Hul

BUSINESS ENVIRONMENT AND SUSTAINABILITY 2018-19 STAKEHOLDER ANALYSIS: HINDUSTAN UNILEVER KODAI MERCURY POISIONING CASE Submitted in partial fulfilment of the requirements of the course

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD Submitted to: Instructor: Prof. Ram Mohana Turaga Associate: Nandini Singh IIM Ahmedabad

Submitted by: Group B11 Akshay Mehndiratta Anubhav Phukan Gunish Handa Mahima Rastogi Saloni Goyal Sameer S.A.

Section B PGP 2018-20, IIM Ahmedabad

Date of Submission: 27th March, 2019

Contents Introduction and Context ....................................................................................................... 3 Stakeholders Identification and Classification ....................................................................... 4 Key attributes of stakeholders: .......................................................................................... 4 Stakeholder Analysis............................................................................................................. 6 1.

Factory Ex-employees: .............................................................................................. 6

2.

Local communities: .................................................................................................... 6

3.

Shareholders and Investors: ...................................................................................... 7

4.

Local governing bodies and political parties:.............................................................. 7

5.

Scientific and Technical bodies: ................................................................................ 8

6.

Public Interest groups and Individual activists:........................................................... 8

7.

HUL Customers: ........................................................................................................ 9

References: ..................................................................................................................... 10

Introduction and Context Mercury contamination case of Kodaikanal is a case of Environmental damage allegation made against Hindustan Unilever during the process of making thermometers. The thermometer factory was eventually closed in the year 2001 as suggested by Tamil Nadu Pollution Control Board (TNPCB), endorsed cleaning of mercury-contaminated soil in 2008, which a coalition of 25 organizations called Tamil Nadu Alliance Against Mercury (TAAM), claimed was sub-standards and set below acceptable limits. The issue of ensuring that the contaminated soil at Kodaikanal’s former thermometer factory is remediated to the optimal standards is a very complex issue. Although there were many claims concerning the standards that should be applied for soil remediation these claims were both confusing and misleading as Hindustan Unilever abide by the decision of Tamil Nadu Pollution Control Board (TNPCB) which is the statutory authority and is solely responsible in deciding soil remediation standards. Also, the Central Pollution Control Board (CPCB) and Scientific Expert Committee (SEC) which was constituted by the Supreme Court Monitoring Committee have been consulted in deciding these remediation standards. Activities at Kodaikanal site became the focus for attention, and HUL engaged Dames and Moore as independent international consultants to conduct an environmental impact assessment and risk assessment of the place which showed no significant damage(2) but still HUL wants to reduce the performance gaps between various stakeholders. This report is aimed at understanding various stakeholders, their attributes, identifying and analyzing performance gaps that exist between multiple stakeholders and trying to reduce these gaps.

Stakeholders Identification and Classification Stakeholders are the people involved in and affected by the system directly or indirectly by the system. They can be either people, groups or institutions which are likely to be affected or those who can change the outcome of the intervention. Based on this an exhaustive list of stakeholders who are considered affected and those who influence the outcome of this case have been identified. 1. Factory employees 2. Local communities 3. Shareholders and Investors 4. Local governing bodies and political parties 5. Various Scientific and Technical Bodies 6. Public interest group 7. Tourists from different parts of India 8. Hindustan Unilever customer. 9. Individual activists like Sofia Ashraf and Nityanand Jayaraman Among these Factory employees, Local communities and Investors & Shareholders are Primary Stakeholders. Local Governing bodies, political parties, and various scientific & technical bodies are Public Stakeholders. Public interest groups, customers, tourists & individual activists are Secondary Stakeholders. Key attributes of stakeholders:(1)

Stakeholder

Factory employees Local Communities Shareholders and Investors

Stakeholder Type

Stakeholder Attributes

Stakeholder Salience

Power

Urgency

Legitimacy

Primary

YES

YES

YES

Definitive

Primary

NO

YES

NO

Demanding

Primary

YES

NO

YES

Dominant

Governing bodies

Public

YES

NO

YES

Dominant

Public

NO

NO

YES

Discretionary

Secondary

NO

YES

YES

Dependent

Tourists

Secondary

NO

YES

NO

Demanding

HUL Customers

Secondary

YES

NO

NO

Dormant

Individual activists

Secondary

YES

YES

YES

Definitive

& Political Parties Scientific and Technical Bodies Public interest groups

The above stakeholder attributes can be easily understood with the help of Venn diagram.

