Case study on Environment Law non-compliance by Sterlite Corporation

Environment Law non-compliance

Sterlite Corporation

(Regulatory and Compliance Risk)

By Akash NV, Sai Apurupa Kasibhatta, Kriti Sharma, Simran Mahajan (PGDRM July’19-20 and Jan’20-21)

Introduction

The environment refers to our immediate surroundings in which all living and non-living components co-exist. It can be used to refer to the social, natural or built environment. The environment has a huge impact on an individual’s behavior and intellect. Any change that occurs in a living entity either directly or indirectly is related to a change in his immediate surrounding.

Environment Regulations

ENVIRONMENTAL (PROTECTION) ACT, 1986:

The Environment (Protection) Act, 1986 was introduced as an umbrella legislation that provides a holistic framework for the protection and improvement to the environment.

WATER (PREVENTION & CONTROL ) ACT 1974:

The objectives of the Water (Prevention and Control of Pollution) Act are to provide for the Prevention and Control of Water Pollution and the maintenance or restoration of the wholesomeness of water for the establishment, with a view to carrying out the purposes.

AIR (PREVENTION AND CONTROL OF POLLUTION) ACT 1981:

The objective of this Act is to provide for the prevention, control and abatement of air pollution, for the establishment, with a view to carrying out the aforesaid purposes.

The Factories Act, 1948:

Factories Act, 1948 is a social welfare legislation intend to secure health, safety and welfare of the workers employed in factories. However, some of the provisions of this Act are concerned with prevention of water pollution.

Environmental Impact Assessment (EIA):

It is an important management tool for ensuring optimal use of natural resources for sustainable development. The scope of the EIA has been enhanced to cover other developmental sectors such as industries, mining schemes, energy, etc.

Control Pollution Control Board:

The Central Pollution Control Board (CPCB) is a statutory organization, whose function is to promote cleanliness of streams and wells in different areas of the States as well as Advise the Central Government on any matter concerning the prevention and control of water pollution. They Advise the Central Government on any matter concerning the prevention and control of water pollution.

Ministry of Environment and Forest:

The ministry is responsible for planning, promoting, coordinating, and overseeing the implementation of environmental and forestry programmes in the country. It also ensures the conservation of flora and fauna of the Indian forests.

Ministry Of Water Resources:

It is the apex body for the formulation of rules and regulations for the development of water resources in India.

Tamil Nadu Pollution Control Board:

It is the governing body to monitor and control air, noise, and water pollution in the state of Tamil Nadu.

About the company

Sterlite Copper is a subsidiary of Sterlite industries, a company owned by Vedanta Limited.
Sterlite operated the largest copper smelter plant in India, in Thoothukudi from 1998 to 2018.
The plant also included a refinery, a phosphoric acid plant and a sulphuric acid plant.
Anil Agarwal is the owner of Sterlite copper.

Environmental Impact

Iron content of ground water was found to be 17–20 times the permissible limits making it unfit for agriculture
Salinity level of 7854 mg/litre recorded in ground water
Respiratory diseases and Ear-Nose-Throat problems were very common and instances of asthma was found to be twice the state average.
High levels of iron, cadmium, nickel and arsenic in soil samples collected from near the plant higher than permissive levels contributing to more cancer cases and skin and respiratory allergies
Water sample had ten times the permissible sulphate levels which could cause severe stomach disorders and calcium levels were also high.

Aftermath Impact on Environment

TNPCB reports 

Decrease in level of sulphur di oxide & air quality index improved significantly.

Impact on Financials of company

Closure of the plant made company to lose ₹5 crores every day.
Total loss till date estimated by the company is around $600 million.

Impact on economy

The closure of company has led to

Rise in import of copper worth USD 2 billion
Export loss of over USD 1.5 billion, resulting in an overall loss of Rs 20,000 crores to the economy.

Compliance Issues

Company: Violation of the order by TNPCB to provide Environmental impact assessment (EIA) result.
Company was engaged in unlicensed production. The year production was 1,64,236 Tonnes as against the permitted production of 70000 Tonnes per year
Didn’t comply with the TNPCB’s order to develop green belt around 25 meters of the plant.
Environment health and safety (EHS) – Noncompliance
Release of Toxic wastewater along with rainwater to the nearby localities and presence of Arsenic was reported.
Plant set up 14 km from the Gulf of Mannar ; where the prescribed distance to be maintained was 25kms.
MOEF: Ministry of Environment and forests issued environmental clearance without conducting environmental impact assessment and pollution hazards tests.
Three gas leaks incidence happened, and PCB did not take any actions.

Root Causes

The local board for environment (TNPCB) and regulatory body (District administration) in Tamil Nadu kept their own personal benefit as their priority instead of prioritizing the environmental issues affecting the people and their surroundings.
Political support from various political parties helped Sterlite to set up and operate an unlicensed factory.
Weak preventive measures and control set in the factory to avoid gas leaks.
No measures were taken to reduce the environment impacts that their factory had.
Constant bribery to various boards, regulatory bodies and political parties to avoid legal conflict for running an unlicensed factory.

Strategies

What the company could’ve done:

Complied with the 25 kms rule
Proper waste management system
Maintain a green belt
Regular pollution checks and measures to reduce the same

What the company can do now:

Set up a factory in a secluded area which would not affect the environment or people.
Assurance that it will be 100 percent compliant to all the environment and safety boards and the government
A strong Regulatory and compliance audit at regular intervals
Strong CSR contributing to environment.

Stakeholder Mapping

ENVIRONMENTALLY ETHICAL COMPANY

HINDALCO INDUSTRIES LTD., an Indian Aluminium and copper manufacturing company, is a subsidiary of the Aditya Birla Group.

About Hindalco:

Locations-Jharkhand, Odisha, Chhattisgarh and Maharashtra.
Focus – To achieve operational excellence while minimizing resource use and being accountable to the environment and society.
Primary products at Hindalco – aluminum and copper

Why aluminum and Copper?

minimum impact on the environment
significant recycling potential

Read the full case study here: Case Study on Sterlite Corporation

Disclaimer
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