Business Ethics And Extraction Industry

Group No 5: Group Members: Kiran Kulwant Kunal Madhawi Mathan Mohan

[BUSINESS ETHICS AND EXTRACTION INDUSTRY] 1 Group 5 Section A Prof: C.V.Baxi Business Ethics 19th oct 2013. BUSINESS ETHICS AND EXTRACTION INDUSTRY Introduction Except few, many of resource rich countries many have not succeeded to rudece poverty and standard of living for theier citizens. In fact majority of poor country exacerbated poverty due to displacement of indigenous people from their lands, territories and resources on which their livelihoods depend. There has not any sustainable design which protects and promise social accountability system in practise. These two factors are the major factors among the majot contributing factors. Therfore, social accountibility has received attention from the policy makers, policy reserchers and donore to concentrate and protect the citizens from the unethical practices of the extraction industry operations. Moreover, growing education level and awareness about the rights and duties of citizens, putting pressure on national governments and demanding to stop unsustainable and sociallly irresponsible exploitation of natural resources. Coal Industry Coal is amongst one of the most important fossil fuels. It is still the main source of energy in our current society. Coal formation is very tedious process and it takes thousands of years for its formation under extreme temperature and pressure. We usually get coal from mining process as these types fossil fuels are found deep below the earth .Coal Mining industry provides lakhs of jobs to people and is also responsible raising the GDP and per capita income but still we have think and ponder upon the negative effects of this industry. If we analyse the present negative impacts of coal mining industries, we will find that, it is more harmful than being good. Coal is a non-renewable source of energy and one day it will get over. Coal is one of the easiest convertible sources of energy. Let us analyse aspects associated with coal mining where are not ethical as per

the business. One of the major negative impacts of coal mining industries is on environment. Mining and burning of coal releases lots of carbon dioxide which is leading to greenhouse effect. Coal plant also release sulphur dioxide which leads to acid rains. Although its the task or job of the concerned mining industry to contribute to environment. But this ethical part is always ignored by this huge profit making mining industries. Apart from that there are number of cases which sights today how this coal mining industries are crossing the ethical lines in quenching their thirst of earning more profits. We have often come across various coal mining accidents through news. Most of these accidents have happened due to improper safety measures taken. Proper safety equipment is never provided to the people going deep inside the mine just in order to cut their cost of coal production. If even sometime, supervisors are aware of the high risk involved, still they dont care about and leave the miners to go inside. Filling of mines with water, improper oxygen supply and proper lighting facilities too have led to many accidents and may people have lost their lives due to these improper and unethical decisions taken by the companys high officials. In some cases, Coal mining industries has failed to provide even first aid facilities to people getting any injuries while doing the job. In the desire of earning more and more profit these people not only crosses ethical lines but also has degraded their values by not only harming animals, environment but their own species. Although BetterCoal code has been developed to cover social, ethical and environmental aspects but still these codes lies on paper and companies are still on their path of earning huge profit without caring around. Even we are aware of the recently Coalgate Scam. Greediness to earn more profit and corruption has not left coal mining industry alone. One of the saddest parts is that there is no international law or global code of conducts over these mining industries. Business ethics and sustainability in steel and aluminum industry In todays moodern life Steel and Aluminum are unique and vital material that touches every part of modern life. They are the key element of our infrastructure. From buses to buldings, from canned food to computers, almost everything we see around is either made of steel or is made using steel or alumunium. Hence, steel and aluminium manufacturing compines indulge in extracting of these raw material to turn them in to finished goods products that require lots of mining operations that affects the daily lifestyle of the people. That puts the question mark on the exsistence of the firm and encourgaes firms to behave unethically behind the CSR activities to earn more profits.

