INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH, BHOPAL

PGDM Trimester-V Batch 4th (2012-2014) Business Ethics Case Analysis HLL

Submitted To: Prof. Gazal Sharma

Submitted By: Saijeeth Vasudevan

Introduction to the Case: The case talks about a MNC which was caught red handed doing unethical things. These unethical things were affecting the environment nearby the plant and also affecting the life of employees which were doing work in the factory. On March 2001, more than 400 residents of Kodaikanal, an idyllic hill station on the Western Ghats in the South of India, caught red-handed the multinational Hindustan Lever Ltd (HLL), when they found a dumpsite with toxic mercury-laced waste from the companys thermometer factory located in the heart of the town. 7.4 ton of crushed mercury containing glass was spilled in a busy scrap yard located near a school. Such an exposure marked the beginning of an ongoing saga of dishonesty, by Unilevers Indian subsidiary, Hindustan Lever Ltd. It was estimated around 32,000 people were affected, living in Kodaikanal. Ten workers died in the factory while it was functioning, and Greenpeace, a global NGO committed to environmental protection, claimed that the deaths were due to mercury poisoning. Symptoms reported by ex-workers were fatigue, respiratory headaches, nausea, blurred vision,

disorders, central nervous system problems such as loss of memory, tremor

etc. The ex-workers claimed that they got these symptoms after they were employed at the factory. History of HLL: The factory was originally located in New York but was shut down for environmental reasons US-based Chesebrough Ponds relocated its aging mercury thermometer factory from Watertown, New York to Kodaikanal in 1983. The factory was acquired by Unilever & it bought Chesebrough Ponds owner of HLL, which is Unilevers 51 percent owned Indian subsidiary. It was said to be the largest thermometer plant in the world Unilever, the Anglo-Dutch FMCG giant, imported all the glass and mercury for the thermometers from the US and exported all the finished thermometers to the US based Faichney Medical Co. which in turn exported them to markets in the US,UK, Canada, and other countries. Mercury is a toxic metal, which when converted into deadlier forms such as methyl mercury and released into the environment could cause tremendous health problems to people living nearby and even far away. It was found that after processing of mercury, glass and recycling of glass scrap was done, the remaining scrap was sold to

recyclers unlawfully and in breach of the companys operating policies. Investigations proved that the factory buried glass scrap on the site after appropriate regulatory approvals. The slopes where the wastes are dumped are part of the Pambar Shola watershed, draining water through the Pambar River. This small river eventually ends in the plains leading up to the temple city of Madurai. Damage to Workers and Environment: It was reported that 600- 800 workers were exposed to mercury. 20 workers between the age group 22-35 years have died to poisoning in the factory. Thousands of people in the vicinity of the Factory suffered from Skin diseases, Headaches, Stomach pain etc. Poisonous vapor carrying mercury travelled across the town. Management Negligence played a key role Company discontinued occupational safety measures at the factory from 1985 i.e. in the 2nd years of operation. The only warning that was given to the workers by the management as wash hands before eating. The company didnt gave information to employees about the hazardous nature of the work they were engaged in, thereby covertly endangering their lives. The above points prevented timely remedial measures that could had taken place. HLLs Response to Complaints: Earlier the company was dismissing the complaints but after many denials & coverups the company agreed that it shipped out 5.3 tons of mercury waste to scrap yard, but independent verification showed that 7.4 tons of mercury wastes were shipped to scrap yard. Though HLL was defensive at earlier stages, but then HLLs response to the complaints was transparent and even aggressive. The persons responsible for breach were identified & penalized & also a new manager, R. John was appointed to defend the Factory administration. Manufacturing operations were suspended on March 2001 & glass scrap yard was shifted to a more secure place.

An environmental audit was commissioned by HLL and for that it appointed URS Dames & Moore of Aus to conduct a detailed environmental audit. The result showed that 300 kg of mercury was disposed to the Pambar Sholas Forest and another 700 kg of waste through air. Another notable International expert Dr P.N Vishwanath found no evidence to risks caused due to mercury.

