the conscience of a corporation?

Even if a corporation could have a conscience, would this be a

good thing? Will it distract the organization from its main

goals like profit and growth?

The questions are too difficult to answer

Explicit ethical questions may be troubling because they make

the invisible foundations of a corporate culture all too visible

Difficulty faced by corporations in coping with the daily

demands of the growing business world

High growth rate demands continuous improvements

Corporate conscience

Individual and Corporation

Analogy between the individual and the corporation project to corporations the concept of moral responsibility

A corporation can have a conscience, Goodpaster and Mathews highlight three notions of individual responsibility: responsibility as accountability, that someone is to blame

(Exxon was responsible for the Exxon Valdez oil spill) responsibility as rule-following, that something has to be

done (General Motors is responsible for meeting its pension obligations)

responsibility as decision-making, that trustworthiness can be expected (Google wants to be considered a responsible corporate citizen)

Differences between Corporations

Corporations have features in there incentive systems, board structure, internal control systems that we can call self control,integrity & conscientiousness (visa-a-vi person)

Some corporations are more aware about consumers, employees and society

Corporations reject operations & policies that are questionable Moral responsibility based on rationality and respect A thoughtful, transparent process that values individuals can

go a long way toward demonstrating that your corporate responsibility program, and your company, does indeed have a conscience. Thus gain trust of stake holders

Societies view

Society finds the idea of holding corporations responsible useful and intelligible 1968: Ford Pinto case Ford had access to a new design which would decrease the possibility of

the Ford Pinto from exploding The company chose not to implement the design, which would have cost

$11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths

The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit

Based on the numbers Ford used, the cost would have been $137 million versus the $49.5 million price tag put on the deaths, injuries, and car damages, and thus Ford felt justified not implementing the design change.

Safety doesn’t Sell

Ford was not in violation of the law Ethical issue:

It seems unethical to determine that people should be allowed to die or be seriously injured because it would cost too much to prevent it

Use of risk/benefit analysis to decide consumers safety was condemned Ford ended up having negative publicity The result of the Ford Pinto case indicate there is a belief held by most

of the public that it is wrong for a corporation to make decisions which may sacrifice the lives of its customers in order to reduce the company's cost or increase its profits.

Value of human life cannot be estimated and quantified.

Bhopal Gas Tragedy

Occurrence: 3rd December 1984. Place of occurrence: Bhopal, Madhya Pradesh, India. Company: Union Carbide Corporation. Chemical: Methyl Isocyanate (27 tons)

AMONG THE 500,000 PEOPLE EXPOSED TO THE GAS, 20,000 HAVE DIED TILL DATE AND 120,000 CONTINUE TO SUFFER DEVASTATING HEALTH EFFECTS AS A RESULT OF THEIR EXPOSURE.

Union Carbide Corporation Started their Indian operations in 1969 in Bhopal Phosgene, Monomethlyamine, Methyl Isocyanate (MIC) and the pesticide

Carbaryl, also known as Sevin. Taken over by DOW Chemicals in 2001. DOW refused Union Carbide’s Liabilities in Bhopal, India.

Response by Union Carbide

A disgruntled plant employee, apparently bent on spoiling a batch of methyl iso cyanate, added water to a storage tank”. -B. Browning Jackson (Vice President)

It's not a deadly gas, just irritating, a sort of tear gas.” Dr Loya, Union Carbide's official doctor in Bhopal, commenting on Methyl Isocyanate, after the tragedy.

The pesticide factory was built in the midst of densely populated settlements

UCIL chose to store and produce MIC, one of the most deadly chemicals in an area where nearly 120,000 people lived.

MIC in the tank was filled to 87% of its capacity while the maximum permissible was 50%.

MIC was not stored at zero degree centigrade as prescribed and the refrigeration and cooling systems had been shut down five months before the disaster, as part of UCC's global economy drive

As part of UCC's drive to cut costs, the work force in the Bhopal factory was brought down by half from 1980 to 1984.

There had been many accidents of similar nature in UCC's American plants prior to the Bhopal accident, but United Carbide chose to ignore warnings

COCA COLA CONTROVERSY- PLACHIMADA, KERALA

BACK GROUND

Plachimada in Kerala known as “rice bowl of India”

Important agricultural region for the state

Depends heavily on canal irrigation and ground water

However it lies in rain shadow region of western ghats and is

drought prone

80 per cent of the population depends upon agriculture for

their livelihood.