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Many a times companies commit towards the environmentally friendly practises as part of many business and act resposibly towards both socity and environment . social resposiblity refres to the maximizing compnies positive effects and minimizing negative impacts on the lives of affected people because of their factory or business operation. Therefore in modern lifestyle we see almost every single organisation violating the norms of fair busniess practise in the industry to maximize the profits. Business ethics mean taking the right choice these inculdes all the busness operations such as production, business process, and the companies behavior towards customers and communities in which it operats.Does CSR activity or ISO 14001 certification makes them ethical after damaging both society and environment to large extent? Legislation and ethical practice

There has been guidelines, rules, regulations and legislation that encourage ethical and sustainable pracitce to protect both society and environment. For example, anti-pollution laws place strict limits on lvels of CO2 emissions. It becomes resposiblity of the business owner to ensure the proper implementation of the ethical practices in the organisation and meet the ethical standards. It actually aims to go beyond the minimum requirement law, making a postive contribution wherever is possible . Tata steel is one of the example to these approach they endulge in CSR activities, takes sustainablity challenges and in particularly satisfy all its relevant stakeholders. They save energy and waste, they can work efficeintly and reduce the costs. Acting responsibly alson benefits its reputation. It has worked in case of TATA Steel, commitment to save environement and resposible business, giving good PR in a competative world market. As discussed steel is most desirable material to ensure sustainability because it is a truly recyclable-when steel is recycled it becomes new steel and not an inferior product. Making ethical decisions: Building culture of following ethical practices in to business operations has become a madatory operation part of the organisation to set their priorities. Such as, continue to achieve emissions reductions, invest in longerterm breakthrough technologies for producing low-carbin steels, develop new products and services that generate lower CO2 emissions through the life cycle, actively engage in the entire workforce in the challenge, lead by example within the golbal steel industry. Tata steel among the elite steel company that ensures the resposiblity towards its own operations, interms of choices mabe by its customers and end users of its steel, it is vital that balanced decisions are taken. This means not just looking at CO2 emissions, but at whole range of environment, social and economic considerations. It also means taking life cycle approach to decisionmaking- assessing products in terms of how they are made, used and finally diposed of. Often, just one phase is included, typically just manufacturer or just use-phase. However, Tatasteel promotes life cycle thinking so that decisions are taken on the basis of manufaturer, use and end-life phase for any material or product. Aluminum Industrry Aluminums combination of physical properties results in its use in a wide variety of products , many of which are indispensable to modern life. Because of its lightweight and electrical conductivity, aluminum wire is used for long distance transmission of electricity. Aluminums strength, light weight, and workability have led to

[BUSINESS ETHICS AND EXTRACTION INDUSTRY] 5 increased use in transportation systems including light vehicles, railcars, and aircraft as efforts to reduce fuel consumption have increased. Aluminums excellent thermal properties and resistance to corrosion have led to its use in air conditioning, refrigeration, and heat exchange systems. Finally, its malleability has allowed it to be rolled and formed into very thin sheets used in a variety of packaging. Figure is a generalized model of the entire life cycle, or flow, of aluminum. Primary aluminum production begins with the mining of bauxite, which is processed first into alumina and subsequently into aluminum metal. The main wastes from bauxite mining are tailings produced by grinding and washing the bauxite. The processing of bauxite to alumina involves initial chemical processing of the bauxite. The main waste from alumina refining is the production of red mud, a solid waste that is usually disposed of in a landfill. The electrolysis of alumina to produce aluminum involves the use of aluminum fluoride, carbon anodes, and large amounts of electricity. The most significant waste products from the production of aluminum from alumina are air emissions including per fluorocarbon gases and carbon dioxide from the production of anodes and electricity. Following smelting of the alumina to produce aluminum, the metal is poured into several basic shapes. These shapes are then fabricated into semimanufactured goods and then processed into finished goods. Fabrication may involve rolling of the metal into sheets, casting the metal into shapes, drawing the metal into wire, or extrusion of the metal to produce different shapes. Waste, or scrap, from fabrication and manufacture is variable depending on individual processes. For example, cutting of aluminum sheet produces significant amounts of scrap while casting aluminum parts produces little scrap. Scrap from fabrication and manufacture of finished goods is generally recycled and is called new scrap. The main end uses, or classes, of aluminum-bearing goods include buildings (construction), durable goods, electrical (power), machinery, packaging, and transportation. Old, or post-consumer, scrap is generated at varying rates for different types of goods depending on the in-service life of the goods and the economics of collecting and recovering aluminum from the good.