All the surveys and studies made both by HLL and activists offered conflicting views about the exact nature and impact of the mercury waste on workers and the immediate community of the Kodai thermometer factory.

HLL exit from Thermometer Production: HLL said in a statement that it has decided to exit from the thermometer business in January 2001 because it was not Core Company. The companys core business is the manufacture and marketing of soap, detergents, skin care products, deodorants, food and beverages etc. The TNPCB ordered the factory to close down and clean up the toxic mess the company had created, because of the order of TNPCB the company sent back at least 300 tons of the toxic material to the United States in 2006. Role of NGOS in making HLL Redress Public Grievances: The NGOs left no stones unturned to mobilize public opinion and to pressure TNPCB and the TN government to compel HLL to make amends for its acts of commission and omission in unlawful disposal of the hazardous toxic waste and in the exposure of workers to potentially dangerous work environment. It was NGOs that galvanized workers, concerned citizens and environmental activists to force the factory to suspend operations in March 2001, after discovering that the company had dumped the mercury-contaminated waste at several public locations. The NGOs were also responsible to form the TN alliance against mercury (TAAM), which tried to identify and contain contaminated soil. The NGOs were also behind the former workers approaching the supreme court of India in 2005, demanding compensation from HLL for loss of their jobs and health hazards the suffered. The most laudable part of NGOs role is the novel and dramatic manner in which the kept they mercury waste spill issue alive throughout, by using a variegated set of measures available to them.

Where does the truth lie? Two scientific studies, made after the closure of the Kodai factory in March 2001, Amounts of mercury found along the hills surrounding Kodaikanal Lake and also high levels of mercury was seen to as far as 20 kilometers from the Kodaikanal but HLL denied these allegations. Admitted to 5.3 tons of mercury containing glass wastes lying at the Munjikal scrap yard came from HLL factory. HLL promised to track, retrieve and clear such other waste. NGOs demanded justice from HLL for the damage. Ultimate demand to Government: Initiate legal action against HLL for lying to statutory body. Take serious action against the inspectorate of factory, who for 18 years failed in their assigned duty to find any traces of mercury at the factory site or beyond. The government should initiate long term studies to monitor the impact of mercury on the whole system. The government should order, at HLL expense, to make enquiry into the impact of mercury on the health of people and give treatment. The government should find means and ways to compensate the families of dead workers. Government should ensure that the mercury retrieved from HLLs wastes is permanently destroyed. Conclusion: HLL Plant had adversely effected the entire Kodaikanal environment. There are evidence that can prove that mercury emitted from the plant had far larger impact than revealed by the expert commissioned by HLL. HLL yet to have submit the complete clean-up protocols to TNPCB. Mercury is still prevalent in the atmosphere through the discarded factory scraps. The Environment is badly affected. Hindustan Levers behavior violates the environmental principles of the UN Global Compact.

Questions & Answers Q1. Trace the history of the establishment of Kodaikanal Thermometer factory and how it came into the adverse view of the NGOs, the public and the TNPCB? Ans1. Originally a New York based company which was shut down there due to environmental reasons. It was then relocated from Watertown, New York to Kodaikanal, Tamil Nadu in 1983. The factory was acquired by Unilever, after it bought Chesebourgh Ponds owner of HLL, which is Unilevers owned Indian subsidiary. Reason to come into the adverse view of the NGOs, the public and the TNPCB is that more than 400 residents of Kodaikanal caught HLL red-handed dumping toxic mercury-laced waste & also mercury is a toxic metal which can cause tremendous health problems to people living nearby and even far away. Q2. How did Hindustan Lever Ltd. Respond to the initial complaints of various stakeholders that the company had adopted a callous attitude towards the disposal of Hazardous mercuryladen waste? What type of strategy did the company adopt when it realized that the entire fault lay in the carelessness of the factorys administration? Ans2. Initially HLL sought to dismiss the Complaints. Company responded that they were characterized by denials, cover-ups and lack of transparency. The company said that the records of any mercury waste leaving the factory were kept meticulously. They tried to hide things and for this lied to the statutory bodies also. Strategies adopted by the company after realizing the fault: HLL duly informed TNPCB of the details of the mercury disposals. The persons involved in the event were identified and penalized, the penalty depend on the severity of the offence committed. A new factory manager, R. John George who knew the local language, Tamil was appointed for factorys administration. Q3. What was the role of NGOs in bringing to light HLLs dumping of mercury waste in various parts of Kodaikanal locality? To what extent were they able to get justice to the affected workers and the general public?