Fig 1: Stakeholder Salience Based on how many attributes each stakeholder has each one of them can be further classified into Latent stakeholders, Expectant stakeholders and Definitive stakeholders.

Stakeholder Analysis 1. Factory Ex-employees: They have to be considered as the Primary stakeholders as they claim to have highest effect on HUL’s thermometer factory. They claim for Influence and Economic benefits. But these claims can be considered as indirect claims(4) as they themselves have no voice and are dependent on public interest groups and NGO’s to put up their demands. Issue: Their issue is that they are effected by mercury poisoning and even claim that many children born to these ex-worker suffered from congenital deficiencies. Because of the nature of claims and Public Interest Group’s support they have all the three attributes of power, urgency and legitimacy and the demands of these stakeholders have to be catered first. Demands: 

Provides adequate financial compensation to workers and arranges for longterm medical treatment, monitoring and rehabilitation for workers and their families.



Provide avenues for economic rehabilitation of the workers and their families.

Analysis: Initial dialogue and continuous monitoring are required. They have to be informed with balanced and objective information to assist them in understanding the problems, alternatives and/or solutions better. If needed financial support has to be given to the families of effected workers. 2. Local communities: Even local communities can be considered as the primary stakeholders as mercury poisoning of lands have directly affected their lives as they claim their water bodies are polluted and also damaged their sensitive ecosystem. Nature of claims of these local communities is influential. They can be classified as demanding stakeholders as they only have urgency and do not possess any power or legitimacy to influence. Issue: The entire premise of the factory falls within water catchment area of Pambar Shola, resulting in polluting of the entire catchment. Also there are more than 17 endangered plant species which are endemic to this sensitive ecosystem which are on the verge of extinction due to mercury poisoning. Demands:



Cleans up the mercury contaminated factory site and surroundings to international standards that are adequate to protect the sensitive watershed forests of Pambar Shola.



Pays for long-term environmental monitoring for mercury build-up in the food chain in the forests and aquatic ecosystems in and around the factory. Improve biodiversity of the region by bearing costs for protection of wildlife and endangered plant species.

Analysis: Directly communicating with them and directly involving them by informing various decisions taken in collaboration with Tamil Nadu Pollution Control Board (TNPCB) will help. Also coming up with mutual aggregable soil remediation standards with the help of TNPCB and Scientific Expert Committee (SCE) have to be done. 3. Shareholders and Investors: These are considered as primary stakeholders as their decisions directly effect HUL and their nature of claim is gaining maximum economic value or profit maximization. They can be claimed as Dominant stakeholder as they have both power and legitimacy to influence the decisions taken by HUL. Issue: They were sceptical about the HUL’s stand on Kodaikanal issue and whether it does any good to company in a long run. They want the matter to be attended immediately as it is diluting the image of the company. Analysis: Collaborating and consulting with these investors and shareholders in various decision making have to be done to fill the performance gaps. Keeping them informed, listening and acknowledging their concerns and proving them continuous feedback on how their inputs have influenced their decision shows organizational priorities. 4. Local governing bodies and political parties: These are public stakeholders with dominant salience as they possess power and legitimacy. They want this issue to be resolved but do not possess the urgency to do it. They were quick enough to shift the case by forming Scientific Expert Committee (SEC) and asking them to collaborate with TNPCB and Tamil Nadu Alliance Against Mercury (TAAM) Analysis: There is clear conflicting goals between both the parties. To reduce these gaps continuously collaborating with government and partnering with them in each aspect of decision making including what should be the site remediation standards, how and by what means the financial aid to be given etc. will help to reduce performance gaps.