Environmental issues related to bauxite mining Due to its location close to the surface and relatively shallow thickness, bauxite mining involves disturbance of relatively large land areas. On average one square meter of land is mined (including roads and infrastructure) in order to give one tonne of aluminum metal the annual world wide encroachment on new land related to bauxite mining is about 40-50 square kilometers. However, quickly after mining the area, it will be normally prepared and re-vegetated with local species. This means that although the resource is spread out, the area opened at any time is normally small.

[BUSINESS ETHICS AND EXTRACTION INDUSTRY] 7 Depending on the local circumstances, the mining operations may involve a number of environmental issues: Removal and re-establishment of vegetation; change of landscape Control of erosion and run off from the mine Disturbance of hydrology Waste disposal (tailings) Mining operations and transport of bauxite - dusting/noise Opening new areas may also provide access to illegal logging, farming, settling and hunting The aluminum industry recognizes these challenges, and the International Aluminum Institute (IAI) has carried out periodic surveys of the performance of the bauxite mines since 1991. Aluminum refining

Environmental issues related to alumina production The main environmental issues related to alumina production are: Disposal of the bauxite residue (red mud) Energy consumption / energy efficiency Water management Physical footprint of the plant with infrastructure and the red mud disposal area

Environmental issues related to primary aluminum production The main issues related to production of primary aluminum are: Energy production, transmission and consumption Emissions of greenhouse gases Emissions of fluoride, SO2, dust and PAH Liquid effluents Waste disposal

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Health effects Based on the available scientific literature, the following main conclusions may be drawn regarding potential health effects of exposure to aluminum, aluminum oxide and aluminum hydroxide: Neurotoxic effects are not expected at the levels of aluminum to which the general public is typically exposed. There is no evidence for a chemical-specific fibro genic effect due to aluminum metal powder. Aluminum oxide and aluminum hydroxide behave as nuisance dusts under current controlled occupational exposure conditions. A very limited sensitization potential (allergy, asthma) for aluminum metal, aluminum oxide, and aluminum hydroxide dusts on exposure by inhalation is suggested. No evidence of effects on fertility or development of fetus and infants from aluminum exposure. IARC (International Agency for Research on Cancer) has classified Aluminium Production as Group 1 carcinogenic. This is related to potential exposure to known carcinogens such as PAH. The industry has

systematically reduced the PAH exposure, and the level today is below current occupational exposure limits. There is no evidence of carcinogenic, mutagenic or genotoxic effects of aluminum or common aluminum compounds. The weight of evidence suggests limited sensitization potential for aluminum metal, aluminum oxide, and aluminum hydroxide dusts on exposed skin. It has been suggested that high intake of aluminum may be a risk factor in developing Alzheimers disease (AD). The current weight of evidence does not support a primary role for aluminum in causing AD or other diseases involving cognitive decline. Policy framework Some of the most challenging social issues are related to mining operations. Hydro has joined the International Council on Mining and Metals (ICMM), which has developed common principles related to business ethics, social responsibility, environment, health and safety. Hydros Corporate Social Responsibility (CSR) policies and guidelines are based on these principles, aiming at maximizing the benefits and minimizing negative impacts on the society. The CSR policies focus on four areas: Integrity and anti-corruption, Community and stakeholder engagement, Human rights Supply chain and product stewardship. In addition to the ICMM framework, Hydros policies and guidelines are also based on internationally accepted standards developed by governmental and non-governmental organizations, such as: The Universal Declaration of Human Rights UN Global Compact Transparency International Amnesty International International Finance Corporations (IFC) Equator Principles and performance standards

