Question

Lead batteries are widely used in vehicles, energy storage for solar systems, wind power, telecommunications, and data centers. Approximately 80% of lead produced worldwide goes into 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 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 Page 4 extracted and resold on commodities markets. Unlike most hazardous waste, used lead batteries are almost always recycled as this is a profitable enterprise throughout the world. 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. 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 Times reporters 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. 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. Others argue that consumers contribute to the poor situation described here. One of the main reasons that consumers are willing to buy recycled batteries instead of new ones is because of the relatively lower price of recycled batteries compared to new ones. If companies like Johnson Controls mandate the use of stricter standards for recycling batteries in Mexico, they would be forced to pass some of the additional costs of recycling to consumers. Otherwise, it would put them at a cost disadvantage compared to other companies that follow weaker standards. Therefore, by continually putting pressure on companies to provide products at lower prices, consumers encourage companies to find ways to lower their costs by cutting environmental and labor safety standards. (Source: Adapted from Charles W.L. Hill and G. Thomas M. Hult, Global Business Today, 8th edition, McGraw Hill) Answer the following question: What is the ethical dilemma faced by the US firms that export used batteries for recycling in Mexico, in the context of: (i) the Mexican workers employed by them, and (ii) the impact on the environment? Please provide arguments in support of your answer. (10 marks)

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Answer 1

Ethical dilemma faced here is high cost of recycling lead batteries will be passed onto customers however if costs are lowered then environment and labor laws get violated as excessive radiation of lead in Mexico which is permissible at 20 times higher to USA.

This causes Mexican workers to be health risk orineted as low costs corresponding to breach of safety standards and environmental levels. Moreover environment is thus contaminated with hazardous lead levels for sake of lower recycling prices and making available to consumers.