5. Scientific and Technical bodies: These have similar role as governing bodies but they do not possess power as they do. So their salience is Discretionary in nature. These include TNPCB, CPCB, SEC and URS Dames and Moore. They either represent the government or independent consultants whose main responsibility is to conduct Environmental Impact Assessment and Risk assessment and come up with environmental standards or assess the already done damage. Analysis: The reports given by these technical bodies are in favour of HUL and there isn’t much performance gap between both the parties. But there is constant pressure on these bodies to reconsider the soil remediation standards from various public interest groups and NGO’s which is forcing them to reconsider their environmental standards. Also as there aren’t any stringent environmental standards for inorganic chemicals in residential and environmentally sensitive regions, this further increases the differences further. Looking for them for direct advice and innovation in formulating solutions to various issues will reduce these differences. 6. Public Interest groups and Individual activists: These stakeholders possess Urgency and legitimacy but lack power. However they try to gain power against the corporation by various means like online petitions, awareness campaigns, articles etc. Their nature of claim is to gain influence so as to meet their demands. They are generally dependent stakeholders but can also be dangerous or definitive stakeholders based on amount of power they possess. They include 

Tamil Nadu Alliance Against Mercury (TAAM), a coalition of Kodaikanal residents and other environmental organizations



Centre for Research for Multinational Corporations (SOMO), who overviewed business practices of HUL in 2009, pertaining to mercury contamination case.



Independent Social activists like Sofia Ashraf and Nityanand Jayaraman who by their music albums and articles tried to educate people and bring international attention to this case.

Demands and allegations: 

Clean up the contaminated site with international remediation standards at mercury concentration of 6.6 mg/kg.



TAAM has accused Hindustan Unilever to collude with TNPCB and NEERI to keep public in dark and dilute clean-up standards to 25 mg/kg of mercury in soil.



Made allegation against HUL saying that HUL is following double-standards by following

different

standards

for

different

countries

where

stringent

environmental standards were followed in UK and Netherlands and substandard environmental standards were followed in India Analysis: They prioritize environment over economic gains which makes it really difficult to reduce these performance gaps. Trying to collaborate with these people and directly involving them in decision making process taking into considerations their demands and recommendations have to be done. Continuous monitoring is not required . 7. HUL Customers: These are secondary stakeholders who possess only power, and they lack authority and voice which makes them dormant stakeholders. Analysis: Effect on these stakeholders indirectly effects the reputation and brand value of HUL. Continuously monitoring them from time to time and by constant communication about company’s environmental policies and various eco-friendly activities done by the company reduces this performance gap.

References: 1. Stakeholder Salience. (2019, 1). Retrieved from https://www.stakeholdermap.com/stakeholder-analysis/stakeholder-salience.html 2. Kodaikanal, India. (2016, September 3). Retrieved from https://www.unilever.com/sustainable-living/what-matters-to-you/kodaikanalindia.html 3. ACCA - https://www.accaglobal.com. (n.d.). All about stakeholders – part 1. 4. (PDF) Participation: Rhetoric and Reality. The Importance of Understanding Stakeholders Based on a Case Study in Upper East Ghana. (2005, January 1). Retrieved from https://www.researchgate.net/publication/233148057_Participation_Rhetoric_and_ Reality_The_Importance_of_Understanding_Stakeholders_Based_on_a_Case_Study _in_Upper_East_Ghana 5. Krishnan, A. (2015, August 10). Everything you need to know about Kodaikanal Mercury Poisoning. Retrieved from https://www.india.com/news/india/kodaikanalmercury-poisoning-everything-you-need-to-know-about-unilever-mercury-dumpingcase-498944/ 6.