1 [BUSINESS ETHICS AND EXTRACTION INDUSTRY] 1 ILOs 8-core conventions Implementation of the policies and guidelines is subject to reporting and auditing. Community issues In most local communities, Hydros industrial activities are welcomed as a source of employment, income, tax generation and general activity in the community. As a secondary consequence of the activity, the communities can be better equipped for health care services, education and cultural activities. However, some groups may be adversely affected by the activities, such as involuntary resettlement, loss of land for harvesting and impacts on traditional ways of life. The presence of a production plant or mine may also enlarge the economic gaps between groups of people, and generate social tensions. Hydro has a long tradition of stakeholder dialogue in the communities where we operate. Through our membership in ICMM we are also committed to local stakeholder dialogue and engagement to discuss and respond to such issues and conflicts. This includes maintaining interaction with affected parties, including minorities and other marginalized groups. We will contribute to community development in collaboration with host communities and encourage partnerships with governments and non-governmental organizations to ensure that community services are well designed and effectively delivered. When possible, we will enhance social and economic development to address poverty. Human rights In a number of countries, human rights are not fully respected, including: Freedom of expression Freedom of association and collective bargaining Labor standards Forced labor Child labor Minority rights Indigenous people Use of security forces. Almost all of our production sites in Europe, Australia, and Brazil and Argentina representing 89 percent

of our employees are unionized. About 80 percent of employees in Norway belong to unions, and a large proportion of employees in Germany and Brazil are also union members. Contact between union representatives across borders is an important part of the integration process for new activities in Brazil.. In countries where the right to form trade unions is restricted, like in Qatar and China, companoes try to find alternative forums to uphold the rights of employees to influence their work situation. In March 2011, Hydro signed an international frame agreement with four unions, aiming to secure the development of good working relations in Hydros worldwide operations. In January 2012, we signed a new corporate agreement with the main unions regarding the European Works Council. Business Ethics and Integrity Corruption is increasingly seen as a major political issue not just limited to its legal and ethical implications. The Hydro Integrity Program Handbook and the Competition Compliance Manual have been developed to guide and support staff in handling issues related to anti-corruption and competition issues also related to business relations. Employees may report breaches or perceived breaches of Hydros requirements through the Alert Line served by an external company where all permanent and temporary employees can report their concerns at any time and in their own language through toll-free phone external stakeholders can also access numbers or the Internet The Alert Line. In 2011, as in previous years, no instances of corruption were reported in Hydro. Conclusion

1 [BUSINESS ETHICS AND EXTRACTION INDUSTRY] 3 The companies should identify the ethical issues and tackle and attach those issues in terms of CSR activity. The ecological factors are often the primary concerns that can be the most effective entry point for CSR implementation. They should identify the root causes of human rights violations and eliminate it from the root, sustainability, economical and operational efficiency, and the social license to operate. Key to addressing sustainability and economical variables are conversion of the natural capital, represented by natural resources, to social capital that would allow for long-term livelihoods. It assumes that extracting industries are not compromising on natural environment, social and economical dimensions. References
Steel:

http://businesscasestudies.co.uk/tata-steel/business-ethics-and-sustainability-in-the-steel-industry/making-ethical-andsustainable-decisions.html#axzz2hyAIt5dk

http://www.abesit.in/pdfs/business-ethics-and-sustainability-in-the-steel-industry-contributed-by-prof-saritasrivastav.pdf

http://www.oecd.org/env/waste/46194971.pdf

http://www.hydro.com/upload/Aluminium/Download/Aluminium_environment-and-society.pdf

Saleem H. Ali and Ciaran OFaircheallaigh, journal , Greener Management internatianl issue dated October 2007, ISSN: 0966-9671 pages 5-16