Reference no: EM131721235

Ethics of Exporting Used Batteries

Lead is a highly toxic metal, and lead in this case relates to exporting used batteries to Mexico. Elevated levels of lead in the human body have been associated with damage to many organs and body tissues, including the heart, bones, intestines, kidneys, and reproductive and nervous systems. High lead exposure in young children is particularly worrying. It can result in lower intelligence and learning disabilities, impaired hearing, reduced attention span, hyperactivity, and antisocial behavior. It is not surprising then that exposure to lead has been highly regulated in developed nations. In the United States, the Environmental Protection Agency (EPA) has mandated tough rules designed to limit lead pollution. One consequence of these rules has been to increase the cost of recycling lead batteries. These rules, however, do not prohibit companies from exporting used batteries to other nations where standards are lower and enforcement is lax. A study conducted by the reporters from the New York Times found that about 20 percent of used vehicle batteries and industrial batteries in the United States are exported to Mexico, tripling this form of export in just five years. The lead in these batteries is then extracted and resold on commodities markets. It is a booming business. Lead scrap prices stood at $0.73 a pound in July 2015, up from $0.05 a decade earlier. Recycling in Mexico is also a dirty business. While Mexico does have some regulations for smelting and recycling lead, the laws are weak by American standards, allowing plants to release about 20 times as much as their American equivalents. To make matters worse, enforcement is lax due to the lack of funds for quality control. For example, a government study in Mexico found that 19 out of 20 recycling plants did not have proper authorization for importing dangerous waste, including lead batteries. At some recycling plants in Mexico, used batteries are dismantled by people wielding hammers and their lead smelted in furnaces whose smokestacks vent into the open air. Point in case, a sample of soil collected from a schoolyard next to one of the recycling plants showed a lead level of 2,000 parts per million, five times the limit for children's play areas in the United States, as set by the EPA. The New York Timesreporters documented several cases of children living close to this plant who had elevated levels of lead in their bodies. One four-month-old had 24.8 micrograms of lead per deciliter of blood, almost two and a half times as much as the level typically associated with serious mental retardation. The value chain for used batteries and this form of lead exports is also done by intermediaries in the United States who buy up old batteries and then ship them across the border to the cheapest processors, typically a Mexican company. Some large multinationals are also in this business, however, although they mostly try to adhere to stricter standards and regulations. For example, one large U.S. battery company, Exide Technologies, has five recycling plants in the United States and it does no recycling in Mexico. According to an Exide official, it was not in the company's best interest to skirt regulations. Another large U.S. battery manufacturer, Johnson Controls, does ship a significant number of batteries to Mexico, but it has its own recycling plants in Mexico as well. Johnson Controls states that its Mexican facilities abide by the stricter U.S. regulations, rather than the Mexican standards. Its recycling operations in Mexico are also well below current U.S. standards for employee blood levels and substantially better than average.

Sources E. Rosenthal, “Used Batteries from U.S. Expose Mexicans to Risk,” The New York Times, December 9, 2011; “New Report Detailing Failures of Mexican Battery Recyclers Proves the Exportation of SLABs Must Be Stopped,” Business Wire, June 15, 2011; “Johnson Controls Announces Planned Investment in Its Automotive Battery Recycling Center in Mexico,” PR Newswire, August 30, 2011. Case Discussion Questions

1. Which country's regulations should apply to a company—the stricter regulations or the country's regulations in which operations are taking place? What happens if all multinational corporations focus on countries with the least strict standards?

2. With more than 200 countries in the world, is it realistic to expect ethical guidelines to be established across all countries or even within industries across countries? Is one person's or one company's ethics likely to be similar to other people's or companies' ethics?