Corporate Sustainability

Question 1: What could HUL do differently to manage the social and environmental
consequences? Please lay down your thoughts and provide reasoning. You may consider the
key events / timeline (acquisition of PIL, workplace safety, handling of hazardous waste,
handling protests and litigations)

Answer:

It can be inferred from the case, that company has been in consistent denial from taking the
responsibility of damage caused to the environment and human life from its operation of mercury
factory. Therefore, a responsible and graceful acceptance of the harm caused to the environment
and society, and proactive remediation measures, should ideally have been the course of action by
HUL. We will now examine all the aspects of cases in detail and see how the HUL could have
responded to the consequences of their actions.

HUL in its mercury factory had failed to provide safe workplace conditions, which is proved by the
fact that medical examination of its employees revealed various disorders, WHO identifies exposure
to mercury as major health concern and United States Agency mentioned about the impact of
mercury vapors on different body parts. A report by committee appointed by Ministry of Labour and
Employment substantiated the similar claims. HUL’s response to this has been a constant denial.
Instead, they should have accepted their acts on humanitarian grounds and should have much
earlier succumbed to employees’ agitations and protests, to provide them with appropriate
compensation for the damage caused and on the directives of Supreme Court should have setup
health clinics to support the medical remediation of the victims. Now this is something expected
from them when damage has been done. Ideally, the right course of action should have been
initiated from the very beginning of the acquisition of PIL. They should have ensured that employees
are provided with protective equipments to filter the harmful mercury vapors, dangerous mercury
and non-mercury areas are segregated and employees are provided regular health checkups to
timely trace any symptoms of hazardous diseases, in order to ensure overall safe working conditions.
There should have been the clear outline of rules and principles for fair and safe treatment of
workers in the factory, with necessary checks and balances mechanism in place to ensure the
adherence of the guidelines.

The company should also have responsibly handled disposal of hazardous material like mercury. The
company should have demonstrated sensitivity, instead of double standards when they insisted for
leaving up to 25mg/Kg of mercury in soil in an eco-sensitive area, when residential standard for
mercury in the soil is 1mg/kg in their home country, i.e. 25 times stricter. They should have behaved
responsibly regarding disposal and that too from the time of acquisition of PIL, considering the
harmful impact of their actions on soil, land, nearby water bodies and local communities. Entire
disposal process should have been mechanized, where policies are there to prevent any open
disposal of
untreated waste generated and where the generated waste is being collected in a separate area or
vessel, that can further be transported to mercury recycling facilities for treatment. Even if due to
some reasons, open disposal was necessary, it was important for the company to determine the
recommended safe levels of mercury contamination and adhere to it. Company should have had in
place a strict vigilance process where a neutral external agency is entrusted to periodically examine
the contamination levels of the pieces of land surrounding by and report its results to the company
with required remediation measures. Instead in the entire episode they tried to prove otherwise,
and even expected leniency at a significant level while cleaning up the waste generated by them,
when they should have proactively undertaken the remediation measures to avoid any further
deterioration of environment and harm caused to brand name by public protests and lawsuits.

The entire process should have been governed with regular audits of workplace condition and safety
of operations, by independent 3rd party agencies. The company should also have secured
certifications like Fairtrade and B Corporation or have followed international standards such as ISO
26000, UN Global Compact etc., to ensure credibility in the safety of their operations and build trust
amongst the local communities and employees.

Question 2: Who were the key stakeholders for the business operations of the mercury
plant and why? How did the stakeholders influence the local (HUL) management as well as
the Unilever management?

Answer:

On the basis of first classification, the stakeholders for the business operations of the mercury plant
are

 Internal Stakeholders: Former and existing plant employees and contract workers, Company
Management.
 External Stakeholders: Local communities and residents of Kodaikanal, State Government
and Ministry of Labour and Employment, TNPCB, Ex-Mercury Employees Welfare
Association, Supreme Court and Madras high court, Environmental Activists, Media
Channels, URS Dames & Moore, National Environmental Engineering Research Institute
(NEERI) and Shareholders.

On the basis of second classification, the stake holders for the business operations of the mercury
plant are

 Latent Stake Holders:

1. Dormant (only power): This involves former plant employees, who carried out protests
against the company even after facing resistance.
2. Discretionary (only legitimacy): This involves Independent Environmental Consultant
URS Dames & Moore, NEERI, because they are inspection organisations and Ex-
Mercury Employees Welfare Association, that don’t have the power to influence the
firm and nor have any urgent claims against effects of company operations.
 Expectant Stakeholders:
 1. Dominant (Power and Legitimacy): Local Communities and residents, Environment
Activists which were involved in the protest against mercury disposal and had the will
to protest against resistance, but their relationship with company is not critical.
Contract workers are also involved in this.
2. Dangerous (Urgency and Power): Consumers can be categorized into this because
they have the power to influence the firm by impacting the demands for firm’s
products which the company and form a critical relationship with company, but were
not involved in this protest. Shareholders will also be involved in this who were not a
part of protests but can own other 2 attributes.
 Definitive stakeholders: Courts, Government and Ministry, Media Channels, Company
Management, Current Plant employees and TNPCB are involved in this, because they all
possess the power to influence the firm’s actions, were involved in the entire protests and
litigation process and have critical relationship with the company.

Examining the influence of Stakeholders on the management of Hindustan Unilever and

Unilever explained elaboratively in the case. Initially company operations were shut down
when residents, former workers and Green Peace Campaigners marched to factory gates in
their protest against hazardous working conditions and open dumping of mercury wastes.
Again, with protest from same stakeholders after the factory closure, the company was
made to conduct medical tests of the employees and pay severance package of 3 months
along with bonus to compensate them due to closure of factory under normal conditions.
HUL even engaged URS dame and Moore to conduct a contamination and risk assessment
study in response to the protests from employees and residents, and, in 2003 the company
was even forced to export the mercury contaminated material to mercury recycling facility in
US. With Supreme Court’s intervention in 2004, a committee were appointed for
supervision of remediation and they directed the HUL Board to appoint an independent
agency as a consultant for site remediation, under which NEERI was appointed as that
consultant. Finally comes the online activism, in which demands of Ex-Workers brought
forward through social media and the movement was supported by activist organisations.
Online petition and campaigns gained traction, which even featured in top newspapers
globally. Consumer awareness campaign #WontBuyUnilver was launched which reached
over 5 lakhs individuals on Twitter Alone. This was when the company decided to enter into
a settlement after facing sustained campaign and agitation of 15 years and agreed to provide
“undisclosed” ex-gratia amount to 591 former workers/association and their families.