COCA COLA BOTTLING PLANT

Hindustan Coca Cola Company set up a plant in this district in

the year 2000

The plant occupies an area of around 34 acres of land

The land had been classified ‘arable’ by the Government of

India

CONTROVERSY

• Salinity and hardness of water increased

• Water in neighboring open wells found to have developed strong

bitter taste

• People suffered from stomach disorders and skin ailments

• Few wells in the area dried up due to over extraction of groundwater

• Agricultural yield decreased

• Distribution of sludge as fertilizer to farmers which contained high

quantities of lead and cadmium

AFTERMATH

• The Gram Panchayat put a ban on company by refusing to

renew its license

• In 2003, Coca cola filed a case in Kerala High court against

Gram Panchayat

• Coca Cola denied all allegations and attributed the drying up

of wells to less rainfall

• High court ruled in favour of Coke

• Panchayat then appealed to Supreme court

• Coca cola to pay damages worth Rs 216 crore

NIKE

• Basic footwear, street-smart athletics shoes, sports apparel

• Global symbol of athleticism & Urban cool

• Saves cost by outsourcing manufacturing to low cost parts of

world

ISSUES

Unfair Labor Practices

Child labor-12-14 yrs old

Poor wages- Not enough to met even 70% of basic req.

Argument – Provides some source of income to otherwise jobless

Unsafe living conditions

- Poor ventilation

- Exposure to toxic chemicals

- Lack/inadequate safety equipments

Inhumane working conditions:

- More than 16 working hrs

- Improper/Lack of basic amenities

-Nike turned blind eye to sexual harassment in its factories

(Vietnam)

On 17 October 1996, CBS News ran a 48 hour program

covering the inhumane treatment of workers by their

supervisors

Several leading newspapers and journals including The New

York Times, USA Today, The Wall Street Journal, AP, and

Reuters

Reputation & Image tarnished to great extent

Reforms

Raised the min. age of workers to 18yrs

Adopted to US OSHA clean air standards

Educational programs for workers

Micro-loans for workers

Safety training for workers

BHARAT PETROLEUMCOMMUNITY DEVELOPMENT AT VILLAGE ‘RAMTHENGA’, JAJPUR DISTRICT,ORISSA

Background Note

This village is dominated by the tribal population – ‘Santhal Tribe’

Most of the villagers worked in the neighboring mines hence developed severe respiratory / skin infections

The children did not attend any school and the nutrition status of the children was very poor

The women were suppressed and worked in the farm as well as in the mines

Lack of availability of water was also one of the main concerns of the villagers

Background Note

Major interventions were required in the area of: Health Education Awareness about health/ sanitation/ hazards of working in the mines Precautions to prevent respiratory illness Making water available

BPCL constituted a team to implement the work in the community.

The main participants in the project were : Villagers NGO partner – Research Analysis Consultants BPCL LPG Team based in Bhuvaneshwar and Khurda headed by TM Khurda BPCL HR Team at Kolkata headed by HR Chief and CSR co-ordinator BPCL Corporate CSR Team headed by GM (Admin)

Initiatives

Phase 1 BPCL Khurda Team identified an NGO with its main office in

Bhuvaneshwar which did a need assessment of the village health services, primary education and Self Help Groups emerged as

one of the main needs

Phase 2

BPCL supported the project through NGO RAC by: Providing the services of a Homeopathic Doctor (from neighboring

area) for free thrice in a week Initiating a Balwadi (pre-primary) for children within the village

Initiatives

Phase 3 Awareness was created about precautions for working in the mines

through street plays, skits during village festivals, drawing competitions for children as well as through the homeopathic doctor

Deepening of village pond and encouraged fishery• With support from RAC the villagers engaged in cleaning the pond and

also dredging the same • With the help of Central Institute of Fresh Aqua Culture,

Bhuvaneshwar, the villagers were trained of fishery management Repair and maintenance of Bore wells• the bore wells were repaired and the villagers were also trained to

maintain the same

Initiatives

Phase 4Formation of 1st SHG in the village comprising of women

• BPCL supported by way of providing teacher from the nearby village and also 4 sewing machines

• A group of women were trained to market the stitched products in the local haats (local bazaar)

Promoting Mushroom Cultivation• The NGO assisted SHG to purchase mushroom sponge at INR 17 a packet from

‘Orissa Institute of Agriculture and Technology’ Bhuvaneshwar.• Each packet of sponge would generate approximately 1.5 kg of mushroom and

would sell at INR 80

Phase 5Promoting Banana & Papaya plantations:

• to provide alternate source of income and reduce dependence on mining

Rigveda says –

“A businessman should benefit from business like a honey bee which suckles honey from the flower without affecting its charm and beauty”

References

Can a corporation have a conscience?; Goodpaster et al.; Harvard business review; 1982

http://en.wikipedia.org/wiki/Criticism_of_Coca-Cola#Water_use

http://www.ielrc.org/content/w0705.pdf

http://www.coca-colaindia.com/water_management/

water_management_approach2water.aspx

http://logosinstitute.net/blog/2009/05/14/does-your-corporate-

responsibility-program-have-a-conscience/

THANK YOU