Ans3. The NGOs left no stones unturned to mobilize public opinion and to pressure TNPCB and the TN government to compel HLL to make amends for its acts of commission and omission in unlawful disposal of the hazardous toxic waste and in the exposure of workers to potentially dangerous work environment. It was NGOs that galvanized workers, concerned citizens and environmental activists to force the factory to suspend operations in March 2001, after discovering that the company had dumped the mercury-contaminated waste at several public locations. The NGOs were also responsible to form the TN alliance against mercury (TAAM), which tried to identify and contain contaminated soil. The NGOs were also behind the former workers approaching the supreme court of India in 2005, demanding compensation from HLL for loss of their jobs and health hazards the suffered. The most laudable part of NGOs role is the novel and dramatic manner in which the kept they mercury waste spill issue alive throughout, by using a variegated set of measures available to them. The NGOs with their continuous demand and incessant ensured the livelihoods of workers that are put to risk by HLL. As a result the damages caused to the workers, the community and ecology of the Kodaikanal town was compensated adequately. The NGOs kept the issue alive throughout. Q4: Explain in your own words the HLL Kodaikanal mercury spill controversy. What is the present status of the controversy? Ans4. On March 2001, more than 400 residents of Kodaikanal, an idyllic hill station on the Western Ghats in the South of India, caught red-handed the multinational Hindustan Lever Ltd (HLL), when they found a dumpsite with toxic mercury-laced waste from the companys thermometer factory located in the heart of the town. 7.4 ton of crushed mercury containing glass was spilled in a busy scrap yard located near a school. Even after 5 years of being caught the HLL has not submitted the complete clean up protocols to the TNPCB. It is also noted that the mercury is still prevalent in the atmosphere because the discarded factory scraps and contaminated vegetation re-emit absorbed mercury. Q5. What kind of roles have NGOs such as Greenpeace India, played in bringing to the open the issue of HLLs spill of toxic mercury waste in and around Kodaikanal hills? Did it have the desired impact in your view? Ans5. They mobilized public opinions to pressurize the government for compelling HLL to make amendments for its acts of commission and omission in the unlawful disposal of the toxic waste. It galvanized workers, concerned citizens and environmental activist to force the

factory to suspend its operations in March 2001. It also formed the TN alliance against mercury which tried to find out contaminated soils. NGO had played a very vital role in this issue because of NGO only HLL saw the reason and took some corrective measures. It helped the former workers to approach the Supreme Court of India in 2005, demanding compensation for the loss of job and health from HLL. Q6. How would you reconcile diametrically opposite views held by HLL assigned scientists and those appointed by the government and NGOs about the quantity and the toxic nature of the spilled mercury waste and its impact on the failure ecology of Kodaikanal hills? Was there any meeting point at all between these two viewpoints? Ans6. An environmental audit was commissioned by HLL. The URS scientist admitted that the discharge of mercury to the Pambar Shola forest was approximately 300 kg. HLL

appointed consultants who said that about 700 kg of mercury waste were released through air-bone emissions. An expert, Dr. P.N. Vishwanathan of eco-toxicology of mercury was appointed by HLL. He could not find any evidence to risks caused by mercury either to human or to environment. The results were opposite when scientists of government and NGOs. The scientists found that the concentrations of mercury up to 1.32 g/ m^3 which was about thousand times higher than in the areas that were not contaminated. It was very clear that the viewpoints of both the scientist one appointed by HLL and other by the government was totally opposite to each other.