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The Bhopal disaster, also referred to as the Bhopal gas

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The Bhopal disaster, also referred to as the Bhopal gas tragedy, was a gas leak incident on the night of 2–3 December
1984 at the Union Carbide India Limited pesticide plant in Bhopal, Madhya Pradesh, India. It is considered among
the world's worst industrial disasters.
Deaths: At least 3,787; over 16,000 claimed (even more than 25000 if include those who can't sustain injuries or
disorder and died on later date(s). Non-fatal injuries: At least 558,125
Cause: Methyl isocyanate leak from Union Carbide India Limited plant
Start date: 2 December 1984
Location: Bhopal
Court said, Businesses will have absolute liability rather strict liability
In India, when Environment Protection Act 1986 was enacted the absolute liability was imposed on business to
protect the environment
In 1994, for the first time under the Environment Protection Act, 1986, the EIA (Environment Impact Assessment)
notification was formulated in India.
The National Green Tribunal Act, 2010 is an Act of the Parliament of India which enables the creation of a special
tribunal to handle the expeditious disposal of the cases pertaining to environmental issues.
What was ongoing in rest of world
EIA as a mandatory regulatory procedure originated in the early 1970s, with the implementation of the National
Environment Policy Act (NEPA) 1969 in the US. A large part of the initial development took place in a few high-income
countries, like Canada, Australia, and New Zealand (1973-74). However, there were some developing countries as
well, which introduced EIA relatively early - Columbia (1974), Philippines (1978)
US has the Environmental Protection Agency, which is an independent executive agency of the United States federal
government tasked with environmental protection matters. (President Richard Nixon proposed the establishment
of EPA on July 9, 1970; it began operation on December 2, 1970)
The Exxon Valdez oil spill occurred when Exxon Valdez, that was bound for Long Beach, California struck Prince
William Sound's Bligh Reef, 1.5 mi (2.4 km) west of Tatitlek, Alaska at 12:04 a.m. and spilled 10.8 million US gallons
of crude oil over the next few days.
Date: 24 March 1989
Shoreline impacted: 1,300 mi (2,100 km)
Operator: Exxon Shipping Company
Volume: 10.8×10^6 US gal (260,000 bbl; 41,000 m3) (or 37,000 metric tonnes)
US EPA after this issue came-up with series of guidelines and publication to make EMA and EIA reality
The Division for Sustainable Development (DSD) provides leadership and is an authoritative source of expertise
within the United Nations system on sustainable development. It promotes integration of the social, economic and
environmental dimensions of sustainable development in policy-making at international, regional and national
Came up with guidelines through multiple publications and conventions to create common understanding among
nations regarding sustainable development goals.
Are these laws and regulations really work?
Whether stakeholder (especially policy maker and business) consider them seriously?
Does any penalty actually imposed?
John Craxford and his company John Craxford Plant Hire Ltd (a UK based Company) was also ordered to
pay £86,937 in fines and legal costs in Feb 2008 for being guilty for a string of offences (8) committed at
Yannon Lane landfill site at Kingkerswell in Devon – including the illegal burying of “massive volumes of
unsuitable waste” as well as waste licence and pollution permit breaches since March 2003.
The case marks a major success for the Environment Agency in the South West. The seizure of £1,194,638
million represents the largest ever. Judge Wassell said the company must make a payment of £300,000
by March 31 and the remaining balance will have to be paid by the end of July this year. Mr Craxford faces
a five-year prison sentence if he does not pay up.
In India too,
1. National Green Tribunal Holds Art of Living Responsible for Damage to Yamuna Floodplains. The
Tribunal has also directed that the INRs 5 crore paid by the organisation as a fine be utilised by
the DDA for restoration of the affected area.
2. A $ 31 billion hillside township project of LAVASA Corporation Limited slipped on bumpy path
because environmental clearances was not properly taken and finally land into insolvency (INRs
7700 crores of lenders on stake).
So, the first reason of adopting EMA is regulatory requirement & huge financial cost in form of penalty if
failed to adopt in spirit.
Ranganathan and Ditz wrote an article in 1996
In which they mention pointed out that hidden costs for environment-related activities cannot be
revealed with the use of conventional management accounting.
And further they mentioned that for Amoco at their Yorktown plant the total environmental cost was 22%
of operating cost against estimate of 3%
Since in certain industries environmental cost can be significant % of operating cost, and they can be
identified (in order to manage them) only with EMA, hence this becomes second reason why companies
adopting EMA.
Green Consumerism is buzz now
Customers prefers to purchase the product which has least environment impact (if price of different
alternative is same - even if not same; then also few consumers prefer to buy green product) - This
becomes third major reason.
Defined EMA as Tool,
That use environmental information
To manage the (a) environment impacts & (b) environment costs
Of their business decision
Environmental information can be classified into
Physical Information - Physical flow of material or product, water, energy and generation of waste
Monetary Information - That result in either environmental costs or savings (such as carbon credit)
Environment costs as per United Nations, are costs connected with the actual or potential deterioration
of natural assets due to economic activities. But we have to see it from accounting point view
So, for us (being an accountant), environmental cost is cost incurred by business to prevent the loss of
environment or paid in form of penalty for failure to prevent the loss of environment
But penalty imposed only if there is violation of law and such violation come into knowledge of law and
proved as well.
And also, in those cases where emission of pollutant is more than a specified limit.
If pollutant emitted are less then threshold or violation not come into knowledge of law then the cost in
form of degraded environment needs to be borne by society.
So environmental cost can be seen into two parts - Inside the business (internal) and outside the business
EMA only identify, allocate and manage only internal cost (because external environment cost is beyond
control) and this become major shortcoming of EMA.
Input - output analysis
Flow cost accounting