Background Information
For a number of years, Amnesty International has campaigned
for justice for the victims of the Bhopal chemical disaster.
On the night of 2/3 December 1984 toxic gas leaked from
a chemical plant owned by Union Carbide Corporation
(UCC) in Bhopal, India, killing more than 7,000 people
within days. Over the next 22 years exposure to the
toxins resulted in the deaths of a further 15,000 people
as well as chronic and debilitating illnesses for more
than 100,000 others. Despite efforts by survivors, the
plant site has not been cleaned up and as a result,
piles of toxic waste continue to pollute the environment
and the water that surrounding communities drink. Following
Dow Chemical's 2001 acquisition of UCC, Amnesty
International has been calling on Dow to address the
continuing health, social and environmental damage suffered
by the people of Bhopal as a consequence of the ongoing
contamination of the site.
Learn more
about Bhopal »
In our effort to hold the company accountable, we have
used a variety of tactics, including shareholder activism.
Shareholders enjoy special rights and privileges, since
they are considered part owners of the companies they
invest in. One of the ways investors can create change
is by filing shareholder resolutions that will be voted
on at a company's annual meeting. For three years
now, Amnesty has filed a shareholder resolution about
Bhopal with Dow Chemical to help increase the pressure
on the company to address its responsibilities. Each
year that a resolution is submitted, it must reach a
threshold vote in order to be voted on again the following
year. This year, that threshold is 10%. Reaching 10%
is challenging, since many shareholders blindly vote
the way that management recommends. In the past Dow
has recommended a vote against the Bhopal resolution
and we expect the same this year. In order to help increase
the vote, we are asking activists to send letters to
top shareholders to help make them aware of Bhopal and
to recommend they support the shareholder resolution.
Learn more
about shareholder activism »
Making the case to shareholders
Despite efforts by Bhopal survivors and activists, Dow has consistently denied any responsibility for the damage caused by either the gas leak or the ensuing contamination. They have repeated this message to their shareholders over the years, making it a challenge to convince investors otherwise.
But Dow's position on Bhopal is not only untenable from a human rights perspective, it also has the potential to cause significant damage to the company's long term economic value. This concern is supported by a 2004 report by Innovest Strategic Value Advisors which downgraded Dow from an AA to a BB ratio after considering the Bhopal disaster, among other issues, as an ongoing concern with significant potential to harm the company's reputation, give rise to material liabilities, and constrain investment in Asia.
Shareholders should also be concerned that Dow's legacy in Bhopal may be blocking the company's ability to expand in the critical Indian market. According to the Indian Express, on November 8th, 2006, Dow CEO Andrew Liveris wrote in a letter to the Indian Ministry of External Affairs that "it was not possible for Dow to invest in India unless the [Bhopal] issue was cleared." Recently, the Indian Department of Chemicals and Fertilizers filed a district court brief suggesting that Dow should contribute $22 million towards clean up of the contaminated Bhopal site and drinking water. Furthermore, Bhopal survivors have vowed to block Dow's business in India until their demands for clean up and health care are met.
Shareholder proponents of the Bhopal resolution seek to send a clear message to Dow's management that promises by the company concerning environmental and social responsibility must be matched with action, especially in Bhopal. This is of greater concern in the context of Dow's recently launched "Human Element" campaign, which emphasizes the importance of public health and sustainable water supplies. The public impression created by this new campaign, which is cited in the shareholder resolution, is that Dow has upped its commitment to address environmental and human rights issues wherever they arise in the world. It is reasonable for investors to wonder whether this changes the company's posture regarding its immense legacy issues relative to Bhopal. The news release announcing the Human Element campaign noted that the campaign "is a commitment to realize the trio of attributes in CEO Andrew Liveris' vision: To make Dow the biggest, most profitable, most respected chemical company in the world. It also breathes life into the Company's recently-announced 2015 sustainability goals – to improve safety, to reduce environmental impact, conserve natural resources and use science and technology to solve global problems." The resolution presents the opportunity, therefore, for the company to articulate the relationship between its stated public commitment and initiatives on clean water and human needs and the ongoing contamination in Bhopal.
Dow has a long history of failing to disclose the full extent of their liabilities and obligations associated with Bhopal. This year, as in the past, the company sent an extensive challenge to the Securities and Exchange Commission (SEC) regarding the resolution on Bhopal in an attempt to have it removed from the ballot. The SEC ruled in our favor, ensuring that this resolution will be voted on at the annual meeting. However, investors will receive an opposition statement from Dow, recommending shareholders vote against this resolution. That is why it is so important to provide shareholders with all the facts, and to encourage them to support the resolution.
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