3) Can a corporation have conscience of its own
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Transcript of 3) Can a corporation have conscience of its own
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